tag:blogger.com,1999:blog-82132874781601314392024-03-14T02:04:39.991-07:00Words: Who, What, WhenWords matter. Words in context matter even more. This blog will post words spoken and written by the people that play an intrinsic role in shaping policies and perceptions. This blog will revisit those words over time and in context. Any errors are mine and will be revised as needed.Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.comBlogger164125tag:blogger.com,1999:blog-8213287478160131439.post-43536530344053416232009-06-26T11:09:00.001-07:002009-06-26T11:10:49.160-07:00Disturbing Fibonacci chart<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_FQVPzt7NnF0/SkUO_ycFeII/AAAAAAAAAEo/POWFt7INyIQ/s1600-h/SPX.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 229px;" src="http://4.bp.blogspot.com/_FQVPzt7NnF0/SkUO_ycFeII/AAAAAAAAAEo/POWFt7INyIQ/s320/SPX.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5351700221233821826" /></a><br />Credit - David Steckler (HGS contributor)Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com58tag:blogger.com,1999:blog-8213287478160131439.post-38504513097671678272009-06-19T16:33:00.000-07:002009-06-19T17:18:08.779-07:00The Experiment with TycoI am publishing this trade virtually because I think this is a good trade but I am on options rookie so I am trying out my playbook here.<br /><br />Here's what I read on Friday Jun 19th Quadruple Expiration Day.<br /><br /><i>Tyco has been trading in a reasonably tight range recently, and that has prompted one options trader to step in.The security company is down just $0.04 on the day to trade at $26.85. It broke above $29 on the first day of the month, after a run up from near $17 in early March. TYC shares have gotten back above the 200 day moving average, through which the stock broke down back in August when the price was above $40. The options trade is out in October, with the 26 puts and the 27.50 calls. There were 6,524 contracts traded in each at the same time. This appears to be a short straddle, with the October 26 puts sold for $2.05 and the October 27.5 calls traded for $2 even. If this was in fact a volatility sale, the trade will profit up to $31.50 and down to $22. This trade would go along with the falling volatility levels. Implied and historical volatility are both around 39 percent, continuing to fall over the last four months and now at their lowest levels since last October. </i><br /><br /><b>PLAY 1 - Short Straddle on Jul 27.5 TYC </b><br />I didnt know how to take advantage of this today but now sitting here at home with my playbook I am wondering what would happen if I were to do a short straddle myself but do it for July instead. Selling TYCSY this evening if it was possible would net me 1.40. Selling TYCGY would net me 0.75 for a total of 2.15 for the trade. Ofcourse a short straddle has unlimited risk on the upside substantial downside risk but given the low volatility of the stock - collecting 2.15 doesnt sound bad does it? We will revisit this trade on Jul expiration and see where we sit.<br />I can tolerate a fall from current price to 24.87 to a rise upto 28.87<br /><br /><b>PLAY 2 - Short Strangle on Jul 26 and 27.5 TYC </b><br />Sell TYCSK (Jul 26 TYC Put) - 0.7<br />Sell TYCGY (Jul 27.5 TYC Call) - 0.75<br />Yielding a net 1.55<br /><br />Of the two plays - Play 2 Yields a lower amount but I like it better ! With Play 2, I can tolerate a fall in the stock price upto 24.50 and a rise upto 29. As you can see with Play 2 - I have a better tolerance of swings in price. Looking at TYC charts - I see the 50-200 golden cross (bullish) but a parabolic stop and reverse (bearish). Near term I think the bearish trend wins and we should see price gradually migrate downwards with first resistance at the 50 day MA. If it goes through that the very gradually sloping 200 MA is at around 24. As I think out loud here - perhaps it might be better to wait nearer term to see if TYC bounces at the 50 day MA before jumping into the short strangle. Will update as I have time.Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-14218799401306441012009-06-17T13:22:00.000-07:002009-06-17T13:54:38.300-07:00Interesting Day in the Markets (OPEX week Jun 17)<strong>TRADING THOUGHTS</strong> <em>(This is intended as a personal blog for me to jot down my daily thoughts and help with the learning process). PLEASE DO NOT COPY ANYTHING I DO ON THIS BLOG - I am not responsible for any trade losses you will incur. </em><br /><br />Today was an interesting day in the markets and possibly a turning point in the rally we have seen. The last couple of days had seen some intense selling especially in small caps with large beta. I had a bunch of those in my portfolio. The selling was brutal from the open. It actually seemed to diminish as the day wore on. I sold my entire portfolio today (well almost my entire portfolio - I continue to hold UNG and VTG). Natural gas seems to be holding up really well here and its about that time of the year anyway. UNG is a solid play off of Natural Gas futures. VTG is a driller and will be profitable this year. They have also been able to raise money in private placement.<br /><br />Towards the end of the day - Tim Knight (<a href="http://www.slopeofhope.com/">http://www.slopeofhope.com/</a>) - went short the ES futures at 911.50 and I in turn bought 400 SDS at 56.30. Then around 3:45 - there was very interesting action in AXL, VTG and TEN. Some huge buys came in especially in AXL. Either these were people short covering or actually buying - I am not sure. Regardless, AXL went positive for a short time but fell back down. VTG went positive and stayed positive. In the markets as well - they started turning +ve briefly. Looking at that action - I immediately sold my SDS for a small profit at 56.65 (I intended to sell SDS before end of day anyway). SDS ended the day at 56.83<br /><br />The S&P is currently sitting ON its 200 day moving average but its MACD has crossed and turned lower. Saw an interesting video by Adam Hewinson of INO.com and Marketclub on the INX (S&P) where he sees it turning lower with the first fibonacci around 881. From previous resistance levels as well S&P seems to be headed to 880. I am in all cash and will be looking to play the short-side tomorrow. Overshadowing all this is whether or not OPEX (which is this week) is messing with us. My impression looking at optionpain.com was that OPEX week would make the markets trend lower given what optionpain.com was suggesting. I was thinking of buying puts on Friday to protect my gains (on Friday - I was sitting on a much better profit level in my portfolio). I didnt buy them and I paid for that mistake. I am now all cash with some small positions.<br /><br />I have created portfolios in FINVIZ (because the stocks I had purchased are strong small cap names like - VTG, CENX, AXL, GRO, SEED, FEED, HOGS, CHU, BBY, COT, CPY, CENT, FUQI, APWR etc).<br /><br />Just got an email from Market Club - BMI went higher to 42 (argghhh) and all healthcare stocks seem to be higher today. RDY is looking quite strong. Within small caps - best healthcare action in the last 3 days has been in MRGE. UBET and MNKD also received strong rankings of 100+Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com2tag:blogger.com,1999:blog-8213287478160131439.post-4025355358160938772009-06-05T18:33:00.000-07:002009-06-05T18:44:48.397-07:00The End of the Long WinterOk so its been a while. A lot of things have changed. <br /><br />The markets seem to have put in a solid bottom in March. I sent out an email to the rest of my office in mid April entitled "The End of the Long Winter." <br /><br />I believe Obama created this bottom. Smart man. He knows that the driving force in any economy is confidence. Animal spirits if you will. The play a disproportionate role in this economy. And those of you who followed Obama's call to invest in the market are now doing quite well. The S&P bottomed at 666 with a beautiful double bottom and then carved out a beautiful cup and handle formation and has broken out. <br /><br />Small caps especially Chinese small caps are going absolutely nuts. So are Russian stocks. All are raging buys and are going up as fast and hard as they fell down. Look at the charts of stocks like: SEED, FEED, GRO, SOL, CHU, YTEC, MTL, IGC etc. Look at the macro ETFs of things like RSX, GUR, FXI and INP. Look at TLT crashing and TBT rocking. They all tell a micro and macro story. I am making solid returns in the past month or two on the long side in both stocks and options. <br /><br />This is a good time to be in the markets. New stocks are powering higher. Look at stocks of companies like AXL, XTXI etc. American Axle a key automotive supplier is now starting to climb. Yes, can you believe it? An automotive supplier. And it has a long way to go as today its only around 2.6 dollars. It could easily be around 15 in the next year. And as it does, I intend on riding it all the way. As always excercise caution and ALWAYS, ALWAYS use a stop loss. <br /><br />This blog is for informational purposes only for my entertainment and not intended to be investment advice. Follow anything I can and you can and will incur a loss. DO NOT PUT YOUR MONEY TO WORK ON ANYTHING WRITTEN HERE ON THIS BLOG. DONT MAKE ME HURT YOU!Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-29577815916049171652009-02-06T19:45:00.000-08:002009-02-06T19:48:42.791-08:00Gary Schilling's Predictions: 2009<strong>Gary Shilling's 2009 Predictions: We're Still Screwed<br /></strong>Henry Blodget Jan 6, 09 3:58 PM<br /><br />Last year, economist Gary Shilling humiliated the rest of the economic forecasting industry by going 13 for 13.<br /><br />As promised, here are Gary's predictions for this year:<br /><br />Every one of our 13 investment strategies for 2008 worked last year. Some of them have been fully exploited so we dropped them from this year's list. But others are only partially achieved in view of our dire outlook that the worst global financial crisis and deepest worldwide recession since the 1930s will continue throughout 2009.<br /><br />So we've retained 10 of our 2008 strategies this year, some in modified form, and added two new ones.<br /><br />1. Sell homebuilder stocks and bonds.<br />2. If you plan to sell your house, second home or investment houses anytime soon, do so yesterday.<br />3. Sell some housing-related stocks.<br />4. Sell some consumer discretionary spending companies.<br />5. Sell most commercial real estate.<br />6. Sell some commodities.<br />7. Sell emerging market equities.<br />8. Sell emerging market debt.<br />9. Buy the dollar.<br />10. Sell stocks in general. (S&P 500 to 600)<br />11. Sell consumer lenders’ equities.<br />12. Buy, carefully, high-grade bonds.<br /><br />from: clusterstock.alleyinsider.comNoblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-41747123559937242692009-02-06T19:32:00.001-08:002009-02-06T19:33:46.436-08:00Rep. Gary Ackerman takes on the SECThis is what I want my congressman to say. You rock Gary. <br /><br /><br /><object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/FOKSkaQoF_I&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1"></param><param name="allowFullScreen" value="true"></param><embed src="http://www.youtube.com/v/FOKSkaQoF_I&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-63812730805219580432009-02-06T19:17:00.000-08:002009-02-06T19:23:42.040-08:00Moody's to review CMBS<strong>Moody’s to Review $302.6 Billion in Commercial Debt (Update2)</strong><br /><a href="mailto:?Subject=Bloomberg%20news:%20%20Moody’s" 26refer="'%26sid%3Davp8qF3bDuyc" body="%20Moody’s">Email</a> <a onclick="javascript:window.open('/apps/news?pid=20670001&refer=&sid=avp8qF3bDuyc','my_new_window','scrollbars=yes,resizable=yes,width=610,height=670')" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aUxk2VzFAWjU#">Print</a> <a onclick="setStyleById('article', 'fontSize', '9pt');" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aUxk2VzFAWjU#">A</a> <a onclick="setStyleById('article', 'fontSize', '11pt');" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aUxk2VzFAWjU#">A</a> <a onclick="setStyleById('article', 'fontSize', '13pt');" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aUxk2VzFAWjU#">A</a><br />By Sarah Mulholland<br /><br />Feb. 5 (Bloomberg) -- Moody’s Investors Service is reviewing the ratings of <strong>$302.6 billion</strong> in commercial mortgage-backed securities as real-estate values drop and property owners fall behind on payments.<br /><br /><strong>The review encompasses 52 percent of outstanding U.S. commercial mortgage-backed debt ranked by Moody’s, the New York- based ratings company said today in a statement. </strong>The ratings of so-called senior and mezzanine AAA bonds, the top two classes of CMBS accounting for about 72 percent of the securities being reviewed, probably won’t be affected, Moody’s said.<br /><br />The U.S. recession is crimping consumer spending and hurting business growth, making it harder for commercial property owners to make their payments. Should Moody’s decide to cut the ratings, investors including banks and insurers may need to sell CMBS holdings to maintain required levels of capital.<br /><br />“Property values declined sharply in 2008, and we anticipate further declines over the next 12 to 24 months,” Moody’s analyst <a href="http://search.bloomberg.com/search?q=Nick+Levidy&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Nick Levidy</a> said in the statement. “Delinquencies on CMBS loans are also on the rise, and we expect the pace to accelerate as macroeconomic pressures take a toll on property cash flows.”<br /><br />Moody’s said it may downgrade the lowest levels of the securities by an average of four to five levels. Many of the securities are trading at levels that already suggest their ratings were lowered.<br /><br />The gap, or spread, on commercial mortgage-backed bonds relative to benchmark interest rates has soared in the past year on concern that defaults will rise. Top-rated commercial real estate securities are trading at about 10.3 percentage points more than the swap rate, compared with 1.8 percentage points a year ago, Bank of America Corp. data show. The swap rate is currently 3.154 percent.<br /><br />Fait Accompli<br />“This was already a fait accompli in the market,” said <a href="http://search.bloomberg.com/search?q=David+Castillo&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">David Castillo</a>, a senior trader of structured-finance bonds at Further Lane Securities in San Francisco.<br /><br />Sales of the securities plummeted to $12.2 billion last year, compared with a record $237 billion in 2007, according to JPMorgan Chase & Co. data.<br /><br />To contact the reporter on this story: <a href="http://search.bloomberg.com/search?q=Sarah+Mulholland&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Sarah Mulholland</a> in New York at <a href="mailto:smulholland3@bloomberg.net" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">smulholland3@bloomberg.net</a> Last Updated: February 5, 2009 16:09 EST<br /><br /><i> Here we go. Review, Downgrade, Markdown, Bailout. Yee haw! The banks are insolvent dammit. Nationalize them and get this over with. Ofcourse game theory dictates that uncertainty on one hand makes things worse for the economy and on the other hand makes Treasury debt popular. Right now, the Treasury is focused on raising money for the Fed at cheap rates and therefore they'll try to keep certainty from coming back into the market. For now. At some point Obama has to make an executive decision here and say enough with the uncertainty - the damage that is being caused to "animal spirits" in the economy is unacceptable. </i>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-72757165006800175612009-02-02T11:43:00.000-08:002009-02-02T11:47:04.389-08:00<div><br /></div><div><span class="Apple-style-span" style="font-family: 'Times New Roman'; "><div style="background-color: white; font: normal normal normal 83.5%/normal Georgia, serif; margin-left: 10px; margin-right: 10px; "><div class="header" style="float: left; color: rgb(102, 102, 102); font-family: arial, Helvetica, sans-serif; font-size: 74.8%; width: 100%; "><div class="left" style="float: left; width: 410px; "><a href="http://www.nytimes.com/" style="color: rgb(0, 0, 102); "><img src="http://graphics8.nytimes.com/images/misc/nytlogo153x23.gif" align="left" alt="The New York Times" border="0" hspace="0" vspace="0" /></a><nyt_reprints_form><form name="cccform" action="https://s100.copyright.com/CommonApp/LoadingApplication.jsp" target="_Icon"></form></nyt_reprints_form><div class="printInfo" style="clear: left; padding-top: 8px; padding-bottom: 5px; "><br /></div></div><div class="right" style="float: right; width: 260px; text-align: right; margin-right: 0px; "><table width="80%" cellspacing="0" cellpadding="0" border="0" style="margin-bottom: 3px; margin-top: 3px; float: right; width: 260px; text-align: right; margin-right: 0px; "><tbody><tr valign="bottom"><td><div style="margin-right: 2px; "><div align="right"><img src="http://graphics8.nytimes.com/ads/spacer.gif" alt="" width="1" height="1" border="0" /></div></div></td></tr></tbody></table></div></div><div class="timestamp" style="margin-top: 15px; font-size: 10pt; font-weight: bold; ">February 2, 2009</div><div class="kicker" style="font-weight: bold; color: rgb(102, 102, 102); text-transform: uppercase; margin-top: 15px; "></div><h1 style="font-size: 180%; font-weight: bold; margin-top: 3px; "><nyt_headline version="1.0" type=" ">Big Risks for U.S. in Trying to Value Bad Bank Assets</nyt_headline></h1><nyt_byline version="1.0" type=" "><div class="byline" style="font-weight: bold; font-size: 10pt; ">By <a href="http://topics.nytimes.com/top/reference/timestopics/people/b/vikas_bajaj/index.html?inline=nyt-per" title="More Articles by Vikas Bajaj" style="color: rgb(0, 0, 102); ">VIKAS BAJAJ</a> and <a href="http://topics.nytimes.com/top/reference/timestopics/people/l/stephen_labaton/index.html?inline=nyt-per" title="More Articles by Stephen Labaton" style="color: rgb(0, 0, 102); ">STEPHEN LABATON</a></div></nyt_byline><nyt_text><div id="articleBody"><p style="color: black; font-size: medium; line-height: 24px; ">As the Obama administration prepares its strategy to rescue the nation’s banks by buying or guaranteeing troubled assets on their books, it confronts one central problem: How should they be valued?</p><p style="color: black; font-size: medium; line-height: 24px; ">Not just billions, but hundreds of billions of taxpayer dollars are at stake.</p><p style="color: black; font-size: medium; line-height: 24px; ">The Treasury secretary, <a href="http://topics.nytimes.com/top/reference/timestopics/people/g/timothy_f_geithner/index.html?inline=nyt-per" title="More articles about Timothy F. Geithner." style="color: rgb(0, 0, 102); ">Timothy F. Geithner</a>, is expected to announce details of the new plan within weeks. Administration and Congressional officials say it will give the government flexibility to buy some bad assets and guarantee others in an effort to have a broad impact but still tailor the aid for different institutions.</p><p style="color: black; font-size: medium; line-height: 24px; ">But getting this right will not be easy. The wild variations on the value of many bad bank assets can be seen by looking at <span class="Apple-style-span" style="font-weight: bold;">one mortgage-backed bond recently analyzed by a division of </span><a href="http://topics.nytimes.com/top/news/business/companies/standard_and_poors/index.html?inline=nyt-org" title="More articles about Standard & Poor's." style="color: rgb(0, 0, 102); "><span class="Apple-style-span" style="font-weight: bold;">Standard & Poor’s</span></a><span class="Apple-style-span" style="font-weight: bold;">, the credit rating agency.</span></p><p style="color: black; font-size: medium; line-height: 24px; "><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="font-style: italic;">The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors.</span></span></p><p style="color: black; font-size: medium; line-height: 24px; ">The bond analyzed by S.& P. is just one of thousands that the government might buy or guarantee should it go forward with setting up a “bad bank” that would acquire $1 trillion or more of toxic assets from banks.</p><p style="color: black; font-size: medium; line-height: 24px; ">The idea is that, free from the burden of carrying these bad assets, banks would start lending again and bolster the faltering economy. The bad bank set up by the government would, over time, sell the assets and recover some or most of what it had paid.</p><p style="color: black; font-size: medium; line-height: 24px; ">While the government is considering several approaches to helping the banks, including more capital injections, buying or insuring toxic assets is likely to be a centerpiece. Determining the right price for these assets is crucial to success. Placing too low a value would force institutions selling and others holding similar investments to register crushing losses that could deplete their capital and make it harder for them to increase lending.</p><p style="color: black; font-size: medium; line-height: 24px; ">But inflated values would bail out the companies, their shareholders and executives at the expense of taxpayers, who would swallow the losses if the government could not recoup what it had paid.</p><p style="color: black; font-size: medium; line-height: 24px; "><span class="Apple-style-span" style="font-style: italic;"><span class="Apple-style-span" style="font-weight: bold;">Some critics of the plan warn that the government should not buy the assets, because banks will try to get too high a price and leave taxpayers holding the bag.</span></span></p><p style="color: black; font-size: medium; line-height: 24px; ">“To date, the banks have stuck their heads in the sand,” said Lynn E. Turner, a former chief accountant for the Securities and Exchange Commission, “and demanded that they be paid the price of good apples for bad apples.”</p><p style="color: black; font-size: medium; line-height: 24px; ">But many believe that, given the depth of the problem and the fact that it keeps getting worse, the government has little choice.</p><p style="color: black; font-size: medium; line-height: 24px; ">Finance experts from Wall Street and academia are advising the administration on other options. To sidestep the thorny valuation problem, some have suggested that the bad bank acquire only assets that have already been marked down significantly and guarantee other assets, but officials would have just as difficult a task in determining how much to charge for insuring risky assets.</p><p style="color: black; font-size: medium; line-height: 24px; ">Economists predict that the cost of the program will most likely exceed the $350 billion remaining in the $700 billion Troubled Assets Relief Program that Congress approved in October.</p><p style="color: black; font-size: medium; line-height: 24px; "><span class="Apple-style-span" style="font-style: italic;"><span class="Apple-style-span" style="font-weight: bold;">They say the Obama administration may need upwards of $1 trillion in additional aid for banks </span></span>— on top of the more than $800 billion the administration is seeking in an economic stimulus measure moving through Congress.</p><p style="color: black; font-size: medium; line-height: 24px; ">Many in Washington question whether the rescue has achieved its goal of stabilizing the financial markets. A <a href="http://www.gao.gov/products/GAO-09-296" style="color: rgb(0, 0, 102); ">report</a> by the Government Accountability Office on Friday concluded that whether the bailout program had been effective might never be known.</p><p style="color: black; font-size: medium; line-height: 24px; ">“While the package helped avoid a financial collapse, many are frustrated by the results — and rightfully so,” <a href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per" title="More articles about Barack Obama." style="color: rgb(0, 0, 102); ">President Obama</a> said in his<a href="http://www.whitehouse.gov/blog_post/moving_forward/" style="color: rgb(0, 0, 102); ">weekly address</a> on Saturday. “Too often taxpayer dollars have been spent without transparency or accountability. Banks have been extended a hand, but homeowners, students, and small businesses that need loans have been left to fend on their own.”</p><p style="color: black; font-size: medium; line-height: 24px; ">Mr. Obama and many lawmakers have expressed anger that banks that received the first batch of aid money do not appear to have increased their lending significantly, even as some firms have spent billions on bonuses, corporate jets and other perks. In two weeks the House will hold a hearing to ask chief executives of the eight largest banks about their spending controls.</p><p style="color: black; font-size: medium; line-height: 24px; ">As early as this week, the Treasury Department may impose new limits on the <a href="http://topics.nytimes.com/top/reference/timestopics/subjects/e/executive_pay/index.html?inline=nyt-classifier" title="More articles about executive pay." style="color: rgb(0, 0, 102); ">executive pay</a> of companies receiving financial assistance. The Oversight Panel created by Congress to monitor the program is also expected to publish a report this week looking at whether the government paid too much to the large banks that they have provided with assistance.</p><p style="color: black; font-size: medium; line-height: 24px; ">A frequent refrain in Washington and on Wall Street is that there are no current market prices for toxic securities. But people who buy and sell these investments say that is a simplistic reading of the problem. They say most kinds of securities can be valued and are being traded, but trading has slowed as sellers and buyers disagree about what that the price should be.</p><p style="color: black; font-size: medium; line-height: 24px; ">The value of these securities is based on the future cash flow they provide to investors. To determine that, traders have to make assumptions about the housing market and the economy: How high will the unemployment rate go in the coming years? How many borrowers will default? What will homes be worth?</p><p style="color: black; font-size: medium; line-height: 24px; ">The Standard & Poor’s group, Market, Credit and Risk Strategies, which operates independently from the company’s credit ratings business, has been studying troubled securities for investors and banks. The bond that is trading at 38 cents provides a vivid illustration of the dilemma in valuing these assets.</p><p style="color: black; font-size: medium; line-height: 24px; ">The bond is backed by 9,000 second mortgages used by borrowers who put down little or no money to buy homes. Nearly a quarter of the loans are delinquent, and losses on defaulted mortgages are averaging 40 percent. The security once had a top rating, triple-A.</p><p style="color: black; font-size: medium; line-height: 24px; ">Michael G. Thompson, a managing director at the S.& P. group, says his computer models can easily calculate what the bond is worth under different situations. “This is not rocket science, this is straight bond math,” he said. But determining what the future holds is much harder. “We are not masters of the universe who can predict the macroeconomic environment,” he added</p><p style="color: black; font-size: medium; line-height: 24px; ">Some would-be buyers of these assets fear that a deep recession could drive up default rates and push down home prices much further. They also worry that a cataclysm like the failure of a big bank could send prices tumbling again, just as the collapse of <a href="http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html?inline=nyt-org" title="More articles about Lehman Brothers." style="color: rgb(0, 0, 102); ">Lehman Brothers</a>did in September. Others see no reason to bid up prices because those who need to sell are desperate.</p><p style="color: black; font-size: medium; line-height: 24px; ">Big banks and other owners of mortgage investments have argued that the low market prices reflect fire sales. Many have classified such securities as level-three assets, for which accounting rules allow them to determine values using computer models rather than the marketplace. Mr. Thompson estimates that at the end of September financial firms had $600 billion in such hard-to-value assets.</p><p style="color: black; font-size: medium; line-height: 24px; ">But critics like Mr. Turner say that the banks’ accounting for these assets cannot be trusted because they have an incentive to use optimistic assumptions.</p><p style="color: black; font-size: medium; line-height: 24px; ">In some instances, the government has guaranteed losses on certain assets for big, systemically important companies like <a href="http://topics.nytimes.com/top/news/business/companies/citigroup_inc/index.html?inline=nyt-org" title="More information about Citigroup Incorporated" style="color: rgb(0, 0, 102); ">Citigroup</a> and<a href="http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html?inline=nyt-org" title="More information about Bank of America Corp" style="color: rgb(0, 0, 102); ">Bank of America</a>.</p><p style="color: black; font-size: medium; line-height: 24px; ">Policy makers have found such arrangements appealing because they do not require upfront payments and they can be customized for each bank, Douglas J. Elliott, a fellow at the <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/b/brookings_institution/index.html?inline=nyt-org" title="More articles about Brookings Institution" style="color: rgb(0, 0, 102); ">Brookings Institution</a>, wrote in a <a href="http://www.brookings.edu/papers/2009/0129_banks_elliott.aspx" style="color: rgb(0, 0, 102); ">recent paper</a>.</p><p style="color: black; font-size: medium; line-height: 24px; ">Still, government guarantees need to be based on sound valuations, Mr. Elliott and others say. If the government underestimates the risks of default, taxpayers could eventually lose tens of billions of dollars. The cost of insuring such assets in the private market is often several times greater than the price the government is charging banks.</p><p style="color: black; font-size: medium; line-height: 24px; ">Whatever approach the Obama administration takes, investors and policy makers say it should provide more and clearer information about the health of banks and the risks that the government is taking.</p><p style="color: black; font-size: medium; line-height: 24px; ">Many analysts do not trust what they are told about the quality of the securities and loans held by banks and other financial firms. Most banks provide only a very general description of their holdings, because they consider the information privileged.</p><p style="color: black; font-size: medium; line-height: 24px; ">But the government, using its power as a big investor, could compel the banks to divulge more specific data, without giving away the names of individual <a href="http://topics.nytimes.com/your-money/investments/stocks-and-bonds/index.html?inline=nyt-classifier" title="More articles about stocks and bonds." style="color: rgb(0, 0, 102); ">bonds</a> or loans, analysts said. The market could then do its own analysis on what the assets are worth.</p><p style="color: black; font-size: medium; line-height: 24px; ">“At least it would give the government one objective measure of the value of these assets,” said Anthony Lembke, co-head of investments at MKP Capital Management, a hedge fund firm that is a big investor in mortgages. “In the absence of transparency and clarity, investors are going to assume a value that will be conservative and then add a risk premium.”</p><nyt_update_bottom></nyt_update_bottom></div></nyt_text><br /><center><nyt_copyright><div id="footer" style="clear: both; padding-top: 5px; padding-bottom: 1px; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: rgb(185, 185, 185); min-width: 768px; background-color: rgb(229, 229, 229); font-family: Arial, Helvetica, 'sans serif'; font-size: 76%; "><a href="http://www.nytimes.com/ref/membercenter/help/copyright.html" style="color: rgb(0, 0, 102); ">Copyright 2009</a> <a href="http://www.nytco.com/" style="color: rgb(0, 0, 102); 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color: rgb(35, 31, 32); font-family: Arial; font-size: 14px; "><strong class="title" style="font: normal normal bold 17px/normal Arial; color: rgb(111, 184, 53); display: block; padding-top: 8px; padding-right: 0px; padding-bottom: 5px; padding-left: 0px; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; text-transform: uppercase; ">NEWS</strong><div class="add_tools" style="float: right; margin-top: -25px; margin-right: 0px; margin-bottom: 7px; margin-left: 0px; "><a href="http://www.russiatoday.com/send_to_friend/news/36554" onclick="new Limb.Window(this.href, "send_to_friend_popup", {width: 450, height: 400, noautoresize: true}); return false;" style="color: rgb(0, 0, 0); font: normal normal normal 11px/normal Arial; text-decoration: underline; ">Send to friend</a> | <a href="javascript:window.print()" style="color: rgb(0, 0, 0); font: normal normal normal 11px/normal Arial; text-decoration: underline; ">Print version</a></div><div class="image_caption" style="font: italic normal normal 11px/normal Arial; float: right; margin-top: 0px; margin-right: 0px; margin-bottom: 15px; margin-left: 10px; clear: right; width: 220px; "><img src="http://www.russiatoday.com/media/news/0/4980a7f06db5a.jpg" alt="Putin's speech at Davos World Economic Forum" style="display: block; margin-bottom: 5px; " /><i style="margin-top: 0px; margin-right: 5px; margin-bottom: 0px; margin-left: 5px; display: block; ">AFP Photo / Fabrice Coffrini</i></div><span class="date" style="font: normal normal normal 10px/normal Arial; color: rgb(35, 31, 32); ">January 28, 2009, 21:40</span><h1 style="font: normal normal bold 20px/normal Arial; color: rgb(0, 0, 0); padding-top: 0px; padding-right: 0px; padding-bottom: 5px; padding-left: 0px; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">Putin's speech at Davos World Economic Forum</h1><i class="annotation" style="font: italic normal bold 13px/normal Arial; display: block; margin-bottom: 15px; ">For the first time in the history of the Forum Russian politician Prime Minister Vladimir Putin will deliver the key-note speech.</i><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 25px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; ">Esteemed participants of the World Economic Forum,<br /><br />Ladies and gentlemen,<br /><br />I am grateful to the organisers of the Forum for this opportunity to share with you my considerations about what is happening in the world economy today, and to tell you about our plans and proposals. <br /><br />The world today has encountered the first really global economic crisis. Moreover, the speed at which the crisis manifestations are unfolding is breaking all records.<br /><br />The current situation is often compared to the Great Depression at the end of the ‘20s and beginning of the ‘30s in the last century. To be sure, the parallels are actually visible.<br /><br />Yet, there are principle differences. In the epoch of globalisation, the crisis has affected everyone – all countries irrespective of their political or economic systems. All of them are in the same boat. <br /><br />There is, I believe, quite a well-known concept such as “the perfect storm.” That is when the unleashed natural elements focus in one point of the ocean and continue to build up their destructive force manifold. The current crisis looks precisely like “the perfect storm.”<br /><br />Responsible and well-versed people must prepare for such a storm. But even so, it comes unexpectedly. And that’s what has happened this time. The crisis was actually hanging in midair. However, the majority who were trying to get a bigger piece of the pie – a billion or one dollar – did not wish to notice the rising tidal wave. <br /><br /><span class="Apple-style-span" style="font-weight: bold;">During the past several months, practically any statement that was made on the subject of the crisis began with rebukes addressed to the USA. I am not going to do that. </span><br /><br /><span class="Apple-style-span" style="font-weight: bold;">I would only like to remind you that only a year ago, from this rostrum, we heard the words of American representatives about the fundamental stability and cloudless prospects of the US economy. But today, the pride of Wall Street – the investment banks – have practically stopped existing. For the past year, they have had to acknowledge losses far exceeding their profits for the past quarter of a century. This example alone reflects the real state of affairs better than any criticism. </span><br /><br />The time has come to see the light. We must calmly, and without gloating, try to look into the deep-lying causes of what has happened and to try to look into the future. <br /><br />As we see it, the crisis was triggered by a combination of several factors simultaneously.<br /><br />This is the collapse of the existing financial system. It is the result of poor quality regulation. And as a result of this, huge risks were overlooked. <br /><br />This has been prompted by colossal imbalances that piled up over the recent years. First of all, this concerns imbalances between financial operations and the fundamental value of assets. This is the result of the increasing burden on international credits and the sources providing them. <br /><br /><span class="Apple-style-span" style="font-weight: bold;">There was a serious malfunction in the very system of global economic growth – namely, when one regional center endlessly prints money and reaps the benefits; whereas, another center produces not very costly commodities and saves money that other states have printed. </span><br /><br />To this, I can add that <span class="Apple-style-span" style="font-weight: bold;">in such a system, whole regions of the world, including Europe, found themselves on the periphery of global economic processes.</span> <span class="Apple-style-span" style="font-weight: bold;">And this means they were outside the framework of the key economic and financial decisions.</span><br /><br />What is more, <span class="Apple-style-span" style="font-weight: bold;">the benefits that were generated were distributed very disproportionately. In fact, such disproportions could be seen between layers of the population in individual countries and even in highly developed countries,</span> as well as between different countries and regions of the world. <br /><br />For a significant part of mankind, comfortable housing, education and qualitative medical care are still inaccessible. And the world upsurge of recent years has not radically changed this situation.<br /><br />And last, but not least – this crisis was triggered by elevated expectations. The appetites of corporations in regard to growing demand were unjustifiably encouraged. The race of stock market indices and capitalisation obviously began to dominate over raising productivity and the real efficiency of companies.<br /> <br />Unfortunately, elevated expectations existed not only in the business medium. They prompted a rapid growth of standards of individual consumption – first of all, in the developed countries. And this growth, we must directly admit, was not backed up with real possibilities. <br /><br />This was a well-being that was not earned. This was a well-being in debts that will have to be paid off by future generations.<br /><br />Sooner or later, this “pyramid of expectations” had to come crashing down – which is actually something that we have witnessed with our own eyes.<br /><br />* * *<br /><br />Dear colleagues,<br /><br />It is common knowledge that during times of crises there is a strong temptation to seek simple and popular recipes. But if one treats only the symptoms of an illness, then in the final count, one can receive much graver complications. <br /><br />Understandably, the governments of all countries, the leaders of business must act with maximal resoluteness. Nonetheless, even in these force majeure circumstances, it is important to avoid taking steps for which we may be sorry in the future. <br /><br />That is why I would like to begin with what in our opinion, should not be done. And what we in Russia intend to refrain from doing. <br /><br /><span class="Apple-style-span" style="font-weight: bold;">One must not allow oneself to skid down to isolationism and unbridled economic egoism.</span> At the “Big 20” Summit, the leaders of the foremost economies of the world agreed to refrain form setting up barriers in the way of world trade and movement of capital. Russia shares these principles. <br /><br /><span class="Apple-style-span" style="font-weight: bold;">Even if amid crisis a certain strengthening of protectionism becomes inevitable, we will still need to keep the sense of proportion. </span><br /><br /><span class="Apple-style-span" style="font-weight: bold;">The second possible mistake would be excessive interference into the economic life of the country. And the absolute faith into the all-mightiness of the state. <br /></span><br />Of course, the role of the state becomes more direct during crises – it is a natural response to the faults of the market. However, instead of improving market mechanisms there is always a temptation to enlarge the sphere of the immediate interference of the state in the economy. <br /><br />The flip side of the anti-crisis measures in almost every country is the concentration of the excessive assets in the hands of the state. <br /><br />During the time of the Soviet Union the role of the state in economy was made absolute, which eventually lead to the total non-competitiveness of the economy. That lesson cost us very dearly. I am sure nobody would want history to repeat itself. <br /><br />We should also be aware that for during the last months, <span class="Apple-style-span" style="font-weight: bold;">we have been witnessing the washout of the entrepreneurship spirit. That includes the principle of the personal responsibility -- of a businessman, an investor or a share-holder - for his or her own decisions.</span> There are no grounds to suggest that by putting the responsibility over to the state, one can achieve better results. <br /><br />Another thing – handling crisis must not turn into financial populism, into rejecting a responsible macro-economic policy. <span class="Apple-style-span" style="font-weight: bold;">Unreasonable expansion of the budget deficit, accumulation of the national debt -- are as destructive as an adventurous stock market game.</span><br /><br />* * *<br /><br />Dear Ladies and Gentlemen,<br /><br />Unfortunately, we are still far from fully fathoming the real scale of the current crisis. One thing though is obvious: the intensity and the continuance of the recession will largely depend on how precisely we will define the direction of our actions; and how coordinated and professional we shall be. <br /><br />The first step that we think is essential to take in the nearest future is to literally and figuratively draw the line under our past. It is show-down time. <span class="Apple-style-span" style="font-weight: bold;">We need to figure out the real state of affairs. </span><br /><br />The businesses need to write off their irrecoverable debts and “bad” assets. Yes, it is a very painful and unpleasant process. And not everyone does it willingly, having fears for their capitalisation, bonuses or reputation. <br /><br /><span class="Apple-style-span" style="font-weight: bold;">But, avoiding clearing the balance means “preserving” and prolonging the crisis. I think that the writing-off mechanism must be effective and fit the realities of today’s economy. </span><br /><br />Secondly, together with clearing the balance, <span class="Apple-style-span" style="font-weight: bold;">it is time to go free from virtual money, made-up reports and doubtful ratings.</span> The understanding of the health of the world economy and the real state of things with corporations must not be made vague by illusions. Even if the authors of those illusions sit in the world’s largest audit and consulting agencies. <br /><br /><span class="Apple-style-span" style="font-weight: bold;">The essence of our suggestion is that the principle of fundamental asset cost would be returned and put as the basis for the reform of audit, accounting and rating system standards.</span> That is, the evaluation of this or that business must be built upon its capacity to generate the added value. <span class="Apple-style-span" style="font-weight: bold;">We think that the economy of the future must be the economy of real values.</span> How to get there? – That is the question put forward for all of us. Let’s work on it together. <br /><br />Thirdly, <span class="Apple-style-span" style="font-weight: bold;">the excessive dependence on what is basically the only reserve currency is dangerous for the world economy. </span>So it would be reasonable to stimulate a process of getting a number of strong reserve currencies in the future. It is time to start a specific dialogue on how to make the transition into a new model - smooth and irreversible. <br /><br /><span class="Apple-style-span" style="font-weight: bold;">Fourthly, most countries keep their international reserves in foreign currencies. And they would want to be confident of their security. In their turn, the emitters of the reserve and accounting currencies are objectively interested to see that their money is in demand in other countries. </span><br /><br />That is, that mutual interest and mutual dependence are clearly in place. <br /><br />It is of vital importance that the countries responsible for the world’s reserve currencies offer more transparency for their credit and monetary policies. <br /><br />These countries should take up a commitment to be guided in those policies by internationally adopted rules of macroeconomic and financial security. </p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 25px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><span class="Apple-style-span" style="font-weight: bold;">And demand for such committed approach is pressing.</span></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 25px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; ">But beyond global finances, there are many other issues that are calling for a solution.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 25px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><span class="Apple-style-span" style="font-weight: bold;">The unipolar pattern of the world economy that is completely outdated by now must be replaced by a new system based on cooperation of several big centres. </span><br /><br />But to avoid chaos and unpredictable behaviour in a multipolar world, we need to bolster the network of global regulators – working in full compliance with international law and multilateral agreements. This is why we are calling for a re-think of the role of leading international organisations and institutions.<br /><br />I am convinced that we are able to build a more fair and effective economic architecture for the whole world. However, due to time restraints it’s impossible to outline all the details of the proposed structure in this short speech.<br /><br />Still, it’s obvious that in such a system all the countries must have guaranteed access to the resources they need for life, also access to new technologies and resources for further development. The world must work out guarantees that would allow minimising the risks of a new economic crisis.<br /><br />We need to continue the discussion of all these issues, including debates at such venues as the G 20 meeting in London.<br /><br />The decisions that we are now making must not only respond to the current situation, but also address the demands of a new, post-crisis world.<br /><br />While struggling its way out of the crisis, the global economy may face a shortage of energy resources. There will simply be no juice for the future growth.<br /><br />Three years ago Russia held the G8 summit focused on global energy security. We called for mutual responsibility on the part of suppliers, consumers and transit states. I believe it’s high time for action. We need to launch a system of responsibility that would really work.<br /><br />The only way to ensure a true energy security for the whole world is to forge an interdependency, including an exchange of assets, – but without discrimination or double standards. Such interdependency is something that is definite to bring about a genuine mutual responsibility.<br /><br />Unfortunately, the existing energy charter has failed to become a working tool that could be used to solve problems.<br /><br /><span class="Apple-style-span" style="font-weight: bold;">I propose to work out a new international legal framework for energy security.</span> If implemented, our initiative could have the same economic impact as the Treaty establishing the European Coal and Steel Community. That is, we will be able to unite consumers and producers in a common energy partnership that would be real and based on clear-cut international rules.<br /><br />We all realise that sharp and abrupt price fluctuations for energy resources are a strong factor that destabilises the world economy. The current price collapse could lead to the increase in non-expedient consumption of resources.<br /><br />On the one hand, investment into energy saving projects and alternative energy sources will decline. But on the other hand, oil companies will cut the spending for the oil extraction – inevitably prompting a fall. That, in its turn, will again lead to skyrocketing prices and a new crisis.<br /><br /><span class="Apple-style-span" style="font-weight: bold;">We must get back to an averaged price based on the balance of demand and supply. We need to make our market clear of speculations brought about by secondary financial instruments.</span><br /><br />One of the key problems is the safe transit of energy. There are two ways to solve the issue and both of them must be used.<br /><br />The first way is transition to universally recognised market principles of tariffs formation for transit services. They can be fixed in international legal documents.<br /><br /><span class="Apple-style-span" style="font-weight: bold;">The second way is development and diversification of transportation routes for energy resources. We have been actively working in this direction for a long time.</span><br /><br />Only in recent years we fulfilled such projects as gas pipelines “Yamal-Europe” and “Blue Stream”. Life has proved their urgency and demand. <br /><br />I am convinced that such projects as “South Stream” and “Nord Stream” are equally vital for the energy security of Europe. Their total capacity is about 85 billion cubic metres of gas a year. <br /><br />“Gazprom” together with its partners, the companies “Shell”, “Mitsui”, “Mitsubishi” will soon start operating facilities for liquefying and transportation of natural gas produced in the area of Sakhalin Island. It is also Russia’s contribution to the global system of energy security.<br /><br />We have been developing the infrastructure of our oil pipelines. The first phase of constructing the Baltic pipeline system has already been completed.<br /><br />BPS-1 provides produces up to 75 million tonnes of oil a year. Moreover, it directly delivers it to consumers through our ports in the Baltic Sea. In this way, transit risks are absolutely eliminated. <br /><br />At present the work for designing and construction of BPS-2 is under way. Its oil carrying capacity is 50 million tonnes a year. <br /><br /><span class="Apple-style-span" style="font-weight: bold;">We intend to develop transport infrastructure in all directions. </span>The first stage of the Eastern Siberia – Pacific Ocean” oil pipeline is nearing completion. Its final point will be a new oil port in the Kozmin Bay and a refinery in the Vladivostok area. <span class="Apple-style-span" style="font-weight: bold;">In the future, in parallel to the pipeline, a gas pipeline will be laid towards the Pacific Ocean and China.<br /></span><br />* * *<br /><br />I would also like to mention the effect the global crisis had on the Russian economy. It has affected us in a most serious way.<br /><br />But nevertheless, but unlike many countries, we have accumulated substantial resources. <br /><br />And they expand our possibilities to assertively pass through the period of global instability.<br /><br />The crisis has exposed the challenges we have. These are excessive orientation of export and the economy, in general, on raw materials and a weak financial market. There is a greater demand for the development of basic market structures, first of all, the entire competitive environment. <br /><br />We were aware of these problems and have worked for their consistent solutions. The crisis just forces us to more actively move ahead according to the declared priorities without changing the strategy itself, whose essence is the qualitative renewal of Russia within the next 10-12 years. <br /><br />Our anti-crisis policy is directed to internal demand support, social security of citizens and creation of new working places. Like many other countries, we are reducing taxes on production, investing money in the economy. We are optimising state expenses. <br /><br />I’d like to reiterate that along with the measures of first response, we are elaborating a platform for post-crisis development. <br /><br />We are confident that the leaders of world economy rehabilitation will become those who will create attractive conditions for investments already today as well as those who will manage to preserve and strengthen the sources of strategically important resources. <br /><br />Therefore, the creation of a favourable entrepreneur ambience and development of competition, creation of a sustainable credit system based on internal resources and realisation of transport and other infrastructural projects are among our priorities. <br /><br />At present, Russia is already one of the biggest exporters of several food products. And our input to provision of <span class="Apple-style-span" style="font-weight: bold;">global food security </span>will only increase. <br /><br />We will also actively develop innovative sectors of the economy, first of all, those where Russia has competitive advantages in outer space, nuclear energy and aviation. In these directions, we have already been actively developing technological cooperation with other countries. The field of energy saving can also become a prospective subject for mutual cooperation. The increase of energy efficiency is just considered to be a key factor of energy security and future development.<br /><br />We will continue reforms in Russia’s energy sector. We are implementing a new system of pricing for domestic consumers which is based on economically justified tariffs. This is important, among other things, to promote energy conservation. We will continue with our policy of being open to foreign investment.<br /><br />I think that the 21st-century economy is an economy of people, not of factories. The intellectual aspect in the global economic development has grown immensely. That’s why we plan to concentrate on creating additional opportunities for our people to realise their potential.<br /><br />Even today, we are a well-educated nation. But we need Russian people to get the best and the most modern education, to obtain professional skills which will be in great demand in the world today. Thus, we will develop educational programs for key professions in Russia with utmost vigour.<br /><br />We will expand the practice of student exchange and organise internships for our students in leading universities and most advanced companies. We will create conditions for the best scientists, professors and teachers—regardless of their ethnic background and nationality—to desire to work in Russia.<br /><br />History gives our country a unique chance. The way events unfold requires that we reform our economy and modernise our social sphere. And we are not going to miss this chance. Russia should come out of this crisis renewed, more powerful and more competitive.<br /><br />* * *<br /><br />Now I’d like to say a few words about problems that are not specifically economic—and yet, they are quite urgent under current conditions.<br /><br />Unfortunately, more and more often we hear that increasing military spending will help solve today’s social and economic problems. The logic here is quite simple. <span class="Apple-style-span" style="font-weight: bold;">Additional allocations for military needs create new jobs.</span><br /><br />For reference:<br /><span class="Apple-style-span" style="font-weight: bold;">The growth of military spending:<br />USA—$529 billion in 2006, $555 billion in 2007, and $583 billion in 2008. Experts expect $606 billion in 2009.<br />Great Britain—£27 billion in 2006, £31 billion in 2007, £34 billion in 2008, and £35.2 billion planned for 2009.<br />Germany—€23 billion in 2006, €24 billion in 2007, and €25 billion in 2008.<br />China—$38 billion in 2006, $44 billion in 2007, $58 billion in 2008, and a 17% increase in 2009 (around $66 billion).<br />Georgia (according to the Stockholm International Peace Research Institute)—$49 million in 2002, $80 million in 2004, $362 million in 2006, $592 million in 2007, and $1.104 billion in 2008.</span><br /><br />At a glance, it seems to be merely a method to fight the crisis and unemployment. Perhaps, in the short run, such a measure may yield some results. <span class="Apple-style-span" style="font-weight: bold;">But in reality, instead of solving the problem, militarisation pushes it to a deeper level. It draws away from the economy immense financial and material resources, which could have been used much more efficiently elsewhere.</span><br /><br />I am confident that if we limit our military spending, at the same time strengthening global stability and security, this will definitely produce serious economic dividends as well.<br /><br />I hope this point of view will prevail in the world. On our side, we are ready to work actively in the sphere of disarmament.<br /><br />I would also like to draw your attention to the fact that the economic crisis may aggravate the negative tendencies that are present in global politics. The world has recently been confronted with an unparalleled growth of aggressive manifestations—Georgia’s adventure in the Caucasus, terrorist acts in India and the escalation of violence in the Gaza Strip. On the face of it, these events are not directly related, but their development reveals some common aspects. <br /><br />It is above all <span class="Apple-style-span" style="font-weight: bold;">the inability of existing international structures to offer constructive resolutions to regional conflicts and work towards achieving positive results in settling inter-ethnic and interstate contradictions.</span> Essentially, multilateral political mechanisms have yielded as little effect as the institutions of financial and economic regulation. <br /><br /><span class="Apple-style-span" style="font-weight: bold;">Let us be frank: provoking military-political instability and other regional conflicts is also a convenient way of deflecting people’s attention from mounting social and economic problems. Regrettably, further attempts of this kind cannot be ruled out. </span><br /><br />We will have to make the system of international relations much more effective, more secure and stable if we are to prevent this course of events.<br /><br />There are quite a few pressing issues on the global agenda where the interests of the majority of countries objectively concur. These include the need to overcome the world economic crisis, joint efforts to reform international financial institutions, improve mechanisms of regulation and achieve reliable security in the sphere of energy and diffuse the world’s food crisis, something that has not yet receded into the background. <br /><br />Russia is ready to make its contribution to the solution of top-priority tasks confronting the international community. We hope that all of our partners in Europe, Asia, America and elsewhere - <span class="Apple-style-span" style="font-weight: bold;">I also have in mind the new US Administration, and we wish it success - will display an interest in joint and constructive work. </span><br /><br />Ladies and gentlemen,<br /><br />The set of problems facing the international community is exceptionally complicated. It sometimes seems that it is simply impossible to cope with them. But as the saying goes, a journey of a thousand miles begins with a single step.<br /><br />We must seek support in the moral values that have ensured the progress of our civilisation. Honesty and hard work, responsibility and faith in our strength are bound to bring us success. <br /><br />There should be no place for despondency. The crisis can and must be fought by uniting our intellectual, spiritual ad material resources. <br /><br />This kind of consolidation of efforts is inconceivable without mutual trust. This does not only concern participants in business life. Primarily this concerns states. <br /><br />Achieving mutual trust is a key task that all of us will have to pursue. <br /><br />It is trust and solidarity that will help us overcome existing difficulties, avoid numerous upheavals and achieve prosperity and well-being in the current century.<br /><br />Thank you for your attention.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 25px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><br /></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 25px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><i> Brilliant speech-craft from a master statesman. He lays out the groundwork for a Basel III, Energy Security, alludes briefly to Food Security, Russia's economy and the creation of complex mutual inter-dependencies for Security in this century. He also alludes to the disproportionate dollars spent on military spending by various counties. Quite a speech. Worth reading several times. </i></p></span>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-54531133706667672462009-01-28T08:51:00.000-08:002009-01-28T08:57:05.421-08:00<div><br /></div><div><span class="Apple-style-span" style="font-family: 'Times New Roman'; "><div style="background-color: white; font: normal normal normal 83.5%/normal Georgia, serif; margin-left: 10px; margin-right: 10px; "><div class="header" style="float: left; color: rgb(102, 102, 102); font-family: arial, Helvetica, sans-serif; font-size: 74.8%; width: 100%; "><div class="left" style="float: left; width: 410px; "><a href="http://www.nytimes.com/" style="color: rgb(0, 0, 102); "><img src="http://graphics8.nytimes.com/images/misc/nytlogo153x23.gif" align="left" alt="The New York Times" border="0" hspace="0" vspace="0" /></a><nyt_reprints_form><form name="cccform" action="https://s100.copyright.com/CommonApp/LoadingApplication.jsp" target="_Icon"></form></nyt_reprints_form><div class="printInfo" style="clear: left; padding-top: 8px; padding-bottom: 5px; "><br /><br /></div></div></div><br /><hr size="1" align="left"><div class="timestamp" style="margin-top: 15px; font-size: 10pt; font-weight: bold; ">January 29, 2009</div><div class="kicker" style="font-weight: bold; color: rgb(102, 102, 102); text-transform: uppercase; margin-top: 15px; "></div><h1 style="font-size: 180%; font-weight: bold; margin-top: 3px; "><nyt_headline version="1.0" type=" ">Report on Russia Missiles Suggests Gesture to U.S.</nyt_headline></h1><nyt_byline version="1.0" type=" "><div class="byline" style="font-weight: bold; font-size: 10pt; ">By <a href="http://topics.nytimes.com/top/reference/timestopics/people/l/clifford_j_levy/index.html?inline=nyt-per" title="More Articles by Clifford J. Levy" style="color: rgb(0, 0, 102); ">CLIFFORD J. LEVY</a></div></nyt_byline><nyt_text><div id="articleBody"><p style="color: black; font-size: medium; line-height: 24px; ">MOSCOW — A Russian news report on Wednesday that <a href="http://topics.nytimes.com/top/news/international/countriesandterritories/russiaandtheformersovietunion/index.html?inline=nyt-geo" title="More news and information about Russia and the Post-Soviet Nations." style="color: rgb(0, 0, 102); ">Russia</a> is putting off its plan to deploy missiles near the Polish border raised speculation that the Kremlin is seeking ways to lower tensions with the United States now that a new administration has taken office.</p><p style="color: black; font-size: medium; line-height: 24px; ">The report, on the Interfax news agency, was attributed to an unidentified Russian defense official, and when contacted later in the day, other Russian foreign and defense officials in Moscow would not confirm or comment on it.</p><p style="color: black; font-size: medium; line-height: 24px; ">Interfax quoted the unnamed defense official as saying that, “These plans have been suspended,” referring to the Kremlin’s proposal to base Iskander missiles in the western region of Kaliningrad and direct them toward Europe.</p><p style="color: black; font-size: medium; line-height: 24px; ">The unnamed official was quoted as saying the Russian government had taken the step because Washington is not “pushing ahead” with the Bush administration’s proposal to deploy an anti-missile system in Poland and the Czech republic to defend against what the administration had said was a threat from countries like Iran.</p><p style="color: black; font-size: medium; line-height: 24px; ">Asked about the Interfax report, <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/n/north_atlantic_treaty_organization/index.html?inline=nyt-org" title="More articles about the North Atlantic Treaty Organization." style="color: rgb(0, 0, 102); ">NATO</a> said through a spokesman that if confirmed, “It would be a positive step.”</p><p style="color: black; font-size: medium; line-height: 24px; ">The Kremlin has sharply criticized the Bush anti-missile system, contending that it was aimed at Russia. Bush officials had sought to soothe Russian concerns, but ´the issue had damaged relations between the two countries.</p><p style="color: black; font-size: medium; line-height: 24px; ">While the official quoted by Interfax said the United States was not going forward with the antimissile plan, the Obama administration is in fact only reviewing the plan, and has not publicly rejected it.</p><p style="color: black; font-size: medium; line-height: 24px; ">And it would seem unlikely that the Kremlin would offer the concession of shelving the missile plan without first obtaining a promise from the Obama administration that the American plan had been canceled.</p><p style="color: black; font-size: medium; line-height: 24px; ">While the Kremlin remained silent about the issue on Wednesday, Itar-Tass, the government-run news agency, quoted an unnamed senior defense official as saying that any such reports in the Russian media about the Kremlin pulling back were “pure fiction, total nonsense.”</p><p style="color: black; font-size: medium; line-height: 24px; ">The unnamed official suggested it would be a mistake for the Russians to withdraw their threat unilaterally while the issue was still playing out.</p><p style="color: black; font-size: medium; line-height: 24px; ">In an interview with Bloomberg News on Monday, Prime Minister <a href="http://topics.nytimes.com/top/reference/timestopics/people/p/vladimir_v_putin/index.html?inline=nyt-per" title="More articles about Vladimir V. Putin." style="color: rgb(0, 0, 102); ">Vladimir V. Putin</a> indicated that he was hopeful that the Obama administration would reject the Bush plan.</p><p style="color: black; font-size: medium; line-height: 24px; ">“We have heard signals concerning anti-missile defense, and we know that people close to Mr. Obama say they should not hurry and the issue demands further analyses,” Mr. Putin said. “We are glad to hear such statements. Beyond that, our proposal on developing those systems is still on the agenda.”</p><p style="color: black; font-size: medium; line-height: 24px; "><a href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per" title="More articles about Barack Obama." style="color: rgb(0, 0, 102); ">President Obama</a> and Russia’s president, <a href="http://topics.nytimes.com/top/reference/timestopics/people/m/dmitri_a_medvedev/index.html?inline=nyt-per" title="More articles about Dmitri A. Medvedev." style="color: rgb(0, 0, 102); ">Dmitri A. Medvedev</a>, spoke on the phone on Monday. The Kremlin said in a statement that the two leaders discussed “their intention to focus their efforts on renewing the potential of Russian-American relations, and on resolving issues in a constructive way.”</p><nyt_update_bottom></nyt_update_bottom></div></nyt_text><br /><center><nyt_copyright><div id="footer" style="clear: both; padding-top: 5px; padding-bottom: 1px; border-bottom-width: 1px; border-bottom-style: solid; border-bottom-color: rgb(185, 185, 185); min-width: 768px; background-color: rgb(229, 229, 229); font-family: Arial, Helvetica, 'sans serif'; font-size: 76%; "><a href="http://www.nytimes.com/ref/membercenter/help/copyright.html" style="color: rgb(0, 0, 102); ">Copyright 2009</a> <a href="http://www.nytco.com/" style="color: rgb(0, 0, 102); ">The New York Times Company</a><ul style="margin-right: 0px; margin-bottom: 0px; list-style-type: none; list-style-position: initial; list-style-image: initial; margin-top: 10px; margin-left: 0px; padding-top: 4px; padding-right: 4px; padding-bottom: 4px; padding-left: 10px; white-space: nowrap; "><li style="margin-top: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-bottom: 0px; padding-left: 0px; display: inline; padding-right: 6px; margin-right: 6px; border-right-width: 1px; border-right-color: rgb(0, 0, 0); border-top-style: none; border-right-style: none; border-bottom-style: none; border-left-style: none; border-width: initial; border-color: initial; "></li></ul></div></nyt_copyright></center><img height="1" width="3" border="0" src="http://up.nytimes.com/?d=0//3&t=&s=2&ui=2686115&r=http%3a%2f%2fwww%2enytimes%2ecom%2f2009%2f01%2f29%2fworld%2feurope%2f29missiles%2ehtml%3fhp&u=www%2enytimes%2ecom%2f2009%2f01%2f29%2fworld%2feurope%2f29missiles%2ehtml%3fhp%3d%26pagewanted%3dprint" /> <img src="http://www.nytimes.com/adx/bin/clientside/5bb3dc68Q2Fd,Q3BQ248Q252(Q258eQ3E,Q7BQ25Q24BQ258Q3ETQ24(1Q24" height="1" width="3" /></div><div style="background-color: white; font: normal normal normal 83.5%/normal Georgia, serif; margin-left: 10px; margin-right: 10px; "><i> Wow - what is this world coming to? :) Gestures to the Greater Middle East and now peaceful gestures between US and Russia? This must piss-off the military industrial complex no-doubt. But I guess with one of the greatest financial crises ever facing the country - we can only show that much machismo towards the world, eh? </i> </div></span></div>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-44644609411934246202009-01-27T13:31:00.000-08:002009-01-27T13:57:52.031-08:00Roubini: Nowhere to Hide and Nationalize<span class="Apple-style-span" style="font-family: 'Lucida Grande'; font-size: 12px; white-space: pre;"><span class="Apple-style-span" style="font-family: Verdana; line-height: 16px; white-space: normal; "><span class="news_story_title" style="font: normal normal bold 12pt/normal verdana, sans-serif; color: rgb(0, 0, 0); line-height: 140%; ">Roubini Sees ‘Nowhere to Hide’ From Global Slowdown (Update2) </span><br /><div id="pe" style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; float: right; "><div id="email" style="font-size: 9pt; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; text-align: right; "><a href="mailto:?Subject=Bloomberg%20news:%20%20Roubini%20Sees%20%E2%80%98Nowhere%20to%20Hide%E2%80%99%20From%20Global%20Slowdown%20(Update2)%20&body=%20Roubini%20Sees%20%E2%80%98Nowhere%20to%20Hide%E2%80%99%20From%20Global%20Slowdown%20(Update2)%20%0D%0A%0D%0A%20http%3A//www.bloomberg.com/apps/news%3Fpid%3Demail_en%26refer=%26sid%3Dao5mihirSB1Y" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">Email</a> | <a href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ao5mihirSB1Y#" onclick="javascript:window.open('/apps/news?pid=20670001&refer=&sid=ao5mihirSB1Y','my_new_window','scrollbars=yes,resizable=yes,width=610,height=670')" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">Print</a> | <a onclick="setStyleById('article', 'fontSize', '9pt');" href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ao5mihirSB1Y#" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); "><span style="font-size: 9pt; ">A</span></a> <a onclick="setStyleById('article', 'fontSize', '11pt');" href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ao5mihirSB1Y#" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); "><span style="font-size: 11pt; ">A</span></a> <a onclick="setStyleById('article', 'fontSize', '13pt');" href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ao5mihirSB1Y#" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); "><span style="font-size: 13pt; ">A</span></a></div></div><br /><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">By Betty Liu and Eric Martin</p><div style="float: left; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; "><div id="newsphoto" style="position: relative; width: 220px; height: auto; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; background-color: rgb(0, 0, 0); color: rgb(255, 255, 255); border-top-width: 5px; border-right-width: 5px; border-bottom-width: 5px; border-left-width: 5px; border-top-style: solid; border-right-style: solid; border-bottom-style: solid; border-left-style: solid; border-top-color: rgb(0, 0, 0); border-right-color: rgb(0, 0, 0); border-bottom-color: rgb(0, 0, 0); border-left-color: rgb(0, 0, 0); text-align: left; font-family: Verdana, sans-serif; font-size: 10px; line-height: normal; "><img src="http://www.bloomberg.com/apps/data?pid=avimage&iid=i6qGvoxBu2fs" width="220" height="162" alt="" border="0" style="border-top-width: 0px; border-right-width: 0px; border-bottom-width: 0px; border-left-width: 0px; border-style: initial; border-color: initial; " /></div></div><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">Jan. 27 (Bloomberg) -- Global stock market declines are increasingly correlated and emerging economies will follow developed nations into a “severe recession,” according to New York University Professor <a href="http://search.bloomberg.com/search?q=Nouriel+Roubini&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" onmouseover="return escape( popwSearchNews( this ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">Nouriel Roubini</a>.</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; "><span class="Apple-style-span" style="font-weight: bold;">Roubini said economic growth in China will slow to less than 5 percent and the U.S. will lose 6 million jobs. The American economy will expand 1 percent at most in 2010 as private spending falls and unemployment climbs to at least 9 percent, he added.</span></p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">“There is nowhere to hide,” Roubini, an economics professor at NYU’s Stern School of Business who predicted the financial crisis, said from Zurich in an interview with Bloomberg Television. “We have for the first time in decades a global synchronized recession. Markets have become perfectly correlated and economies are also becoming perfectly correlated. This is not your kind of traditional minor recession.”</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; "><span class="Apple-style-span" style="font-weight: bold;">Roubini said the U.S. government should nationalize the biggest banks because losses will exceed assets, threatening to push them into bankruptcy. The banks could be privatized again in two or three years, Roubini said. The professor reiterated his prediction that U.S. financial losses will more than triple to $3.6 trillion and that global equities will fall 20 percent this year from current levels.</span></p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">‘Zombie Banks’</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">“Nobody’s in favor of long-term ownership of the U.S. banking system by the government, but if you don’t do it this way, you end up like Japan where you kept alive for a decade zombie banks that were never restructured,” he said. “That’s going to be much worse. It’s better to clean it up, nationalize it and sell it to the private sector.”</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">Japanese policy makers hesitated in addressing a banking crisis in the 1990s and then struggled to revive growth and fight deflation in what is known as the “Lost Decade.”</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">Roubini recommended holding cash or short-term government debt and said high-yield bonds are cheap relative to U.S. stocks.</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">In July 2006, Roubini predicted the financial crisis. In February of last year, he forecast a “catastrophic” meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks with mortgage holdings and a “sharp drop” in equities. Since then, Bear Stearns Cos. was forced into a sale and Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital.</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">Deeper Into Recession</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">The world’s biggest economies are sliding deeper into recession as the fall-out from the global financial crisis hobbles manufacturing output and punctures consumer spending from New York to Beijing. The U.S. economy probably contracted at 5.5 percent pace in the fourth quarter, the fastest in 26 years, a survey of economists showed.</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; "><a href="http://www.bloomberg.com/apps/quote?ticker=CAT%3AUS" onmouseover="return escape( popwQuoteShort( this, 'CAT:US' ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">Caterpillar Inc.</a>, Sprint Nextel Corp., Home Depot Inc. and ING Groep NV led companies announcing at least 77,000 job cuts yesterday as sales withered while U.S. jobless claims touched a 26-year high of 589,000 in the week ended Jan. 17. President <a href="http://search.bloomberg.com/search?q=Barack+Obama&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" onmouseover="return escape( popwSearchNews( this ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">Barack Obama</a> is pushing congress to approve an $825 billion stimulus package to create 3 million to 4 million new jobs.</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">In China, the urban unemployment rate, which doesn’t include millions of migrant workers, rose for the first time since 2003 in the fourth quarter. The government is targeting a rate of 4.6 percent for the year, which would be the highest since 1980. The slowdown may destabilize the country’s communist government, <a href="http://search.bloomberg.com/search?q=Albert+Edwards&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" onmouseover="return escape( popwSearchNews( this ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">Albert Edwards</a>, a strategist at Societe Generale in London, said in a Jan. 15 research note.</p><p style="padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; ">To contact the reporters on this story: <a href="http://search.bloomberg.com/search?q=Betty+Liu&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" onmouseover="return escape( popwSearchNews( this ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">Betty Liu</a> in New York at<a href="mailto:bliu17@bloomberg.net" onmouseover="return escape( popwSendEmail( this ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">bliu17@bloomberg.net</a>; <a href="http://search.bloomberg.com/search?q=Eric+Martin&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" onmouseover="return escape( popwSearchNews( this ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">Eric Martin</a> in New York at<a href="mailto:emartin21@bloomberg.net" onmouseover="return escape( popwSendEmail( this ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">emartin21@bloomberg.net</a>.</p><i>Last Updated: January 27, 2009 14:00 EST</i></span><br /></span>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-4740110637010493972009-01-27T13:17:00.000-08:002009-01-27T13:20:30.594-08:00Geithner on Bailout Lobbying: NO<div class="timestamp">January 28, 2009</div> <div class="kicker"></div> <h1><nyt_headline type=" " version="1.0">Geithner Sets Limits on Lobbying for Bailout Money </nyt_headline></h1><nyt_byline type=" " version="1.0"> <div class="byline">By <a title="More Articles by Charlie Savage" href="http://topics.nytimes.com/top/reference/timestopics/people/s/charlie_savage/index.html?inline=nyt-per">CHARLIE SAVAGE</a> and <a title="More Articles by David D. Kirkpatrick" href="http://topics.nytimes.com/top/reference/timestopics/people/k/david_d_kirkpatrick/index.html?inline=nyt-per">DAVID D. KIRKPATRICK</a></div></nyt_byline><nyt_text> <div id="articleBody"> <p>WASHINGTON — The Treasury secretary, <a title="More articles about Timothy F. Geithner." href="http://topics.nytimes.com/top/reference/timestopics/people/g/timothy_f_geithner/index.html?inline=nyt-per">Timothy F. Geithner</a>, announced on Tuesday that he would crack down on lobbying to influence the $700 billion financial bailout program by the companies that are receiving billions in taxpayer funds.</p> <p>Mr. Geithner, who was confirmed and sworn in on Monday, said that he would also <a title="set new limits" href="http://www.treasury.gov/press/releases/tg02.htm">set new limits</a> intended to prevent political interference with the decisions about which firms receive bailout money.</p> <p>The announcement followed several reports about efforts by corporate lobbyists and Congressional lawmakers to influence the program, including decisions about which banks should receive taxpayer money.</p> <p>“American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system,” Mr. Geithner said in a statement. “Today’s actions reaffirm our commitment toward that goal.”</p> <p>The details of the rules — the text has not been completed — were not released. But in a news release, the Treasury Department outlined the Obama administration’s intent to prevent corporate and political lobbying to influence spending of the bailout program.</p> <p>Among the changes will be rules to “combat lobbyist influence” over the bailout program, including <span class="Apple-style-span" style="font-weight: bold;">restricting officials from “contacts with lobbyists in connection with applications for, or disbursements of” bailout funds, the department said.</span></p> <p>The New York Times reported on Saturday that <span class="Apple-style-span" style="font-weight: bold;">at least a dozen firms that received billions from the bailout program lobbied the government about the program in the final three months of 2008, according to a review of disclosure forms.</span></p> <p>The new rules announced Tuesday will also “ensure that political influence does not interfere” with bailout decisions, “using as a model for these protections the limits on political influence over tax matters,” the Treasury Department said.</p> <p>A Treasury Department spokeswoman said the tax safeguards that would form the basis of the new bailout policy <span class="Apple-style-span" style="font-weight: bold;">include a federal statute prohibiting high-ranking executive branch officials from intervening in individual tax disputes, like ordering the </span><a title="More articles about the Internal Revenue Service." href="http://topics.nytimes.com/top/reference/timestopics/organizations/i/internal_revenue_service/index.html?inline=nyt-org"><span class="Apple-style-span" style="font-weight: bold;">Internal Revenue Service</span></a><span class="Apple-style-span" style="font-weight: bold;"> to conduct or terminate an audit of a particular taxpayer. </span></p> <p><span class="Apple-style-span" style="font-weight: bold;">The safeguards include the agency’s refusal “to accept any political interference whatsoever in individual tax matters,” the spokeswoman said.</span></p> <p>While such a policy would block high-ranking executive branch officials from steering bailout money to a particular bank, <span class="Apple-style-span" style="font-weight: bold;">it was not immediately clear whether the rule would also prohibit Treasury officials from talking with lawmakers who are seeking help for banks in their districts. </span></p> <p>The Wall Street Journal reported last Thursday that several lawmakers had tried to ensure that bailout funds would go to banks in their districts, although it said there was no way to prove that such efforts were linked to a later decision to give money to a particular bank. </p> <p>Also on Tuesday, Mr. Geithner said that the Treasury Department’s <a title="More articles about the Office of Financial Stability." href="http://topics.nytimes.com/top/reference/timestopics/organizations/t/treasury_department/office_of_financial_stability/index.html?inline=nyt-org">Office of Financial Stability</a>, in making reports to Congress about how it was disbursing the funds, would certify that each decision was based only on objective “investment criteria and the facts of the case.” </p> <p>In addition, the department said that it would publish soon a detailed description of its investment review process and that only banks recommended by their primary bank regulator would be eligible for bailout funds.</p> <p>The announcement on Tuesday represented the latest step by the Obama administration to make the bailout program more open and accountable as it moves to disburse the second $350 billion, following bipartisan criticism over the Bush administration’s handling of the first $350 billion of the bailout program.</p> <p>The Obama administration has said it will step up monitoring of lending patterns by financial institutions that receive bailout money to make sure the money is being used to ease the credit squeeze. It also said it would seek to limit <a title="More articles about executive pay." href="http://topics.nytimes.com/top/reference/timestopics/subjects/e/executive_pay/index.html?inline=nyt-classifier">executive compensation</a> at banks that receive future taxpayer help.</p> <p>During his Senate confirmation hearings last week, Mr. Geithner said that the bailout program needed “serious reform” and pledged that the Obama administration would impose “tough conditions to protect the taxpayer and the necessary transparency to allow the American people to see how and where their money is being spent and the results those investments are delivering.”</p> <p>He added: “And we are going to do that. This is an important program and we need to make it work.”</p><span class="nytd_selection_button" id="nytd_selection_button" title="Lookup Word" style="BACKGROUND: none transparent scroll repeat 0% 0%; FILTER: progid:DXImageTransform.Microsoft.AlphaImageLoader(src='http://graphics8.nytimes.com/images/global/word_reference/ref_bubble.png', sizingMethod='image'); MARGIN: -20px 0px 0px -20px; WIDTH: 25px; CURSOR: pointer; POSITION: absolute; HEIGHT: 29px" undefined="margin:-20px 0 0 -20px; position:absolute; background:url(http://graphics8.nytimes.com/images/global/word_reference/ref_bubble.png);width:25px;height:29px;cursor:pointer;_background-image: none;filter: progid:DXImageTransform.Microsoft.AlphaImageLoader(src="http://graphics8.nytimes.com/images/global/word_reference/ref_bubble.png", sizingMethod="image");"></span><nyt_update_bottom></nyt_update_bottom></div></nyt_text>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-32831885184905848132009-01-27T08:56:00.000-08:002009-01-27T08:58:42.459-08:00Geithner sworn in as Treasury SecretaryTimothy Geithner takes on the mantle of Treasury Secretary for the Obama Administration<br /><br /><br /><object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/OA2TqX0XvRM&hl=en&fs=1"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/OA2TqX0XvRM&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-83089879947323264942009-01-27T08:02:00.000-08:002009-01-27T08:05:45.081-08:00Obama: New Tone with the Islamic World<span class="Apple-style-span" style="font-family: 'Lucida Grande'; font-size: 12px; white-space: pre;"><br /></span><div><span class="Apple-style-span" style="font-family: 'Lucida Grande'; font-size: 12px; white-space: pre;"><span class="Apple-style-span" style="font-family: 'Times New Roman'; font-size: 16px; white-space: normal; "><div style="background-color: white; font: normal normal normal 83.5%/normal Georgia, serif; margin-left: 10px; margin-right: 10px; "><div class="header" style="float: left; color: rgb(102, 102, 102); font-family: arial, Helvetica, sans-serif; font-size: 74.8%; width: 100%; "><div class="left" style="float: left; width: 410px; "><a href="http://www.nytimes.com/" style="color: rgb(0, 0, 102); "><img src="http://graphics8.nytimes.com/images/misc/nytlogo153x23.gif" align="left" alt="The New York Times" border="0" hspace="0" vspace="0" /></a></div><div class="right" style="float: right; width: 260px; text-align: right; margin-right: 0px; "><table width="80%" cellspacing="0" cellpadding="0" border="0" style="margin-bottom: 3px; margin-top: 3px; float: right; width: 260px; text-align: right; margin-right: 0px; "><tbody><tr valign="bottom"><td><div style="margin-right: 2px; "><div align="right"><img src="http://graphics8.nytimes.com/ads/spacer.gif" alt="" width="1" height="1" border="0" /></div></div></td></tr></tbody></table></div></div><div class="timestamp" style="margin-top: 15px; font-size: 10pt; font-weight: bold; ">January 28, 2009</div><div class="kicker" style="font-weight: bold; color: rgb(102, 102, 102); text-transform: uppercase; margin-top: 15px; "></div><h1 style="font-size: 180%; font-weight: bold; margin-top: 3px; "><nyt_headline version="1.0" type=" ">Obama Signals New Tone in Relations With Islamic World</nyt_headline></h1><nyt_byline version="1.0" type=" "><div class="byline" style="font-weight: bold; font-size: 10pt; ">By <a href="http://topics.nytimes.com/top/reference/timestopics/people/c/alan_cowell/index.html?inline=nyt-per" title="More Articles by Alan Cowell" style="color: rgb(0, 0, 102); ">ALAN COWELL</a></div></nyt_byline><nyt_text><div id="articleBody"><p style="color: black; font-size: medium; line-height: 24px; ">PARIS — In one of his first interviews since taking office, President <a href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per" title="More articles about Barack Obama" style="color: rgb(0, 0, 102); ">Barack Obama</a> struck a conciliatory tone toward the Islamic world, saying he wanted to persuade Muslims that “the Americans are not your enemy” and adding that “the moment is ripe for both sides” to negotiate in the Middle East.</p><p style="color: black; font-size: medium; line-height: 24px; ">His remarks, recorded in Washington on Monday night, signaled a shift — in style and manner at least — from the Bush administration, offering a dialogue with Iran and what he depicted as a new readiness to listen rather than dictate.</p><p style="color: black; font-size: medium; line-height: 24px; ">Mr. Obama spoke as his special Middle East envoy, <a href="http://topics.nytimes.com/top/reference/timestopics/people/m/george_j_mitchell/index.html?inline=nyt-per" title="More articles about George J. Mitchell." style="color: rgb(0, 0, 102); ">George J. Mitchell</a>, arrived in Egypt to begin an eight-day tour that will include Israel, Jordan, Saudi Arabia, France and Britain. Mr. Mitchell planned to meet President <a href="http://topics.nytimes.com/top/reference/timestopics/people/m/hosni_mubarak/index.html?inline=nyt-per" title="More articles about Hosni Mubarak." style="color: rgb(0, 0, 102); ">Hosni Mubarak</a>.</p><p style="color: black; font-size: medium; line-height: 24px; ">In a transcript published on Al Arabiya’s English language Web site, Mr. Obama said he believed “the most important thing is for the United States to get engaged right away” and that he had told his envoy to “start by listening, because all too often the United States starts by dictating.”</p><p style="color: black; font-size: medium; line-height: 24px; ">“Ultimately, we cannot tell either the Israelis or the <a href="http://topics.nytimes.com/top/reference/timestopics/subjects/p/palestinians/index.html?inline=nyt-classifier" title="More articles about Palestinians." style="color: rgb(0, 0, 102); ">Palestinians</a> what’s best for them. They’re going to have to make some decisions,” Mr. Obama said. “But I do believe that the moment is ripe for both sides to realize that the path that they are on is not going to result in prosperity and security for their people. And that, instead, it’s time to return to the negotiating table.”</p><p style="color: black; font-size: medium; line-height: 24px; ">Shortly after the interview was broadcast, an explosion on the Israel-Gaza border on Tuesday killed an Israeli soldier. A Palestinian farmer was shot dead, according to Palestinian witnesses, in retaliatory gunfire. The incidents were the first known fatal incidents since the Gaza fighting ended 10 days ago.</p><p style="color: black; font-size: medium; line-height: 24px; ">Mr. Obama said Israel “will not stop being a strong ally of the United States and I will continue to believe that Israel’s security is paramount. But I also believe that there are Israelis who recognize that it is important to achieve peace. They will be willing to make sacrifices if the time is appropriate and if there is serious partnership on the other side.”</p><p style="color: black; font-size: medium; line-height: 24px; ">He also said he believed it was “possible for us to see a Palestinian state — I’m not going to put a time frame on it — that is contiguous, that allows freedom of movement for its people, that allows for trade with other countries, that allows the creation of businesses and commerce so that people have a better life.”</p><p style="color: black; font-size: medium; line-height: 24px; ">But he also said the Israel-Palestine conflict should not be seen in isolation. “I do think it is impossible for us to think only in terms of the Palestinian-Israeli conflict and not think in terms of what’s happening with Syria or Iran or Lebanon or Afghanistan and Pakistan,” Mr. Obama said.</p><p style="color: black; font-size: medium; line-height: 24px; ">He spoke at length about America’s future relationship with the Muslim world, saying his “job is to communicate to the American people that the Muslim world is filled with extraordinary people who simply want to live their lives and see their children live better lives.”</p><p style="color: black; font-size: medium; line-height: 24px; ">“My job to the Muslim world is to communicate that the Americans are not your enemy. We sometimes make mistakes. We have not been perfect. But if you look at the track record, as you say, America was not born as a colonial power, and that the same respect and partnership that America had with the Muslim world as recently as 20 or 30 years ago, there’s no reason why we can’t restore that. And that I think is going to be an important task,” he said.</p><p style="color: black; font-size: medium; line-height: 24px; ">He drew a distinction between “extremist organizations” committed to violence and “people who may disagree with my administration and certain actions, or may have a particular viewpoint in terms of how their countries should develop.”</p><p style="color: black; font-size: medium; line-height: 24px; ">“We can have legitimate disagreements but still be respectful. I cannot respect terrorist organizations that would kill innocent civilians and we will hunt them down,” he said. “But to the broader Muslim world what we are going to be offering is a hand of friendship.”</p><p style="color: black; font-size: medium; line-height: 24px; ">He also said it was “important for us to be willing to talk to Iran, to express very clearly where our differences are, but where there are potential avenues for progress.”</p><p style="color: black; font-size: medium; line-height: 24px; ">He echoed his inaugural address last week when he said, “If countries like Iran are willing to unclench their fist, they will find an extended hand from us.”</p><p style="color: black; font-size: medium; line-height: 24px; ">He was not asked whether he would continue the policy of former President George Bush in refusing to exclude military action in the dispute over Iran’s nuclear ambitions.</p><nyt_update_bottom></nyt_update_bottom></div></nyt_text><i> This is nuanced and smart. The war with terrorists was not going to be won without a strong PR campaign and with actions to backup the PR. The terrorists have to be isolated and their support cut off. </i></div></span></span></div>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-87661929881360242512009-01-26T08:28:00.000-08:002009-01-26T08:37:23.345-08:00"Nationalization" now in the mainstream pressJanuary 26, 2009<br />News Analysis<br /><strong><span style="font-size:130%;">Nationalization Gets a New, Serious Look</span></strong><br />By <a title="More Articles by David E. Sanger" href="http://topics.nytimes.com/top/reference/timestopics/people/s/david_e_sanger/index.html?inline=nyt-per">DAVID E. SANGER</a><br /><br />WASHINGTON — Only five days into the Obama presidency, members of the new administration and Democratic leaders in Congress are already dancing around one of the most politically delicate questions about the financial bailout: Is the president prepared to nationalize a huge swath of the nation’s banking system?<br /><br />Privately, most members of the Obama economic team concede that the rapid deterioration of the country’s biggest banks, notably <a title="More information about Bank of America Corp" href="http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html?inline=nyt-org">Bank of America</a> and <a title="More information about Citigroup Incorporated" href="http://topics.nytimes.com/top/news/business/companies/citigroup_inc/index.html?inline=nyt-org">Citigroup</a>, is bound to require far larger investments of taxpayer money, atop the more than $300 billion of taxpayer money already poured into those two financial institutions and hundreds of others.<br /><br />But if hundreds of billions of dollars of new investment is needed to shore up those banks, and perhaps their competitors, what do taxpayers get in return? And how do the risks escalate as government’s role expands from a few bailouts to control over a vast portion of the financial sector of the world’s largest economy?<br /><br />The Obama administration is making only glancing references to those questions. In an interview Sunday on “This Week” on ABC, the House speaker, <a title="More articles about Nancy Pelosi." href="http://topics.nytimes.com/top/reference/timestopics/people/p/nancy_pelosi/index.html?inline=nyt-per">Nancy Pelosi</a>, alluded to internal debate when she was asked whether nationalization, or partial nationalization, of the largest banks was a good idea.<br /><br /><strong><em>“Well, whatever you want to call it,” said Ms. Pelosi, Democrat of California. “If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization.<br /></em></strong><br />“I’m not talking about total ownership,” she quickly cautioned — stopping herself by posing a question: “Would we have ever thought we would see the day when we’d be using that terminology? ‘Nationalization of the banks?’ ”<br /><br />So far, <a title="More articles about Barack Obama." href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per">President Obama</a>’s top aides have steered clear of the word entirely, and they are still actively discussing other alternatives, including creating a “bad bank” that would nationalize the worst nonperforming loans by taking them off the hands of financial institutions without actually taking ownership of the banks. Others talk of de facto nationalization, in which the government owns a sizeable chunk of the banks but not a majority, with all that connotes.<br /><br />That has already happened; taxpayers are now the biggest shareholders in Bank of America, with about 6 percent of the stock, and in Citigroup, with 7.8 percent. But the government’s influence is far larger than those numbers suggest, because it has guaranteed to absorb the losses of some of the two banks’ most toxic assets, a figure that could run into the hundreds of billions of dollars.<br /><br />Many believe this form of hybrid ownership — part government, part private, with the responsibilities of ownership unclear — will not prove workable.<br /><br /><strong>“The case for full nationalization is far stronger now than it was a few months ago,” said Adam S. Posen, the deputy director of the Peterson Institute for International Economics. “If you don’t own the majority, you don’t get to fire the management, to wipe out the shareholders, to declare that you are just going to take the losses and start over. It’s the mistake the Japanese made in the ’90s.”</strong><br /><br /><strong><em><span style="font-size:180%;">“I would guess that sometime in the next few weeks, President Obama and </span></em></strong><a title="More articles about Timothy F. Geithner." href="http://topics.nytimes.com/top/reference/timestopics/people/g/timothy_f_geithner/index.html?inline=nyt-per"><strong><em><span style="font-size:180%;">Tim Geithner</span></em></strong></a><strong><em><span style="font-size:180%;">,” he said, referring to the nominee for Treasury secretary, “will have to come out and say, ‘It’s much worse than we thought,’ and just bite the bullet.”</span></em></strong><br /><br />So far the Obama administration has signaled that it is trying to avoid that day, and members of its economic team — among them Mr. Geithner and the president’s top economic adviser, <a title="More articles about Lawrence H. Summers." href="http://topics.nytimes.com/top/reference/timestopics/people/s/lawrence_h_summers/index.html?inline=nyt-per">Lawrence H. Summers</a> — made the case during the Asian <a title="More articles about the credit crisis." href="http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_crisis/index.html?inline=nyt-classifier">financial crisis</a> in the 1990s that governments make lousy bank managers.<br /><br />Indeed, the risks of nationalization they warned about then apply equally to the United States now. <strong><span style="font-size:130%;">The first is that nationalization can prove contagious.</span></strong> If the Obama administration took over Bank of America and Citigroup, two of the largest banks in the United States, private investors could decide to flee from the likes of <a title="More information about Morgan, J. P., Chase & Company" href="http://topics.nytimes.com/top/news/business/companies/morgan_j_p_chase_and_company/index.html?inline=nyt-org">JPMorgan Chase</a> and <a title="More information about Wells Fargo & Co" href="http://topics.nytimes.com/top/news/business/companies/wells_fargo_and_company/index.html?inline=nyt-org">Wells Fargo</a>, or other major banks, fearing they could be next.<br /><br /><strong>Moreover, Mr. Obama’s advisers say they are acutely aware that if the government is perceived as running the banks, the administration would come under enormous political pressure to halt foreclosures or lend money to ailing projects in cities or states with powerful constituencies, which could imperil the effort to steer the banks away from the cliff.<br /></strong><br />“The nightmare scenarios are endless,” one of the administration’s senior officials said.<br /><br /><strong>The argument in favor of nationalization, even a brief nationalization of a few months or years, is straightforward: It might be the only way to pull America’s largest financial institutions out of the downward spiral that makes it enormously difficult to raise the capital they need to keep operating.<br /></strong><br /><strong>Right now, many banks are reluctant to write off their bad debts, and absorb huge losses, unless they can first raise enough capital to cushion the blow. But they cannot attract that capital without first purging their balance sheets of the toxic assets.</strong> Japan’s experience proved the dangers of that downward swirl; the economy stagnated, new lending ground to a halt and the country’s diplomatic clout shrank with its balance sheets.<br /><br />Nationalization could pull the banks out of that dive, at least temporarily, as the government injected capital, hired new managers and ordered a restart to lending. But some Republicans who bit their tongues when President <a title="More articles about George W. Bush." href="http://topics.nytimes.com/top/reference/timestopics/people/b/george_w_bush/index.html?inline=nyt-per">George W. Bush</a> ordered huge interventions in the market would charge that Mr. Obama was steering America toward socialism.<br /><br />Nationalization, said Charles Geisst, a financial historian at <a title="More articles about Manhattan College" href="http://topics.nytimes.com/top/reference/timestopics/organizations/m/manhattan_college/index.html?inline=nyt-org">Manhattan College</a> “is just not a term in the American vocabulary.”<br /><br />“We think of it,” he continued, “as something foreigners do to us, not something we do.”<br />It is also something foreigners do to themselves: the British have recently taken a majority stake in the Royal Bank of Scotland.<br /><br />Some of Mr. Obama’s advisers have asked who the government would get to run the banks. Many of the most experienced executives are tainted by the decisions they made during the age of excess. And how would the government attract the best talent if it demanded that they take minimal pay — a political reality in the current environment?<br /><br />Another option is for the government to buy the banks’ most toxic assets either through a giant fund, or, more likely, a federally supported bad bank designed to buy up troubled investments. But in that case, taxpayers might well be the losers: They would have all of the banks’ worst assets and none of their performing loans. And unless a deal is worked out to take a larger share of the banks whose bad loans are shuffled off to the government, the taxpayers would not have the chance to benefit by selling the shares back to private investors.<br /><br />Moreover, cleaning up the banks’ bad assets, without extracting a heavy price for the bank managers, shareholders and their lenders, is exactly what Mr. Summers and Mr. Geithner warned against during the Asian financial crisis.<br /><br />“We told the Asians that they had to be willing to let banks and companies fail,” said Jeffrey Garten, a professor at the Yale School of Management and a top official in the Clinton administration. “We warned that there was great moral hazard if governments just bailed them out.”<br /><br />“And now,” he said, “we are doing the polar opposite of our advice.”<br /><br />Eric Dash contributed reporting from New York.<br /><br /><i> I have been calling for a Nationalization since the middle of last year. It is obvious to everyone why banks have NO CAPITAL available. Where is all the private money - its on the sidelines (a lot of it is probably in Zurich) because everyone knows the king has no clothes. But here we are - hemming and hawing our way to a Global Depression because we dont have the balls to say yes we need to Nationalize these insolvent institutions. Even at this late hour - it is not too late. Declare a Bank Holiday and Nationalize these insolvent institutions. Wipe out the shareholders and their lenders. NOW. The Global Depression clock is now ticking. Tick, Tock. </i>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-83714005557297070872009-01-23T11:59:00.000-08:002009-01-23T12:06:47.703-08:00Geithner on Yuan: More Analysisdrezner.foreignpolicy.com<br /><br /><strong><span style="font-size:130%;">Bond markets react wildly to blinding glimpse of the obvious</span></strong><br />Thu, 01/22/2009 - 4:35pm<br /><br /><a href="http://www.portfolio.com/views/blogs/market-movers/2009/01/22/geithners-written-responses-to-the-senate-finance-committee" target="_blank">Felix Salmon</a> reviews Tim Geithner's written testimony and concludes that, "Geithner's answers are highly diplomatic and content-free," <br /><br />The bond market, however, appears to <a href="http://blogs.wsj.com/marketbeat/2009/01/22/the-geithner-bond-selloff/" target="_blank">disagree</a>: <br />Mr. Geithner’s strong words on China have resulted in a sharp selloff in Treasurys. In testimony to Congress, Geithner wrote, in response to a question from Sen. Olympia Snowe, (R-Maine), that President Obama’s administration “backed by the conclusions of a broad range of economists - believes that China is manipulating its currency.”<br /><br />“He came right out and said Obama believes China is manipulating their currency,” says Maryann Hurley, bond market strategist at D.A. Davidson, who notes that China’s economy is slowing as well. “It’s very easy to pick another country to be your whipping boy. In an era where we’re looking at deficits as far as the eye can see all we don’t need is somebody starting to dump our debt.”<br /><br />As the FT's <a href="http://www.ft.com/cms/s/0/b19b6900-e8c2-11dd-a4d0-0000779fd2ac.html" target="_blank">Krishna Guha and Alan Beattie write</a>, "experts said the declaration could fuel trade tensions at a time of global recession and fast-rising unemployment."<br /><br /><a href="http://www.newsweek.com/id/177258" target="_blank">I'm as concerned about this</a> as the next guy, but let's be careful here and parse things out. <br />The bond market is conflating two issues here. The first is that Geithner said out loud what everyone knows to be true. And, to be sure, before the U.S. responds to currency manipulation, it has to say that it's happening. So Geithner's statement is a quasi-first step. <br /><br />The second issue, however, is what kind of action Obama and Geithner are planning. Beattie and Guha suggest options like, "punitive import tariffs on Chinese goods."<br /><br />This is where a closer look at Geithner's written testimony would be a good idea. Here are the two relevant passsages:<br /><br /><span style="font-size:130%;">[W]e look forward to a productive economic dialogue with the Chinese government on a number of short- and long-tem issues. The Yuan is certainly an important piece of that discussion, but given the crisis the immediate focus needs to be on the broader issue of stabilizing domestic demand in China and the US. The latest figures show that China's growth in 2008 was 9%, a full 4 percentage points lower than in the previous year. Because China accounts for such a large fraction of the world economy, a further slowdown in China would lead to a substantial fall in world growth (and demand for US exports) and delay recovery from the crisis. Therefore, the immediate goal should be for us to convince China to adopt a more aggressive stimulus package as we do our part to try to pass a stimulus package here at home....<br /></span><br /><span style="font-size:130%;"><strong>[T]he best approach to ensure that countries do not engage in manipulating their currencies is to demonstrate that the disadvantages of doing so outweigh the benefits.</strong> If confirmed, I look forward to a constructive dialogue with our trading partners around the world in which Treasury makes the <strong>fact-based case</strong> that market exchange rates are a central ingredient to healthy and sustained growth.<br /></span><br />Two signals here. First, Geithner seems more concerned about China expanding its domestidc growth than with any manipulation of the yuan right now -- a <a href="http://blogs.cfr.org/setser/2009/01/18/it-is-the-time-to-worry-about-a-fall-in-chinas-demand-for-the-worlds-goods-not-a-fall-in-chinas-demand-for-treasuries/" target="_blank">conviction shared by Brad Setser</a>, incidentally. <br /><br />Second, it seems pretty clear that Geithner's first option on the currency issue is jaw-jaw rather than protect-protect. In other words, the bond market should have reacted more like Felix Salmon. <br /><br /><a href="http://drezner.foreignpolicy.com/blog/2188">Daniel W. Drezner</a> <a href="http://drezner.foreignpolicy.com/node/15357">Permalink</a> <a title="digg this post" href="http://digg.com/submit?phase=2&url=http://blog.foreignpolicy.com/node/15357&title=Bond+markets+react+wildly+to+blinding+glimpse+of+the+obvious" target="_blank"></a><a title="add this post to reddit" href="http://reddit.com/submit?url=http://blog.foreignpolicy.com/node/15357&title=Bond+markets+react+wildly+to+blinding+glimpse+of+the+obvious" target="_blank"></a><a title="add this post to del.icio.us" href="http://del.icio.us/post?url=http://blog.foreignpolicy.com/node/15357&title=Bond+markets+react+wildly+to+blinding+glimpse+of+the+obvious" target="_blank"></a><a title="find others who link to this post" href="http://technorati.com/cosmos/search.html?url=http://blog.foreignpolicy.com/node/15357" target="_blank"></a> Comments? <a href="http://drezner.foreignpolicy.com/user/login?destination=comment/reply/15357%2523comment-form">Login</a> or <a href="http://drezner.foreignpolicy.com/user/register">register</a><br />( filed under:<br /><a href="http://drezner.foreignpolicy.com/category/wordpress_tag/bretton_woods_ii">Bretton Woods II</a> <a href="http://drezner.foreignpolicy.com/category/wordpress_tag/chimerica">Chimerica</a> <a href="http://drezner.foreignpolicy.com/category/wordpress_tag/financial_meltdown">financial meltdown</a> <a href="http://drezner.foreignpolicy.com/category/wordpress_tag/geithner">Geithner</a> <a href="http://drezner.foreignpolicy.com/category/wordpress_category/globalization">globalization</a>)Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-24125988574551183252009-01-23T08:37:00.000-08:002009-01-23T08:52:15.996-08:00Warren Buffets interview on PBS tonight - Full Transcriptfrom richard-wilson.blogspot.com<br /><br /><strong>Warren Buffett Interview<br />Warren Buffett Interview Transcript</strong><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" title="Warren Buffett Interview Transcript " href="http://hedgefundblogger.com/" alt="Warren Buffett Interview Transcript "></a><br /><br />Below is a short interview with Warren Buffett who was featured on the the PBS Nightly Business Report tonight.<br />PBS’ Nightly Business Report & Warren Buffett<br />Full Transcript of NBR Anchor Susie Gharib’s interview with Warren Bufffett<br />Airs <strong>January 22, 2009,</strong><br /><br />Nightly Business Report’s 30th Anniversary<br /><br />SUSIE GHARIB, ANCHOR, NIGHTLY BUSINESS REPORT: Are we overly optimistic about what President Obama can do?<br />WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY: Well I think if you think that he can turn things around in a month or three months or six months and there’s going to be some magical transformation since he took office on the 20th that can’t happen and wouldn’t happen. So you don’t want to get into Superman-type expectations. On the other hand, I don’t think there’s anybody better than you could have had; have in the presidency than Barack Obama at this time. He understands economics. He’s a very smart guy. He’s a cool rational-type thinker. He will work with the right kind of people. So you’ve got the right person in the operating room, but it doesn’t mean the patient is going to leave the hospital tomorrow.<br /><br /><strong>SG: Mr. Buffett, I know that you’re close to President Obama, what are you advising him?</strong><br />WB: Well I’m not advising him really, but if I were I wouldn’t be able to talk about it. I am available any time. But he’s got all kinds of talent right back there with him in Washington. Plus he’s a talent himself so if I never contributed anything for him, fine.<br /><br /><strong>SG: But I know that during the election that you were one of his economic advisors, what were you telling him?</strong><br />WB: I was telling him business was going to be awful during the election period and that we were coming up in November to a terrible economic scene which would be even worse probably when he got inaugurated. So far I’ve been either lucky or right on that. But he’s got the right ideas. He believes in the same things I believe in. America’s best days are ahead and that we’ve got a great economic machine, its sputtering now. And he believes there could be a more equitable job done in distributing the rewards of this great machine. But he doesn’t need my advice on anything.<br /><br /><strong>SG: How often do you talk to him?</strong><br />WB: Not often, not often... no no and it will be less often now that he’s in the office. He’s got a lot of talent around him.<br /><br /><strong>SG: What’s the most important thing you think he needs to fix?</strong><br />WB: Well the most important thing to fix right now is the economy. We have a business slowdown particularly after October 1st it was sort of on a glide path downward up til roughly October 1st and then it went into a real nosedive. In fact in September I said we were in an economic Pearl Harbor and I’ve never used that phrase before. So he really has a tough economic situation and that’s his number one job. Now his number one job always is to keep America safe that goes without saying.<br /><br /><strong>SG: But when you look at the economy, what do you think is the most important thing he needs to fix in the economy?</strong><br />WB: Well we’ve had to get the credit system partially fixed in order for the economy to have a chance of starting to turn around. But there’s no magic bullet on this. They’re going to throw everything from the government they can in. As I said, the Treasury is going all in, the Fed and they have to and that isn’t necessarily going to produce anything dramatic in the short term at all. Over time the American economy is going to work fine.<br /><br /><strong>SG: There is considerable debate as you know about whether President Obama is taking the right steps so we don’t get in this kind of economic mess again, where do you stand on that debate?</strong><br />WB: Well I don’t think the worry right now should be about the next one, the worry should be about the present one. Let’s get this fire out and then we’ll figure out fire prevention for the future. But really the important thing to do now is to figure out how we get the American economy restarted and that’s not going to be easy and its not going to be soon, but its going to get done.<br /><br /><strong>SG: But there is debate about whether there should be fiscal stimulus, whether tax cuts work or not. There is all of this academic debate among economists. What do you think? Is that the right way to go with stimulus and tax cuts?</strong><br />WB: The answer is nobody knows. The economists don’t know. All you know is you throw everything at it and whether it’s more effective if you’re fighting a fire to be concentrating the water flow on this part or that part. You’re going to use every weapon you have in fighting it. And people, they do not know exactly what the effects are. Economists like to talk about it, but in the end they’ve been very, very wrong and most of them in recent years on this. We don’t know the perfect answers on it. What we do know is to stand by and do nothing is a terrible mistake or to follow Hoover-like policies would be a mistake and we don’t know how effective in the short run we don’t know how effective this will be and how quickly things will right themselves. We do know over time the American machine works wonderfully and it will work wonderfully again.<br /><br /><strong>SG: But are we creating new problems?</strong><br /><strong>WB: Always</strong><br /><br /><strong>SG: How worried are you about these multi-trillion dollar deficits?</strong><br />WB: You can’t just do one thing in economics. Anytime somebody says they’re going to do this and then what? And there is no free lunch so if you pour money at this problem you do have after effects. You create certain problems. I mean you are giving a medicine dosage to the patient on a scale that we haven’t seen in this country. And there will be after effects and they can’t be predicted exactly. But certainly the potential is there for inflationary consequences that would be significant.<br /><br /><strong>SG: We all know that in the long run everything is going to work out, but as you analyze President Obama’s economic plan, what do you think are the trade-offs? What are the consequences?</strong><br />WB: Well the trade-off… the trade-off basically is that you risk setting in motion forces that will be very hard to stop in terms of inflation down the road and you are creating an imbalance between revenues and expenses in the government that is a lot easier to create than it will be to correct later on, but those are problems worth taking on, but you don’t get a free lunch.<br /><br /><strong>SG: What about the regulatory system, is it a matter of making new rules or simply doing a better job at enforcing the rules we already have?</strong><br />WB: Well there are probably some new rules needed, but the regulatory system I don’t think could have stopped this. Once you get the bubble going... once the American public, the U.S. Congress, all the commentators, the media, everybody else started thinking house prices could go nothing up, you were creating a bubble that would have huge consequences because the asset class was so big. I mean you had 22 trillion dollars probably worth of homes. It was the biggest asset of most American families and you let them borrow 100% in many cases of the price of those and you let them refi up to where they kept taking out more and more and treating it as an ATM machine.. the bubble was going to happen.<br /><br /><strong>SG: But everybody is saying we need more rules, we have to enforce them, we need to go after every institution, every financial market. Do you think that new rules will do the trick or do we have enough rules that we just need to enforce them?</strong><br />WB: Well you can have a rule for example to prevent another real estate bubble; you just require that anybody bought a house to put 20% down and make sure that the payments were not more than a third of their income. Now we would not have a big bust ever in real estate again, but we would also have people screaming that you’re denying home ownership to all these people that you got a home yourself and now you’re saying a guy with a 5% down payment shouldn’t get one. So I think it’s very tough to put rules out... I mean I can design rules that will prevent it but it will have other consequences. It’s like I say in economics you can’t just do one thing and where the balance is struck on that will be a political question. My guess is that it won’t be struck particularly well, but that’s just the nature of politics.<br /><br /><strong>SG: You’ve said that we’re in an economic Pearl Harbor, so how bad are things really?</strong><br />WB: They’re bad, they’re bad. The credit situation is getting a little better now. Things have loosened up from a month ago in the corporate debt market. But the rate of business descent is at a pretty alarming pace, I mean there is no question things have really slowed down.Peoples’ buying habits have changed. Fear has taken over and fear is a tough thing to fight because you can’t go on television and say don’t be afraid, that doesn’t work. People will get over it, they got greedy and they got over being greedy. But it took a while to get over being greedy and now the pendulum has swung way over to the fear side. They’ll get over that and we just hope that they don’t go too far back to the greed side.<br /><br /><strong>SG: What’s your view on the recession? How much longer is it going to last?</strong><br />WB: I don’t know. I don’t know. I don’t know the answer to these things. The only thing is I know that I don’t know. Maybe other people think they know, but I have no idea.<br /><br /><strong>SG: The last time we talked, you said back in the Spring, you said the recession is not going to be a short-haul thing. What is your feel for it right now?</strong><br />WB: It isn’t going to be short, but I just don’t know Susie. There’s no way of knowing.<br /><br /><strong>SG: Berkshire Hathaway is in a lot of businesses that are economically sensitive, like furniture, paint, bricks. Do you see any signs of a pick up?</strong><br />WB: No. No. The businesses that are either construction or housing related, or that are just plain consumer businesses, they’re doing very, very poorly. The American consumer has stepped back big time and it’s contagious and there’s a feedback mechanism because once you hear about this then you get fearful and then don’t do things at all. And that will end at a point, but it hasn’t ended at this point. Now fortunately our two biggest businesses are not really tied that way- in insurance and in our utility business we don’t feel that, but everything that’s consumer related feels it big time.<br /><br /><strong>SG: Do you think that the psyche of the American consumer has changed, becoming more savers than spenders?</strong><br />WB: Well it certainly has at this point and my guess is that continues for quite a while. What it will be five years from now, I have no idea. I mean the American consumer when they’re confident they spend and they’re not confident now and they’ve cut it back but who knows whether.. I doubt that that’s a permanent reset of behavior, but I think it’s more than a one day or one week or one month wonder in that case.<br /><br /><strong>SG: Is that a bad thing?</strong><br />WB: Well it just depends who the consumer is. I mean consumer debt within reason makes sense. It makes sense to take out a mortgage on a home particularly if you aren’t buying during a bubble. You are normally going to see house price appreciation if you don’t buy during a time when people are all excited about it. So I don’t have any moral feelings about debt as to how people should.. I think people should only take on what they can handle though and that gets to their income level…<br /><br /><strong>SG: Let me ask it this way, with Americans saving more may be good for consumers, but is that bad for business?</strong><br />WB: Well it’s certainly bad for business in the short term. Now whether it’s better for business over a 10 or 20 year period... if the American public gets itself in better shape financially that presumably is good for business down the road, but while they’re getting themselves in better shape, its not much fun for the merchant on Main street.<br /><br /><strong>SG: One thing that Americans aren’t buying these days is stocks. Should they be buying?</strong><br />WB: Well just as many people buy a stock everyday as sell one so there are people buying stocks everyday and we’re buying stocks as we go along. If they’re buying into a business that they understand at a sensible price they should be buying them. That’s true at any time. There are a lot more things selling at sensible prices now than they were two years ago. So clearly it’s a better time to buying stocks than a couple of years ago. Is it better than tomorrow? I have no idea.<br /><br /><strong>SG: This financial crisis has been extraordinary in so many ways, how has it changed your approach to investing?</strong><br />WB: Doesn’t change my approach at all. My approach to investing I learned in 1949 or ‘50 from a book by Ben Graham and it’s never changed.<br /><br /><strong>SG: So many people I have talked to this past year say this was unprecedented… the unthinkable happened. And that hasn’t at all impacted your philosophy on this?</strong><br />WB: No and if I were buying a farm, I wouldn’t change my ideas about how to buy a farm or an apartment house or a business and that’s all a stock is. It’s part of a business so if I were going to buy stock in a private business here in Omaha, I’d look at it just like I would have looked at it two years ago and I’ll look at it the same way two years from now. I look at how much I am getting for my money, how good the management is, how the competitive position of that business compares to others, how durable it is and just fundamental questions. The stock market is... you can forget about that. Any stock I buy I will be happy owning it if they close the stock market for five years tomorrow. In other words I am buying a business. I’m not buying a stock. I’m buying a little piece of a business, just like I buy a farm. And that doesn’t change. And all the newspapers headlines of the world don’t change that. It doesn’t mean you can’t buy it cheaper tomorrow. It may turn out that way. But the real question is did I get my money’s worth when I bought it?<br /><br /><strong>SG: One of your famous investing principals is, “be fearful when others are greedy and greedy when others are fearful.” So is this the time to be greedy, right?</strong><br />WB: Yeah. My greed quotient has risen as stocks have gone down. There’s no question about that. The cheaper something gets that you’re going to buy, the happier you feel, right? You’re going to buy groceries the rest of your life; you want grocery prices to go up or down? You want them to go down. And if they go down you don’t think gee I got all those groceries sitting in my cabinet at home and I’ve lost money on those. You think I am buying my groceries cheaper, I am going to keep buying groceries. Now if you’re a seller, obviously prices are higher. But most people listening to this program, certainly I, myself, and Berkshire Hathaway, we’re going to be buying businesses over time. We like the idea of businesses getting cheaper.<br /><br /><strong>SG: So where do you see the opportunities in the stock market right now?</strong><br />WB: That one I wouldn’t tell you about.<br /><br /><strong>SG: Let me throw out some sectors and you just tell me quickly how you feel about these sectors.</strong><br />WB: Susie, I am not going to recommend anything…<br /><br /><strong>SG: Even in general, for example a lot of people now are looking at infrastructure companies, is that a sector that you find attractive?</strong><br />WB: I wouldn’t have any comment. What they ought to do is look at businesses they understand. They‘d be happy owning for years if there was never a quote on the stock. Just like they buy in privately into a business in their hometown... They ought to forget all about what somebody says is going to be hot next year or the year after, whatever… because what’s going to be hot you may be paying twice as much for as something that’s not going to be hot. You don’t want to think in terms of what’s going to be good next year, you want to think of what’s a good business to be in and then buy it at an attractive price. And then you can’t lose.<br /><br /><strong>SG: Do you see more opportunities in the U.S. compared to overseas?</strong><br />WB: Well I am more familiar with the U.S. We have such a big market. I see lots of opportunities here and I see lots of opportunities around the world.<br /><br /><strong>SG: Investor confidence was so shattered last year, what do you think its going to take to restore confidence?</strong><br />WB: If people were dependent on the stock market going up to be confident they’re in the wrong business. They ought to be confident because they look at a business and think I got my money’s worth. They ought to be confident if they buy a farm, not on whether they get a quote the next day on the farm, but they ought to look at what the farm produces, how many bushels an acre do they get out of their corn or soybeans and what prices do they bring. So they ought to look to-the business as to whether to be confident compared to the price that they paid and they ought to forget about what anybody is saying, including me on television, or what they’re reading in the paper. That’s got nothing to do with whether they made a good decision or not. What’s got to do with whether they made a good decision, what kind of business they bought and what they paid for it.<br /><br /><strong>SG: People are reeling from this whole Bernie Madoff scandal. What would you say to people who have lost trust in the financial system?</strong><br />WB: They shouldn’t have lost... you don’t need to lose trust in the American system. If you decide to buy a farm and you pay the right price for it, you don’t need to lose faith in American agriculture you know because the prices of farms go down…<br /><br /><strong>SG: But you know what I’m saying. People lost money last year in companies that they thought were rock solid. As I said the unthinkable happened and then on top of it, this whole Bernie Madoff scandal. It has undermined people’s sense of well being about our system. So what do you say to people who have lost trust?</strong><br />WB: Well they may be better off not being in equities. If they’re really depending on somebody else and they don’t know anything about the somebody else, they’ve got a problem. They shouldn’t do that. I mean there are going to be crooks out there and this guy was a crook on a scale that we’ve never seen before. But you ought to know who you’re dealing with. But if you’re going to buy a stock in some business that’s been around for a 100 years and will be around for 100 more years and it’s not a leveraged company and it sells some important product and it’s got a strong competitive position and you buy it at a reasonable multiple of earnings, you don’t have to worry about crooks, you’re going to do fine.<br /><br /><strong>SG: Is there any take away lessons from the Bernie Madoff story?</strong><br />WB: Well he was a special case. I mean here is a guy who had a good reputation for 30 years or something, and the trust of a lot of people around him. So it’s very easy to draw assurances from the fact that if fifty other people that are prominent and intelligent trust the guy, that maybe you should trust him too. But I wouldn’t put my trust in a single individual like that. I would put my trust in a very good business. I would want a business that was so good that if a social guy was running it, it would still certainly do well and there are plenty of businesses that are like that.<br /><br /><strong>SG: So are you saying that investing has gotten so complicated that investors should stick to what they know? Is that the take-away lesson?</strong><br />WB: You should always stick to what you know. I say the “know-nothing investor” and there’s nothing wrong with being a “know-nothing investor”. I spend 60 hours a week, thinking about investments and most people have got jobs and other things to do. They can buy index funds. And they’re not going to do better then an index fund if they go around and trust some guy who’s promising them very high returns. If you buy a cross section of American business and you don’t buy it during a period when everybody is all enthused about stock, you’re going to do fine over 10 or 20 years. If you buy something with the idea that you’re going to do fine over 10 months, you may or may not. I do not know what stock is going be up 10 months from now, and I never will.<br /><br /><strong>SG: What about Berkshire Hathaway stock? Were you surprised that it took such a hit last year, given that Berkshire shareholders are such buy and hold investors?</strong><br />WB: Well most of them are. But in the end our price is figured relative to everything else so the whole stock market goes down 50 percent we ought to go down a lot because you can buy other things cheaper. I‘ve had three times in my lifetime since I took over Berkshire when Berkshire stock’s gone down 50 percent. In 1974 it went from $90 to $40. Did I feel badly? No I loved it! I bought more stock. So I don’t judge how Berkshire is doing by its market price, I judge it by how our businesses are doing.<br /><br /><strong>SG: Is there a price at which you would buy back shares of Berkshire? $85,000? $80,000?</strong><br />WB: I wouldn’t name a number. If I ever name a number I’ll name it publicly. I mean if we ever get to the point where we’re contemplating doing it, I would make a public announcement.<br /><br /><strong>SG: But would you ever be interested in buying back shares?</strong><br />WB: I think if your stock is undervalued, significantly undervalued, management should look at that as an alternative to every other activity. That used to be the way people bought back stocks, but in recent years, companies have bought back stocks at high prices. They’ve done it because they like supporting the stock…<br /><br /><strong>SG: What are your feelings with Berkshire. The stock is down a lot. It was up to $147 thousand last year. Would you ever be opposed to buying back stock?</strong><br />WB: I’m not opposed to buying back stock.<br /><br /><strong>SG: Everyone wants to know your plans. What you’re going to do with all of Berkshire Hathaway’s cash, some 30 billion dollars? Is this now the right time to do a big acquisition?</strong><br />WB: Well we’ve spent a lot of money in the last 4 months. We spent $5 billion on Goldman Sachs, $3 billion on GE, $6.6 billion on Wrigley, we’ve got $3 billion committed on Dow. We’ve spent a lot of money. We’ve got money left, but I love spending money. Cash makes me very unhappy. I like to always have enough and never way more than enough, but I always want to have enough. So we would never go below $10 billion of cash at Berkshire. We’re in the insurance business - we got a lot of things. We’re never going to depend on the kindness of strangers. But anything excess in that, I love the idea of buying things and the cheaper they get the better I like it.<br /><br /><strong>SG: You’ve been talking about doing a big acquisition for a while now, what are you waiting for?</strong><br />WB: Well we’ve spent $20 billion dollars... that might not be.<br /><br /><strong>SG: I mean in terms of a company…</strong><br />WB: Well we’ll wait for the right deal. We had a deal to buy Constellation for roughly $5 billion and then events with the French coming in meant we didn’t do it. But I was delighted to commit to that $5 billion dollars for Constellation Energy. And it could happen tomorrow. That one happened on a Tuesday afternoon I mean it happened like that. Constellation was in big trouble and we flew back that day, talked to the people at MidAmerican that Tuesday and made them an offer that night.<br /><br /><strong>SG: It seems that you’re pretty optimistic about the long term future of the American economy and stock market, but a little pessimistic about the short term... is that a fair assessment of where your head is right now?</strong><br />WB: I am unquestionably optimistic about the long term. I’m more than a little pessimistic about the short term, but that doesn’t mean I am pessimistic about the stock market. We bought stocks today. If you tell me the economy is going to be terrible for 12 months, pick a number, and then if I find something that is attractive today, I am going to buy it today. I am not going to wait and hope that it sells cheaper 6 months from now. Because who knows when stocks will hit a low or a high? Nobody knows that. All you know is whether you’re getting enough for your money or not.<br /><br /><strong>SG: As you know it’s the 30th anniversary of Nightly Business Report. As you look back on the past three decades, what would you say is the most important lesson that you’ve learned about investing?</strong><br />WB: Well I’ve learned my lessons before that. I read a book what is it, almost 60 years ago roughly, called The Intelligent Investor and I really learned all I needed to know about investing from that book, in particular chapters 8 and 20 so I haven’t changed anything since.<br /><br /><strong>SG: Graham and Dodd?</strong><br />WB: Well that was Ben Grahams’ book The Intelligent Investor. Graham and Dodd goes back even before that which was important, very important. But you know you don’t change your philosophy assuming you think have a sound one and I picked up I didn’t figure it out myself, I learned it from Ben Graham, but I got a framework for investing that I put in place back in 1950 roughly and that framework is the framework I use now. I see different ways to apply it from time to time but that is the framework.<br /><br /><strong>SG: Can you describe what it is? I mean what is your most important investment lesson?</strong><br />WB: The most important investment lesson is to look at a stock as a piece of business not just some thing that jiggles up and down or that people recommend or people talk about earnings being up next quarter, something like that, but to look at it as a business and evaluate it as a business. If you don’t know enough to evaluate it as a business you don’t know enough to buy it. And if you do know enough to evaluate it as a business and its selling cheap, you buy it and don’t worry about what its doing next week, next month or next year.<br /><br /><strong>SG: So if we asked for your investment advice back in 1979 back when Nightly Business Report first got started, would it be any different than what you would say today?</strong><br />WB: Not at all. If you’d ask the same questions, you’ve gotten the same answers.<br /><br />SG: Thank you so much Mr. Buffett … Thank you so much, always a pleasure talking to you.<br />WB: Thank you, been a real pleasure.Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-5662550219190198582009-01-23T08:18:00.001-08:002009-01-23T08:28:28.251-08:00More on Obama - Geithner China commentsJanuary 23, 2009<br /><strong><span style="font-size:130%;">Geithner Hints at Harder Line on China Trade</span></strong><br />By <a title="More Articles by Jackie Calmes" href="http://topics.nytimes.com/top/reference/timestopics/people/c/jackie_calmes/index.html?inline=nyt-per">JACKIE CALMES</a><br /><br />WASHINGTON — <a title="More articles about Timothy F. Geithner." href="http://topics.nytimes.com/top/reference/timestopics/people/g/timothy_f_geithner/index.html?inline=nyt-per">Timothy F. Geithner</a>, who moved closer to confirmation as Treasury secretary on Thursday, told senators that <a title="More articles about Barack Obama." href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per">President Obama</a> believed <a title="More news and information about China." href="http://topics.nytimes.com/top/news/international/countriesandterritories/china/index.html?inline=nyt-geo">China</a> was “manipulating” its currency, suggesting a more confrontational stance toward that country than under the Bush administration.<br /><br />Mr. Geithner’s comment was made in writing to the Senate Finance Committee hours before it voted 18 to 5 to recommend that the full Senate confirm him. The statement, which is certain to anger the Chinese government, comes at a particularly sensitive time, with economies in both the United States and China weakening and tensions already rising around the globe over trade.<br /><br />The United States, moreover, is increasingly dependent on China to finance its ballooning deficit.<br />An administration official said that Mr. Geithner was only repeating what Mr. Obama had said during the campaign, and pointed out that his statement also emphasized that the president intended to use “all the diplomatic avenues available to him” to address the currency question.<br /><br />It remained unclear whether Mr. Geithner was signaling that Mr. Obama would officially declare later this spring that China was engaging in currency manipulation, when the administration is required by a 20-year-old trade law to report to Congress on exchange rate issues. Such a finding would begin a legal process that starts with diplomacy and could end with the imposition of trade barriers like tariffs. The objective would be to persuade China to let the value of its currency, <a title="More articles about the Yuan." href="http://topics.nytimes.com/top/reference/timestopics/subjects/c/currency/yuan/index.html?inline=nyt-classifier">the yuan</a>, freely float — a move that would let its value rise and would increase the cost of its exports.<br /><br /><strong>“President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency,” Mr. Geithner wrote.</strong> He stopped short of charging that China is manipulating its currency intentionally to gain an unfair trade advantage, as the 1988 law requires for an official citation of currency “manipulation.”<br /><br />Even so, the Obama administration’s restatement of that position in writing on its second day was immediately seen as significant. The Bush administration purposely did not use the term “currency manipulator” to avoid antagonizing the Chinese, even when it was criticizing China’s trade policies.<br /><br />The more aggressive position will be popular with organized labor in the United States, a major supporter of Mr. Obama’s presidential campaign, and with many manufacturers who say China is purposely keeping its currency devalued against <a title="More articles about the American dollar." href="http://topics.nytimes.com/top/reference/timestopics/subjects/c/currency/dollar/index.html?inline=nyt-classifier">the dollar</a> and leaving American exports at a competitive disadvantage against lower-priced Chinese goods.<br /><br /><strong>“It’s huge,” said Simon Johnson, a former chief economist at the </strong><a title="More articles about the International Monetary Fund." href="http://topics.nytimes.com/top/reference/timestopics/organizations/i/international_monetary_fund/index.html?inline=nyt-org"><strong>International Monetary Fund</strong></a><strong> who is now a professor of economics at the </strong><a title="More articles about Massachusetts Institute of Technology" href="http://topics.nytimes.com/top/reference/timestopics/organizations/m/massachusetts_institute_of_technology/index.html?inline=nyt-org"><strong>Massachusetts Institute of Technology</strong></a><strong>. “I’m very supportive in general and I think China needs to be called to account and the I.M.F. has not done it,” he said.</strong><br /><br />But, he added, “I have to say this is really a bit of an issue for Mr. Obama’s internationalist sort of theme for his foreign policy because <strong>this is going to be at least a spat with China, and if we don’t back down it’s then a row, and you know how that goes.”<br /></strong><br />Prices of Treasury debt fell modestly after news of Mr. Geithner’s comments, reflecting worry among investors that China might be less willing to buy United States debt if the new administration pushed the country to further revalue its currency. The yield on the 30-year bond, which moves in the opposite direction from its price, climbed to 3.247 percent from 3.159 percent on Wednesday afternoon.<br /><br />Even before, yields on long-term government debt had been moving up in the last three weeks, as investors anticipated a significant increase in government borrowing.<br /><br />The Obama official, who did not want to be identified because of the sensitivity of Mr. Geithner’s confirmation process, cited the Treasury nominee’s earlier oral testimony to the Finance Committee. <strong>“As Tim Geithner said, it is important for the United States and the world economy that our major trading partners operate with a flexible exchange rate system,” the official said, “in which market forces determine the value of exchange rates. The new administration is committed to using a fully integrated approach to bring this about in the current economic environment.”</strong><br /><br />As a senator, Mr. Obama supported legislation as recently as last year that would open the door to trade sanctions against China for currency manipulation.<br /><br />Mr. Geithner’s statement was in response to a written question about the new administration’s stance that was submitted by Senator <a title="More articles about Charles E. Schumer." href="http://topics.nytimes.com/top/reference/timestopics/people/s/charles_e_schumer/index.html?inline=nyt-per">Charles E. Schumer</a>, Democrat of New York, a vocal critic of China’s currency policies.<br /><br />On Thursday, Mr. Schumer welcomed Mr. Geithner’s reply. “For the first two days, this is a big step” from the Obama administration, he said in an interview. “And I think it’s an indication: They are not going to be anti-free trade; they are not going to be for putting artificial barriers in the way. But when other countries do, they’re going to be much tougher on them.”<br /><br />The <a title="More articles about National Association of Manufacturers" href="http://topics.nytimes.com/top/reference/timestopics/organizations/n/national_assn_of_manufacturers/index.html?inline=nyt-org">National Association of Manufacturers</a>, whose members have pushed previous administrations to get tougher with China, was pleased, but also cautious given the potential for a confrontation that could exacerbate global woes.<br /><br /><strong>“You know the world has changed a lot with the </strong><a title="More articles about the credit crisis." href="http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_crisis/index.html?inline=nyt-classifier"><strong>financial crisis</strong></a><strong> and China has a lot in U.S. Treasuries,” said Frank Vargo, vice president for international economic affairs at the manufacturers’ association.</strong> “This needs to be done in a cooperative, not a confrontational, way.”<br /><br />Some market strategists said Mr. Geithner’s statement inflamed a contentious issue unnecessarily given that China’s exports and economy were slowing significantly.<br /><br />“Things have changed quite a bit since Hank Paulson made an issue of this,” said one, <a title="More articles about Edward Yardeni." href="http://topics.nytimes.com/top/reference/timestopics/people/y/edward_yardeni/index.html?inline=nyt-per">Edward Yardeni</a>, an independent analyst, referring to <a title="More articles about Henry M. Paulson Jr." href="http://topics.nytimes.com/top/reference/timestopics/people/p/henry_m_jr_paulson/index.html?inline=nyt-per">Henry M. Paulson Jr.</a>, the just-departed Treasury secretary. “The Chinese trade surplus is shrinking dramatically and China’s economy is falling into recession. I think it really wasn’t necessary. It doesn’t accomplish anything.”<br /><br />Mr. Paulson initiated a round of strategic talks with the Chinese and, on his watch, the Chinese allowed the yuan to appreciate nearly 20 percent.<br /><br />Mr. Geithner would be as aware of China’s sensitivity as anyone, and no one has suggested that he made his statement in error. Before taking his current post as president of the <a title="More articles about Federal Reserve Bank of New York" href="http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_reserve_bank_of_new_york/index.html?inline=nyt-org">Federal Reserve Bank of New York</a>, <strong>Mr. Geithner was a policy director at the I.M.F.</strong> <strong>Before that, he was the under secretary of the Treasury for international affairs</strong> in the Clinton administration, <strong>a crisis manager during the Asian financial crisis</strong> of the 1990s and <strong>a Treasury attaché to Japan.</strong> <strong><span style="font-size:130%;">By his own description, Mr. Geithner’s expertise is in matters of currency exchange rates and monetary policy.</span></strong><br /><br /><strong>In his written statement to the Senate panel, Mr. Geithner further noted Mr. Obama’s support as a senator for</strong> <strong>“tough legislation to overhaul the U.S. process for determining currency manipulation and authorizing new enforcement measures so countries like China cannot continue to get a free pass for undermining fair trade principles.”</strong><br /><br /><strong>“The question is how and when to broach the subject in order to do more good than harm,” he added. “The new economic team will forge an integrated strategy on how best to achieve currency realignment in the current economic environment.”</strong><br /><br />The full Senate is expected to confirm Mr. Geithner, 47, as Treasury secretary on Monday. Some Republican senators blocked a vote for this week, given lingering objections about Mr. Geithner’s failure until recently to pay about $34,000 in payroll taxes on his income at the I.M.F. from 2001 to 2004.<br /><br />He was roundly criticized in his Finance Committee hearing on Wednesday, but its bipartisan vote reflected members’ opinion that Mr. Geithner’s expertise outweighed his personal tax lapses. Those were “completely unacceptable,” said Senator <a title="More articles about Kent Conrad." href="http://topics.nytimes.com/top/reference/timestopics/people/c/kent_conrad/index.html?inline=nyt-per">Kent Conrad</a>, Democrat of North Dakota. “In normal times that alone would lead me to oppose his nomination. These are not normal times.”<br /><br />All the panel’s Democrats and five of the 10 Republicans voted for Mr. Geithner.<br />“I’m convinced he’s a person of great integrity even though he’s made these mistakes,” said Senator <a title="More articles about Orrin G. Hatch." href="http://topics.nytimes.com/top/reference/timestopics/people/h/orrin_g_hatch/index.html?inline=nyt-per">Orrin G. Hatch</a>, Republican of Utah. But another Republican, Senator Michael B. Enzi of Wyoming, said, “I’m really disappointed that we’re even voting on this,” given that other nominees had been disqualified for less.<br /><br />Vikas Bajaj contributed reporting from New York.Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com8tag:blogger.com,1999:blog-8213287478160131439.post-86429136698976917752009-01-23T07:13:00.001-08:002009-01-23T07:16:55.552-08:00Princeton in the news!From the Conscience of a Liberal - Paul Krugman<br />krugman.blogs.nytimes.com<br /><a title="Go to Paul Krugman Home" href="http://krugman.blogs.nytimes.com/"></a><br /><strong>January 22, 2009, 7:40 pm — Updated: 7:40 pm --></strong><br /><strong>Invasion of the DC body-snatchers</strong><br /><br />So, for the second time since I arrived at Princeton in 2000, my “boss” — people who know academic life will know why I put quotes around that — has been abducted by Washington. First, <strong>a terrific economics department head named Ben Bernanke</strong> went off to do something or other in the monetary field.<br /><br />Now, <strong>Anne-Marie Slaughter,</strong> the equally terrific <strong>dean of the Woodrow Wilson School</strong>, has gone off to become the <strong>director of policy planning at the State Department.</strong> I assume that means we’ll now actually have planned policy — what an innovation!<br /><br />Anyway, congrats to Anne-Marie — and kudos to Secretary Clinton for making such a great hire.<br /><br /><i> Smart is the new cool. Living in Princeton, I feel a justified sense of pride </i>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-18884070755437583192009-01-23T06:57:00.001-08:002009-01-23T07:01:29.592-08:00The Global "Adverse Feedback Loop"from <a href="http://www.bloomberg.com/">www.bloomberg.com</a><br /><br /><strong><span style="font-size:130%;">Roubini, Edwards Predict Slump in S&P 500 on China (Update3)</span></strong><br /><a href="mailto:?Subject=Bloomberg%20news:%20%20Roubini," 26refer="'home%26sid%3DaYDHQoUv6u.A" body="%20Roubini,">Email</a> <a onclick="javascript:window.open('/apps/news?pid=20670001&refer=home&sid=aYDHQoUv6u.A','my_new_window','scrollbars=yes,resizable=yes,width=610,height=670')" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aYDHQoUv6u.A&refer=home#">Print</a> <a onclick="setStyleById('article', 'fontSize', '9pt');" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aYDHQoUv6u.A&refer=home#">A</a> <a onclick="setStyleById('article', 'fontSize', '11pt');" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aYDHQoUv6u.A&refer=home#">A</a> <a onclick="setStyleById('article', 'fontSize', '13pt');" href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aYDHQoUv6u.A&refer=home#">A</a><br />By Michael Patterson and Adam Haigh<br /><br />Jan. 23 (Bloomberg) -- Stocks will retreat around the world because of shrinking demand from China as growth in the third- biggest economy slows, said <a href="http://search.bloomberg.com/search?q=Nouriel+Roubini&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Nouriel Roubini</a>, the New York University professor who predicted last year’s financial crisis.<br /><br />Global equities will fall 20 percent from current levels as China, which contributed 19.5 percent to total growth in 2007, contends with its slowest expansion in seven years, he said. Wall Street strategists predict the <a href="http://www.bloomberg.com/apps/quote?ticker=SPX%3AIND" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Standard & Poor’s 500 Index</a> will rise 29 percent this year from the closing level yesterday.<br /><br />Roubini, an economics professor at NYU’s Stern School of Business, said China already is in a “recession” despite government data showing a 6.8 percent fourth-quarter growth rate, as power output drops and manufacturing shrinks.<br /><br />“Demand is falling in China, they’re over-invested in capacity and there’s a global supply glut,” Roubini, 50, said in a telephone interview. “It has very, very important implications.”<br />Roubini’s view is shared by Societe Generale SA global strategist <a href="http://search.bloomberg.com/search?q=Albert+Edwards&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Albert Edwards</a>, who was correct in forecasting in March 2007 that a U.S. contraction would spur a bear market in equities. Edwards says the China slowdown will reduce earnings at industrial, energy and raw-materials companies, worsening a selloff in emerging and developed-market stocks that may send the S&P 500 down 40 percent to 500.<br /><br /><strong>Emperor’s Clothes</strong><br />“People should be thinking really hard about this rather than sticking their heads in the sand,” said Edwards, a London- based strategist and member of the top-ranked global investment strategy team in Thomson Extel’s surveys the past three years. “We’re just pointing out when the emperor doesn’t have any clothes on.”<br /><br />The consensus among eight strategists surveyed by Bloomberg this week is for the index to end the year at 1,066. The <a href="http://www.bloomberg.com/apps/quote?ticker=SPX%3AIND" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">S&P 500</a> fell 1.5 percent yesterday to 827.50, and futures on the index dropped 2.2 percent as of 4:32 a.m. in New York.<br /><br />Data at China’s National Bureau of Statistics is gathered in a “scientific and realistic method,” <a href="http://search.bloomberg.com/search?q=Ma+Jiantang&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Ma Jiantang</a>, the agency’s director, said at a briefing in Beijing yesterday in response to a question about the accuracy of government figures. <a href="http://search.bloomberg.com/search?q=Zhang+Yingxiang&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Zhang Yingxiang</a>, a spokeswoman for the statistics bureau, declined further comment when contacted by phone today.<br /><br /><strong>China Stocks Fall</strong><br />China’s economy grew 9 percent for all of 2008 after a 13 percent <a href="http://www.bloomberg.com/apps/quote?ticker=GDPNTTLY%3AIND" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">expansion</a> in the previous year, the fastest in the world. China’s <a href="http://www.bloomberg.com/apps/quote?ticker=SHSZ300%3AIND" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">CSI 300 Index</a> fell 0.6 percent at the close in Shanghai, the biggest drop in eight days. Commodity producers led declines after Aluminum Corp. of China Ltd. and Yunnan Copper Industry Co. reported lower profit.<br /><br />Economists at JPMorgan Chase & Co., Citigroup Inc., the World Bank and the International Monetary Fund all predict China will grow at least 7 percent this year, while investors <a href="http://search.bloomberg.com/search?q=Jim%0ARogers&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Jim Rogers</a> and <a href="http://search.bloomberg.com/search?q=Mark+Mobius&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Mark Mobius</a> are buying Chinese shares on expectations the government will bolster economic growth with interest-rate cuts and fiscal stimulus. The IMF said China’s contribution to global growth increased to 19.5 percent in 2007 from 17.2 percent in the previous year.<br /><br />China, which has $1.9 trillion set aside in the world’s largest reserves, plans to spend at least 4 trillion yuan on bridges, housing and tax breaks to boost the economy. Chinese President <a href="http://search.bloomberg.com/search?q=Hu+Jintao&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Hu Jintao</a> has pledged further measures to maintain stable growth in the face of “serious challenges and difficulties.”<br /><br /><strong>China Recession?</strong><br />Rogers, who predicted the start of the commodities rally in 1999, recommends investors buy China’s agriculture, water treatment, power generation and infrastructure stocks because the companies won’t be hurt by the nation’s slowing economy.<br /><br />“China could be in recession, I have no idea and it’s not relevant to me because I’m using my judgment as to what will happen six months from now,” said Rogers, who authored books on investing including “A Bull in China: Investing Profitably in the World’s Greatest Market.”<br /><br />“There is a lot happening in China and there will be those that will hold up well.”<br /><br />China’s <a href="http://www.bloomberg.com/apps/quote?ticker=CNGDPYOY%3AIND" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">economy</a> will grow 6.3 percent this quarter from a year earlier, according to the median estimate of nine economists surveyed by Bloomberg after yesterday’s GDP report.<br /><br />China’s electricity output declined 7.8 percent in November from a year earlier and fell 3 percent in October, the first declines since February 2002, according to China Economic Information Net data compiled by Bloomberg. Manufacturing shrank for a third month as the deepening global recession cut demand for the nation’s toys, clothes and electronics.<br /><br /><strong>‘Manipulating’ the Yuan</strong><br />Edwards said rising <a href="http://www.bloomberg.com/apps/quote?ticker=EHUPCN%3AIND" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">unemployment</a> among factory workers will fuel <strong><span style="font-size:180%;">social unrest</span>,</strong> threatening the Communist Party’s survival <strong><span style="font-size:130%;">and increasing the risk authorities will devalue the yuan to boost exports.<br /></span></strong><br />The yuan appreciated about 19 percent against the dollar between 2005 and July 2008 as China redressed what U.S. officials saw as an unfair price advantage for exports. The yuan has since stabilized at about 6.85 per dollar. <a href="http://search.bloomberg.com/search?q=Timothy+Geithner&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Timothy Geithner</a>, President <a href="http://search.bloomberg.com/search?q=Barack+Obama%3Fs&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Barack Obama’s</a> nominee for Treasury secretary, said yesterday that China is “manipulating” its currency.<br /><br /><strong><span style="font-size:130%;">The yuan fell the most in a month today as the nation’s banks refuted the new U.S. administration’s accusation.</span></strong><br /><br />“If you amble your way through the analysis, you realize if push comes to shove they will devalue” the yuan, Edwards said. <strong><span style="font-size:180%;">That may spur lawmakers in the U.S. and China to increase trade barriers, he said.<br /></span></strong><br />To contact the reporter on this story: <a href="http://search.bloomberg.com/search?q=Michael+Patterson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">Michael Patterson</a> in London at <a href="mailto:mpatterson10@bloomberg.net" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true">mpatterson10@bloomberg.net</a>. Last Updated: January 23, 2009 05:50 ESTNoblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-52959556024307302182009-01-22T08:26:00.001-08:002009-01-22T08:29:29.409-08:00Obama's Geithner: China manipulates Yuanfrom <a href="http://www.bloomberg.com/">http://www.bloomberg.com/</a><br /><strong><span style="font-size:130%;">Obama Deems China ‘Manipulating’ Yuan, Geithner Says (Update2)</span></strong><br /><a style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" href="mailto:?Subject=Bloomberg%20news:%20%20Obama" body="%20Obama" 26refer="'home%26sid%3DaK1BgzZY6h4s">Email</a> <a style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" onclick="javascript:window.open('/apps/news?pid=20670001&refer=home&sid=aK1BgzZY6h4s','my_new_window','scrollbars=yes,resizable=yes,width=610,height=670')" href="http://www.blogger.com/post-create.g?blogID=8213287478160131439#">Print</a> <a style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" onclick="setStyleById('article', 'fontSize', '9pt');" href="http://www.blogger.com/post-create.g?blogID=8213287478160131439#">A</a> <a style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" onclick="setStyleById('article', 'fontSize', '11pt');" href="http://www.blogger.com/post-create.g?blogID=8213287478160131439#">A</a> <a style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" onclick="setStyleById('article', 'fontSize', '13pt');" href="http://www.blogger.com/post-create.g?blogID=8213287478160131439#">A</a><br />By Rebecca Christie<br /><br />Jan. 22 (Bloomberg) -- <a onmouseover="return escape( popwSearchNews( this ))" style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" href="http://search.bloomberg.com/search?q=Timothy+Geithner&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Timothy Geithner</a>, President<a onmouseover="return escape( popwSearchNews( this ))" style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" href="http://search.bloomberg.com/search?q=Barack%0AObama&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Barack Obama</a>’s nominee for Treasury secretary, said the new U.S. administration believes China is “manipulating” its currency.<br /><br />Geithner also said, in written responses to questions from Senate Finance Committee members, that there are “no current plans” to request more financial bailout funds. He played down any need to nationalize U.S. banks, without specifically ruling out the option.<br /><br />The remarks on China’s exchange rate policy may presage a tougher American line with the nation that is the biggest foreign investor in U.S. government debt. Former Treasury Secretary <a onmouseover="return escape( popwSearchNews( this ))" style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" href="http://search.bloomberg.com/search?q=Henry+Paulson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Henry Paulson</a> preferred diplomacy over confrontation with China to resolve trade disputes and, in semiannual reports, refrained from labeling the country an illegal “manipulator” of its currency.<br /><br />“President Obama -- backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency,” Geithner said in the remarks, which were posted on the Senate Finance Committee Web site today. “The new economic team will forge an integrated strategy on how best to achieve currency realignment in the current economic environment.”<br /><br />Characterizing China’s policy as manipulation is “a very substantial change” by the Obama administration, said <a onmouseover="return escape( popwSearchNews( this ))" style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" href="http://search.bloomberg.com/search?q=Nicholas%0ALardy&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Nicholas Lardy</a>, an economist who specializes in China at the Peterson Institute for International Economics in Washington.<br /><br />‘Bent Over Backwards’<br />“It’s certainly something the Bush administration bent over backwards to avoid,” Lardy said. “It sounds also like he’s giving himself a little bit of wiggle room, saying we’ll take it up when we think it’ll be most effective” and not necessarily as an immediate issue.<br /><br />Geithner said that in the short term, China should pursue “more aggressive” efforts to boost economic growth, in concert with a similar U.S. economic stimulus package.<br /><br />The finance panel is expected to vote on Geithner’s nomination today.<br /><br />The Obama administration is continuing to weigh a proposal to spur home buying by driving down mortgage rates, he said.<br /><br />“The primary objective of the proposal to provide 4.5 percent mortgages is to assure that affordable mortgages are available to qualified borrowers,” Geithner said. “We share the objective and will continue examining proposals aimed at increasing the flow of credit to qualified borrowers.”<br /><br />One version of the proposal would use Fannie Mae and Freddie Mac, the federal-chartered mortgage finance companies seized by the government in September, to reduce 30-year fixed home-loan rates to around 4.5 percent, from a current average of about 4.96 percent.<br /><br />To contact the reporter on this story: <a onmouseover="return escape( popwSearchNews( this ))" style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" href="http://search.bloomberg.com/search?q=Rebecca+Christie&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1">Rebecca Christie</a> in Washington at<a onmouseover="return escape( popwSendEmail( this ))" style="FONT-WEIGHT: bold; COLOR: rgb(245,147,0); TEXT-DECORATION: none" href="mailto:Rchristie4@bloomberg.net">Rchristie4@bloomberg.net</a>;Last Updated: January 22, 2009 11:05 ESTNoblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-2704946050669787512009-01-21T07:51:00.000-08:002009-01-21T07:55:23.587-08:00Toyota: World's Largest Automaker (2008)from nytimes.com<br /><br />January 22, 2009<br /><strong><span style="font-size:180%;">Toyota Ahead of G.M. in 2008 Sales</span></strong><br />By NICK BUNKLEY<br /><br />DETROIT — For the first time since <a title="Recent and archival news about the Great Depression." href="http://topics.nytimes.com/top/reference/timestopics/subjects/g/great_depression_1930s/index.html?inline=nyt-classifier">the Great Depression</a>, <a title="More information about General Motors Corp" href="http://topics.nytimes.com/top/news/business/companies/general_motors_corporation/index.html?inline=nyt-org">General Motors</a> cannot call itself the world’s largest automaker. Its sales fell behind <a title="More information about TOYOTA MOTOR Corporation" href="http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html?inline=nyt-org">Toyota</a> in 2008, a year when <a title="More information about General Motors Corporation" href="http://topics.nytimes.com/top/news/business/companies/general_motors_corporation/index.html?inline=nyt-org">G.M.</a> celebrated its 100th anniversary and narrowly avoided a bankruptcy filing amid a downturn in the economy.<br /><br />G.M. said Wednesday that it sold 8.35 million vehicles in 2008, about 620,000 less than Toyota’s 8.97 million. G.M.’s sales were down 11 percent from 2007, while Toyota’s declined 4 percent.<br /><br />Toyota, which was founded in Japan two years after G.M. became the dominant carmaker, had been closing in on G.M. for years.<br /><br />Its sales surged around the world while G.M.’s global expansion was tempered by decades of falling market share in the United States. The two had traded places from one quarter to the next in recent years, and G.M. had been widely expected to slip into second place in 2007 but held off Toyota by 3,000 vehicles.<br /><br />Both companies struggled in 2008, as vehicle demand slumped, but G.M. was hurt more, to the point that executives said the company would run out of money without billions in loans from the United States government. G.M.’s global sales fell 26 percent in the fourth quarter, and the company received a $4 billion loan in December.<br /><br />“The challenges in the global financial markets, including credit tightening, the drop in commodity prices, and economic uncertainty continue to negatively impact overall demand for new vehicles,” Jonathan Browning, G.M.’s vice president for global sales, service and marketing, said Wednesday in a statement. “For the total global industry, we saw about 3.5 million fewer vehicles sold in 2008 than the previous year.”<br /><br />In 2008, 64 percent of G.M.’s sales occurred outside the United States, up from 59 percent the previous year. The company still outsells Toyota in the United States by a wide margin — nearly 800,000 vehicles in 2008, or 33 percent more than Toyota — but the Japanese company is a bigger player in the rest of the world.<br /><br />G.M., which has lost money every year since 2004, has said it is more concerned with restructuring to become a smaller but profitable company than remaining the world leader in sales.<br /><br /><i>What a colossal failure of Leadership. The American Auto Industry desperately needs a Steve Jobs. Detroit still doesnt get it. It is firmly mired in the past. The world has moved on. </i>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-56685342181157229232009-01-20T15:43:00.000-08:002009-01-20T16:03:11.551-08:00President Barack Hussein Obama 1/20/09: Inaugural AddressMy fellow citizens:<br /><br />I stand here today humbled by the task before us, grateful for the trust you have bestowed, mindful of the sacrifices borne by our ancestors. I thank President Bush for his service to our nation, as well as the generosity and cooperation he has shown throughout this transition.<br />Forty-four Americans have now taken the presidential oath. The words have been spoken during rising tides of prosperity and the still waters of peace. Yet, every so often the oath is taken amidst gathering clouds and raging storms. At these moments, America has carried on not simply because of the skill or vision of those in high office, but because <strong>we the people have remained faithful to the ideals of our forebears, and true to our founding documents. </strong>So it has been. So it must be with this generation of Americans.<br /><br />That we are in the midst of crisis is now well understood. Our <strong>nation is at war, against a far-reaching network of violence and hatred.</strong> <strong>Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age.</strong> Homes have been lost; jobs shed; businesses shuttered. Our health care is too costly; our schools fail too many; and each day brings further evidence that <strong>the ways we use energy strengthen our adversaries and threaten our planet.<br /></strong><br />These are the indicators of crisis, subject to data and statistics. <strong>Less measurable but no less profound is a sapping of confidence across our land</strong> — a nagging fear that America's decline is inevitable, and that the next generation must lower its sights.<br /><br />Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America — <strong>they will be met.<br /></strong><br />On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord.<br /><br />On this day, we come to proclaim an end to the petty grievances and false promises, the recriminations and worn out dogmas, that for far too long have strangled our politics.<br />We remain a young nation, but in the words of Scripture, <strong>the time has come to set aside childish things. </strong>The time has come to reaffirm our enduring spirit; <strong>to choose our better history;</strong> to carry forward that precious gift, that noble idea, passed on from generation to generation: the God-given promise that all are equal, all are free and all deserve a chance to pursue their full measure of happiness.<br /><br />In reaffirming the greatness of our nation, we understand that <strong>greatness is never a given.</strong> It must be earned. Our journey has never been one of shortcuts or settling for less. It has not been the path for the faint-hearted — for those who prefer leisure over work, or seek only the pleasures of riches and fame. <strong>Rather, it has been the risk-takers, the doers, the makers of things</strong> — some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.<br /><br />For us, they packed up their few worldly possessions and traveled across oceans in search of a new life.<br /><br />For us, they toiled in sweatshops and settled the West; endured the lash of the whip and plowed the hard earth.<br /><br />For us, they fought and died, in places like Concord and Gettysburg; Normandy and Khe Sanh.<br /><br />Time and again these men and women struggled and sacrificed and worked till their hands were raw so that we might live a better life. They saw America as bigger than the sum of our individual ambitions; greater than all the differences of birth or wealth or faction.<br /><br />This is the journey we continue today. We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. <strong>Our minds are no less inventive,</strong> our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.<br />For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act — <strong>not only to create new jobs, but to lay a new foundation for growth.</strong> We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. <strong>We will restore science to its rightful place,</strong> and wield technology's wonders to raise health care's quality and lower its cost. <strong>We will harness the sun and the winds and the soil to fuel our cars and run our factories. </strong>And we will transform our schools and colleges and universities to meet the demands of a new age. All this we can do. All this we will do.<br /><br />Now, there are some who question the scale of our ambitions — <strong>who suggest that our system cannot tolerate too many big plans.</strong> Their memories are short. For they have forgotten what this country has already done; what free men and women can achieve when imagination is joined to common purpose, and necessity to courage.<br /><br /><strong>What the cynics fail to understand is that the ground has shifted beneath them</strong> — that the stale political arguments that have consumed us for so long no longer apply. <strong>The question we ask today is not whether our government is too big or too small, but whether it works </strong>— whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. Those of us who manage the public's dollars will be held to account — to spend wisely, reform bad habits, and do our business in the light of day — because only then can we restore the vital trust between a people and their government.<br /><br /><strong>Nor is the question before us whether the market is a force for good or ill.</strong> Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that <strong>without a watchful eye, the market can spin out of control</strong> — and that a nation cannot prosper long when it favors only the prosperous. <strong><span style="font-size:130%;">The success of our economy has always depended not just on the size of our gross domestic product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart — not out of charity, but because it is the surest route to our common good.<br /></span></strong><br /><strong>As for our common defense, we reject as false the choice between our safety and our ideals.</strong> Our founding fathers ... our found fathers, faced with perils we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience's sake. And so to all the other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: <strong>know that America is a friend of each nation and every man, woman, and child who seeks a future of peace and dignity, and that we are ready to lead once more.<br /></strong><br />Recall that earlier generations faced down fascism and communism not just with missiles and tanks, <strong>but with sturdy alliances and enduring convictions</strong>. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. <strong><span style="font-size:130%;">Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.<br /></span></strong><br />We are the keepers of this legacy. Guided by these principles once more, we can meet those new threats that demand even greater effort — even greater cooperation and understanding between nations. <strong>We will begin to responsibly leave Iraq to its people, and forge a hard-earned peace in Afghanistan.</strong> With old friends and former foes, we will work tirelessly to lessen the nuclear threat, and <strong>roll back the specter of a warming planet.</strong> We will not apologize for our way of life, nor will we waver in its defense, and for <strong>those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that our spirit is stronger and cannot be broken; you cannot outlast us, and we will defeat you.<br /></strong><br />For we know that our patchwork heritage is a strength, not a weakness. <strong>We are a nation of Christians and Muslims, Jews and Hindus — and non-believers.</strong> We are shaped by every language and culture, drawn from every end of this Earth; and <span style="font-size:130%;"><strong>because we have tasted the bitter swill of civil war and segregation, and emerged from that dark chapter stronger and more united,</strong> </span><strong><span style="font-size:130%;">we cannot help but believe that the old hatreds shall someday pass; that the lines of tribe shall soon dissolve; that as the world grows smaller, our common humanity shall reveal itself; and that America must play its role in ushering in a new era of peace.<br /></span></strong><br /><strong><span style="font-size:130%;">To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect.</span></strong> To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West — <strong><span style="font-size:180%;">know that your people will judge you on what you can build, not what you destroy. </span></strong>To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history; <strong><span style="font-size:130%;">but that we will extend a hand if you are willing to unclench your fist.<br /></span></strong><br />To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds. <strong>And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to the suffering outside our borders; nor can we consume the world's resources without regard to effect.</strong> For the world has changed, and we must change with it.<br /><br />As we consider the road that unfolds before us, we remember with humble gratitude those brave Americans who, at this very hour, patrol far-off deserts and distant mountains. They have something to tell us, just as the fallen heroes who lie in Arlington whisper through the ages. <strong>We honor them not only because they are guardians of our liberty, but because they embody the spirit of service; a willingness to find meaning in something greater than themselves. </strong>And yet, at this moment — a moment that will define a generation — it is precisely this spirit that must inhabit us all.<br /><br />For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies. It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours. It is the firefighter's courage to storm a stairway filled with smoke, but also a parent's willingness to nurture a child, that finally decides our fate.<br /><br />Our challenges may be new. The instruments with which we meet them may be new. But those values upon which our success depends — hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism — these things are old. These things are true. They have been the quiet force of progress throughout our history. What is demanded then is a return to these truths. What is required of us now is a new era of responsibility — a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.<br /><br />This is the price and the promise of citizenship.<br /><br />This is the source of our confidence — the knowledge that God calls on us to shape an uncertain destiny.<br /><br />This is the meaning of our liberty and our creed — why men and women and children of every race and every faith can join in celebration across this magnificent Mall, <strong>and why a man whose father less than sixty years ago might not have been served at a local restaurant can now stand before you to take a most sacred oath.<br /></strong><br />So let us mark this day with remembrance, of who we are and how far we have traveled. In the year of America's birth, in the coldest of months, a small band of patriots huddled by dying campfires on the shores of an icy river. The capital was abandoned. The enemy was advancing. The snow was stained with blood. At a moment when the outcome of our revolution was most in doubt, <strong>the father of our nation ordered these words be read to the people:<br /><span style="font-size:180%;">"Let it be told to the future world ... that in the depth of winter, when nothing but hope and virtue could survive...that the city and the country, alarmed at one common danger, came forth to meet (it)."</span><br /></strong><br /><strong>America, in the face of our common dangers, in this winter of our hardship, let us remember these timeless words.</strong> With hope and virtue, let us brave once more the icy currents, and endure what storms may come. Let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and <strong><span style="font-size:130%;">with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.<br /></span></strong><br />Thank you. God bless you. And God bless the United States of America.<br /><br /><i> Brilliant speechcraft, a truly heartfelt speech. Inspiring and Historic. And you start to understand how the man truly thinks. His thoughts are complex and he is a seeker of truth and peace. He recognizes the false choices and calls us to rise above our childishness. </i>Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-76540074005025870692009-01-19T13:49:00.001-08:002009-01-19T13:51:39.528-08:00He continues to inspire me....January 19, 2009<br /><strong>Obama Celebrates Holiday With Service</strong><br />By <a title="More Articles by Brian Knowlton" href="http://query.nytimes.com/search/query?ppds=bylL&v1=BRIAN" fdq="19960101&td=sysdate&sort=newest&ac=BRIAN" inline="'nyt-per">BRIAN KNOWLTON</a><br /><br /><img id="BLOGGER_PHOTO_ID_5293125564706205186" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 177px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_FQVPzt7NnF0/SXT1qCvaLgI/AAAAAAAAAEU/MsmQs-vrTg4/s320/Obama+Service+on+MLK+Day.jpg" border="0" /><br /><br />WASHINGTON — <a title="More articles about Barack Obama" href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per">Barack Obama</a> rolled up his sleeves on Monday and helped out at a homeless center, devoting much of his last full day as president-elect to paying tribute to <a title="More articles about Martin Luther King Jr.." href="http://topics.nytimes.com/top/reference/timestopics/people/k/martin_luther_jr_king/index.html?inline=nyt-per">Martin Luther King Jr.</a> and to the spirit of volunteerism and public service he said Mr. King represented.<br />Mr. Obama began the day visiting wounded troops at <a title="More articles about Walter Reed Army Medical Center." href="http://topics.nytimes.com/top/reference/timestopics/organizations/r/reed_walter_army_medical_center/index.html?inline=nyt-org">Walter Reed Army Medical Center</a>, his second homage to the military in two days, after a somber visit Sunday to Arlington National Cemetery. Mr. Obama was accompanied at Walter Reed by Martin Luther King III.<br /><br />Monday is the federal holiday commemorating the birth of Martin Luther King Jr., the civil rights icon, who for some people foreshadowed the ascendance of someone like Obama with his “I Have a Dream” speech delivered in 1963 from the Lincoln Memorial.<br /><br />“Today, we celebrate the life of a preacher who, more than forty-five years ago, stood on our national mall in the shadow of Lincoln and shared his dream for our nation,” Obama said in a statement. “His was a vision that all Americans might share the freedom to make of our lives what we will; that our children might climb higher than we would.<br /><br />“Dr. Martin Luther King’s was a life lived in loving service to others. As we honor that legacy, it’s not a day just to pause and reflect — it’s a day to act.” He called on ordinary Americans to take part Monday in public service projects across the country and then to make “an ongoing commitment to enriching the lives of others in their communities, their cities and their country.”<br /><br />It was a call to service not unlike that issued by another young American leader, President <a title="More articles about John Fitzgerald Kennedy." href="http://topics.nytimes.com/top/reference/timestopics/people/k/john_fitzgerald_kennedy/index.html?inline=nyt-per">John F. Kennedy</a>, though perhaps with added resonance because of Obama’s experience as a community organizer working with the jobless and needy on the South Side of Chicago.<br /><br />In late morning, Obama arrived at the <a href="http://www.sashabruce.org/">Sasha Bruce House</a>, said to be the only emergency shelter for homeless teens in Washington. Television showed him doffing his overcoat and rolling up the sleeves of his white shirt — which he wore tieless, and with an open collar — before helping paint a wall shades of blue, using a roller with an extension handle. He chatted easily with the young people, and at one point appeared to bend over to tie a shoe.<br /><br />The house, situated about 10 blocks northeast of the Capitol Building, seeks to provide homeless teens with a sense of comfort and community; residents stay in furnished apartments, and the center trains them in cooking, cleaning and computer use, and counsels them in finding work and medical help, with an emphasis on cultivating self-reliance.<br /><br />Separately, <a title="More articles about Michelle Obama." href="http://topics.nytimes.com/top/reference/timestopics/people/o/michelle_obama/index.html?inline=nyt-per">Michelle Obama</a> and Vice president-elect <a title="More articles about Joseph R. Biden Jr." href="http://topics.nytimes.com/top/reference/timestopics/people/b/joseph_r_jr_biden/index.html?inline=nyt-per">Joseph Biden Jr.</a> arrived, amid considerable excitement, to take part in other service projects.<br /><br />On Tuesday, as the inauguration and inaugural parade occupy much of the heart of the day, workers will be moving the Bushes out of the White House and the Obamas in within a six-hour period.<br /><br />President <a title="More articles about George W. Bush." href="http://topics.nytimes.com/top/reference/timestopics/people/b/george_w_bush/index.html?inline=nyt-per">George W. Bush</a>, during his last full day in office, spoke by phone to several world leaders. The White House said that he chatted with the leaders of Russia, Georgia, France, Germany, Italy, Denmark, South Korea, Israel, Brazil, Japan and Britain. He also spoke to <a title="More articles about Vicente Fox." href="http://topics.nytimes.com/top/reference/timestopics/people/f/vicente_fox/index.html?inline=nyt-per">Vicente Fox</a>, the former Mexican president. It was not clear whether he would make other calls.<br />A White House spokesman, Gordon Johndroe, said that the president had thanked the leaders for their cooperation and hospitality over the years.Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0tag:blogger.com,1999:blog-8213287478160131439.post-84149378675810516432009-01-19T06:38:00.000-08:002009-01-19T06:42:05.653-08:00Obama visits the Roberts Supreme Courtfrom <a href="http://www.nytimes.com/">www.nytimes.com</a><br /><br />January 18, 2009<br /><strong><span style="font-size:130%;">Two Stars, Meeting Across a Bible</span></strong><br />By <a title="More Articles by Linda Greenhouse" href="http://topics.nytimes.com/top/reference/timestopics/people/g/linda_greenhouse/index.html?inline=nyt-per">LINDA GREENHOUSE</a><br /><br /><br /><br />WASHINGTON — A few pairings stand out in the history of chief justices swearing in presidents.<br />Roger B. Taney swore in <a title="More articles about Abraham Lincoln." href="http://topics.nytimes.com/top/reference/timestopics/people/l/abraham_lincoln/index.html?inline=nyt-per">Abraham Lincoln</a> four years after writing the <a title="More articles about the U.S. Supreme Court." href="http://topics.nytimes.com/top/reference/timestopics/organizations/s/supreme_court/index.html?inline=nyt-org">Supreme Court</a>’s opinion in the Dred Scott case, the pro-slavery ruling that Lincoln denounced and that inflamed the passions that were leading to civil war.<br /><br /><br /><br /><a title="More articles about William H. Rehnquist." href="http://topics.nytimes.com/top/reference/timestopics/people/r/william_h_rehnquist/index.html?inline=nyt-per">William H. Rehnquist</a> swore in <a title="More articles about Bill Clinton." href="http://topics.nytimes.com/top/reference/timestopics/people/c/bill_clinton/index.html?inline=nyt-per">Bill Clinton</a> for a second term a week after the Supreme Court heard arguments on whether <a title="More articles about Paula Corbin Jones." href="http://topics.nytimes.com/top/reference/timestopics/people/j/paula_corbin_jones/index.html?inline=nyt-per">Paula Jones</a> could pursue her sexual harassment suit against the president. (“Good luck,” Chief Justice Rehnquist murmured audibly. Is it fanciful to suppose that he had to bite his tongue to keep from adding, “You’ll need it”?)<br /><br /><br /><br />Chief Justice Rehnquist also swore in <a title="More articles about George W. Bush." href="http://topics.nytimes.com/top/reference/timestopics/people/b/george_w_bush/index.html?inline=nyt-per">George W. Bush</a> — six weeks after the court’s decision in Bush v. Gore effectively handed Mr. Bush the presidency.<br /><br /><br /><br />When Chief Justice <a title="More articles about John G. Roberts Jr." href="http://topics.nytimes.com/top/reference/timestopics/people/r/john_g_jr_roberts/index.html?inline=nyt-per">John G. Roberts Jr.</a> administers the oath on Tuesday to <a title="More articles about Barack Obama" href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per">Barack Obama</a>, the fleeting personal intersection between these two late-baby-boom superstars may not appear equally fraught. But there will be electricity in the encounter nonetheless.<br /><br /><br /><br /><strong>For a start, Mr. Obama was one of 22 Democratic senators to vote against the confirmation of Judge Roberts to the Supreme Court in 2005. In his remarks at the time, Senator Obama said his decision had not been an easy one. Judge Roberts had a stellar record and ample qualifications, he said. But the nominee’s “overarching political philosophy” troubled him, Mr. Obama continued, adding, “It is my personal estimation that he has far more often used his formidable skills on behalf of the strong in opposition to the weak.”<br /></strong><br /><br /><br />Tough words, but that is not where the real drama on the inaugural platform lies. After all, Chief Justice Roberts had the last laugh in that first encounter, and at 53 can look forward to a tenure that could easily far outlast the Obama presidency.<br /><br /><br /><br />What is most striking about the two men who will meet at arm’s length, the Lincoln Bible between them, is the difference in the paths that brought them to this moment. In this tableau, they represent two faces of a generation that grew to adulthood after Vietnam, after the fantasies and tragedies of the 1960s, after the civil rights marches were over, when the cities were still smoldering but no longer burning.<br /><br /><br /><br />Those who set out on their adult journeys in the 1980s, as both John Roberts and Barack Obama did, inherited an ambiguous legacy that required them to assign their own meaning to the unfulfilled promises of the era that faded with their adolescence.<br /><br /><br /><br />Their early years had little in common: John Roberts was raised in suburban Indiana and sent to a small Catholic boys’ boarding school that was started five years earlier by Chicago and Indiana businessmen much like his own father, a steel company executive; Barack Obama, fatherless, struggled to construct a personal identity at a famous school in Hawaii founded in 1841 to educate the children of white missionaries and where no one looked quite like him.<br /><br /><br /><br />Still, their intelligence and drive took these two, from such different beginnings, to the same place, <a title="More articles about Harvard University." href="http://topics.nytimes.com/top/reference/timestopics/organizations/h/harvard_university/index.html?inline=nyt-org">Harvard</a> Law School. They did not overlap there, but their shared experience was one of achievement and recognition: both were named to the law review, where John Roberts served as managing editor and Barack Obama was elected president, and both graduated magna cum laude.<br /><br /><br /><br />Having gone directly from college to law school, John Roberts continued on what could be seen as the conventional path to success in the law: a clerkship for an esteemed federal appeals court judge, Henry J. Friendly; followed by a Supreme Court clerkship for William Rehnquist, then an associate justice; followed by responsible staff positions in the Justice Department and White House counsel’s office as well as partnership in a large law firm. For the government and private clients, he argued 39 Supreme Court cases and was considered by both justices and competitors to be one of the very best.<br /><br /><br /><br />Doing well in all the right places — a huge achievement but in some ways a career path without risk to a sense of identity — offered great rewards and appears to have left him with few doubts about how the world works, or should work, if his legal writings are the measure. “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race,” was his uncomplicated explanation in a 2007 opinion on why Louisville and Seattle could not constitutionally use student assignments to keep their public schools from resegregating after finally having achieved a measure of integration.<br /><br /><br /><br />Mr. Obama’s path, more circuitous, led him to spend five years between college and law school working as a community organizer, and to return to community development work, along with part-time law teaching, after he left Harvard and before he finally migrated to electoral politics. It was an unconventional path full of risk, driven in no small part by the search for “a workable meaning for his life,” as “Dreams From My Father,” the memoir he published at 34, describes his journey.<br /><br /><br /><br />With the economic wreckage of the last year, with major law firms shrinking or disappearing and business institutions that once seemed destined to last forever lying in ruins, a number of the old conventional paths can no longer be considered particularly safe for talented young graduates. An unconventional path, on the other hand, might offer something of a template for those half a generation behind the chief justice and the president-elect: a new Democratic member of Congress from Virginia, Tom Perriello, 34, a Yale Law School graduate, spent a career in community service before going into politics and winning improbably against a longtime Republican incumbent. In a recent interview, he described himself and a growing number of young politicians with similar biographies as “the service generation.”<br /><br /><br /><br />Inaugurations are about the future, not the past, of course, and after they leave the inaugural platform, John Roberts and Barack Obama will be very much entwined with each other’s future. The <a title="More articles about potential members of President-elect Barack Obama's administration." href="http://topics.nytimes.com/top/news/us/series/the_new_team/index.html?inline=nyt-classifier">Obama administration</a> has some immediate decisions to make about cases pending in or on their way to the Supreme Court, and the court itself has hardly been reticent in recent years about speaking back to both Congress and the president. And Chief Justice Roberts must know that Mr. Obama’s choices to fill any Supreme Court vacancies in the next four years are most unlikely to bolster the fragile conservative majority that the chief justice can most often — although not always — call upon. For Chief Justice Roberts, the current alignment may be as good as it gets for the foreseeable future.<br /><br /><br /><br />Perhaps the chief justice and the new president can wish each other good luck, until their paths cross again. <strong>When the two met Wednesday in the Supreme Court’s west conference room at Chief Justice Roberts’s invitation, they were dwarfed by a huge portrait of Chief Justice William Howard Taft — the only president ever to become a Supreme Court justice.</strong><br /><br /><br /><br /><img id="BLOGGER_PHOTO_ID_5293014831647188210" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 192px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_FQVPzt7NnF0/SXSQ8h80ZPI/AAAAAAAAAEM/3Gx9L_nxuhA/s320/Supreme+Court+visit.jpg" border="0" /><br /><br /><br />Even if President-elect Obama were to serve two terms, he would be only 55 when he left the White House. Is it completely implausible to suppose that the Roberts Court lies in this one-time constitutional law teacher’s future in more ways than one?<br /><br /><br />Linda Greenhouse, former Supreme Court correspondent for The Times, is a senior fellow at Yale Law School and author of “Becoming Justice Blackmun.”Noblehttp://www.blogger.com/profile/02224072482343360109noreply@blogger.com0