United States Takes Steps to Make Economy Better

[Luke_Wilbur]

A good indicator to see exactly where are economy is at by reading statement from the Bureau of Economic Analysis is an agency of the U.S. Department of Commerce. Our Real gross domestic product (the output of goods and services produced by labor and property located in the United States) increased at an annual rate of 3.3 percent in the second quarter of 2008. The increase in real GDP in the second quarter primarily reflected positive contributions from exports, personal consumption expenditures (PCE), federal government spending, nonresidential structures, and state and local government spending.

 

The Federal Reserve's rescue plan, along with the Securities and Exchange Commission's move to ban short-selling on 799 financial shares through Oct. 2 will help restrain the financial crisis. With tighter regulation Americans can expect a quicker turn around. The government needs to invest more money in our workforce to stimulate small business growth. The country as a whole should invest in wind energy and electric transportation companies located in the U.S.A.

 

Americans should begin to do their part in restoring our economy by looking at the labels of the products they purchase to see if they are made in America. If your favorite retail establishment does not carry 'Made in USA' goods tell the store manager you want to see less foreign made goods. If there is no change share your story how your local retailer is not supporting our country with everyone you know.

 

American manufacturers should begin retooling factories in the United States. Cheaper transportation costs should offset labor costs. Many Americans need jobs and are ready to get back to work.

Edited September 19, 2008 by Luke_Wilbur

[Guest Walmart Mom]

If it is not made in America or does not grow in America I am not buying it.

[Guest Senator Hillary Rodham Clinton]

Senator Hillary Rodham Clinton today called for a new national commitment to revitalizing the nation’s infrastructure and expanding and improving mass transit systems. Delivering remarks at the New York State Public Transit Industry Fall Conference, Senator Clinton urged support for a sweeping new plan to improve existing transit systems, expand public transportation to areas that currently have limited access, and overhaul the process by which public transit is planned and financed. Senator Clinton underscored the benefits of increased investment in infrastructure and transit including job creation, reducing America’s dependence on foreign oil, cutting transportation costs for families, and curbing harmful fossil fuel emissions.

 

“Expanding and improving public transportation is central to solving our nation’s infrastructure problems. Across the country, demand for mass transit is at an all time high, but existing systems don’t have the resources they need to maintain service without raising costs. We need a national commitment to invest in mass transit systems across the country so that people in more communities will have greater access to reliable, affordable public transportation,” said Senator Clinton.

 

Senator Clinton has long been an advocate for mass transit in New York and around the nation. Earlier this year, Senator Clinton testified before the Senate Committee on Banking, Housing, and Urban Affairs, to urge her colleagues to support the Saving Energy through Public Transportation Act. This legislation, which Senator Clinton introduced, would authorize $1.7 billion over two years to support mass transit systems in New York and across the country and keep fares affordable. During her testimony, Senator Clinton underscored the increased demands facing New York’s 130 public transit systems.

[Guest LAW_*]

SPEAKERS: BOB SCHIEFFER, HOST

 

SECRETARY OF THE TREASURY TIMOTHY F. GEITHNER

 

LARA LOGAN, CBS NEWS

 

HARRY BACON, WASHINGTON POST

 

[*] SCHIEFFER: Today on “Face the Nation,” an exclusive interview with Secretary of the Treasury Tim Geithner. The economy, executive bonuses, the auto bailout and banks -- these are the issues for Tim Geithner, the secretary of the Treasury.

 

We’ll talk about the rest of the week’s news, including North Korea’s rocket launch last night, with our chief foreign correspondent Lara Logan and Harry Bacon, who covers politics for the Washington Post.

 

I’ll have a final word on a touching moment.

 

But first, Tim Geithner on “Face the Nation.”

 

And you can see from the pictures the cherry blossoms are out. Good morning again. And joining us in the studio, the Treasury Secretary Tim Geithner.

 

GEITHNER: Thank you, Bob.

 

SCHIEFFER: Mr. Secretary, glad to have you with us. I guess last week you could kind of call it the best of times and the worst of times. The stock market performance overall the best since, what, 1933 maybe. But unemployment reached 8.5 percent, and that’s the worst in what, 25 years I guess.

 

The administration began the year forecasting that unemployment might go to 8.9 by the end of the year. We’re already at 8.5. Does this mean you’re going to have to ask Congress for another stimulus?

 

GEITHNER: Bob, this recession has caused enormous damage. You’ve seen 5 million Americans lose their jobs already, millions more had to cut cutting back on hours, millions more living with the fear that they might lose their job going forward.

 

And that’s why it’s so important that we do as much as we can to put in place what’s the most powerful program of support for jobs and private investments since the second world war, that we work to address this housing crisis to make sure we’re fixing our financial system so the credit is flowing again. It’s enormously important. A lot of pain and suffering across the country. We need to keep acting as forcefully as we can.

 

SCHIEFFER: So does this mean you may have to go back to the Congress and ask for more?

 

GEITHNER: Our first priority now really is to move as quickly as possible to put in place these programs. They are, again, these are very powerful programs.

 

I think the most encouraging thing is where we’ve moved, where we’ve acted, you can start to see some signs. So, for example, mortgage interest rates now are at their lowest point in history. And millions of Americans now are going to be able to refinance their homes, take advantage of lower interest rates. That’s cash in the hands of the American people, and that’s very powerful. But again, the most important thing is that we keep at it, working with countries around the world, make sure that we’re doing as much as necessary to make sure we bring a recovery back in place as quickly as possible.

 

SCHIEFFER: But I guess the specific question I was asking, do you think you’re going to have to ask for more in the way of a stimulus?

 

GEITHNER: Can’t make that judgment at this time. Again, our first priority now is just to move on the programs Congress has passed and to put those in place as quickly as possible.

 

SCHIEFFER: Will unemployment figures go up? Larry Summers suggests that perhaps they will beyond where they are now.

 

GEITHNER: The typical pattern of recoveries is that growth recovers, growth starts to turn positive, people start to spend more, people -- businesses hire more, they invest more, before you see unemployment peak. That’s the crude reality of recoveries.

 

SCHIEFFER: It’s the lagging indicator.

 

GEITHNER: It lags. It does.

 

SCHIEFFER: So do you think it could go as high as 10 percent?

 

GEITHNER: Well, again, Bob, it depends on how effective we are in moving. And that’s why it’s so important that we move with countries around the world, like you saw the president this week in London, move with countries around the world to make sure that they’re moving with us.

 

You know, in past recoveries, the world sort of depended on the American consumer to spend the world into recovery. And that’s not a healthy, balanced way for us to do this. We need the countries around the world moving with us.

 

SCHIEFFER: You seem to be suggesting, though, that maybe we are seeing some glimmers of hope here. Does that mean that this basically has bottomed out?

 

GEITHNER: Well, Bob, what I say is there are encouraging signs. But again, it took us a long time to get here. It is going to take some time for us to work through this. Progress is not going to be even. We’re going to have fits and starts. There is going to be a period where it is going to feel very bad still and very uncertain. And that’s again why it’s so important that we just keep moving.

 

You know, this week we changed -- last change we changed withholding rates to put in place the make-work-pay tax credits so that 95 percent of Americans will see a reduction in withholding taxes. We’re moving as quickly as possible to enact this very powerful program of stimulus.

 

SCHIEFFER: The big news of last week, of course, was that the president forced out Rick Wagoner as CEO of General Motors, gave the company 60 days to come up with a way to reorganize. But a lot of people that I talked to this week say that General Motors is really being given an impossible task. Aren’t you basically trying to force General Motors into some kind of managed bankruptcy here with a government guarantee that on warrantees and things of that sort, and that they’ll continue to have the money to keep the business running?

 

GEITHNER: Bob, General Motors is going to be part of this country’s future. The president -- as the president said, we want to see a strong automobile industry emerge from this recession, and that’s going to require very substantial restructuring, and we’re prepared to help make that process work. We’re prepared to explore all options to make that possible, but our test is what’s going to work. What’s going to allow them to emerge from this strong enough so they can survive without assistance from the government on an ongoing basis?

 

SCHIEFFER: Well, the new man at GM who took Rick Wagoner’s place said this morning, on NBC, that some sort of a managed bankruptcy may very well be the best alternative.

 

I take it you agree with that?

 

GEITHNER: Well, there’s a range of options that could work. Again, our test is what’s going to work. We’re open to what’s going to work. We’re prepared to be helpful and to help that.

 

And it’s going to take more. These guys have made some progress in putting together a restructuring plan, but they’re not there yet. We wanted to give them the time to try to get it right.

 

But, again, our objective is to allow -- is to help these companies emerge stronger in the future so they can survive without government assistance.

 

SCHIEFFER: Let me just see if I can sum this up in one sentence. You seem to be saying that, if it takes bankruptcy, if it goes to bankruptcy, then that’s what you’ll have to do but that General Motors is not going away.

 

GEITHNER: Yes, what we want to see -- again, our test is what’s going to work?

 

What’s going to help bring about the kind of restructuring, allow them to emerge stronger and be part of this American economy?

 

You know, they’re a central part -- the automobile industry is a central part of the American dream, of the basic fabric of the American experience. We want them to be part of our future.

 

SCHIEFFER: Some people continue to say that you’re going easier on our financial institutions than you are on the auto industry. And this morning, in the New York Post, the chairman of a congressional watchdog panel that’s been appointed to watch over these TARP funds says that, frankly, that unless -- there’s no way out of this situation that we’re in unless you the people that are running these big banks and these financial institutions.

 

What’s your response to that?

 

GEITHNER: Bob, this is a very important issue. Let me just start by saying that, you know, we’re five quarters into this recession. And if you look back to the beginning of this process, look at the financials that existed before the recession started, we’ve already seen a substantial number of the largest banks in our country fail or be absorbed by other institutions, no longer existing at independent institutions.

 

And where the government has acted, like in Fannie and Freddie or like in AIG, where we’ve had to do exceptional things to stabilize them, we have replaced the management and the board.

 

And we’ve done that because we want to make sure that taxpayers’ assistance is going to make these companies stronger, make sure there’s accountability, make sure it comes with strong conditions. And we’ll do that in the future if that is necessary.

 

It’s a single standard, a single principle. And our obligation to the American people is to do what’s necessary to try to bring recovery back on track as quickly as possible.

 

Just one last thing: You know, economies depend on financial systems. They provide the credit that’s the oxygen for economies. And recovery requires -- and recovery in the automobile industry requires that we have a financial system that is doing a better job of making credit available on reasonable terms for business and families. And that basic objective has to guide everything we do.

 

SCHIEFFER: Well, let me take, for example, two of the people your hear a lot about, and one is Citibank and the other is -- is Bank of America.

 

Should the CEOs of those institutions be worried that they may face the same fate as Rick Wagoner did if their performance does not improve?

 

GEITHNER: Bob, what I’ll say is this. When, in the future -- or I’ll just say, if, in the future, banks need exceptional assistance in order to get through this, then we’ll make sure that assistance comes with conditions, not just to protect the tax payer but to make sure this is the kind of restructuring necessary for them to emerge stronger.

 

And where that requires a change of management of the board, we’ll do that.

 

SCHIEFFER: You will do that? GEITHNER: Where that’s necessary; where it meets the test; where it’s necessary to do what we, here, exist to do, which is to make sure that this financial system supports recovery and the banks emerge stronger.

 

SCHIEFFER: Let me ask you about this plan you have put together to create these public-private partnerships to buy these toxic assets that these banks owned to get them off these bank books so they -- the idea is that, if they can do that, then they can start lending again.

 

But last week the government did change the accounting rules. So the banks can, in essence, put a different value on those assets. Some people are now saying that, with this in place, the banks may no longer want to sell those toxic assets.

 

So I guess the question is, can you get the banks to participate in this program?

 

And do you feel you have the power to force them to sell those toxic assets?

 

GEITHNER: Bob, banks have a large incentive, now, to clean up their balance sheets, to make it easier for them to go raise equity from the markets, from private investors. So they’re going to have significant incentives to clean up their balance sheets. This gives them a way to do that that did not exist before that.

 

Just as an example, you know, if you had to sell your home tomorrow, in a world where nobody could get a mortgage to buy your home, you’d have to sell at an enormously low price.

 

You’d reluctant to sell. You might end up keeping your home longer than you want, not moving to some -- to take a new job, where you can earn more money, going forward.

 

That’s part of what’s happening to our financial system today.

 

GEITHNER: So what we try to do is lay out a proposal for how to create a market for these loans, bring in private investors to help protect the government from not overpaying for these assets.

 

This is just part, though, of a broad set of programs to help address the housing crisis, make sure banks have enough capital to lend even in a deeper recession, make sure we’re providing direct lending to help get small business lending going again. It’s an important part of this -- part of this (inaudible) program.

 

SCHIEFFER: Let me ask you this. Do you think you have the power to force them to sell those assets? Or would you? If you thought that was necessary.

 

GEITHNER: What we need to do is to make sure they’re emerging stronger, have the capital they need to get through a deeper recession if that’s what we face, that they can lend going forward, that they clean up their balance sheets. And we’ll make sure that we encourage that kind of action, that kind of behavior.

 

SCHIEFFER: But could you force it? I mean, would that be something in the government’s power, to force them to sell these assets?

 

GEITHNER: Maybe I should say this, Bob. We’ll do what is necessary to make sure that our banking system emerges out of this stronger. Because, again, you know, economies depend on credit to recover. We want to make sure that they’re strong enough that they can lend even if the economy -- even if we go through a longer downturn.

 

SCHIEFFER: Do you know, Mr. Secretary, how much money has been funneled to these banks? Because some -- you know, there are different estimates. We start out with $700 billion in this TARP fund. Half of it went out. Some people now say -- I think your people say you have around $110 billion left to be used now. But the Center for a Responsible Budget says it’s actually only $32 billion. The Dow Jones News Wire says around $52 billion.

 

Whatever the estimates are, the outside estimates seem to be much lower than what you’re giving as a figure, which makes me wonder, does anybody know where this money is? Or how much has been sent and what’s being done with it?

 

GEITHNER: Absolutely. And we -- we know. And it’s in the public domain where every dollar has gone. And we made a bunch of new commitments going forward to how those will be used...

 

SCHIEFFER: Why is there such disparity with what people say about where this money is?

 

GEITHNER: I’m not sure, Bob, but my obligation is to make sure that we’re clear and transparent to the American people about what resources we have remaining, how we’re going to use those.

 

And let me just say what we’ve committed to do. Within two weeks of taking office, we made a bunch of important changes to make sure there’s transparency and accountability on these programs. Let me just list what these were. We committed to put on our website, financialstability.gov, the precise terms and conditions of all the assistance already provided by my predecessor. And of course we’ll do that going forward.

 

Every contract, every precise term, it will be on the Web site so the American people can see what those conditions were.

 

In addition to that-- and this is very important-- we’re requiring the largest banks in the country to report monthly on what’s happening to lending with a level of detail people can see how much new lending is being generated to businesses and families across the country. And where we provide new assistance, any dollar of new assistance to a bank will come with the condition that they give us first a commitment for how they’re going to expand lending capacity.

 

You know, every dollar of capital we provide can generate $8 to $10 billion -- $8 to $10 of additional lending capacity. And that’s critically important.

 

SCHIEFFER: Let me ask you about one more thing. As Will Rogers once said, all I know about this is what I read in the newspapers. But the Washington Post has reported that even after all the outrage about the bonuses at AIG, that the Treasury Department is working out an arrangement now to set up new some sort of entity where they can funnel money to this entity and then it can give the money to these companies and banks that need help. And in doing that, it allows the banks and their executives to evade and go around limits that had been placed on executive compensation by the Congress. Is that right?

 

GEITHNER: No, that’s not true, Bob. Now, our obligation is to apply the laws that Congress just passed on executive comp, and we’re going to do that.

 

Now, we’re also going to make sure these programs are as effective as possible in making credit more available to businesses and families across the country. Now, the way the legislative process works is Congress legislates. We have an obligation then to design and put out regulations for applying that. We’ll put those out in draft. The American people have the chance to evaluate those and assess and comment on those. We’re working with Congress as we do this. And -- but again, our obligation is to apply those laws, and we’re going to do that because it is very important to us that every dollar of assistance we provide doesn’t -- goes to expand lending.

 

SCHIEFFER: But are you saying to me -- and we’ll close with this -- that every limit that Congress has put on executive compensation, that you’re going to see that that’s enforced and that these -- there’s not going to be a way to get around that?

 

GEITHNER: Absolutely, because we want the American taxpayers -- this is going to generate greater lending, not providing excess compensation.

 

SCHIEFFER: All right, Mr. Secretary, thank you so much for being with us this morning.

 

GEITHNER: Thank you very much.

 

SCHIEFFER: We’ll be back in one minute.

 

(COMMERCIAL BREAK)

 

SCHIEFFER: And we’re back now with Perry Bacon, national political reporter for The Washington Post and Lara Logan, our CBS News chief foreign correspondent.

 

To you first, Lara. We wake up this morning and find that the North Koreans have fired, basically, an inter-continental ballistic missile over Japan. They say they’re putting a weather satellite into orbit.

 

President Obama called this a provocative act and urged them not to do it. What happens next?

 

LOGAN: Well, that’s a very good question because there are still sanctions that have yet to be enforced from the last time North Korea did something like this. And, clearly, they’re doing this for two different reasons. One is the domestic market and two, internationally.

 

Domestically, they want -- Kim Jong-Il wants to strengthen his grip on power after rumors of a stroke. And internationally, he wants to strengthen his hand going to the negotiating table, because the talks on North Korea’s nuclear program have stalled.

 

But this is typical of North Korea’s actions. The truth is his country is starving. And he -- and he doesn’t want to admit this. He doesn’t want to let anyone see it. And so he’s using this -- concessions on the military side to try and get aid for his country without admitting to it. SCHIEFFER: It’s certainly going to -- and there’s already caused a lot of consternation in Japan. I mean, people in Japan are even suggesting that maybe the Japanese may have to make a decision to go nuclear.

 

I mean, this is an inter-continental missile, clearly able to reach their country. These people say they are building a nuclear -- or, you know, already have nuclear weapons.

 

What do you think -- what will Japan’s response to all this be?

 

LOGAN: Well, you’re absolutely right. Japan’s response is critical because they’re right there in the firing line. They went into a war footing. And there was grave concern about what Japan’s actions would be.

 

They’re a close ally of the U.S. President Obama is very aware of that. And Secretary of State Hillary Clinton -- they’ve both been talking about condemning North Korea in the strongest terms, in order to reassure Japan that they still stand firmly at their side.

 

But the international community looks somewhat impotent in the face of this. North Korea ignores international law. They ignore international sanctions.

 

They have, however, said that, if there are more U.N. sanctions imposed after this launch, that they will pull out of the talks.

 

So they are -- there is some sensitivity there, which suggests maybe a small amount of leverage.

 

What’s perhaps more critical is looking at North Korea’s relationship with Iran, which launched a similar missile in February. And of, course, Russia, still being a very firm North Korea ally, says it will block any international sanctions.

 

SCHIEFFER: We’ll get back to that and the Iran part of it in a minute. I want to turn to Perry.

 

So far, it looks like that the president’s trip to Europe -- he’s certainly been well received. He didn’t get a lot of the things that he wanted at the G-20, number one, encouraging other European countries to do more to stimulate their economies.

 

But he came off getting pretty good reviews in Europe, didn’t he?

 

BACON: I think, politically, this was a great trip for him. I mean, in terms of the leaders, the foreign leaders, you saw Gordon Brown. I think he wanted Obama’s endorsement, if nothing else. I mean, there’s a lot of popularity among the leaders who really -- the president of France praised him. He really got a lot of praise from them.

 

I think that, domestically, that’s useful, too, because I spent a lot of time on the campaign trail, the last couple years, and there was some concern among voters that America had lost its respect around the world. And I think Obama, you saw on this trip, that a lot of people abroad and their leaders really liked him a lot.

 

BACON: But like you said, substantively, he didn’t get a lot done in a sense that he wanted more countries to get involved in the economic stimulus and have it to be more of a worldwide stimulus, and that didn’t happen. And also, he wanted more troops -- more countries to commit troops to Afghanistan, which also did not happen. So substantively, not, you know, not perfect, but in terms of the politics and in terms of the pictures, I think it was a great trip for him, a great first trip in that sense.

 

SCHIEFFER: While he was gone, he got his budget through Congress, the biggest budget ever. But again, he got virtually no support from the Republicans. Where does this go, Perry? Is he going to get all the things that are now outlined in this budget? I mean, is he going to get the health care reform he wants? Is he going to get all the stuff for education? I mean, this is just one step in a very long process. How do you see this shaking down?

 

BACON: The next couple of weeks, Congress is out of session, actually, but the Congress -- the staffers will start working on these conference committees to sort of reconcile the versions of the bill. And I think wheat you’re seeing is that the health care part of it seems like something the Democrats are very committed to doing, to the point where they’re talking about and the White House is talking about using this unusual rule to allow passage of a health care bill without needing any Republican votes. So I think the health care part they seem very committed to, to the point where Obama seems not as concerned about making sure Republicans vote for it at all.

 

They seem to not be pushing as much in the climate change direction, sort of cap-and-trade programs which some of the Senate Democrats are very worried about. But I think...

 

SCHIEFFER: What about cap-and-trade? This is basically putting a tax on people who produce carbon into the air. Is that going to wind up being a law? What’s your sense of it right now?

 

BACON: My sense is that it’s probably not going to happen this year. The Congress is a little more focused on, A, helping the economy, and B, working on some of the big health care initiatives, which of course you will recall such -- was so difficult in the ‘93- ‘94 period. The Congress is a little more focused on that.

 

Some of the votes in the Senate suggested that there is some wariness of getting into -- some of the congressmen in the Midwest particularly are a little wary of what a cap-and-trade bill will look like. SCHIEFFER: Let me ask you quickly, Lara, because it went almost unnoticed. General Petraeus went to Capitol Hill last week and announced that lo and behold, they may actually need more troops in Afghanistan next year, maybe another 10,000. Where are we going in Afghanistan? Are we getting ready to have the kind of build-up there that we had in Iraq at one point?

 

LOGAN: Well, it is certainly building in that direction, but it doesn’t surprise me to hear that at all, Bob, because this comes down to one central fact -- holding ground in Afghanistan. And that is the problem. Everybody understands that this is not about just a military solution. There’s a civilian component. There’s an economic component. That is not a mystery to anyone anymore. But what is the -- what is the most enduring thing, difficulty that they have there is holding the ground that they take. And what U.S. troops are doing is going back over and over and over to the same places, retaking ground, repeatedly. And unless they have troops to hold that ground, that is a cycle that will continue.

 

SCHIEFFER: All right. Thank you very much, both of you. We’ll be back with the final thought in just a second.

 

(COMMERCIAL BREAK)

 

SCHIEFFER: Finally, let me just say that personally, I was OK with Michelle Obama touching the queen of England. I thought it was sweet, and I’m assured the queen touched her first.

 

I believe everyone should be treated with respect, of course, and I love the British and it’s their business that they want to have a king and queen. But my views on royalty more or less parallel those of the founders.

 

How should I say it? I find the royals amusing. And when we were invited to the British embassy last year to see the visiting Elizabeth and Philip, my wife donned a hat as big as a washtub, and we had a fine time. But all this does bring back a memory from years ago, when a member of the royal family visited the Texas legislature, and a protocol officer told some state legislators not to shake hands unless the royal hand was extended first. As the story goes, the legislator responded, fine, but added, “I’ll tell you one thing, they couldn’t get elected in my district if they didn’t shake hands.”

 

You know, I expect he was right. And aren’t we glad our founders took care of all that a long time ago?

 

Back in a minute.

 

(COMMERCIAL BREAK)

 

SCHIEFFER: And that’s our broadcast. See you next Sunday on “Face the Nation.”

[Guest Human_*]

Okay Law, now what is your point of view?

---------------------------------------------------------------------------------------------------------------------

SPEAKERS: BOB SCHIEFFER, HOST

 

SECRETARY OF THE TREASURY TIMOTHY F. GEITHNER

 

LARA LOGAN, CBS NEWS

 

HARRY BACON, WASHINGTON POST

 

[*] SCHIEFFER: Today on “Face the Nation,” an exclusive interview with Secretary of the Treasury Tim Geithner. The economy, executive bonuses, the auto bailout and banks -- these are the issues for Tim Geithner, the secretary of the Treasury.

 

We’ll talk about the rest of the week’s news, including North Korea’s rocket launch last night, with our chief foreign correspondent Lara Logan and Harry Bacon, who covers politics for the Washington Post.

 

I’ll have a final word on a touching moment.

 

But first, Tim Geithner on “Face the Nation.”

 

And you can see from the pictures the cherry blossoms are out. Good morning again. And joining us in the studio, the Treasury Secretary Tim Geithner.

 

GEITHNER: Thank you, Bob.

 

SCHIEFFER: Mr. Secretary, glad to have you with us. I guess last week you could kind of call it the best of times and the worst of times. The stock market performance overall the best since, what, 1933 maybe. But unemployment reached 8.5 percent, and that’s the worst in what, 25 years I guess.

 

The administration began the year forecasting that unemployment might go to 8.9 by the end of the year. We’re already at 8.5. Does this mean you’re going to have to ask Congress for another stimulus?

 

GEITHNER: Bob, this recession has caused enormous damage. You’ve seen 5 million Americans lose their jobs already, millions more had to cut cutting back on hours, millions more living with the fear that they might lose their job going forward.

 

And that’s why it’s so important that we do as much as we can to put in place what’s the most powerful program of support for jobs and private investments since the second world war, that we work to address this housing crisis to make sure we’re fixing our financial system so the credit is flowing again. It’s enormously important. A lot of pain and suffering across the country. We need to keep acting as forcefully as we can.

 

SCHIEFFER: So does this mean you may have to go back to the Congress and ask for more?

 

GEITHNER: Our first priority now really is to move as quickly as possible to put in place these programs. They are, again, these are very powerful programs.

 

I think the most encouraging thing is where we’ve moved, where we’ve acted, you can start to see some signs. So, for example, mortgage interest rates now are at their lowest point in history. And millions of Americans now are going to be able to refinance their homes, take advantage of lower interest rates. That’s cash in the hands of the American people, and that’s very powerful. But again, the most important thing is that we keep at it, working with countries around the world, make sure that we’re doing as much as necessary to make sure we bring a recovery back in place as quickly as possible.

 

SCHIEFFER: But I guess the specific question I was asking, do you think you’re going to have to ask for more in the way of a stimulus?

 

GEITHNER: Can’t make that judgment at this time. Again, our first priority now is just to move on the programs Congress has passed and to put those in place as quickly as possible.

 

SCHIEFFER: Will unemployment figures go up? Larry Summers suggests that perhaps they will beyond where they are now.

 

GEITHNER: The typical pattern of recoveries is that growth recovers, growth starts to turn positive, people start to spend more, people -- businesses hire more, they invest more, before you see unemployment peak. That’s the crude reality of recoveries.

 

SCHIEFFER: It’s the lagging indicator.

 

GEITHNER: It lags. It does.

 

SCHIEFFER: So do you think it could go as high as 10 percent?

 

GEITHNER: Well, again, Bob, it depends on how effective we are in moving. And that’s why it’s so important that we move with countries around the world, like you saw the president this week in London, move with countries around the world to make sure that they’re moving with us.

 

You know, in past recoveries, the world sort of depended on the American consumer to spend the world into recovery. And that’s not a healthy, balanced way for us to do this. We need the countries around the world moving with us.

 

SCHIEFFER: You seem to be suggesting, though, that maybe we are seeing some glimmers of hope here. Does that mean that this basically has bottomed out?

 

GEITHNER: Well, Bob, what I say is there are encouraging signs. But again, it took us a long time to get here. It is going to take some time for us to work through this. Progress is not going to be even. We’re going to have fits and starts. There is going to be a period where it is going to feel very bad still and very uncertain. And that’s again why it’s so important that we just keep moving.

 

You know, this week we changed -- last change we changed withholding rates to put in place the make-work-pay tax credits so that 95 percent of Americans will see a reduction in withholding taxes. We’re moving as quickly as possible to enact this very powerful program of stimulus.

 

SCHIEFFER: The big news of last week, of course, was that the president forced out Rick Wagoner as CEO of General Motors, gave the company 60 days to come up with a way to reorganize. But a lot of people that I talked to this week say that General Motors is really being given an impossible task. Aren’t you basically trying to force General Motors into some kind of managed bankruptcy here with a government guarantee that on warrantees and things of that sort, and that they’ll continue to have the money to keep the business running?

 

GEITHNER: Bob, General Motors is going to be part of this country’s future. The president -- as the president said, we want to see a strong automobile industry emerge from this recession, and that’s going to require very substantial restructuring, and we’re prepared to help make that process work. We’re prepared to explore all options to make that possible, but our test is what’s going to work. What’s going to allow them to emerge from this strong enough so they can survive without assistance from the government on an ongoing basis?

 

SCHIEFFER: Well, the new man at GM who took Rick Wagoner’s place said this morning, on NBC, that some sort of a managed bankruptcy may very well be the best alternative.

 

I take it you agree with that?

 

GEITHNER: Well, there’s a range of options that could work. Again, our test is what’s going to work. We’re open to what’s going to work. We’re prepared to be helpful and to help that.

 

And it’s going to take more. These guys have made some progress in putting together a restructuring plan, but they’re not there yet. We wanted to give them the time to try to get it right.

 

But, again, our objective is to allow -- is to help these companies emerge stronger in the future so they can survive without government assistance.

 

SCHIEFFER: Let me just see if I can sum this up in one sentence. You seem to be saying that, if it takes bankruptcy, if it goes to bankruptcy, then that’s what you’ll have to do but that General Motors is not going away.

 

GEITHNER: Yes, what we want to see -- again, our test is what’s going to work?

 

What’s going to help bring about the kind of restructuring, allow them to emerge stronger and be part of this American economy?

 

You know, they’re a central part -- the automobile industry is a central part of the American dream, of the basic fabric of the American experience. We want them to be part of our future.

 

SCHIEFFER: Some people continue to say that you’re going easier on our financial institutions than you are on the auto industry. And this morning, in the New York Post, the chairman of a congressional watchdog panel that’s been appointed to watch over these TARP funds says that, frankly, that unless -- there’s no way out of this situation that we’re in unless you the people that are running these big banks and these financial institutions.

 

What’s your response to that?

 

GEITHNER: Bob, this is a very important issue. Let me just start by saying that, you know, we’re five quarters into this recession. And if you look back to the beginning of this process, look at the financials that existed before the recession started, we’ve already seen a substantial number of the largest banks in our country fail or be absorbed by other institutions, no longer existing at independent institutions.

 

And where the government has acted, like in Fannie and Freddie or like in AIG, where we’ve had to do exceptional things to stabilize them, we have replaced the management and the board.

 

And we’ve done that because we want to make sure that taxpayers’ assistance is going to make these companies stronger, make sure there’s accountability, make sure it comes with strong conditions. And we’ll do that in the future if that is necessary.

 

It’s a single standard, a single principle. And our obligation to the American people is to do what’s necessary to try to bring recovery back on track as quickly as possible.

 

Just one last thing: You know, economies depend on financial systems. They provide the credit that’s the oxygen for economies. And recovery requires -- and recovery in the automobile industry requires that we have a financial system that is doing a better job of making credit available on reasonable terms for business and families. And that basic objective has to guide everything we do.

 

SCHIEFFER: Well, let me take, for example, two of the people your hear a lot about, and one is Citibank and the other is -- is Bank of America.

 

Should the CEOs of those institutions be worried that they may face the same fate as Rick Wagoner did if their performance does not improve?

 

GEITHNER: Bob, what I’ll say is this. When, in the future -- or I’ll just say, if, in the future, banks need exceptional assistance in order to get through this, then we’ll make sure that assistance comes with conditions, not just to protect the tax payer but to make sure this is the kind of restructuring necessary for them to emerge stronger.

 

And where that requires a change of management of the board, we’ll do that.

 

SCHIEFFER: You will do that? GEITHNER: Where that’s necessary; where it meets the test; where it’s necessary to do what we, here, exist to do, which is to make sure that this financial system supports recovery and the banks emerge stronger.

 

SCHIEFFER: Let me ask you about this plan you have put together to create these public-private partnerships to buy these toxic assets that these banks owned to get them off these bank books so they -- the idea is that, if they can do that, then they can start lending again.

 

But last week the government did change the accounting rules. So the banks can, in essence, put a different value on those assets. Some people are now saying that, with this in place, the banks may no longer want to sell those toxic assets.

 

So I guess the question is, can you get the banks to participate in this program?

 

And do you feel you have the power to force them to sell those toxic assets?

 

GEITHNER: Bob, banks have a large incentive, now, to clean up their balance sheets, to make it easier for them to go raise equity from the markets, from private investors. So they’re going to have significant incentives to clean up their balance sheets. This gives them a way to do that that did not exist before that.

 

Just as an example, you know, if you had to sell your home tomorrow, in a world where nobody could get a mortgage to buy your home, you’d have to sell at an enormously low price.

 

You’d reluctant to sell. You might end up keeping your home longer than you want, not moving to some -- to take a new job, where you can earn more money, going forward.

 

That’s part of what’s happening to our financial system today.

 

GEITHNER: So what we try to do is lay out a proposal for how to create a market for these loans, bring in private investors to help protect the government from not overpaying for these assets.

 

This is just part, though, of a broad set of programs to help address the housing crisis, make sure banks have enough capital to lend even in a deeper recession, make sure we’re providing direct lending to help get small business lending going again. It’s an important part of this -- part of this (inaudible) program.

 

SCHIEFFER: Let me ask you this. Do you think you have the power to force them to sell those assets? Or would you? If you thought that was necessary.

 

GEITHNER: What we need to do is to make sure they’re emerging stronger, have the capital they need to get through a deeper recession if that’s what we face, that they can lend going forward, that they clean up their balance sheets. And we’ll make sure that we encourage that kind of action, that kind of behavior.

 

SCHIEFFER: But could you force it? I mean, would that be something in the government’s power, to force them to sell these assets?

 

GEITHNER: Maybe I should say this, Bob. We’ll do what is necessary to make sure that our banking system emerges out of this stronger. Because, again, you know, economies depend on credit to recover. We want to make sure that they’re strong enough that they can lend even if the economy -- even if we go through a longer downturn.

 

SCHIEFFER: Do you know, Mr. Secretary, how much money has been funneled to these banks? Because some -- you know, there are different estimates. We start out with $700 billion in this TARP fund. Half of it went out. Some people now say -- I think your people say you have around $110 billion left to be used now. But the Center for a Responsible Budget says it’s actually only $32 billion. The Dow Jones News Wire says around $52 billion.

 

Whatever the estimates are, the outside estimates seem to be much lower than what you’re giving as a figure, which makes me wonder, does anybody know where this money is? Or how much has been sent and what’s being done with it?

 

GEITHNER: Absolutely. And we -- we know. And it’s in the public domain where every dollar has gone. And we made a bunch of new commitments going forward to how those will be used...

 

SCHIEFFER: Why is there such disparity with what people say about where this money is?

 

GEITHNER: I’m not sure, Bob, but my obligation is to make sure that we’re clear and transparent to the American people about what resources we have remaining, how we’re going to use those.

 

And let me just say what we’ve committed to do. Within two weeks of taking office, we made a bunch of important changes to make sure there’s transparency and accountability on these programs. Let me just list what these were. We committed to put on our website, financialstability.gov, the precise terms and conditions of all the assistance already provided by my predecessor. And of course we’ll do that going forward.

 

Every contract, every precise term, it will be on the Web site so the American people can see what those conditions were.

 

In addition to that-- and this is very important-- we’re requiring the largest banks in the country to report monthly on what’s happening to lending with a level of detail people can see how much new lending is being generated to businesses and families across the country. And where we provide new assistance, any dollar of new assistance to a bank will come with the condition that they give us first a commitment for how they’re going to expand lending capacity.

 

You know, every dollar of capital we provide can generate $8 to $10 billion -- $8 to $10 of additional lending capacity. And that’s critically important.

 

SCHIEFFER: Let me ask you about one more thing. As Will Rogers once said, all I know about this is what I read in the newspapers. But the Washington Post has reported that even after all the outrage about the bonuses at AIG, that the Treasury Department is working out an arrangement now to set up new some sort of entity where they can funnel money to this entity and then it can give the money to these companies and banks that need help. And in doing that, it allows the banks and their executives to evade and go around limits that had been placed on executive compensation by the Congress. Is that right?

 

GEITHNER: No, that’s not true, Bob. Now, our obligation is to apply the laws that Congress just passed on executive comp, and we’re going to do that.

 

Now, we’re also going to make sure these programs are as effective as possible in making credit more available to businesses and families across the country. Now, the way the legislative process works is Congress legislates. We have an obligation then to design and put out regulations for applying that. We’ll put those out in draft. The American people have the chance to evaluate those and assess and comment on those. We’re working with Congress as we do this. And -- but again, our obligation is to apply those laws, and we’re going to do that because it is very important to us that every dollar of assistance we provide doesn’t -- goes to expand lending.

 

SCHIEFFER: But are you saying to me -- and we’ll close with this -- that every limit that Congress has put on executive compensation, that you’re going to see that that’s enforced and that these -- there’s not going to be a way to get around that?

 

GEITHNER: Absolutely, because we want the American taxpayers -- this is going to generate greater lending, not providing excess compensation.

 

SCHIEFFER: All right, Mr. Secretary, thank you so much for being with us this morning.

 

GEITHNER: Thank you very much.

 

SCHIEFFER: We’ll be back in one minute.

 

(COMMERCIAL BREAK)

 

SCHIEFFER: And we’re back now with Perry Bacon, national political reporter for The Washington Post and Lara Logan, our CBS News chief foreign correspondent.

 

To you first, Lara. We wake up this morning and find that the North Koreans have fired, basically, an inter-continental ballistic missile over Japan. They say they’re putting a weather satellite into orbit.

 

President Obama called this a provocative act and urged them not to do it. What happens next?

 

LOGAN: Well, that’s a very good question because there are still sanctions that have yet to be enforced from the last time North Korea did something like this. And, clearly, they’re doing this for two different reasons. One is the domestic market and two, internationally.

 

Domestically, they want -- Kim Jong-Il wants to strengthen his grip on power after rumors of a stroke. And internationally, he wants to strengthen his hand going to the negotiating table, because the talks on North Korea’s nuclear program have stalled.

 

But this is typical of North Korea’s actions. The truth is his country is starving. And he -- and he doesn’t want to admit this. He doesn’t want to let anyone see it. And so he’s using this -- concessions on the military side to try and get aid for his country without admitting to it. SCHIEFFER: It’s certainly going to -- and there’s already caused a lot of consternation in Japan. I mean, people in Japan are even suggesting that maybe the Japanese may have to make a decision to go nuclear.

 

I mean, this is an inter-continental missile, clearly able to reach their country. These people say they are building a nuclear -- or, you know, already have nuclear weapons.

 

What do you think -- what will Japan’s response to all this be?

 

LOGAN: Well, you’re absolutely right. Japan’s response is critical because they’re right there in the firing line. They went into a war footing. And there was grave concern about what Japan’s actions would be.

 

They’re a close ally of the U.S. President Obama is very aware of that. And Secretary of State Hillary Clinton -- they’ve both been talking about condemning North Korea in the strongest terms, in order to reassure Japan that they still stand firmly at their side.

 

But the international community looks somewhat impotent in the face of this. North Korea ignores international law. They ignore international sanctions.

 

They have, however, said that, if there are more U.N. sanctions imposed after this launch, that they will pull out of the talks.

 

So they are -- there is some sensitivity there, which suggests maybe a small amount of leverage.

 

What’s perhaps more critical is looking at North Korea’s relationship with Iran, which launched a similar missile in February. And of, course, Russia, still being a very firm North Korea ally, says it will block any international sanctions.

 

SCHIEFFER: We’ll get back to that and the Iran part of it in a minute. I want to turn to Perry.

 

So far, it looks like that the president’s trip to Europe -- he’s certainly been well received. He didn’t get a lot of the things that he wanted at the G-20, number one, encouraging other European countries to do more to stimulate their economies.

 

But he came off getting pretty good reviews in Europe, didn’t he?

 

BACON: I think, politically, this was a great trip for him. I mean, in terms of the leaders, the foreign leaders, you saw Gordon Brown. I think he wanted Obama’s endorsement, if nothing else. I mean, there’s a lot of popularity among the leaders who really -- the president of France praised him. He really got a lot of praise from them.

 

I think that, domestically, that’s useful, too, because I spent a lot of time on the campaign trail, the last couple years, and there was some concern among voters that America had lost its respect around the world. And I think Obama, you saw on this trip, that a lot of people abroad and their leaders really liked him a lot.

 

BACON: But like you said, substantively, he didn’t get a lot done in a sense that he wanted more countries to get involved in the economic stimulus and have it to be more of a worldwide stimulus, and that didn’t happen. And also, he wanted more troops -- more countries to commit troops to Afghanistan, which also did not happen. So substantively, not, you know, not perfect, but in terms of the politics and in terms of the pictures, I think it was a great trip for him, a great first trip in that sense.

 

SCHIEFFER: While he was gone, he got his budget through Congress, the biggest budget ever. But again, he got virtually no support from the Republicans. Where does this go, Perry? Is he going to get all the things that are now outlined in this budget? I mean, is he going to get the health care reform he wants? Is he going to get all the stuff for education? I mean, this is just one step in a very long process. How do you see this shaking down?

 

BACON: The next couple of weeks, Congress is out of session, actually, but the Congress -- the staffers will start working on these conference committees to sort of reconcile the versions of the bill. And I think wheat you’re seeing is that the health care part of it seems like something the Democrats are very committed to doing, to the point where they’re talking about and the White House is talking about using this unusual rule to allow passage of a health care bill without needing any Republican votes. So I think the health care part they seem very committed to, to the point where Obama seems not as concerned about making sure Republicans vote for it at all.

 

They seem to not be pushing as much in the climate change direction, sort of cap-and-trade programs which some of the Senate Democrats are very worried about. But I think...

 

SCHIEFFER: What about cap-and-trade? This is basically putting a tax on people who produce carbon into the air. Is that going to wind up being a law? What’s your sense of it right now?

 

BACON: My sense is that it’s probably not going to happen this year. The Congress is a little more focused on, A, helping the economy, and B, working on some of the big health care initiatives, which of course you will recall such -- was so difficult in the ‘93- ‘94 period. The Congress is a little more focused on that.

 

Some of the votes in the Senate suggested that there is some wariness of getting into -- some of the congressmen in the Midwest particularly are a little wary of what a cap-and-trade bill will look like. SCHIEFFER: Let me ask you quickly, Lara, because it went almost unnoticed. General Petraeus went to Capitol Hill last week and announced that lo and behold, they may actually need more troops in Afghanistan next year, maybe another 10,000. Where are we going in Afghanistan? Are we getting ready to have the kind of build-up there that we had in Iraq at one point?

 

LOGAN: Well, it is certainly building in that direction, but it doesn’t surprise me to hear that at all, Bob, because this comes down to one central fact -- holding ground in Afghanistan. And that is the problem. Everybody understands that this is not about just a military solution. There’s a civilian component. There’s an economic component. That is not a mystery to anyone anymore. But what is the -- what is the most enduring thing, difficulty that they have there is holding the ground that they take. And what U.S. troops are doing is going back over and over and over to the same places, retaking ground, repeatedly. And unless they have troops to hold that ground, that is a cycle that will continue.

 

SCHIEFFER: All right. Thank you very much, both of you. We’ll be back with the final thought in just a second.

 

(COMMERCIAL BREAK)

 

SCHIEFFER: Finally, let me just say that personally, I was OK with Michelle Obama touching the queen of England. I thought it was sweet, and I’m assured the queen touched her first.

 

I believe everyone should be treated with respect, of course, and I love the British and it’s their business that they want to have a king and queen. But my views on royalty more or less parallel those of the founders.

 

How should I say it? I find the royals amusing. And when we were invited to the British embassy last year to see the visiting Elizabeth and Philip, my wife donned a hat as big as a washtub, and we had a fine time. But all this does bring back a memory from years ago, when a member of the royal family visited the Texas legislature, and a protocol officer told some state legislators not to shake hands unless the royal hand was extended first. As the story goes, the legislator responded, fine, but added, “I’ll tell you one thing, they couldn’t get elected in my district if they didn’t shake hands.”

 

You know, I expect he was right. And aren’t we glad our founders took care of all that a long time ago?

 

Back in a minute.

 

(COMMERCIAL BREAK)

 

SCHIEFFER: And that’s our broadcast. See you next Sunday on “Face the Nation.”

[Guest LAW_*]

National Level

 

Watch where your taxpayer dollars are going. Here is one good source:

 

http://www.usbudgetwatch.org/stimulus?filt...2=&filter3=

 

If you add up the "maximum amount" (the total funds committed) of TARP funds it equals $668 billion. Thus leaving $32 billion in uncommitted TARP funds.

 

Foreclosures are still rampant throughout the country. Every foreclosure directly affects the lender and the value of homes surrounding the property. The Homeowner Affordability and Stability Plan is a good start, but it still does not deal with mortgages that substantially exceed the value of homes.

 

Some of the stimulus package should be set aside for a home buyer that choses to buy an old home that needs remodeling. This gives local contractors and handymen work.

 

One typical pattern of an economic recovery that we been following is that if people start to spend more, businesses will hire more people. Simple supply and demand. But, unemployment is 8.5 percent and growing. Witholding taxes will not help people without jobs. It is still too early to see the results of how the State governments will be spending the stimulas money. It will definitely create construction jobs, but there is great concern on how many large public companies that have sought bankruptcy protection this year are manufacturing companies. We need real jobs that contribute to our GDP. State governments should put stimulas money into helping manufacturing companies execute inovative ideas that will help this country compete in international markets.

 

 

Individual Level

 

Try to curb using your credit card. Instead make purchases using your debit card. For individuals looking to refinance, DO IT NOW! For individuals thinking they will be losing their job in the next few months, APPLY FOR UNEMPLOYMENT NOW! Take time to price shop for the best deal. When purchasing an ornamental luxury item look to local artists in your area. Take Metro, Carpool, or bike to work. Save 5% of your income every paycheck.

 

YOUR TURN HUMAN

[Luke_Wilbur]

I think this is an informative video on what consumers are spending there disposable income on.

 

Watch Tech Trends video:

 

[Guest Human_*]

The Obama administration this month announced: $8.4 billion for states to fix and build public transportation; $2 billion in funding allocations for state and local law enforcement; $44 billion in education funding to prevent cuts in education and teacher layoffs.

 

 

It's nice to know where this Administrations funding is being targeted. The only problem is that it's not geared toward the economy but to Barack Obamas Special Interests.

 

By the way Law; Nice link. Thank You.

---------------------------------------------------------------------------------------------------------------------

National Level

 

Watch where your taxpayer dollars are going. Here is one good source:

 

http://www.usbudgetwatch.org/stimulus?filt...2=&filter3=

 

If you add up the "maximum amount" (the total funds committed) of TARP funds it equals $668 billion. Thus leaving $32 billion in uncommitted TARP funds.

 

Foreclosures are still rampant throughout the country. Every foreclosure directly affects the lender and the value of homes surrounding the property. The Homeowner Affordability and Stability Plan is a good start, but it still does not deal with mortgages that substantially exceed the value of homes.

 

Some of the stimulus package should be set aside for a home buyer that choses to buy an old home that needs remodeling. This gives local contractors and handymen work.

 

One typical pattern of an economic recovery that we been following is that if people start to spend more, businesses will hire more people. Simple supply and demand. But, unemployment is 8.5 percent and growing. Witholding taxes will not help people without jobs. It is still too early to see the results of how the State governments will be spending the stimulas money. It will definitely create construction jobs, but there is great concern on how many large public companies that have sought bankruptcy protection this year are manufacturing companies. We need real jobs that contribute to our GDP. State governments should put stimulas money into helping manufacturing companies execute inovative ideas that will help this country compete in international markets.

Individual Level

 

Try to curb using your credit card. Instead make purchases using your debit card. For individuals looking to refinance, DO IT NOW! For individuals thinking they will be losing their job in the next few months, APPLY FOR UNEMPLOYMENT NOW! Take time to price shop for the best deal. When purchasing an ornamental luxury item look to local artists in your area. Take Metro, Carpool, or bike to work. Save 5% of your income every paycheck.

 

YOUR TURN HUMAN

[Guest Human_*]

Forgot to add this part; It's a good read. Nothing about the insurance companies cherry picking though.

 

 

 

http://www.csgeast.org/pdfs/Fiscal/CSG%20F...20-09%20(2).pdf

[Guest LAW]

This will help curb market volatility. The VIX (index of volatility or commonly known as the fear index) has dropped from 85 a year ago to 25 or less today.

 

http://finance.yahoo.com/q?s=^vix

 

There is a postitive trend among companies to focus more on core businesses which could result in more spinoffs of non-core units. Look for General Electric to consider selling off NBC this year.

 

NYSE Announces First-Quarter 2010 Circuit-Breaker Levels

 

The New York Stock Exchange implemented new circuit-breaker collar trigger levels for first-quarter 2010 that took effect Friday, January 1, 2010.

 

Circuit-breaker points represent the thresholds at which trading is halted marketwide for single-day declines in the Dow Jones Industrial Average (DJIA). Circuit-breaker levels are set quarterly as 10, 20 and 30 percent of the DJIA average closing values of the previous month, rounded to the nearest 50 points.

 

In first-quarter 2010, the 10-, 20- and 30-percent decline levels, respectively, in the DJIA will be as follows:

 

Level 1 Halt

An 1,050-point drop in the DJIA before 2 p.m. will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later unless there is a level 2 halt.

 

Level 2 Halt

A 2,100-point drop in the DJIA before 1:00 p.m. will halt trading for two hours; for one hour if between 1:00 p.m. and 2:00 p.m.; and for the remainder of the day if at 2:00 p.m. or later.

 

Level 3 Halt

A 3,150-point drop will halt trading for the remainder of the day regardless of when the decline occurs.

 

Background:

Circuit-breakers are calculated quarterly. The percentage levels were first implemented in April 1998 and the point levels are adjusted on the first trading day of each quarter. In 2009, those dates have been Jan. 2, April 1, July 1 and Oct. 1.

 

In the end, only true value counts. Market perception gets thrown out the window.

[Guest LAW]

Monetary Policy Report submitted to the Congress on February 24, 2010, pursuant to section 2B of the Federal Reserve Act After declining for a year and a half, economic activity in theUnited States turned up in the second half of 2009, supported by animprovement in financial conditions, stimulus from monetary and fiscalpolicies, and a recovery in foreign economies. These factors, alongwith increased business and household confidence, appear likely toboost spending and sustain the economic expansion. However, the pace ofthe recovery probably will be tempered by households' desire to rebuildwealth, still-tight credit conditions facing some borrowers, and,despite some tentative signs of stabilization, continued weakness inlabor markets. With substantial resource slack continuing to suppresscost pressures and with longer-term inflation expectations stable,inflation is likely to be subdued for some time.

 

U.S. real gross domestic product (GDP) rose at about a4 percent pace, on average, over the second half of 2009. Consumerspending--which was boosted by supportive monetary and fiscalpolicies--posted solid increases, though it remained well below itspre-recession level. Meanwhile, activity in the housing market, whichbegan to pick up last spring, flattened over the second half of 2009.In the business sector, investment in equipment and software posted asizable gain in the second half of last year, likely reflectingimproved conditions in capital markets and brighter sales prospects. Inaddition, firms reduced the pace of inventory liquidation markedly inthe fourth quarter. In contrast, investment in nonresidentialstructures continued to contract. With the recovery in U.S. and foreigndemand, U.S. trade flows rebounded in the second half of 2009 afterprecipitous declines late in 2008 and early in 2009. Nevertheless, bothexports and imports stayed considerably below their earlier peaks.

 

Despite the pickup in output, employment continuedto contract in the second half of 2009, albeit at a markedly slowerpace than in the first half. The unemployment rate rose further duringthe second half, reaching 10 percent by the end of the year--itshighest level since the early 1980s--before dropping back in January.Although job losses have slowed, hiring remains weak, and the medianduration of unemployment has lengthened significantly.

 

Headline consumer price inflation picked up in 2009as energy prices rose sharply: Over the 12 months ending in December,prices for personal consumption expenditures (PCE) increased about2 percent, up from 1/2 percent in 2008. In contrast, price increasesfor consumer expenditures other than food and energy items--so-calledcore PCE--slowed noticeably last year. After rising at an annual rateof about 1-3/4 percent in 2008 and the first half of 2009, core PCEprices increased at an annual rate of just over 1 percent in the secondhalf of the year.

 

The recovery in financial markets that began lastspring continued through the second half of the year and into 2010.Broad equity price indexes increased further, on balance, and riskspreads on corporate bonds narrowed considerably. Conditions inshort-term funding markets returned to near pre-crisis levels;liquidity and pricing in bank funding markets continued to normalize,while risk spreads in the commercial paper market were stable at thelow end of the range observed since the fall of 2007. The functioningof financial markets more generally improved further.

 

Investors became more optimistic about the outlookfor financial institutions during the first half of last year. Thatdevelopment was bolstered by the release of the results of theSupervisory Capital Assessment Program (SCAP), which were seen ashelping clarify the financial conditions of the largest bank holdingcompanies and provided investors with greater assurance about thehealth of the institutions. Sentiment rose further over the remainderof the year as investors became more optimistic about the economicoutlook. Most of the 19 bank holding companies included in the SCAPissued equity, some to augment or improve the quality of their capitaland some to repay investments made by the Treasury under the TroubledAsset Relief Program. Still, delinquency and charge-off rates atcommercial banks increased further in the second half of the year, andloan losses remained very high.

 

Nonfinancial firms with access to capital marketstook advantage of the improvement in financial conditions to issuecorporate bonds and equity shares at a solid pace; a significantportion of issuance likely reflected an effort by businesses tosubstitute attractively priced longer-term financing for shorter-termdebt. In contrast, many small businesses and other firms that dependlargely on banks to meet their funding needs found their access tocredit severely restricted; banks continued to tighten their lendingstandards and terms, though to a more limited extent, during the secondhalf of 2009 amid higher loan losses on their commercial loans andreports of lingering uncertainty about business credit quality.According to survey data, demand for business loans was also weakthroughout 2009.

 

Availability of credit for households remainedconstrained in the second half of 2009, even as interest rates declinedfor mortgages and many consumer loans. Restrictive bank lendingpolicies to individuals likely were due importantly to banks' concernsabout the ability of households to repay loans in an environment ofhigh unemployment and continued softness in house prices. In addition,senior bank loan officers reported weakening loan demand fromhouseholds throughout 2009. However, in part because of support fromthe Federal Reserve's Term Asset-Backed Securities Loan Facility, theconsumer asset-backed securities market, which is an important fundingsource for consumer loans, improved. All told, in 2009 nominalhousehold debt experienced its first annual decline since the beginningof the data series in 1951.

 

The Federal Reserve continued to support thefunctioning of financial markets and promote recovery in economicactivity using a wide array of tools. The Federal Open Market Committee(FOMC) maintained a target range of 0 to 1/4 percent for the federalfunds rate throughout the second half of 2009 and early 2010 andindicated that economic conditions were likely to warrant exceptionallylow levels of the federal funds rate for an extended period. Further,the Federal Reserve continued its purchases of Treasury securities,agency mortgage-backed securities (MBS), and agency debt in order toprovide support to mortgage and housing markets and to improve overallconditions in private credit markets. To promote a smooth transition infinancial markets as the acquisitions are completed, the FederalReserve gradually slowed the pace of these purchases in late 2009 andearly 2010. The planned acquisitions of $300 billion of Treasurysecurities were completed by October, while the purchases of$1.25 trillion of MBS and about $175 billion of agency debt areexpected to be finished by the end of the first quarter of this year.

 

In light of the improved functioning of financialmarkets, the Federal Reserve removed some of the extraordinary supportit had provided during the crisis and closed many of its specialliquidity facilities and the temporary liquidity swap arrangements withother central banks in the fall of 2009 and early in 2010. The FederalReserve also began to normalize its lending to commercial banks throughthe discount window by reducing the maximum maturity of loans extendedthrough the primary credit facility from 90 days to 28 days, effectiveon January 14, and by announcing that the maturity of those loans willbe reduced further to overnight, effective on March 18. The ratecharged on primary credit loans was increased from 1/2 percent to3/4 percent effective February 19. In addition, the Federal Reserveannounced that the final auction under the Term Auction Facility willoccur in March and later noted that the minimum bid rate for thatauction had been increased by 1/4 percentage point to 1/2 percent.Overall, the size of the Federal Reserve's balance sheet increased fromabout $2 trillion in the summer of 2009 to about $2.3 trillion onFebruary 17, 2010. The composition of the balance sheet continued toshift as a considerable decline in credit extended through variousfacilities was more than offset by the increase in securities heldoutright. The Federal Reserve continued to broaden its efforts toprovide even more information to the public regarding its conduct ofthese programs and of monetary policy (see box in Part 3).

 

The Federal Reserve is taking steps to ensure that it will be able tosmoothly withdraw extraordinary policy accommodation when appropriate.Because the Federal Reserve, under the statutory authority provided bythe Congress in October 2008, pays interest on the balances depositoryinstitutions hold at Reserve Banks, it can put upward pressure onshort-term interest rates even with an extraordinarily large volume ofreserves in the banking system by raising the interest rate paid onsuch balances. In addition, the Federal Reserve has continued todevelop several other tools that it could use to reinforce the effectsof increases in the interest rate on balances at Reserve Banks. Inparticular, the Federal Reserve has tested its ability to executereverse repurchase agreements (reverse repos) in the triparty repomarket with primary dealers using both Treasury and agency debt ascollateral, and it is developing the capability to conduct suchtransactions with other counterparties and against agency MBS. TheFederal Reserve has also announced plans for implementing a termdeposit facility. In addition, it has the option of redeeming orselling assets in order to reduce monetary policy accommodation.

 

In conjunction with the January 2010 FOMC meeting,the members of the Board of Governors of the Federal Reserve System andpresidents of the Federal Reserve Banks, all of whom participate inFOMC meetings, provided projections for economic growth, unemployment,and inflation; these projections are presented in Part 4 ofthis report. FOMC participants agreed that economic recovery from therecent recession was under way, but that they expected it to proceed ata gradual pace, restrained in part by household and businessuncertainty regarding the economic outlook, modest improvement in labormarkets, and slow easing of credit conditions in the banking sector.Participants expected that real GDP would expand at a rate that wasonly moderately above its longer-run sustainable growth rate and thatthe unemployment rate would decline only slowly over the next fewyears. Most participants also anticipated that inflation would remainsubdued over this period.

 

Nearly all participants judged the risks to theirgrowth outlook as generally balanced, and most also saw roughlybalanced risks surrounding their inflation projections. Participantscontinued to judge the uncertainty surrounding their projections foreconomic activity and inflation as unusually high relative tohistorical norms. Participants also reported their assessments of therates to which key macroeconomic variables would be expected toconverge in the longer run under appropriate monetary policy and in theabsence of further shocks to the economy. The central tendencies ofthese longer-run projections were 2.5 to 2.8 percent for real GDPgrowth, 5.0 to 5.2 percent for the unemployment rate, and 1.7 to2.0 percent for the inflation rate.

 

 

[Guest LAW]

The Outlook

 

Participants' projections for real GDP growth in 2010 had a central tendency of 2.8 to 3.5 percent, a somewhat narrower interval than in November. Recent readings on consumer spending, industrial production, and business outlays on equipment and software were seen as broadly consistent with the view that economic recovery was under way, albeit at a moderate pace. Businesses had apparently made progress in bringing their inventory stocks into closer alignment with sales and hence would be likely to raise production as spending gained further momentum. Participants pointed to a number of factors that would support the continued expansion of economic activity, including accommodative monetary policy, ongoing improvements in the conditions of financial markets and institutions, and a pickup in global economic growth, especially in emerging market economies. Several participants also noted that fiscal policy was currently providing substantial support to real activity, but said that they expected less impetus to GDP growth from this factor later in the year. Many participants indicated that the expansion was likely to be restrained not only by firms' caution in hiring and spending in light of the considerable uncertainty regarding the economic outlook and general business conditions, but also by limited access to credit by small businesses and consumers dependent on bank-intermediated finance.

 

Looking further ahead, participants' projections were for real GDP growth to pick up in 2011 and 2012; the projections for growth in both years had a central tendency of about 3.5 to 4.5 percent. As in November, participants generally expected that the continued repair of household balance sheets and gradual improvements in credit availability would bolster consumer spending. Responding to an improved sales outlook and readier access to bank credit, businesses were likely to increase production to rebuild their inventory stocks and increase their outlays on equipment and software. In addition, improved foreign economic conditions were viewed as supporting robust growth in U.S. exports. However, participants also indicated that elevated uncertainty on the part of households and businesses and the very slow recovery of labor markets would likely restrain the pace of expansion. Moreover, although conditions in the banking system appeared to have stabilized, distress in commercial real estate markets was expected to pose risks to the balance sheets of banking institutions for some time, thereby contributing to only gradual easing of credit conditions for many households and smaller firms. In the absence of further shocks, participants generally anticipated that real GDP growth would converge over time to an annual rate of 2.5 to 2.8 percent, the longer-run pace that appeared to be sustainable in view of expected demographic trends and improvements in labor productivity.

 

Participants anticipated that labor market conditions would improve only slowly over the next several years. Their projections for the average unemployment rate in the fourth quarter of 2010 had a central tendency of 9.5 to 9.7 percent, only a little below the levels of about 10 percent that prevailed late last year. Consistent with their outlook for moderate output growth, participants generally expected that the unemployment rate would decline only about 2-1/2 percentage points by the end of 2012 and would still be well above its longer-run sustainable rate. Some participants also noted that considerable uncertainty surrounded their estimates of the productive potential of the economy and the sustainable rate of employment, owing partly to substantial ongoing structural adjustments in product and labor markets. Nonetheless, participants' longer-run unemployment projections had a central tendency of 5.0 to 5.2 percent, the same as in November.

 

Most participants anticipated that inflation would remain subdued over the next several years. The central tendency of their projections for personal consumption expenditures (PCE) inflation was 1.4 to 1.7 percent for 2010, 1.1 to 2.0 percent for 2011, and 1.3 to 2.0 percent for 2012. Many participants anticipated that global economic growth would spur increases in energy prices, and hence that headline PCE inflation would run slightly above core PCE inflation over the next year or two. Most expected that substantial resource slack would continue to restrain cost pressures, but that inflation would rise gradually toward their individual assessments of the measured rate of inflation judged to be most consistent with the Federal Reserve's dual mandate. As in November, the central tendency of projections of the longer-run inflation rate was 1.7 to 2.0 percent. A majority of participants anticipated that inflation in 2012 would still be below their assessments of the mandate-consistent inflation rate, while the remainder expected that inflation would be at or slightly above its longer-run value by that time.

 

http://www.federalreserve.gov/monetarypolicy/mpr_20100224_part4.htm

[Guest anothervoice]

I think it is amazing to see that the European Union has the same recovery strategy as us.

 

==============================

 

The Europe 2020 Strategy therefore sets out a vision for Europe's social market economy over the next decade, and rests on three interlocking and mutually reinforcing priority areas: Smart growth, developing an economy based on knowledge and innovation; Sustainable growth, promoting a low-carbon, resource-efficient and competitive economy; and Inclusive growth, fostering a high-employment economy delivering social and territorial cohesion.

 

Progress towards these objectives will be measured against five representative headline EU-level targets, which Member States will be asked to translate into national targets reflecting starting points:

 

*

 

75 % of the population aged 20-64 should be employed.

*

 

3% of the EU's GDP should be invested in R&D.

*

 

The "20/20/20" climate/energy targets should be met.

*

 

The share of early school leavers should be under 10% and at least 40% of the younger generation should have a degree or diploma. .

*

 

20 million less people should be at risk of poverty.

 

In order to meet the targets, the Commission proposes a Europe 2020 agenda consisting of a series of flagship initiatives. Implementing these initiatives is a shared priority, and action will be required at all levels: EU-level organisations, Member States, local and regional authorities.

 

*

 

Innovation union - re-focussing R&D and innovation policy on major challenges, while closing the gap between science and market to turn inventions into products. As an example, the Community Patent could save companies 289€ million each year.

*

 

Youth on the move - enhancing the quality and international attractiveness of Europe's higher education system by promoting student and young professional mobility. As a concrete action, vacancies in all Member States should be more accessible through out Europe and professional qualifications and experience properly recognised.

*

 

A digital agenda for Europe - delivering sustainable economic and social benefits from a Digital Single Market based on ultra fast internet. All Europeans should have access to high speed internet by 2013.

*

 

Resource-efficient Europe - supporting the shift towards a resource efficient and low-carbon economy. Europe should stick to its 2020 targets in terms of energy production, efficiency and consumption. This would result in €60 billion less in oil and gas imports by 2020.

*

 

An industrial policy for green growth – helping the EU's industrial base to be competitive in the post-crisis world, promoting entrepreneurship and developing new skills. This would create millions of new jobs ;

*

 

An agenda for new skills and jobs – creating the conditions for modernising labour markets, with a view to raising employment levels and ensuring the sustainability of our social models, while baby-boomers retire ; and

*

 

European platform against poverty - ensuring economic, social and territorial cohesion by helping the poor and socially excluded and enabling them to play an active part in society.

[Guest greenzen]

Our economic growth is too slow to maintain the American way of life.

[Guest CBO]

Severe economic downturns often sow the seeds of robust recoveries. During a slump in economic activity, consumers defer purchases, especially for housing and durable goods, and businesses postpone capital spending and try to cut inventories. Once demand in the economy picks up, the disparity between the desired and actual stocks of capital assets and consumer durable goods widens quickly, and spending by consumers and businesses can accelerate rapidly. Although CBO expects that the current recovery will be spurred by that dynamic, in all likelihood, the recovery will also be dampened by a number of factors. Those factors include the continuing fragility of some financial markets and institutions; declining support from fiscal policy as the effects of ARRA wane and tax rates increase because of the scheduled expiration of key tax provisions; and slow wage and employment growth, as well as a large excess of vacant houses.

[Guest LAW]

Excerpts from Fed. Chair Ben Bernanke's Testimony at a Hearing on the State of the Economy

 

At a hearing Wednesday convened by House Budget Committee Chairman John Spratt (D-SC),Federal Reserve Chairman Ben S. Bernanke testified about the improving economy and the effectiveness of the federal responses to the financial crisis and the recession, among other topics.

 

The Economy is Recovering

 

"The recovery in economic activity that began in the second half of last year has continued at a moderate pace so far this year. Moreover, the economy--supported by stimulative monetary policy and the concerted efforts of policymakers to stabilize the financial system--appears to be on track to continue to expand through this year and next."

 

GDP Growth on Track to Continue

 

"The latest economic projections of Federal Reserve Governors and Reserve Bank presidents, which were made near the end of April, anticipate that real gross domestic product (GDP) will grow in the neighborhood of 3-1/2 percent over the course of 2010 as a whole and at a somewhat faster pace next year."

 

Private Sector is Strengthening

 

"Although the support to economic growth from fiscal policy is likely to diminish in the coming year, the incoming data suggest that gains in private final demand will sustain the recovery in economic activity."

 

TARP and Recovery Act Have Been Effective Despite Short-Term Deficit Spike

 

"The exceptional increase in the deficit has in large part reflected the effects of the weak economy on tax revenues and spending, along with the necessary policy actions taken to ease the recession and steady financial markets. As the economy and financial markets continue to recover, and as the actions taken to provide economic stimulus and promote financial stability are phased out, the budget deficit should narrow over the next few years."

 

"n the absence of TARP, we would have had a much deeper recession and the losses of tax revenue and the other costs would have far outweighed the cost of the TARP."

 

Spratt question: "Looking back, if we had not taken the extraordinary steps that we took, starting with the TARP solicitation by the Bush Administration, the Recovery Act by the Obama Administration, and many other fiscal and monetary steps in between, where would we be now? Do you think that those steps have been vindicated by events?"

 

Bernanke: "Yes, Mr. Chairman, I do . . . . certainly we have averted what I think would have been, absent those interventions, an extraordinarily severe downturn, perhaps a great depression."

[Guest FRB]

Governor Elizabeth A. Duke

At the Consumer Bankers Association Annual Conference, Hollywood, Florida

June 8, 2010

 

Moving Beyond the Financial Crisis

 

The recent crisis in our mortgage finance system and capital markets was severe. It plunged our economy into a level of stress second only to the Great Depression of the 1930s. The results were devastating for investors, financial institutions, businesses, and consumers from Wall Street to Main Street. As a first responder, the Fed used a wide range of tools to fight the crisis in a direct and urgent manner, including lowering interest rates; maintaining a steady flow of dollars to meet demand abroad; providing liquidity to sound institutions to support faltering financial markets; and providing emergency loans to specific, troubled institutions whose failures would have had disastrous consequences for the financial system and the broad economy. The pervasiveness of the panic required that the Federal Reserve act swiftly, responsibly, and effectively. If we had been unable or unwilling to do so, I believe that today the economic and financial situation would be much worse.1

 

Our actions have hardly come without scrutiny or criticism, of course. While some hailed the forceful steps taken by the Federal Reserve in the fall of 2008 to help prevent the apocalyptic scenario that we all believed possible, a vocal contingent of critics questioned the Federal Reserve's decisions and the degree to which individual financial institutions benefitted from our actions, especially the so-called bailout for insurance company American International Group (AIG).

 

To help you understand our actions, let me put you into the moment when we decided to provide liquidity to AIG. The government had already put Fannie Mae and Freddie Mac into conservatorship to preserve the mortgage market. Lehman had just failed, and we were getting the initial reports of the fallout, like reports of battlefield casualties, that market after market was damaged or frozen. Panic was so heavy in the markets that it was almost a physical presence. I kept having this image in my head of the panic being like the monster called "the Blob" that I saw years ago in an old movie. Like the Blob, panic attacked one institution after another, and with each institution it ate, it grew bigger and stronger. We had just watched it eat Lehman. We could not stop it there because we are only authorized to lend against collateral, and Lehman did not have enough collateral. Now it was focused on AIG. Unlike the situation with Lehman Brothers, we were presented with an action we could take, a loan we could make to avoid the collapse of AIG. Our knowledge of the company was limited because we had never supervised AIG, but the loan could be secured with collateral. Based on our assessments of the collateral, we believed the risk of the loans to be limited. And while the risk of making the loan was limited, the risk of not making the loan--of letting AIG, which was significantly larger than Lehman, fail--was certain to be huge. And no other entity--not a private company, not a consortium of private companies acting together, not any other branch or agency of the government--was in a position to do anything. The clock was ticking, and default was imminent. There was no time to gather more information or find another solution. So I ask you, what would you have done?

 

It was in this context that the Federal Reserve, with the full support of the Treasury, made a loan to AIG to prevent its failure. The loan imposed tough terms, senior management was replaced, and shareholders lost almost all of their investments.

 

If I had to cast that vote again, even knowing all that followed, including the criticism that we have received, I wouldn't change it. I still believe that the consequences would have been far worse for all businesses and consumers if we had let AIG fail. Despite the claims by some that healthier Wall Street firms or even the small businesses and consumers on Main Street did not benefit from assistance to AIG, I would argue that no business or individual was immune to the effects of a sequential collapse of key financial intermediaries.

 

As it was, we still had frozen credit markets so we turned our attention to facilities designed to unfreeze those markets. While actions like our lending to AIG have grabbed the biggest headlines, other moves by the Federal Reserve, like those to ensure the functioning of consumer credit markets, were equally important when it came to supporting consumers and the economy in the midst of the financial crisis. New issuance of asset-backed securities (ABS), which provided funding for auto loans, credit cards, student loans, and other loans to consumers and small businesses, had virtually ceased. Investors had lost faith in the quality of the triple-A ratings on the securities, and the complex system that funded the securities known as the "shadow banking system" broke down. Without access to funding, credit for households and small businesses would have become even less available and more costly. The Federal Reserve designed the Term Asset-Backed Securities Loan Facility, or TALF, to provide funds for the purchase of securities backed by new consumer loans. In the end, nearly 3 million auto loans, over 1 million student loans, about 850,000 small business loans, and millions of credit card accounts were supported by TALF-eligible securities. TALF worked. It served its intended purpose of unlocking lending, the lifeblood of the U.S. economy. As pleased as I was to see that TALF worked, I was even more pleased when it eventually became unnecessary. ABS issuance remained stable in the months after TALF ended.

 

While liquidity helped restore the market for consumer loan securitization, liquidity alone did not solve all the consumer credit problems exposed by the crisis. Additional consumer protection would also be needed to restore healthy consumer lending.

[Guest LAW]

In this week’s address, President Barack Obama announced that the Department of Energy is awarding nearly $2 billion in conditional commitments from the Recovery Act to two solar companies. Abengoa Solar has agreed to build one of the largest solar plants in the world in Arizona, which will create about 1,600 construction jobs with over 70 percent of the construction components and products manufactured here in the USA. When completed, this plant will provide enough clean energy to power 70,000 homes. And, Abound Solar Manufacturing is building two new plants, one in Colorado and one in Indiana. These projects will create more than 2,000 construction jobs, and over 1,500 permanent jobs as the plants produce millions of state of the art solar panels each year.

Remarks of President Barack Obama

Saturday, July 3, 2010

Weekly Address

Washington, DC

 

This week, I spent some time in Racine, Wisconsin, talking with folks who are doing their best to cope with the aftermath of a brutal recession.

 

And while I was there, a young woman asked me a question I hear all the time: “What are we doing as a nation to bring jobs back to this country?”

 

Well, on Friday, we learned that after 22 straight months of job loss, our economy has now created jobs in the private sector for 6 months in a row. That’s a positive sign. But the truth is, the recession from which we’re emerging has left us in a hole that’s about 8 million jobs deep. And as I’ve said from the day I took office, it’s going to take months, even years, to dig our way out – and it’s going to require an all-hands-on-deck effort.

 

In the short term, we’re fighting to speed up this recovery and keep the economy growing by all means possible. That means extending unemployment insurance for workers who lost their job. That means getting small businesses the loans they need to keep their doors open and hire new workers. And that means sending relief to states so they don’t have to lay off thousands of teachers and firefighters and police officers.

 

Still, at a time when millions of Americans feel a deep sense of urgency in their own lives, Republican leaders in Washington just don’t get it. While a majority of Senators support taking these steps to help the American people, some are playing the same old Washington games and using their power to hold this relief hostage – a move that only ends up holding back our recovery. It doesn’t make sense.

 

But I promised those folks in Wisconsin – and I promise all of you – that we won’t back down. We’re going to keep fighting to advance our recovery. And we’re going to keep competing aggressively to make sure the jobs and industries of the future are taking root right here in America.

 

That’s one of the reasons why we’re accelerating the transition to a clean energy economy and doubling our use of renewable energy sources like wind and solar power – steps that have the potential to create whole new industries and hundreds of thousands of new jobs in America.

 

In fact, today, I’m announcing that the Department of Energy is awarding nearly $2 billion in conditional commitments to two solar companies.

 

The first is Abengoa Solar, a company that has agreed to build one of the largest solar plants in the world right here in the United States. After years of watching companies build things and create jobs overseas, it’s good news that we’ve attracted a company to our shores to build a plant and create jobs right here in America. In the short term, construction will create approximately 1,600 jobs in Arizona. What’s more, over 70 percent of the components and products used in construction will be manufactured in the USA, boosting jobs and communities in states up and down the supply chain. Once completed, this plant will be the first large-scale solar plant in the U.S. to actually store the energy it generates for later use – even at night. And it will generate enough clean, renewable energy to power 70,000 homes.

 

The second company is Abound Solar Manufacturing, which will manufacture advanced solar panels at two new plants, creating more than 2,000 construction jobs and 1,500 permanent jobs. A Colorado plant is already underway, and an Indiana plant will be built in what’s now an empty Chrysler factory. When fully operational, these plants will produce millions of state-of-the-art solar panels each year.

 

These are just two of the many clean energy investments in the Recovery Act. Already, I’ve seen the payoff from these investments. I’ve seen once-shuttered factories humming with new workers who are building solar panels and wind turbines; rolling up their sleeves to help America win the race for the clean energy economy.

 

So that’s some of what we’re doing. But the truth is, steps like these won’t replace all the jobs we’ve lost overnight. I know folks are struggling. I know this Fourth of July weekend finds many Americans wishing things were a bit easier right now. I do too.

 

But what this weekend reminds us, more than any other, is that we are a nation that has always risen to the challenges before it. We are a nation that, 234 years ago, declared our independence from one of the greatest empires the world had ever known. We are a nation that mustered a sense of common purpose to overcome Depression and fear itself. We are a nation that embraced a call to greatness and saved the world from tyranny. That is who we are – a nation that turns times of trial into times of triumph – and I know America will write our own destiny once more.

 

I wish every American a safe and happy Fourth of July. And to all our troops serving in harm’s way, I want you to know you have the support of a grateful nation and a proud Commander-in-Chief. Thank you, God Bless You, and God Bless the United States of America.

[Guest HUMAN]

This Administration has so many people spooked in the Business community that I would not touch business right now.

 

Your money is yours, you play the field as you see fit. Stay with what you are good at, don't go beyond what you don't know about, and research, research, research.

[Luke_Wilbur]

That is sound advice. Interest rates are getting higher. You do not want to wind up in massive debt. Do a business plan, marketing plan, cost analysis spread sheet, and talk to your local SBA for advice. There are many retired executives that want to help you for FREE.

[Guest American Iron and Steel]

In the week ending July 3, 2010, domestic raw steel production was 1,752,000 net tons while the capability utilization rate was 72.4 percent. Production was 1,279,000 tons in the week ending July 3, 2009, while the capability utilization then was 49.3 percent. The current week production represents a 37.0 percent increase from the same period in the previous year. Production for the week ending July 3, 2010 is down 0.7 percent from the previous week ending June 26, 2010 when production was 1,763,000 tons and the rate of capability utilization was 72.9 percent.

 

Adjusted year-to-date production through July 3, 2010 was 44,874,000 tons, at a capability utilization rate of 70.6 percent. That is a 64.5 percent increase from the 27,288,000 tons during the same period last year, when the capability utilization rate was 44.6 percent.

 

Broken down by districts, here's production for the week ending July 3, 2010 in thousands of net tons: Northeast Coast: 111; Pittsburgh/Youngstown: 122; Lake Erie: 43; Detroit: 127; Indiana/Chicago: 441; Midwest: 241; Southern: 586 and Western: 81.

(Estimate based on reports from companies representing about 50% of the Industry's Raw Steel Capability + includes revisions for previous months)

[Guest Enron Ex]

Chair Elizabeth Warren of the TARP Congressional Oversight Panel explains how the rest of the world followed the corrupt American derivative market model. The TARP approach was to flood the bank market that in turn pumped most of the bailout money to International Banks. The Department of Treasury and Federal Reserve purposely did not mark where the money was going.

 

I consider this revelation is a step forward to safeguard our financial system.

 

[Guest LAW]

August 30, 2010

Remarks by the President on the Economy

 

Rose Garden

 

1:17 P.M. EDT

 

THE PRESIDENT: Good afternoon, everybody. I just finished a meeting with my economic team about the current state of our economy and some of the additional steps that we should take to move forward.

 

It’s been nearly two years since that terrible September when our economy teetered on the brink of collapse. And at the time, no one knew just how deep the recession would go, or the havoc that it would wreak on families and businesses across this country. What we did know was that it took nearly a decade -- how we doing on sound, guys? Is it still going in the press -- okay. What we did know was that it was going to take nearly a decade in order -- can you guys still hear us? Okay. Let me try this one more time.

 

What we did know was that it took nearly a decade to dig the hole that we’re in -– and that it would take longer than any of us would like to climb our way out. And while we have taken a series of measures and come a long way since then, the fact is, that too many businesses are still struggling; too many Americans are still looking for work; and too many communities are far from being whole again.

 

And that’s why my administration remains focused every single day on pushing this economy forward, repairing the damage that’s been done to the middle class over the past decade, and promoting the growth we need to get our people back to work.

 

So, as Congress prepares to return to session, my economic team is hard at work in identifying additional measures that could make a difference in both promoting growth and hiring in the short term, and increasing our economy’s competitiveness in the long term -- steps like extending the tax cuts for the middle class that are set to expire this year; redoubling our investment in clean energy and R&D; rebuilding more of our infrastructure for the future; further tax cuts to encourage businesses to put their capital to work creating jobs here in the United States. And I’ll be addressing these proposals in further detail in the days and weeks to come.

 

In the meantime, there’s one thing we know we should do -– something that should be Congress’ first order of business when it gets back -- and that is making it easier for our small businesses to grow and hire.

We know that in the final few months of last year, small businesses accounted for more than 60 percent of the job losses in America. That’s why we’ve passed eight different tax cuts for small businesses and worked to expand credit for them.

 

But we have to do more. And there’s currently a jobs bill before Congress that would do two big things for small business owners: cut more taxes and make available more loans. It would help them get the credit they need, and eliminate capital gains taxes on key investments so they have more incentive to invest right now. And it would accelerate $55 billion of tax relief to encourage American businesses, small and large, to expand their investments over the next 14 months.

 

Unfortunately, this bill has been languishing in the Senate for months, held up by a partisan minority that won’t even allow it to go to a vote. That makes no sense. This bill is fully paid for. It will not add to the deficit. And there is no reason to block it besides pure partisan politics.

The small business owners and the communities that rely on them, they don’t have time for political games. They shouldn’t have to wait any longer. In fact, just this morning, a story showed that small businesses have put hiring and expanding on hold while waiting for the Senate to act on this bill. Simply put, holding this bill hostage is directly detrimental to our economic growth.

 

So I ask Senate Republicans to drop the blockade. I know we’re entering election season, but the people who sent us here expect us to work together to get things done and improve this economy.

 

Now, no single step is the silver bullet that will reverse the damage done by the bubble-and-bust cycles that caused our economy into this slide. It’s going to take a full-scale effort, a full-scale attack that not only helps in the short term, but builds a firmer foundation that makes our nation stronger for the long haul. But this step will benefit small business owners and our economy right away. That’s why it’s got to get done.

 

There’s no doubt we still face serious challenges. But if we rise above the politics of the moment to summon an equal seriousness of purpose, I’m absolutely confident that we will meet them. I’ve got confidence in the American economy. And most importantly, I’ve got confidence in the American people. We’ve just got to start working together to get this done.

 

Thank you very much.

 

END

1:21 P.M. EDT

[Guest Rose Marie Goupil]

Economic activity in the manufacturing sector expanded in August for the 13th consecutive month, and the overall economy grew for the 16th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

 

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "Manufacturing activity continued at a very positive rate in August as the PMI rose slightly when compared to July. In terms of month-over-month improvement, the Production and Employment Indexes experienced the greatest gains, while new orders continued to grow but at a slightly slower rate. August represents the 13th consecutive month of growth in U.S. manufacturing."

PERFORMANCE BY INDUSTRY

 

Eleven of the 18 manufacturing industries are reporting growth in August, in the following order: Primary Metals; Apparel, Leather & Allied Products; Transportation Equipment; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Computer & Electronic Products; Paper Products; Chemical Products; Food, Beverage & Tobacco Products; and Printing & Related Support Activities. The five industries reporting contraction in August are: Furniture & Related Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Plastics & Rubber Products; and Machinery.

WHAT RESPONDENTS ARE SAYING ...

 

* "Still experiencing intermittent delays in electronic components due to capacity and raw materials." (Electrical Equipment, Appliances & Components)

* "International sales are especially strong. Domestic business is solid." (Chemical Products)

* "Orders and business still strong." (Primary Metals)

* "Order rate has slowed some. Supplier capacity in general seems to be improved." (Machinery)

* "Large customers reducing pull rates for production." (Computer & Electronic Products)

 

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

 

Caustic Soda; Copper; and Corrugated Containers (6).

Commodities Down in Price

 

Polyethylene (2); Polypropylene; and Steel (2).

Commodities in Short Supply

 

Capacitors (2) is the only commodity listed in short supply.

 

Note: The number of consecutive months the commodity is listed is indicated after each item.

 

PMI

 

Manufacturing continued to grow in August as the PMI registered 56.3 percent, an increase of 0.8 percentage point when compared to July's reading of 55.5 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

 

A PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 16th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 13th consecutive month. Ore stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through August (57.8 percent) corresponds to a 5.3 percent increase in real gross domestic product (GDP). In addition, if the PMI for August (56.3 percent) is annualized, it corresponds to a 4.8 percent increase in real GDP annually."

 

New Orders

 

ISM's New Orders Index registered 53.1 percent in August, which is a decrease of 0.4 percentage point when compared to the 53.5 percent reported in July. This is the 14th consecutive month of growth in the New Orders Index. A New Orders Index above 50.2 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

 

The eight industries reporting growth in new orders in August — listed in order — are: Primary Metals; Apparel, Leather & Allied Products; Paper Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Transportation Equipment; and Chemical Products. The six industries reporting decreases in new orders in August — listed in order — are: Nonmetallic Mineral Products; Furniture & Related Products; Plastics & Rubber Products; Computer & Electronic Products; Machinery; and Food, Beverage & Tobacco Products.

 

Production

 

ISM's Production Index registered 59.9 percent in August, which is an increase of 2.9 percentage points from the July reading of 57 percent. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. This is the 15th consecutive month the Production Index has registered above 50 percent.

 

The 11 industries reporting growth in production during the month of August — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Paper Products; Transportation Equipment; Fabricated Metal Products; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Chemical Products. The four industries reporting a decrease in production in August are: Petroleum & Coal Products; Nonmetallic Mineral Products; Furniture & Related Products; and Printing & Related Support Activities.

 

Employment

 

ISM's Employment Index registered 60.4 percent in August, which is 1.8 percentage points higher than the 58.6 percent reported in July. This is the ninth consecutive month of growth in manufacturing employment. An Employment Index above 49.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

 

Ten of the 18 manufacturing industries reported growth in employment in August in the following order: Transportation Equipment; Paper Products; Printing & Related Support Activities; Primary Metals; Computer & Electronic Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Chemical Products. Furniture & Related Products is the only industry reporting a decrease in employment during August.

 

Supplier Deliveries

 

The delivery performance of suppliers to manufacturing organizations was slower in August as the Supplier Deliveries Index registered 56.6 percent, which is 1.7 percentage points lower than the 58.3 percent registered in July. This is the 15th consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.

 

The 10 industries reporting slower supplier deliveries in August — listed in order — are: Transportation Equipment; Computer & Electronic Products; Plastics & Rubber Products; Primary Metals; Electrical Equipment, Appliances & Components; Chemical Products; Miscellaneous Manufacturing; Fabricated Metal Products; Machinery; and Food, Beverage & Tobacco Products. There were no industry reports of faster deliveries in August.

 

Inventories

 

Manufacturers' inventories grew in August as the Inventories Index registered 51.4 percent. The index is 1.2 percentage points higher than the 50.2 percent reported in July. An Inventories Index greater than 42.6 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

 

The eight industries reporting higher inventories in August — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; and Chemical Products. The six industries reporting decreases in inventories in August — listed in order — are: Furniture & Related Products; Plastics & Rubber Products; Paper Products; Machinery; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products.

 

Customers' Inventories*

 

The ISM Customers' Inventories Index registered 43.5 percent in August, 4.5 percentage points higher than in July when the index registered 39 percent. This is the 17th consecutive month the Customers' Inventories Index has been below 50 percent, indicating that respondents believe their customers' inventories are too low at this time.

 

Miscellaneous Manufacturing is the only manufacturing industry reporting customers' inventories as being too high during August. The eight industries reporting customers' inventories as too low during August — listed in order — are: Nonmetallic Mineral Products; Printing & Related Support Activities; Primary Metals; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Chemical Products; Machinery; and Fabricated Metal Products.

 

Prices*

 

The ISM Prices Index registered 61.5 percent in August, 4 percentage points higher than the 57.5 percent reported in July. This is the 14th consecutive month the Prices Index has registered above 50 percent. While 35 percent of respondents reported paying higher prices and 12 percent reported paying lower prices, 53 percent of supply executives reported paying the same prices as in July. A Prices Index above 49.3 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.

 

The 12 industries reporting paying increased prices during the month of August — listed in order — are: Paper Products; Primary Metals; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Transportation Equipment; Printing & Related Support Activities; Chemical Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Machinery; Miscellaneous Manufacturing; and Computer & Electronic Products. The three industries reporting paying lower prices on average during August are: Nonmetallic Mineral Products; Fabricated Metal Products; and Plastics & Rubber Products.

 

Backlog of Orders*

 

ISM's Backlog of Orders Index registered 51.5 percent in August, 3 percentage points lower than the 54.5 percent reported in July. Of the 84 percent of respondents who reported their backlog of orders, 25 percent reported greater backlogs, 22 percent reported smaller backlogs, and 53 percent reported no change from July.

 

The eight industries reporting increased order backlogs in August — listed in order — are: Paper Products; Primary Metals; Computer & Electronic Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; and Food, Beverage & Tobacco Products. The seven industries reporting decreases in order backlogs during August — listed in order — are: Furniture & Related Products; Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Plastics & Rubber Products; Printing & Related Support Activities; Machinery; and Chemical Products.

 

New Export Orders*

 

ISM's New Export Orders Index registered 55.5 percent in August, which is 1 percentage point lower than the 56.5 percent reported in July. This is the 14th consecutive month of growth in the New Export Orders Index.

 

The 10 industries reporting growth in new export orders in August — listed in order — are: Furniture & Related Products; Primary Metals; Machinery; Transportation Equipment; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Chemical Products. None of the 18 manufacturing industries reported a decrease in export orders during August.

 

Imports*

 

Imports of materials by manufacturers expanded in August as the Imports Index registered 56.5 percent, 4 percentage points higher than the 52.5 reported in July. This is the 12th consecutive month of growth in imports.

 

The nine industries reporting growth in imports during the month of August are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Primary Metals; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; and Machinery. The two industries reporting a decrease in imports during August are: Miscellaneous Manufacturing and Chemical Products.

 

Buying Policy

 

Average commitment lead time for Capital Expenditures increased 15 days to 127 days. Average lead time for Production Materials remained unchanged at 52 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased 2 days to 21 days.

 

About this Report

 

The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM makes no representation, other than that stated within this release, regarding the individual company data collection procedures. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation

 

The Manufacturing ISM Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

 

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers' Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

 

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. The PMI is a composite index based on the seasonally adjusted diffusion indexes for five of the indicators with equal weights: New Orders, Production, Employment, Supplier Deliveries and Inventories.

 

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI in excess of 42 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42 percent, it is generally declining. The distance from 50 percent or 42 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.

 

Responses to Buying Policy reflect the percent reporting the current month's lead time, the approximate weighted number of days ahead for which commitments are made for Production Materials; Capital Expenditures; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

 

The Manufacturing ISM Report On Business® is published monthly by the Institute for Supply Management™. The Institute for Supply Management™, established in 1915, is the largest supply management organization in the world as well as one of the most respected. ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

 

The full text version of the Manufacturing ISM Report On Business® is posted on ISM's Web site at www.ism.ws on the first business day of every month after 10:10 a.m. (ET).

 

The next Manufacturing ISM Report On Business® featuring the September 2010 data will be released at 10:00 a.m. (ET) on Friday, October 1, 2010.

[Guest Eric Blair]

Isn't it time for a fair tax across the board? It shouldn't matter if your rich poor or on welfare, if we as a people were to do away with all taxes property,employment,etc and just had a federal sales tax everyone would pay the same tax and their would be no more reason to give tax breaks.then the 40 or so percent that never pays taxes would have no choice but to pay their share. And our debts to other countries would be payed in short order. And to all those who read this I only pay about 5 percent in taxes so I'm not rich by no means. Just a little some thing to chew on.