Wednesday, February 25, 2009

Charlie Rose Show: A conversation with John Mack, Chairman and CEO of Morgan Stanley

A conversation with John Mack, Chairman and CEO of Morgan Stanley

Reporter Confronts Holocaust-denying Bishop

The Holocaust-denying Catholic bishop whose statements embarrassed the Vatican and led to his expulsion from Argentina threatened a journalist with a defiantly raised fist at the airport. The bishop is now in London. (Feb. 25)

T.I. Says No to Parties and Yes to School

Before starting his one-year prison sentence for federal weapons charges, rapper T.I. preaches to a courtroom filled with students, imploring them to stay in school and do things the right way. (Feb. 25)

Bernanke Warns of Dire Risks in U.S. Yet Fed Chief Says 2010 Could Wind Up As 'Year of Recovery'

Source: International Herald Tribune)By Catherine Rampell and Jack Healy
As President Barack Obama prepared to make a major Congressional address laying out his plans to lift the faltering U.S. economy, the chairman of the Federal Reserve warned on Tuesday that the downturn could get even worse than recent economic forecasts.

Ben Bernanke, the Fed chief, told the Senate Banking Committee that the central bank was doing everything it could to unlock credit markets and ease the financial crisis. But he said it could take until 2010 before the government's actions gained traction.

"If actions taken by the administration, the Congress and the Federal Reserve are successful in restoring some measure of financial stability - and only if that is the case, in my view - there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery," Bernanke said.

Bernanke spoke as a pair of surveys released Tuesday underlined the grim condition of the American economy. U.S. consumer confidence and housing values plummeted. And major U.S. retailers, including Home Depot and Macy's, reported poor earnings.

In the first leg of Bernanke's twice-annual report to both houses of Congress on the state of the economy and the Fed's actions, he painted a dire picture of the financial markets going forward, but assured the committee that government agencies were taking all necessary actions to thaw credit markets.

"The measures taken by the Federal Reserve, other U.S. government entities, and foreign governments since September have helped to restore a degree of stability to some financial markets," Bernanke said. "Nevertheless, despite these favorable developments, significant stresses persist in many markets."

In particular, he said, most securitization markets - those in which investments are backed by a specific group of assets, like mortgages - "remain shut."

Wall Street was cheered by Bernanke's testimony, with the Dow Jones industrial average rising 2.7 percent in afternoon trading Tuesday a day after it slid to a 12-year low.

As required by law, Bernanke addressed both halves of the Fed's dual mandate: stable prices and maximum employment. The first part of the mission has largely been met, with prices more or less unchanged from their level a year ago, and inflation is expected to glide under 1 percent during 2009.

But labor market conditions continue to deteriorate. Citing projections by the interest-rate-setting Federal Open Market Committee in January, he said the unemployment rate, which soared to 7.6 percent in January, would probably reach 8.5 to 8.75 percent in the last quarter of 2009. The country's gross domestic product is projected to decline 0.5 to 1.25 percent this year, he said, and foreclosure rates remain at high levels.

But he added, "This outlook for economic activity is subject to considerable uncertainty, and I believe that, over all, the downside risks probably outweigh those on the upside."

A week ago, Obama laid out a $275 billion plan to help as many as nine million families refinance their mortgages or avoid foreclosures using a variety of incentives and subsidies to try to lower interest rates and the principal on existing home mortgages.

The Fed has taken some extraordinary steps in recent months in the hopes of increasing the flow of credit to businesses and households.

In December its Open Market Committee lowered its benchmark interest rate to virtually zero, its floor. The Fed has been buying mortgage-backed securities - considered the leading cause of the meltdown after the housing bubble burst - that have been guaranteed by the U.S. government. It has also begun unprecedented programs as a lender.

It has expanded the Term Auction Facility, which loans to banks. It has also introduced the Term Asset Backed Securities Loan Facility, which finances consumer loans, and which the Fed recently announced it would expand in both size and scope; and the Commercial Paper Funding Facility, which provides loans in exchange for commercial paper, or short-term business IOUs.

Bernanke said these actions had contributed to improvements in short-term financing markets and the commercial paper market, and declines in the conforming fixed mortgage rate and the London interbank offered rate, known as Libor, which is the rate on which borrowing costs for consumers and businesses are often based.

The Fed has also been working in partnership with the Treasury Department to coordinate intervention in the financial markets.

But the government's boldest rescue to date, its $150 billion commitment for the insurance giant American International Group, is foundering. AIG indicated on Monday it was now negotiating for tens of billions of dollars in additional assistance as losses have mounted.

Separately, the Obama administration confirmed it was in discussions to aid Citigroup, the recipient of $45 billion so far, that could raise the government's stake in the financial company to as much as 40 percent.

The Treasury Department also named a special adviser to work with General Motors and Chrysler, two of Detroit's biggest automakers, which are seeking $22 billion on top of the $17 billion already granted to them.

On Monday, the Treasury, the Fed and other bank regulatory agencies issued a joint statement announcing that the government might demand direct ownership in major banks after they undergo a "stress test" to determine their viability going forward.

Officials have also announced a plan to use public and private money to purchase so-called toxic assets from financial institutions, as well a measures to help slow the mass of foreclosures.

In his testimony Tuesday, Bernanke addressed criticisms regarding a lack of transparency in the administration of these and other programs. He discussed additional reports that the Fed has been providing to Congress, and a new Web site on the Fed's lending programs. He also noted that the Fed's vice chairman, Donald Kohn, is heading a committee to review the agency's publications and disclosure policies.

Meanwhile, the data released Tuesday by Standard & Poor's/Case- Shiller home price index revealed that U.S. home prices plunged at the fastest pace on record in December, a sign that housing was likely to continue declining in the months ahead as the economy sank deeper into recession.

Single-family home values in 20 major metropolitan areas fell 18.5 percent in December compared with a year earlier, the survey showed. Housing prices dropped 2.5 percent from November to December.

"It's a deflationary spiral," said Dan Greenhaus, an analyst in the equity strategy division of Miller Tabak.

And Americans' already battered confidence in the economy went into free fall in February, sinking to new lows as consumers grew more fearful over major job cuts and shrinking retirement accounts.

The Conference Board, a private research group, said Tuesday that its consumer confidence index, which fell slightly in January, plummeted more than 12 points in February to 25, from the revised 37.4 last month, and well below analysts' expectations.

The news came hours after major retailers, including Target, Home Depot and Macy's, reported depressed fourth-quarter results as shoppers focused more on necessities like food.

Eric Holder's No Healer

By Brent Bozell

We’ve endured two years of endless journalistic jawboning about Barack Obama, the great racial healer who would bind us together, the man who would get everyone singing on a sun-soaked hilltop with a bottle of Coke and a smile. So now that he’s in, what have he got? We have Obama’s attorney general Eric Holder telling us how Americans remain "voluntarily socially segregated," and that while we have the foolish pride to think of the United States as an ethnic melting pot, we have always been and continue to be a "nation of cowards."

Whether you support him politically or not, Obama’s election could not help but cause Americans to grow more positive about the state of American race relations. ABC News polls showed the number of Americans saying racism is a "big problem" dropped by more than half, from 54 percent in 1996 to 26 percent now. It was down sharply among blacks and whites alike. Not only that, 58 percent guessed Obama’s presidency would improve race relations. How does the Obama administration react? We are a "nation of cowards."

If anyone was cowardly about frank conversations on race, it was Obama and his supporters in the news media. They’re the ones who refused to raise the issues of racial quotas and profiling and illegal immigration, no doubt for fear of upsetting the white troglodytes. They’re the ones who kept Jesse Jackson and Al Sharpton in a storage closet for more than a year. They’re the ones who spun themselves dizzy insisting that the lunatic rants of his minister Jeremiah Wright only made Barack Obama look nobler. Obama was the man who declared he couldn’t disassociate himself from Wright, and then did exactly that a few weeks later when Wright’s fanaticism had become apparent to all.

And his administration is now lecturing us on "cowardice"?

Then there were the journalistic cowards covering the "nation of cowards" speech. Wait, did I say "covering"? You couldn’t find a news story about it in that alleged paper of record, the New York Times, or in Time magazine, or on CBS. It’s not like the coward line was hard to find. It was the first sentence of the second paragraph of Holder’s remarks.

Others tiptoed past it. The Washington Post gave it a tiny brief of 222 words. NBC anchor Brian Williams simply offered one clip, calling it "a very blunt speech." George Stephanopoulos sat in the evening anchor chair at ABC and also offered only one soundbite, describing it as "an emotional analysis of racism." No one had time for outraged critics.

Some print reporters gave it a full story without finding any critics. The Associated Press dispatch by Devlin Barrett was 727 words long, and featured Holder, Holder’s spokesman, Hillary Shelton of the NAACP calling the speech "constructively provocative," and an Ohio State professor saying it was "right on the substance," if it wasn’t the most "politic" way of putting it.

Among the major print media, only the Los Angeles Times successfully located a Holder critic. After citing liberal Mary Frances Berry calling the speech "very gutsy," reporter Josh Meyer quoted black Republican Joe Hicks, who nailed it perfectly: "Here's the first black attorney general appointed by the first black American president," he said, "and he’s espousing views that appear to be almost ultra-left in their approach to race in America -- that blacks are victims and whites are intolerant and accepting of quasi-racist views."

Holder sure sounded "ultra-left" as he lectured about the civil-rights movement, that "most people, who are not conversant with history, still do not comprehend the way in which that movement transformed America." He boasted that other "major social movements" of the Sixties, from the feminists to the anti-war protesters, were all "set free" by the spirit of the quest for black equality. You’d have to be a leftist to see surrender in Vietnam and legalized abortion as glorious historical landmarks.

Some passages were simply ludicrous. Holder claimed bombastically that "On Saturdays and Sundays America in the year 2009 does not, in some ways, differ significantly from the country that existed some 50 years ago." Has this man never been to a sporting event on the weekends? He claimed outside the workplace, "there is no significant interaction between us." Does this man have no concept of the growth of racial intermarriage since 1959?

Eight years ago, these same earnest liberals who claim to love racial healing were beating new Attorney General John Ashcroft senseless with rhetorical clubs, as if he were a vicious slavemaster like Simon Legree. None of them has enough decency to acknowledge that Ashcroft showed more respect for his opponents and much more love for his country and its people than Eric Holder has mustered.

Barack Obama’s “doublespeak” on the war

By: D. H. Williams @ 9:24 AM - EST

Remember when President Bill Clinton got cornered on questions about Monica Lewinsky? The nation was treated to word games about what the meaning of “is” is.

Here we go again.

This time the word games will have a much bigger impact on the nation as Barack Obama and his Administration of Clinton retreads redefine the word “combat”.

In order to maitain the ruse that Obama will be the president who ends the war troops in Iraq will be renamed “trainers” and “advisors” thereby keeping hope alive for ending the war. You will no doubt hear much in coming months about the Obama Administration reducing the numbers of “combat” troops in Iraq.

The public will be told of constantly changing time tables for withdrawal and the definition of withdrawal will be altered to mean different things on different days.

This behavior is even more outrageous when you consider that Barack Obama’s team of war hawks have actually expanded the War on Terror. In his short month in office he and his war hawks have bombed Pakistan repeatedly and increased the number of troops in Afghanistan by 30,000.

“Military planners are now quietly acknowledging that many [troops] will stay behind as renamed “trainers” and “advisors” in what are effectively combat roles. In other words, they will still be engaged in combat, just called something else.” - New York Times

Just how long will the Obama administration get away with deceiving the American people?

Video: MSNBC’s Rachel Maddow “Obama’s Iraq Withdrawal Not Really A Withdrawal” Original air date December 28, 2008

Video: MSNBC’s Keith Olbermann “A Slowed Down Schedule For The Withdrawal From Iraq.” Original air date February 25, 2009

Reaction to President Obama’s Speech (Updated)

listened to President Obama’s speech last night. I didn’t think he did himself any harm with speech and may even have done himself some good.

To my ear it was at heart a laundry list as State of the Union speeches have increasingly become. It’s clear he genuinely believes in education and a change in energy policy as the keystones of his approach. I’ll comment on education in a separate post; I’ve commented on energy before: I think there are opportunities there but the real direction we need to take won’t be politically popular. The reforms we need would include less spending on roads rather than more, limiting the home mortgage deduction, re-emphasizing rail over highway transport, and so on. Most of the people who are qualified to do the major work on things like a smart grid already have jobs. Subsidizing that will raise their salaries but won’t create a lot of new jobs, at least not in the near term.

I didn’t think there were any particularly engaging insights in the speech. I didn’t learn anything from it. I wasn’t re-assured. On the other hand I wasn’t hostile to it, either. We’ll see how the American people reacted. Or if they were listening.


Apparently, most people who listened to the speech were more favorably impressed by it than I was:

WASHINGTON (CNN) — A national poll indicates that two-thirds of those who watched President Obama’s address to a joint session of Congress on Tuesday night felt very good about his speech.

Sixty-eight percent of speech-watchers questioned in a CNN/Opinion Research Corp. survey said they had a very positive reaction, with 24 percent indicating that they had a somewhat positive response and 8 percent saying they had a negative reaction.

The audience watching his speech was not a perfect match with the nation’s breakdown by political party, presumably because the president is a Democrat. The speech audience questioned in the CNN/Opinion Research Corporation poll was about 8 to 10 points more Democratic than the general public.

Eighty-five percent of those polled said the president’s speech made them more optimistic about the direction of the country over the next few years, with 11 percent indicating the speech made them more pessimistic.

Eighty-two percent of speech-watchers said they support the economic plan Obama outlined in his prime time address, with 17 percent opposing the proposal.

That’s good. I think that a lot of the funk we’re in is psychological. Lack of “animal spirits”, I think the economists say. Not all, mind you. I realize that there are real people who have real problems as a consequence of the downturn.

I’ll try to get some more details on the actual poll and how many people actually watched the speech.

Update 2

Jim Vandehei and Mike Allen do a translation of the speech that I think is right on the money. Here’s a sample:

“So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.”

TRANSLATION: Obama is doing health care reform this year, despite deficits and its high costs. There will be a lot of pressure - mainly from Republicans but also some centrist Democrats - to pay more attention to deficits after the recent spending spree. Obama will ignore them – and is in fact considering a push for near-universal coverage in the second half of this year.

Dear Bobby Jindal: Please run for President

I don’t put much stock into predictions that one party will remain dominant for a generation, but if Bobby Jindal is the best the Republicans have, then they’re going to be out of power for a very long time. Jindal followed Barack Obama’s message about not giving up, making tough choices, and investing in our future with about 5 minutes of poorly-delivered, uninspiring boilerplate.

It’s clear that the Republicans are completely out of ideas. Jindal had nothing to say that we haven’t heard from his party for the last 4 years. In fact, we’ve rejected everything he said at the polls. Twice. In massive numbers. Americans finally see past Jindal’s Grover Norquist-inspired rhetoric. He pointed to Republican failures, such as Hurricane Katrina, as proof that government is the problem. But he’s got that partially wrong. It’s just Republican government — incompetent and full of misplaced priorities — that’s the problem.

Obama, on the other hand gave a vision for how the government could help to solve the problem. He treated us like adults, not giving us platitudes but engaging us in a detailed explanation of how he thought we could turn things around.

In the next few days, I will submit a budget to Congress. So often, we have come to view these documents as simply numbers on a page or laundry lists of programs. I see this document differently. I see it as a vision for America – as a blueprint for our future.

My job – our job – is to solve the problem. Our job is to govern with a sense of responsibility. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage…. That’s what this is about. It’s not about helping banks – it’s about helping people.

David Brooks summed things up nicely:

JIM LEHRER: Now that, of course, was Gov. Bobby Jindal, the governor of Louisiana, making the Republican response. David, how well do you think he did?

DAVID BROOKS: Uh, not so well. You know, I think Bobby Jindal is a very promising politician, and I oppose the stimulus because I thought it was poorly drafted. But to come up at this moment in history with a stale “government is the problem,” “we can’t trust the federal government” - it’s just a disaster for the Republican Party. The country is in a panic right now. They may not like the way the Democrats have passed the stimulus bill, but that idea that we’re just gonna - that government is going to have no role, the federal government has no role in this, that - In a moment when only the federal government is actually big enough to do stuff, to just ignore all that and just say “government is the problem, corruption, earmarks, wasteful spending,” it’s just a form of nihilism. It’s just not where the country is, it’s not where the future of the country is. There’s an intra-Republican debate. Some people say the Republican Party lost its way because they got too moderate. Some people say they got too weird or too conservative. He thinks they got too moderate, and so he’s making that case. I think it’s insane, and I just think it’s a disaster for the party. I just think it’s unfortunate right now.