Ok so its been a while. A lot of things have changed.
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."
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.
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.
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.
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!
Showing posts with label Barack Obama. Show all posts
Showing posts with label Barack Obama. Show all posts
Friday, June 5, 2009
Wednesday, January 28, 2009
Report on Russia Missiles Suggests Gesture to U.S.
MOSCOW — A Russian news report on Wednesday that Russia 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.
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.
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.
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.
Asked about the Interfax report, NATO said through a spokesman that if confirmed, “It would be a positive step.”
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.
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.
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.
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.”
The unnamed official suggested it would be a mistake for the Russians to withdraw their threat unilaterally while the issue was still playing out.
In an interview with Bloomberg News on Monday, Prime Minister Vladimir V. Putin indicated that he was hopeful that the Obama administration would reject the Bush plan.
“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.”
President Obama and Russia’s president, Dmitri A. Medvedev, 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.”
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?
Tuesday, January 27, 2009
Geithner sworn in as Treasury Secretary
Timothy Geithner takes on the mantle of Treasury Secretary for the Obama Administration
Obama: New Tone with the Islamic World
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Obama Signals New Tone in Relations With Islamic World
PARIS — In one of his first interviews since taking office, President Barack Obama 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.
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.
Mr. Obama spoke as his special Middle East envoy, George J. Mitchell, 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 Hosni Mubarak.
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.”
“Ultimately, we cannot tell either the Israelis or the Palestinians 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.”
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.
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.”
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.”
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.
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.”
“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.
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.”
“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.”
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.”
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.”
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.
Monday, January 26, 2009
"Nationalization" now in the mainstream press
January 26, 2009
News Analysis
Nationalization Gets a New, Serious Look
By DAVID E. SANGER
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?
Privately, most members of the Obama economic team concede that the rapid deterioration of the country’s biggest banks, notably Bank of America and Citigroup, 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.
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?
The Obama administration is making only glancing references to those questions. In an interview Sunday on “This Week” on ABC, the House speaker, Nancy Pelosi, alluded to internal debate when she was asked whether nationalization, or partial nationalization, of the largest banks was a good idea.
“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.
“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?’ ”
So far, President Obama’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.
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.
Many believe this form of hybrid ownership — part government, part private, with the responsibilities of ownership unclear — will not prove workable.
“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.”
“I would guess that sometime in the next few weeks, President Obama and Tim Geithner,” 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.”
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, Lawrence H. Summers — made the case during the Asian financial crisis in the 1990s that governments make lousy bank managers.
Indeed, the risks of nationalization they warned about then apply equally to the United States now. The first is that nationalization can prove contagious. 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 JPMorgan Chase and Wells Fargo, or other major banks, fearing they could be next.
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.
“The nightmare scenarios are endless,” one of the administration’s senior officials said.
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.
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. 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.
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 George W. Bush ordered huge interventions in the market would charge that Mr. Obama was steering America toward socialism.
Nationalization, said Charles Geisst, a financial historian at Manhattan College “is just not a term in the American vocabulary.”
“We think of it,” he continued, “as something foreigners do to us, not something we do.”
It is also something foreigners do to themselves: the British have recently taken a majority stake in the Royal Bank of Scotland.
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?
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.
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.
“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.”
“And now,” he said, “we are doing the polar opposite of our advice.”
Eric Dash contributed reporting from New York.
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.
News Analysis
Nationalization Gets a New, Serious Look
By DAVID E. SANGER
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?
Privately, most members of the Obama economic team concede that the rapid deterioration of the country’s biggest banks, notably Bank of America and Citigroup, 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.
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?
The Obama administration is making only glancing references to those questions. In an interview Sunday on “This Week” on ABC, the House speaker, Nancy Pelosi, alluded to internal debate when she was asked whether nationalization, or partial nationalization, of the largest banks was a good idea.
“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.
“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?’ ”
So far, President Obama’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.
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.
Many believe this form of hybrid ownership — part government, part private, with the responsibilities of ownership unclear — will not prove workable.
“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.”
“I would guess that sometime in the next few weeks, President Obama and Tim Geithner,” 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.”
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, Lawrence H. Summers — made the case during the Asian financial crisis in the 1990s that governments make lousy bank managers.
Indeed, the risks of nationalization they warned about then apply equally to the United States now. The first is that nationalization can prove contagious. 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 JPMorgan Chase and Wells Fargo, or other major banks, fearing they could be next.
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.
“The nightmare scenarios are endless,” one of the administration’s senior officials said.
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.
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. 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.
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 George W. Bush ordered huge interventions in the market would charge that Mr. Obama was steering America toward socialism.
Nationalization, said Charles Geisst, a financial historian at Manhattan College “is just not a term in the American vocabulary.”
“We think of it,” he continued, “as something foreigners do to us, not something we do.”
It is also something foreigners do to themselves: the British have recently taken a majority stake in the Royal Bank of Scotland.
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?
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.
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.
“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.”
“And now,” he said, “we are doing the polar opposite of our advice.”
Eric Dash contributed reporting from New York.
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.
Friday, January 23, 2009
Geithner on Yuan: More Analysis
drezner.foreignpolicy.com
Bond markets react wildly to blinding glimpse of the obvious
Thu, 01/22/2009 - 4:35pm
Felix Salmon reviews Tim Geithner's written testimony and concludes that, "Geithner's answers are highly diplomatic and content-free,"
The bond market, however, appears to disagree:
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.”
“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.”
As the FT's Krishna Guha and Alan Beattie write, "experts said the declaration could fuel trade tensions at a time of global recession and fast-rising unemployment."
I'm as concerned about this as the next guy, but let's be careful here and parse things out.
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.
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."
This is where a closer look at Geithner's written testimony would be a good idea. Here are the two relevant passsages:
[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....
[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. If confirmed, I look forward to a constructive dialogue with our trading partners around the world in which Treasury makes the fact-based case that market exchange rates are a central ingredient to healthy and sustained growth.
Two signals here. First, Geithner seems more concerned about China expanding its domestidc growth than with any manipulation of the yuan right now -- a conviction shared by Brad Setser, incidentally.
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.
Daniel W. Drezner Permalink Comments? Login or register
( filed under:
Bretton Woods II Chimerica financial meltdown Geithner globalization)
Bond markets react wildly to blinding glimpse of the obvious
Thu, 01/22/2009 - 4:35pm
Felix Salmon reviews Tim Geithner's written testimony and concludes that, "Geithner's answers are highly diplomatic and content-free,"
The bond market, however, appears to disagree:
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.”
“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.”
As the FT's Krishna Guha and Alan Beattie write, "experts said the declaration could fuel trade tensions at a time of global recession and fast-rising unemployment."
I'm as concerned about this as the next guy, but let's be careful here and parse things out.
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.
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."
This is where a closer look at Geithner's written testimony would be a good idea. Here are the two relevant passsages:
[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....
[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. If confirmed, I look forward to a constructive dialogue with our trading partners around the world in which Treasury makes the fact-based case that market exchange rates are a central ingredient to healthy and sustained growth.
Two signals here. First, Geithner seems more concerned about China expanding its domestidc growth than with any manipulation of the yuan right now -- a conviction shared by Brad Setser, incidentally.
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.
Daniel W. Drezner Permalink Comments? Login or register
( filed under:
Bretton Woods II Chimerica financial meltdown Geithner globalization)
More on Obama - Geithner China comments
January 23, 2009
Geithner Hints at Harder Line on China Trade
By JACKIE CALMES
WASHINGTON — Timothy F. Geithner, who moved closer to confirmation as Treasury secretary on Thursday, told senators that President Obama believed China was “manipulating” its currency, suggesting a more confrontational stance toward that country than under the Bush administration.
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.
The United States, moreover, is increasingly dependent on China to finance its ballooning deficit.
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.
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, the yuan, freely float — a move that would let its value rise and would increase the cost of its exports.
“President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency,” Mr. Geithner wrote. 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.”
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.
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 the dollar and leaving American exports at a competitive disadvantage against lower-priced Chinese goods.
“It’s huge,” said Simon Johnson, a former chief economist at the International Monetary Fund who is now a professor of economics at the Massachusetts Institute of Technology. “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.
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 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.”
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.
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.
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. “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.”
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.
Mr. Geithner’s statement was in response to a written question about the new administration’s stance that was submitted by Senator Charles E. Schumer, Democrat of New York, a vocal critic of China’s currency policies.
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.”
The National Association of Manufacturers, 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.
“You know the world has changed a lot with the financial crisis and China has a lot in U.S. Treasuries,” said Frank Vargo, vice president for international economic affairs at the manufacturers’ association. “This needs to be done in a cooperative, not a confrontational, way.”
Some market strategists said Mr. Geithner’s statement inflamed a contentious issue unnecessarily given that China’s exports and economy were slowing significantly.
“Things have changed quite a bit since Hank Paulson made an issue of this,” said one, Edward Yardeni, an independent analyst, referring to Henry M. Paulson Jr., 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.”
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.
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 Federal Reserve Bank of New York, Mr. Geithner was a policy director at the I.M.F. Before that, he was the under secretary of the Treasury for international affairs in the Clinton administration, a crisis manager during the Asian financial crisis of the 1990s and a Treasury attaché to Japan. By his own description, Mr. Geithner’s expertise is in matters of currency exchange rates and monetary policy.
In his written statement to the Senate panel, Mr. Geithner further noted Mr. Obama’s support as a senator for “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.”
“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.”
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.
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 Kent Conrad, Democrat of North Dakota. “In normal times that alone would lead me to oppose his nomination. These are not normal times.”
All the panel’s Democrats and five of the 10 Republicans voted for Mr. Geithner.
“I’m convinced he’s a person of great integrity even though he’s made these mistakes,” said Senator Orrin G. Hatch, 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.
Vikas Bajaj contributed reporting from New York.
Geithner Hints at Harder Line on China Trade
By JACKIE CALMES
WASHINGTON — Timothy F. Geithner, who moved closer to confirmation as Treasury secretary on Thursday, told senators that President Obama believed China was “manipulating” its currency, suggesting a more confrontational stance toward that country than under the Bush administration.
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.
The United States, moreover, is increasingly dependent on China to finance its ballooning deficit.
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.
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, the yuan, freely float — a move that would let its value rise and would increase the cost of its exports.
“President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency,” Mr. Geithner wrote. 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.”
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.
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 the dollar and leaving American exports at a competitive disadvantage against lower-priced Chinese goods.
“It’s huge,” said Simon Johnson, a former chief economist at the International Monetary Fund who is now a professor of economics at the Massachusetts Institute of Technology. “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.
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 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.”
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.
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.
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. “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.”
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.
Mr. Geithner’s statement was in response to a written question about the new administration’s stance that was submitted by Senator Charles E. Schumer, Democrat of New York, a vocal critic of China’s currency policies.
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.”
The National Association of Manufacturers, 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.
“You know the world has changed a lot with the financial crisis and China has a lot in U.S. Treasuries,” said Frank Vargo, vice president for international economic affairs at the manufacturers’ association. “This needs to be done in a cooperative, not a confrontational, way.”
Some market strategists said Mr. Geithner’s statement inflamed a contentious issue unnecessarily given that China’s exports and economy were slowing significantly.
“Things have changed quite a bit since Hank Paulson made an issue of this,” said one, Edward Yardeni, an independent analyst, referring to Henry M. Paulson Jr., 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.”
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.
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 Federal Reserve Bank of New York, Mr. Geithner was a policy director at the I.M.F. Before that, he was the under secretary of the Treasury for international affairs in the Clinton administration, a crisis manager during the Asian financial crisis of the 1990s and a Treasury attaché to Japan. By his own description, Mr. Geithner’s expertise is in matters of currency exchange rates and monetary policy.
In his written statement to the Senate panel, Mr. Geithner further noted Mr. Obama’s support as a senator for “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.”
“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.”
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.
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 Kent Conrad, Democrat of North Dakota. “In normal times that alone would lead me to oppose his nomination. These are not normal times.”
All the panel’s Democrats and five of the 10 Republicans voted for Mr. Geithner.
“I’m convinced he’s a person of great integrity even though he’s made these mistakes,” said Senator Orrin G. Hatch, 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.
Vikas Bajaj contributed reporting from New York.
Thursday, January 22, 2009
Obama's Geithner: China manipulates Yuan
from http://www.bloomberg.com/
Obama Deems China ‘Manipulating’ Yuan, Geithner Says (Update2)
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By Rebecca Christie
Jan. 22 (Bloomberg) -- Timothy Geithner, PresidentBarack Obama’s nominee for Treasury secretary, said the new U.S. administration believes China is “manipulating” its currency.
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.
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 Henry Paulson 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.
“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.”
Characterizing China’s policy as manipulation is “a very substantial change” by the Obama administration, said Nicholas Lardy, an economist who specializes in China at the Peterson Institute for International Economics in Washington.
‘Bent Over Backwards’
“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.
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.
The finance panel is expected to vote on Geithner’s nomination today.
The Obama administration is continuing to weigh a proposal to spur home buying by driving down mortgage rates, he said.
“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.”
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.
To contact the reporter on this story: Rebecca Christie in Washington atRchristie4@bloomberg.net;Last Updated: January 22, 2009 11:05 EST
Obama Deems China ‘Manipulating’ Yuan, Geithner Says (Update2)
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By Rebecca Christie
Jan. 22 (Bloomberg) -- Timothy Geithner, PresidentBarack Obama’s nominee for Treasury secretary, said the new U.S. administration believes China is “manipulating” its currency.
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.
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 Henry Paulson 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.
“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.”
Characterizing China’s policy as manipulation is “a very substantial change” by the Obama administration, said Nicholas Lardy, an economist who specializes in China at the Peterson Institute for International Economics in Washington.
‘Bent Over Backwards’
“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.
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.
The finance panel is expected to vote on Geithner’s nomination today.
The Obama administration is continuing to weigh a proposal to spur home buying by driving down mortgage rates, he said.
“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.”
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.
To contact the reporter on this story: Rebecca Christie in Washington atRchristie4@bloomberg.net;Last Updated: January 22, 2009 11:05 EST
Tuesday, January 20, 2009
President Barack Hussein Obama 1/20/09: Inaugural Address
My fellow citizens:
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.
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 we the people have remained faithful to the ideals of our forebears, and true to our founding documents. So it has been. So it must be with this generation of Americans.
That we are in the midst of crisis is now well understood. Our nation is at war, against a far-reaching network of violence and hatred. 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. 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 the ways we use energy strengthen our adversaries and threaten our planet.
These are the indicators of crisis, subject to data and statistics. Less measurable but no less profound is a sapping of confidence across our land — a nagging fear that America's decline is inevitable, and that the next generation must lower its sights.
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 — they will be met.
On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord.
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.
We remain a young nation, but in the words of Scripture, the time has come to set aside childish things. The time has come to reaffirm our enduring spirit; to choose our better history; 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.
In reaffirming the greatness of our nation, we understand that greatness is never a given. 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. Rather, it has been the risk-takers, the doers, the makers of things — 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.
For us, they packed up their few worldly possessions and traveled across oceans in search of a new life.
For us, they toiled in sweatshops and settled the West; endured the lash of the whip and plowed the hard earth.
For us, they fought and died, in places like Concord and Gettysburg; Normandy and Khe Sanh.
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.
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. Our minds are no less inventive, 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.
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 — not only to create new jobs, but to lay a new foundation for growth. We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. 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.
Now, there are some who question the scale of our ambitions — who suggest that our system cannot tolerate too many big plans. 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.
What the cynics fail to understand is that the ground has shifted beneath them — that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works — 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.
Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control — and that a nation cannot prosper long when it favors only the prosperous. 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.
As for our common defense, we reject as false the choice between our safety and our ideals. 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: 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.
Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. 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.
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. We will begin to responsibly leave Iraq to its people, and forge a hard-earned peace in Afghanistan. With old friends and former foes, we will work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet. We will not apologize for our way of life, nor will we waver in its defense, and for 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.
For we know that our patchwork heritage is a strength, not a weakness. We are a nation of Christians and Muslims, Jews and Hindus — and non-believers. We are shaped by every language and culture, drawn from every end of this Earth; and because we have tasted the bitter swill of civil war and segregation, and emerged from that dark chapter stronger and more united, 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.
To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West — know that your people will judge you on what you can build, not what you destroy. 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; but that we will extend a hand if you are willing to unclench your fist.
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. 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. For the world has changed, and we must change with it.
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. 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. And yet, at this moment — a moment that will define a generation — it is precisely this spirit that must inhabit us all.
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.
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.
This is the price and the promise of citizenship.
This is the source of our confidence — the knowledge that God calls on us to shape an uncertain destiny.
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, 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.
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, the father of our nation ordered these words be read to the people:
"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)."
America, in the face of our common dangers, in this winter of our hardship, let us remember these timeless words. 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 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.
Thank you. God bless you. And God bless the United States of America.
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 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.
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 we the people have remained faithful to the ideals of our forebears, and true to our founding documents. So it has been. So it must be with this generation of Americans.
That we are in the midst of crisis is now well understood. Our nation is at war, against a far-reaching network of violence and hatred. 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. 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 the ways we use energy strengthen our adversaries and threaten our planet.
These are the indicators of crisis, subject to data and statistics. Less measurable but no less profound is a sapping of confidence across our land — a nagging fear that America's decline is inevitable, and that the next generation must lower its sights.
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 — they will be met.
On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord.
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.
We remain a young nation, but in the words of Scripture, the time has come to set aside childish things. The time has come to reaffirm our enduring spirit; to choose our better history; 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.
In reaffirming the greatness of our nation, we understand that greatness is never a given. 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. Rather, it has been the risk-takers, the doers, the makers of things — 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.
For us, they packed up their few worldly possessions and traveled across oceans in search of a new life.
For us, they toiled in sweatshops and settled the West; endured the lash of the whip and plowed the hard earth.
For us, they fought and died, in places like Concord and Gettysburg; Normandy and Khe Sanh.
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.
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. Our minds are no less inventive, 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.
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 — not only to create new jobs, but to lay a new foundation for growth. We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. 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.
Now, there are some who question the scale of our ambitions — who suggest that our system cannot tolerate too many big plans. 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.
What the cynics fail to understand is that the ground has shifted beneath them — that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works — 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.
Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control — and that a nation cannot prosper long when it favors only the prosperous. 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.
As for our common defense, we reject as false the choice between our safety and our ideals. 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: 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.
Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. 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.
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. We will begin to responsibly leave Iraq to its people, and forge a hard-earned peace in Afghanistan. With old friends and former foes, we will work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet. We will not apologize for our way of life, nor will we waver in its defense, and for 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.
For we know that our patchwork heritage is a strength, not a weakness. We are a nation of Christians and Muslims, Jews and Hindus — and non-believers. We are shaped by every language and culture, drawn from every end of this Earth; and because we have tasted the bitter swill of civil war and segregation, and emerged from that dark chapter stronger and more united, 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.
To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West — know that your people will judge you on what you can build, not what you destroy. 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; but that we will extend a hand if you are willing to unclench your fist.
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. 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. For the world has changed, and we must change with it.
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. 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. And yet, at this moment — a moment that will define a generation — it is precisely this spirit that must inhabit us all.
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.
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.
This is the price and the promise of citizenship.
This is the source of our confidence — the knowledge that God calls on us to shape an uncertain destiny.
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, 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.
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, the father of our nation ordered these words be read to the people:
"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)."
America, in the face of our common dangers, in this winter of our hardship, let us remember these timeless words. 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 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.
Thank you. God bless you. And God bless the United States of America.
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.
Monday, January 19, 2009
He continues to inspire me....
January 19, 2009
Obama Celebrates Holiday With Service
By BRIAN KNOWLTON
WASHINGTON — Barack Obama 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 Martin Luther King Jr. and to the spirit of volunteerism and public service he said Mr. King represented.
Mr. Obama began the day visiting wounded troops at Walter Reed Army Medical Center, 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.
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.
“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.
“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.”
It was a call to service not unlike that issued by another young American leader, President John F. Kennedy, 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.
In late morning, Obama arrived at the Sasha Bruce House, 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.
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.
Separately, Michelle Obama and Vice president-elect Joseph Biden Jr. arrived, amid considerable excitement, to take part in other service projects.
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.
President George W. Bush, 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 Vicente Fox, the former Mexican president. It was not clear whether he would make other calls.
A White House spokesman, Gordon Johndroe, said that the president had thanked the leaders for their cooperation and hospitality over the years.
Obama Celebrates Holiday With Service
By BRIAN KNOWLTON
WASHINGTON — Barack Obama 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 Martin Luther King Jr. and to the spirit of volunteerism and public service he said Mr. King represented.
Mr. Obama began the day visiting wounded troops at Walter Reed Army Medical Center, 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.
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.
“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.
“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.”
It was a call to service not unlike that issued by another young American leader, President John F. Kennedy, 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.
In late morning, Obama arrived at the Sasha Bruce House, 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.
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.
Separately, Michelle Obama and Vice president-elect Joseph Biden Jr. arrived, amid considerable excitement, to take part in other service projects.
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.
President George W. Bush, 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 Vicente Fox, the former Mexican president. It was not clear whether he would make other calls.
A White House spokesman, Gordon Johndroe, said that the president had thanked the leaders for their cooperation and hospitality over the years.
Obama visits the Roberts Supreme Court
from www.nytimes.com
January 18, 2009
Two Stars, Meeting Across a Bible
By LINDA GREENHOUSE
WASHINGTON — A few pairings stand out in the history of chief justices swearing in presidents.
Roger B. Taney swore in Abraham Lincoln four years after writing the Supreme Court’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.
William H. Rehnquist swore in Bill Clinton for a second term a week after the Supreme Court heard arguments on whether Paula Jones 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”?)
Chief Justice Rehnquist also swore in George W. Bush — six weeks after the court’s decision in Bush v. Gore effectively handed Mr. Bush the presidency.
When Chief Justice John G. Roberts Jr. administers the oath on Tuesday to Barack Obama, 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.
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.”
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.
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.
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.
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.
Still, their intelligence and drive took these two, from such different beginnings, to the same place, Harvard 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.
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.
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.
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.
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.”
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 Obama administration 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.
Perhaps the chief justice and the new president can wish each other good luck, until their paths cross again. 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.
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?
Linda Greenhouse, former Supreme Court correspondent for The Times, is a senior fellow at Yale Law School and author of “Becoming Justice Blackmun.”
January 18, 2009
Two Stars, Meeting Across a Bible
By LINDA GREENHOUSE
WASHINGTON — A few pairings stand out in the history of chief justices swearing in presidents.
Roger B. Taney swore in Abraham Lincoln four years after writing the Supreme Court’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.
William H. Rehnquist swore in Bill Clinton for a second term a week after the Supreme Court heard arguments on whether Paula Jones 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”?)
Chief Justice Rehnquist also swore in George W. Bush — six weeks after the court’s decision in Bush v. Gore effectively handed Mr. Bush the presidency.
When Chief Justice John G. Roberts Jr. administers the oath on Tuesday to Barack Obama, 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.
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.”
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.
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.
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.
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.
Still, their intelligence and drive took these two, from such different beginnings, to the same place, Harvard 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.
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.
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.
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.
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.”
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 Obama administration 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.
Perhaps the chief justice and the new president can wish each other good luck, until their paths cross again. 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.
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?
Linda Greenhouse, former Supreme Court correspondent for The Times, is a senior fellow at Yale Law School and author of “Becoming Justice Blackmun.”
Friday, January 16, 2009
"Ring Fencing" Bank of America
from www.federalreserve.gov
January 15, 2009
Summary of Terms
Eligible Asset Guarantee
Eligible Assets: A pool of financial instruments consisting of securities
backed by residential and commercial real estate loans and
corporate debt, derivative transactions that reference such
securities, loans, and associated hedges, as agreed, and
such other financial instruments as the U.S. government
(USG) has agreed to guarantee or lend against (the Pool).
Each specific financial instrument in the Pool must be
identified on signing of the guarantee agreement. Financial
instruments in the Pool will remain on the books of
institution but will be appropriately “ring‐fenced.”
The following financial instruments will be excluded from
the Pool: (i) foreign assets (definition to be provided by
USG); (ii) assets originated or issued on or after March 14,
2008; (iii) equity securities; and (iv) any other assets that
USG deems necessary to exclude.
Size: The Pool contains up to $118 billion of financial
instruments. More specifically, the Pool includes cash
assets with a current book (i.e., carrying) value of up to
$37 billion and a derivatives portfolio with maximum
potential future losses of up to $81 billion (based on
valuations agreed between institution and USG).
Term and Coverage of Guarantee:
Guarantee is in place for 10 years for residential assets and
5 years for non‐residential assets. Residential assets will
include loans secured solely by 1‐4 family residential real
estate, securities predominately collateralized by such
loans, and derivatives that predominately reference such
securities. Institution has the right to terminate the
guarantee at any time (with the consent of USG), and the
parties will negotiate in good faith as to an appropriate fee
or rebate in connection with any permitted termination. If
institution terminates the guarantee, it must prepay any
January 15, 2009 outstanding Federal Reserve loan (described below) in full.
Guarantee covers Eligible Losses on the Pool. Eligible
Losses are the aggregate incurred credit losses (net of any
gains and recoveries) on the Pool during the term of the
guarantee, beyond the January 15, 2009, marks and credit
valuation adjustments for the Pool (as agreed between
institution and USG). Eligible Losses do not include
unrealized mark‐to‐market losses but do include realized
losses from a sale permitted under the asset management
template (described below).
Deductible: Institution absorbs all Eligible Losses in the Pool up to
$10 billion.
USG (UST/FDIC) will share Eligible Losses in the Pool in
excess of that amount, up to $10 billion. All Eligible Losses
beyond the institution’s deductible will be shared USG
(90%) and institution (10%).
Financing: Federal Reserve will provide a non‐recourse loan facility to
institution, subject to institution’s 10% loss sharing.
Federal Reserve loan commitment will terminate (and any
loans thereunder will mature) on the termination dates of
USG guarantee. Institution has the right to terminate the
Federal Reserve loan commitment and prepay any Federal
Reserve loans at any time (with consent of Federal
Reserve).
Federal Reserve will charge a fee on undrawn amounts of
20 bp per annum and a floating interest rate on drawn
amounts of OIS plus 300 bp per annum. Interest and fee
payments will be with recourse to the institution.
Institution may draw on Federal Reserve loan facility if and
when additional mark‐to‐market and incurred credit losses
on the Pool reach $18 billion.
January 15, 2009
Fee for Guarantee – Preferred Stock and Warrants:
Institution will issue to USG (UST/FDIC) (i) $4 billion of
preferred stock with an 8% dividend rate (under terms
described below); and (ii) warrants with an aggregate
exercise value of 10% of the total amount of preferred
issued. The fee may be adjusted, as necessary, based on
the results of an actuarial analysis of the final composition
of the Pool, as required under section 102(c) of the
Emergency Economic Stabilization Act of 2008.
Management of Assets:
Institution generally will manage the financial instruments
in the Pool in accordance with its ordinary business
practices, but will be required to comply with an asset
management template provided by USG. This template will
require institution, among other things, to obtain USG
approval (not to be unreasonably withheld) before any
Material Disposition. A Material Disposition is a disposition
of financial instruments in the Pool that creates an Eligible
Loss that, combined with other dispositions of Pool
instruments in the same year, exceeds 1% of the Pool size
at the beginning of the year. This template also will
include, among other things, a foreclosure mitigation policy
acceptable to USG.
Revenues and Risk Weighting:
Institution will retain the income stream from the Pool.
Risk weighting for the financial instruments in the Pool will
be 20%.
Dividends: Institution is prohibited from paying common stock
dividends in excess of $.01 per share per quarter for three
years without USG consent. A factor taken into account for
consideration of USG consent is the ability to complete a
common stock offering of appropriate size.
Executive Compensation:
An executive compensation plan, including bonuses, that
rewards long‐term performance and profitability, with
appropriate limitations, must be submitted to, and
January 15, 2009
approved by, USG. Executive compensation requirements
will be consistent with the terms of the preferred stock
purchase agreement between USG and institution.
Corporate Governance:
Other matters as specified, consistent with the terms of the
preferred stock purchase agreement between USG and
institution.
The foregoing is accepted and agreed
by and among the following as of
January 15, 2009:
DEPARTMENT OF THE TREASURY
FEDERAL RESERVE BOARD
BANK OF AMERICA CORPORATION
FEDERAL DEPOSIT INSURANCE CORP
So we now have the playbook on how the government will ring-fence (nationalize? I guess its a matter of semantics at this point) the big banks. None of the systematically important big banks will be allowed to fail. The government will provide guarantees on bad assets. It might be better to actually remove these assets from the balance sheets and create a bad bank. This will provide the banks will more confidence to lend. But this shouldnt be done without mechanisms for appropriate oversight. This move is important and is a good move. It begins to restore confidence in the financials. Transparency is still missing but hopefully the new administration will be able to provide that in the future. The tackling of insolvency has begun in the first quarter and overall this is very positive news. There are still other institutions out there. We need to get those under control asap as well. This slow bleed - Countrywide, Merill, Wachovia, Freddie / Fannie, AIG, Bank of America is unfortunate. There are others with bad assets - those should all be dealt with speedily and in this quarter!
January 15, 2009
Summary of Terms
Eligible Asset Guarantee
Eligible Assets: A pool of financial instruments consisting of securities
backed by residential and commercial real estate loans and
corporate debt, derivative transactions that reference such
securities, loans, and associated hedges, as agreed, and
such other financial instruments as the U.S. government
(USG) has agreed to guarantee or lend against (the Pool).
Each specific financial instrument in the Pool must be
identified on signing of the guarantee agreement. Financial
instruments in the Pool will remain on the books of
institution but will be appropriately “ring‐fenced.”
The following financial instruments will be excluded from
the Pool: (i) foreign assets (definition to be provided by
USG); (ii) assets originated or issued on or after March 14,
2008; (iii) equity securities; and (iv) any other assets that
USG deems necessary to exclude.
Size: The Pool contains up to $118 billion of financial
instruments. More specifically, the Pool includes cash
assets with a current book (i.e., carrying) value of up to
$37 billion and a derivatives portfolio with maximum
potential future losses of up to $81 billion (based on
valuations agreed between institution and USG).
Term and Coverage of Guarantee:
Guarantee is in place for 10 years for residential assets and
5 years for non‐residential assets. Residential assets will
include loans secured solely by 1‐4 family residential real
estate, securities predominately collateralized by such
loans, and derivatives that predominately reference such
securities. Institution has the right to terminate the
guarantee at any time (with the consent of USG), and the
parties will negotiate in good faith as to an appropriate fee
or rebate in connection with any permitted termination. If
institution terminates the guarantee, it must prepay any
January 15, 2009 outstanding Federal Reserve loan (described below) in full.
Guarantee covers Eligible Losses on the Pool. Eligible
Losses are the aggregate incurred credit losses (net of any
gains and recoveries) on the Pool during the term of the
guarantee, beyond the January 15, 2009, marks and credit
valuation adjustments for the Pool (as agreed between
institution and USG). Eligible Losses do not include
unrealized mark‐to‐market losses but do include realized
losses from a sale permitted under the asset management
template (described below).
Deductible: Institution absorbs all Eligible Losses in the Pool up to
$10 billion.
USG (UST/FDIC) will share Eligible Losses in the Pool in
excess of that amount, up to $10 billion. All Eligible Losses
beyond the institution’s deductible will be shared USG
(90%) and institution (10%).
Financing: Federal Reserve will provide a non‐recourse loan facility to
institution, subject to institution’s 10% loss sharing.
Federal Reserve loan commitment will terminate (and any
loans thereunder will mature) on the termination dates of
USG guarantee. Institution has the right to terminate the
Federal Reserve loan commitment and prepay any Federal
Reserve loans at any time (with consent of Federal
Reserve).
Federal Reserve will charge a fee on undrawn amounts of
20 bp per annum and a floating interest rate on drawn
amounts of OIS plus 300 bp per annum. Interest and fee
payments will be with recourse to the institution.
Institution may draw on Federal Reserve loan facility if and
when additional mark‐to‐market and incurred credit losses
on the Pool reach $18 billion.
January 15, 2009
Fee for Guarantee – Preferred Stock and Warrants:
Institution will issue to USG (UST/FDIC) (i) $4 billion of
preferred stock with an 8% dividend rate (under terms
described below); and (ii) warrants with an aggregate
exercise value of 10% of the total amount of preferred
issued. The fee may be adjusted, as necessary, based on
the results of an actuarial analysis of the final composition
of the Pool, as required under section 102(c) of the
Emergency Economic Stabilization Act of 2008.
Management of Assets:
Institution generally will manage the financial instruments
in the Pool in accordance with its ordinary business
practices, but will be required to comply with an asset
management template provided by USG. This template will
require institution, among other things, to obtain USG
approval (not to be unreasonably withheld) before any
Material Disposition. A Material Disposition is a disposition
of financial instruments in the Pool that creates an Eligible
Loss that, combined with other dispositions of Pool
instruments in the same year, exceeds 1% of the Pool size
at the beginning of the year. This template also will
include, among other things, a foreclosure mitigation policy
acceptable to USG.
Revenues and Risk Weighting:
Institution will retain the income stream from the Pool.
Risk weighting for the financial instruments in the Pool will
be 20%.
Dividends: Institution is prohibited from paying common stock
dividends in excess of $.01 per share per quarter for three
years without USG consent. A factor taken into account for
consideration of USG consent is the ability to complete a
common stock offering of appropriate size.
Executive Compensation:
An executive compensation plan, including bonuses, that
rewards long‐term performance and profitability, with
appropriate limitations, must be submitted to, and
January 15, 2009
approved by, USG. Executive compensation requirements
will be consistent with the terms of the preferred stock
purchase agreement between USG and institution.
Corporate Governance:
Other matters as specified, consistent with the terms of the
preferred stock purchase agreement between USG and
institution.
The foregoing is accepted and agreed
by and among the following as of
January 15, 2009:
DEPARTMENT OF THE TREASURY
FEDERAL RESERVE BOARD
BANK OF AMERICA CORPORATION
FEDERAL DEPOSIT INSURANCE CORP
So we now have the playbook on how the government will ring-fence (nationalize? I guess its a matter of semantics at this point) the big banks. None of the systematically important big banks will be allowed to fail. The government will provide guarantees on bad assets. It might be better to actually remove these assets from the balance sheets and create a bad bank. This will provide the banks will more confidence to lend. But this shouldnt be done without mechanisms for appropriate oversight. This move is important and is a good move. It begins to restore confidence in the financials. Transparency is still missing but hopefully the new administration will be able to provide that in the future. The tackling of insolvency has begun in the first quarter and overall this is very positive news. There are still other institutions out there. We need to get those under control asap as well. This slow bleed - Countrywide, Merill, Wachovia, Freddie / Fannie, AIG, Bank of America is unfortunate. There are others with bad assets - those should all be dealt with speedily and in this quarter!
Friday, January 9, 2009
Calculated Risk: On Roubini's 2 yr recession
Thursday, January 08, 2009
Roubini: Two Year Recession
by CalculatedRisk on 1/08/2009 04:30:00 PM
From Rex Nutting at MarketWatch: Roubini forecasts recession will last 2 years
The U.S. recession will last two full years, with gross domestic product falling a cumulative 5%, said Nouriel Roubini, ... For 2009, Roubini predicts GDP will fall 3.4%, with declines in every quarter of the year. The unemployment rate should peak at about 9% in early 2010 ...
Roubini is forecasting a pretty serious recession, but far short of a "depression" which is usually defined as a 10% decline in real GDP.
The concensus (and the Fed forecast) is that the economy will bottom in Q2 2009 with a sluggish recovery in the 2nd half of this year.
The recession started officially around Dec 06 - Jan 07. Roubini is prediciting that the recession will last through Jan ' 09 ish. This is exactly my prediction as well (read earlier posts) and I believe Calculated Risk has come up with similar projections himself. Its worth bearing in mind that my projection is based on the following "givens": Obama's Stimulus plan being over 800B and that the US will nationalize major banks QUICKLY. Both of these are policy responses and may not happen in Q1 of 2008 and if there is a substantial delay by the Obama Administration - the recession may drag out further into 2010. I am making my business plans on the assumption that Q1 of 2010 will see the end of the recession.
Roubini: Two Year Recession
by CalculatedRisk on 1/08/2009 04:30:00 PM
From Rex Nutting at MarketWatch: Roubini forecasts recession will last 2 years
The U.S. recession will last two full years, with gross domestic product falling a cumulative 5%, said Nouriel Roubini, ... For 2009, Roubini predicts GDP will fall 3.4%, with declines in every quarter of the year. The unemployment rate should peak at about 9% in early 2010 ...
Roubini is forecasting a pretty serious recession, but far short of a "depression" which is usually defined as a 10% decline in real GDP.
The concensus (and the Fed forecast) is that the economy will bottom in Q2 2009 with a sluggish recovery in the 2nd half of this year.
The recession started officially around Dec 06 - Jan 07. Roubini is prediciting that the recession will last through Jan ' 09 ish. This is exactly my prediction as well (read earlier posts) and I believe Calculated Risk has come up with similar projections himself. Its worth bearing in mind that my projection is based on the following "givens": Obama's Stimulus plan being over 800B and that the US will nationalize major banks QUICKLY. Both of these are policy responses and may not happen in Q1 of 2008 and if there is a substantial delay by the Obama Administration - the recession may drag out further into 2010. I am making my business plans on the assumption that Q1 of 2010 will see the end of the recession.
Tuesday, January 6, 2009
Obama's America 2009
from www.nytimes.com
January 6, 2009
Transcript
Obama’s Media Availability
The following is a rush transcript of President-Elect Barack Obama’s media availability as provided by the Obama team.
Obama: When the American people spoke last November, they were demanding change, change in policies that helped deliver the worst economic crisis that we've seen since the Great Depression, but they're also looking for a change in the way that Washington does business. They were demanding that we restore a sense of responsibility and prudence to how we'd run our government.
One of the measures of irresponsibility that we've seen is the enormous federal debt that has accumulated, a number that has doubled in recent years. As we just discussed, my budget team filled me in on - Peter Orszag now forecasts that, at the current course and speed, a trillion-dollar deficit will be here before we even start the next budget, that we've already looked - we're already looking at a trillion-dollar budget deficit or close to a trillion-dollar budget deficit, and that potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point.
So the reason I raise this is that we're going to have to stop talking about budget reform. We're going to have to totally embrace it. It's an absolute necessity.
And it has to begin with the economic recovery and reinvestment plan that Congress will soon be considering, that we're going to be investing an extraordinary amount of money to jump-start our economy, save or create 3 million new jobs, mostly in the private sector, and lay a solid foundation for future growth.
But we're not going to be able to expect the American people to support this critical effort unless we take extraordinary steps to ensure that the investments are made wisely and managed well. And that's why my recovery and reinvestment plan will have - will set a new higher standard of accountability, transparency, and oversight.
We are going to ban all earmarks, the process by which individual members insert pet projects without review. We will create an economic recovery oversight board made up of key administration officials and independent advisers to identify problems early and make sure we're doing all that we can to solve it. We will put information about where money is being spent online so that the American people know exactly where their precious tax dollars are going and whether we are hitting our marks.
But we're not going to be able to stop there. We're going to have to bring significant reform not just to our recovery and reinvestment plan, but to the overall budget process, to address both the deficit of dollars and the deficit of trust. We'll have to make tough choices, and we're going to have to break old habits. We're going to have to eliminate outmoded programs and make the ones that we do need work better.
That's the challenge that I've handed to Peter, and Rob Nabors, and the rest of my budget team. That's the challenge that the American people have handed me. They know that we're at a perilous crossroad and that tinkering in the margins will not do.
I'm going to have more to say about this subject tomorrow, but today I wanted to lay out an early marker with those that I've entrusted to help bring the changes that the American people voted for. We are going to bring a long-overdue sense of responsibility and accountability to Washington. We are going to stop talking about government reform, and we're actually going to start executing.
That's the charge that I've given the members of the administration. That's the charge that was given to me by the American people. And we are ready for the challenge.
So with that, I'm going to take some questions. And let's start with you.
Question: Thank you, Mr. President-elect. Do you think that you'll be submitting a budget larger than the $3.1 trillion that President Bush submitted for fiscal '09? And, also, what are you doing to address concerns from other Democrats about deficit spending and increasing the deficit with the stimulus package?
Obama: Well, you know, I don't want to get into particular budget numbers, because we're obviously still in the process of reviewing what the existing budget looks like, where we can obtain some savings, what programs we can potentially eliminate. We will be submitting that budget later, after we've submitted the recovery and reinvestment plan.
I can give you a set of general principles, though. We know that we're going to have to spend money to jump-start the economy. I spoke about that yesterday.
We know that even if we did nothing that we have close to a trillion-dollar deficit, even if we were on the current path that we're on. And we know that we have to then implement a set of fiscal measures that deal with the medium and long term so that we have a sustainable path of economic growth.
So what I've assigned Peter to do is - and Rob and others - is to work with my economic team. They are part of the team that is putting together the accountability and oversight measures into the recovery act, but they also have this broader charge, which is, how do we get a fix on this budget so that, as the economy recovers, we start stabilizing the economy and - and getting our budget under control?
It's not just Democrat or Republican colleagues on the Hill that are concerned about this. I'm concerned about this. And so what I've said is, I'm going to be willing to make some very difficult choices in how we get a handle on this deficit. That's what the American people are looking for.
And, you know, what we intend to do this year, next year, and all the years that I'm in office is to demonstrate our seriousness, not by gimmicks, not by punting to future administrations the tough choices, but by making some of those tough choices while I'm in office.
Question: ... Earmarks, you said there will be none that get in there without review. Some people would argue even the so-called bridge to nowhere got review, some level of review ...
Obama: No, no, no. What I'm saying is - let me repeat what I said about that ... We will ban all earmarks in the recovery package. And I describe earmarks as the process by which individual members insert pet projects without review. So what I'm saying is, we're not having earmarks in the recovery package, period. I was describing what earmarks are.
Question: So there's - you're not suggesting there's some level of review that might ...
Obama: I'm saying there are no earmarks in the recovery package. That, that is the position that I'm taking.
Question: Well, if I may, I was just wondering if $200,000 sounds like about the right level at which the tax credits would be phased out. I know that's been thrown out there ...
Obama: You know, look, I think you can get some guidance from what I said during the campaign, but I don't want to be locked in to a particular number, Chuck, just because we're still formulating the details of the plan. OK ...
Question: Some are - some are questioning Leon Panetta's lack of intelligence - lack of experience on intelligence matters. Sorry about that. I know this is tricky for you since you haven't announced it yet, but what does he bring to the table for you?
Obama: Well, as you noted, I haven't made - haven't made a formal announcement about my intelligence team.
(cell phone rings)
Obama: That may be him calling now... finding out where it's at.
Obama: I have the utmost respect for Leon Panetta. I think that he is one of the finest public servants that we have. He brings extraordinary management skills, great political savvy, an impeccable record of integrity.
As chief of staff, he is somebody who - to the president - he's somebody who obviously was fully versed in international affairs, crisis management, and had to evaluate intelligence consistently on a day-to-day basis.
Having said all that, I have not made an announcement. When we make the announcement, I think what people will see is, is that we are putting together a top-notch intelligence team that is not only going to assure that I get the best possible intelligence unvarnished, that the intelligence community is no longer geared towards telling the president what they think the president wants to hear, but instead are going to be delivering the information that the president needs to make critical decisions to keep the American people safe.
I think what you're also going to see is a team that is committed to breaking with some of the past practices and concerns that have, I think, tarnished the image of the agencies, the intelligence agencies, as well as U.S. foreign policy.
Last point I will make, though, on this is that there are outstanding intelligence professionals in the CIA, in DNI, and others, and I have the utmost regard for the work that they've done, and we are committed to making sure that this is a team effort that's not looking backwards, but is looking forward to figure out how we're going to serve the American people best, OK?
Question: Thank you, Mr. President-elect. You're being put under a lot of pressure internationally to get more involved in the situation in Gaza. I understand you think there should only be one president at a time, but what do you have to say to the Israelis and the Palestinians who are fighting and dying in Gaza?
Obama: As I've said before, when it comes to foreign policy, I think the need to adhere to one president at a time is particularly important. In domestic policy, Democrats, Republicans, we can have arguments back and forth about what tax policies are going to be. When it comes to international affairs, other countries are looking to see who speaks for America. Right now, President George Bush, as president of the United States, speaks on behalf of the U.S. government and the American people when it comes to international affairs.
Obviously, I am deeply concerned about the conflict that's taking place there. I'm being fully briefed and monitored - monitoring the situation on a day-to-day basis. The loss of civilian life in Gaza and in Israel is a source of deep concern for me.
And after January 20th, I am going to have plenty to say about the issue. And I am not backing away at all from what I said during the campaign, that I - starting at the beginning of our administration, we are going to engage effectively and consistently in trying to resolve the conflicts that exist in the Middle East.
That's something that I'm committed to. I think it's not only right for the people in that region; most importantly, it's right for the national security of the American people and the stability that is so important to this country. So on January 20th, you will be hearing directly from me and my opinions on this issue. Until then, my job is to monitor the situation and put together the best possible national security team so that we hit the ground running once we are responsible for national security issues.
January 6, 2009
Transcript
Obama’s Media Availability
The following is a rush transcript of President-Elect Barack Obama’s media availability as provided by the Obama team.
Obama: When the American people spoke last November, they were demanding change, change in policies that helped deliver the worst economic crisis that we've seen since the Great Depression, but they're also looking for a change in the way that Washington does business. They were demanding that we restore a sense of responsibility and prudence to how we'd run our government.
One of the measures of irresponsibility that we've seen is the enormous federal debt that has accumulated, a number that has doubled in recent years. As we just discussed, my budget team filled me in on - Peter Orszag now forecasts that, at the current course and speed, a trillion-dollar deficit will be here before we even start the next budget, that we've already looked - we're already looking at a trillion-dollar budget deficit or close to a trillion-dollar budget deficit, and that potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point.
So the reason I raise this is that we're going to have to stop talking about budget reform. We're going to have to totally embrace it. It's an absolute necessity.
And it has to begin with the economic recovery and reinvestment plan that Congress will soon be considering, that we're going to be investing an extraordinary amount of money to jump-start our economy, save or create 3 million new jobs, mostly in the private sector, and lay a solid foundation for future growth.
But we're not going to be able to expect the American people to support this critical effort unless we take extraordinary steps to ensure that the investments are made wisely and managed well. And that's why my recovery and reinvestment plan will have - will set a new higher standard of accountability, transparency, and oversight.
We are going to ban all earmarks, the process by which individual members insert pet projects without review. We will create an economic recovery oversight board made up of key administration officials and independent advisers to identify problems early and make sure we're doing all that we can to solve it. We will put information about where money is being spent online so that the American people know exactly where their precious tax dollars are going and whether we are hitting our marks.
But we're not going to be able to stop there. We're going to have to bring significant reform not just to our recovery and reinvestment plan, but to the overall budget process, to address both the deficit of dollars and the deficit of trust. We'll have to make tough choices, and we're going to have to break old habits. We're going to have to eliminate outmoded programs and make the ones that we do need work better.
That's the challenge that I've handed to Peter, and Rob Nabors, and the rest of my budget team. That's the challenge that the American people have handed me. They know that we're at a perilous crossroad and that tinkering in the margins will not do.
I'm going to have more to say about this subject tomorrow, but today I wanted to lay out an early marker with those that I've entrusted to help bring the changes that the American people voted for. We are going to bring a long-overdue sense of responsibility and accountability to Washington. We are going to stop talking about government reform, and we're actually going to start executing.
That's the charge that I've given the members of the administration. That's the charge that was given to me by the American people. And we are ready for the challenge.
So with that, I'm going to take some questions. And let's start with you.
Question: Thank you, Mr. President-elect. Do you think that you'll be submitting a budget larger than the $3.1 trillion that President Bush submitted for fiscal '09? And, also, what are you doing to address concerns from other Democrats about deficit spending and increasing the deficit with the stimulus package?
Obama: Well, you know, I don't want to get into particular budget numbers, because we're obviously still in the process of reviewing what the existing budget looks like, where we can obtain some savings, what programs we can potentially eliminate. We will be submitting that budget later, after we've submitted the recovery and reinvestment plan.
I can give you a set of general principles, though. We know that we're going to have to spend money to jump-start the economy. I spoke about that yesterday.
We know that even if we did nothing that we have close to a trillion-dollar deficit, even if we were on the current path that we're on. And we know that we have to then implement a set of fiscal measures that deal with the medium and long term so that we have a sustainable path of economic growth.
So what I've assigned Peter to do is - and Rob and others - is to work with my economic team. They are part of the team that is putting together the accountability and oversight measures into the recovery act, but they also have this broader charge, which is, how do we get a fix on this budget so that, as the economy recovers, we start stabilizing the economy and - and getting our budget under control?
It's not just Democrat or Republican colleagues on the Hill that are concerned about this. I'm concerned about this. And so what I've said is, I'm going to be willing to make some very difficult choices in how we get a handle on this deficit. That's what the American people are looking for.
And, you know, what we intend to do this year, next year, and all the years that I'm in office is to demonstrate our seriousness, not by gimmicks, not by punting to future administrations the tough choices, but by making some of those tough choices while I'm in office.
Question: ... Earmarks, you said there will be none that get in there without review. Some people would argue even the so-called bridge to nowhere got review, some level of review ...
Obama: No, no, no. What I'm saying is - let me repeat what I said about that ... We will ban all earmarks in the recovery package. And I describe earmarks as the process by which individual members insert pet projects without review. So what I'm saying is, we're not having earmarks in the recovery package, period. I was describing what earmarks are.
Question: So there's - you're not suggesting there's some level of review that might ...
Obama: I'm saying there are no earmarks in the recovery package. That, that is the position that I'm taking.
Question: Well, if I may, I was just wondering if $200,000 sounds like about the right level at which the tax credits would be phased out. I know that's been thrown out there ...
Obama: You know, look, I think you can get some guidance from what I said during the campaign, but I don't want to be locked in to a particular number, Chuck, just because we're still formulating the details of the plan. OK ...
Question: Some are - some are questioning Leon Panetta's lack of intelligence - lack of experience on intelligence matters. Sorry about that. I know this is tricky for you since you haven't announced it yet, but what does he bring to the table for you?
Obama: Well, as you noted, I haven't made - haven't made a formal announcement about my intelligence team.
(cell phone rings)
Obama: That may be him calling now... finding out where it's at.
Obama: I have the utmost respect for Leon Panetta. I think that he is one of the finest public servants that we have. He brings extraordinary management skills, great political savvy, an impeccable record of integrity.
As chief of staff, he is somebody who - to the president - he's somebody who obviously was fully versed in international affairs, crisis management, and had to evaluate intelligence consistently on a day-to-day basis.
Having said all that, I have not made an announcement. When we make the announcement, I think what people will see is, is that we are putting together a top-notch intelligence team that is not only going to assure that I get the best possible intelligence unvarnished, that the intelligence community is no longer geared towards telling the president what they think the president wants to hear, but instead are going to be delivering the information that the president needs to make critical decisions to keep the American people safe.
I think what you're also going to see is a team that is committed to breaking with some of the past practices and concerns that have, I think, tarnished the image of the agencies, the intelligence agencies, as well as U.S. foreign policy.
Last point I will make, though, on this is that there are outstanding intelligence professionals in the CIA, in DNI, and others, and I have the utmost regard for the work that they've done, and we are committed to making sure that this is a team effort that's not looking backwards, but is looking forward to figure out how we're going to serve the American people best, OK?
Question: Thank you, Mr. President-elect. You're being put under a lot of pressure internationally to get more involved in the situation in Gaza. I understand you think there should only be one president at a time, but what do you have to say to the Israelis and the Palestinians who are fighting and dying in Gaza?
Obama: As I've said before, when it comes to foreign policy, I think the need to adhere to one president at a time is particularly important. In domestic policy, Democrats, Republicans, we can have arguments back and forth about what tax policies are going to be. When it comes to international affairs, other countries are looking to see who speaks for America. Right now, President George Bush, as president of the United States, speaks on behalf of the U.S. government and the American people when it comes to international affairs.
Obviously, I am deeply concerned about the conflict that's taking place there. I'm being fully briefed and monitored - monitoring the situation on a day-to-day basis. The loss of civilian life in Gaza and in Israel is a source of deep concern for me.
And after January 20th, I am going to have plenty to say about the issue. And I am not backing away at all from what I said during the campaign, that I - starting at the beginning of our administration, we are going to engage effectively and consistently in trying to resolve the conflicts that exist in the Middle East.
That's something that I'm committed to. I think it's not only right for the people in that region; most importantly, it's right for the national security of the American people and the stability that is so important to this country. So on January 20th, you will be hearing directly from me and my opinions on this issue. Until then, my job is to monitor the situation and put together the best possible national security team so that we hit the ground running once we are responsible for national security issues.
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