I have an expectation of a mirage shimmering up from the heat of hope this year.

Markets were up today (Jan. 2) dispite news:

http://www.bloomberg.com/apps/news?pid=206...&refer=home

U.S. Economy: Manufacturing Shrinks as Orders Hit 60-Year Low

By Shobhana Chandra

Jan. 2 (Bloomberg) -- The decline in U.S. manufacturing deepened in December
as demand for such products as cars, appliances and furniture reached the lowest level since at least 1948,
signaling further cutbacks in factory jobs and production this year.

The Institute for Supply Management’s factory index fell to 32.4, below economists’ forecasts
and the lowest level since 1980, from 36.2 the prior month. Readings less than 50 signal contraction.
The group’s new-orders measure reached the lowest level on record and prices slid the most since 1949.

“Every component suggests that the weakness is going to carry over into 2009,” Mark Vitner, a senior economist
at Wachovia Corp. in Charlotte, North Carolina, said in a Bloomberg Television interview. “There’s just not a whole lot
of new business coming in,” and companies will have a “painful adjustment” as consumers shun spending.

Today’s figures underscore that, with private demand collapsing, manufacturers’ best hope for new business this year
may be President-elect Barack Obama’s plans for an unprecedented stimulus package.
Obama has pledged an investment program in roads, schools and the U.S. energy network akin to the 1950s- era interstate highway construction boom.

Stocks advanced on the first day of trading in 2009, following the biggest annual drop for the Standard & Poor’s 500
Index in 71 years, on expectations government stimulus efforts will curtail the recession. The S&P index rose
1.4 percent to 916.16 at 11:08 a.m. in New York. Benchmark 10-year Treasury yields rose to 2.25 percent from 2.22 percent late Dec. 31.

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

The speculators are hoping President Obama will pump another trillion bucks into the economy,
replacing the wholesale retreat of individual consumers. And, such would give the illusion
of improvement - probably by summer as many are predicting.

The problem, as I see it, is this: that could create a false sense of improvement while
inflation and federal budget deficits beat Social Security and Medicare to death.

My point is that if the mirage is allowed...the bubble is pumped...we've learned nothing...
and rather than putting the economy on it's feet by 2012...it may disappear as we approach.

Have you ended your other thread, IH?

Markets were up because there were more buyers than sellers.

The fundamentals still suck and are getting worse. Profits will follow, as will stock prices.

"Governors seek $1 trillion federal bailout"

By SCOTT BAUER, Associated Press

Last updated: 3:55 p.m., Friday, January 2, 2009

MADISON, Wis. -- Five Democratic governors are asking the federal government for a $1 trillion bailout package, including $250 billion for education and $150 billion in middle class tax cuts.

The governors from Wisconsin, Massachusetts, New Jersey, New York and Ohio on Friday said they have presented their plan to President-elect Barack Obama's transition team as well as congressional leaders.

They said that level of federal aid is needed to deal with unprecedented state budget shortfalls in 41 states and Washington, D.C., that the Center on Budget and Policy Priorities pegged at $42 billion for the current fiscal year alone.

Wisconsin Gov. Jim Doyle said congressional leaders and the Obama team have been receptive to the governors' ideas.

"That's not to say they've told us this is what they'll do or they're with us all the way," Doyle said.

He also said other governors were involved in creating the plan, which grew out of an early December meeting that Obama had with the nation's governors.

Obama's aides and congressional leaders have been talking about a package roughly half the size of the two-year plan the five governors proposed Friday.

Over two years, $1 trillion is equal to more than 3 percent of the gross domestic product, the U.S. economy's total output.

A package of that size is likely to draw significant opposition from congressional Republicans and concern from moderate and conservative Democratic lawmakers who oppose large budget deficits.

In addition to the money for education and tax cuts, the governors said their plan includes $350 billion for road construction and other infrastructure projects and $250 billion for social service programs such as Medicaid.

The governors all said their states are facing unprecedented budget shortfalls that will require deep cuts to services and possibly irreparably harm their education systems.

"We aren't crying wolf," Ohio Gov. Ted Strickland said.

"These are real circumstances, unprecedented situations we are facing."

Ohio's budget deficit could grow to $7.3 billion even after $1.9 billion was cut from its current budget, Strickland said.

New York Gov. David Paterson said his state faces a $15.4 billion deficit.

Wisconsin's budget is expected to be $5.4 billion short by mid-2011.

New Jersey Gov. Jon Corzine said he had just left a meeting with state legislative leaders where he proposed $2.1 billion in cuts on top of $600 million that's already been cut from the budget.

Strickland said the federal stimulus is needed to help bridge the gap from the current recession to when there's a rebound.

Even with the money, states will have to make deep cuts, he said.

"We are not, any of us, talking about federal money to expand spending, expand programs, to do new things," Massachusetts Gov. Deval Patrick said.

A forecast from Global Insight shows that the economy hasn't hit bottom yet.

National economic growth is now expected to drop 1.8 percent this year, rather than increase 1 percent.

The U.S. labor market is expected to lose 3.7 million jobs during the downturn, with unemployment reaching 8.7 percent in the first half of 2010, it said.

That forecast assumes there will be a $550 billion federal stimulus package, roughly half of what the governors requested.

ANOTHER TRILLION ISN'T EVEN NEAR ENOUGH ....

$TEN TRILLION, MAYBE ...

And so ...

"Manufacturing index drops to 28-year low - Manufacturing index drops to its lowest level since 1980 as orders fall, layoffs mount"

By ELLEN SIMON, Associated Press

Last updated: 4:35 p.m., Friday, January 2, 2009

NEW YORK -- Signs grew that the economy could turn even weaker in 2009, as an index of December manufacturing activity sank to its lowest point in 28 years.

Every corner of the sector was down, from bakeries to cigarette-makers to aluminum smelters.

The Institute for Supply Management, a trade group of purchasing executives, said Friday its manufacturing index fell to 32.4 in December, a greater-than-expected decline from November's reading of 36.2.

Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5.

Components of the index hit historic lows.

New orders fell to their lowest level on records going back to 1948.

Prices fell as the number of respondents saying they had paid more in December than in November sank to its lowest monthly reading since 1949.

A reading below 50 for the overall index indicates contraction.

The index, based on a survey of the institute's members, has fallen steadily for the last five months as the economy deteriorated.

December's reading is the lowest since June 1980, when the economy was near the end of a six-month recession.

If December's rate of manufacturing activity were to persist for 2009, the nation's gross domestic product would show a 2.7 percent contraction, said Norbert Ore, chairman of the group's business survey committee.

GDP, the broadest measure of economic activity, decreased at an annual rate of 0.5 percent in the third quarter of 2008, according to the Bureau of Economic Analysis.

Only three recessions in the history of the index have showed weaker manufacturing readings, said John Ryding, of RDQ Economics.

Those recessions were in 1948 to 1949, 1973 to 1975 and 1980.

The U.S. weakness is part of a worldwide slowdown.

China's manufacturing sector, which accounts for 43 percent of the economy, contracted for a fifth straight month in December.

Singapore said its economy shrank in the fourth quarter, and South Korea said its exports fell 17.4 percent in December.

With European manufacturing indexes also dropping, "the case for a massive global fiscal stimulus continues to grow," Ryding said.

Investors shrugged off the grim report on the new year's first day of trading, eager to start fresh after the losses of 2008.

Stocks closed higher, with the Dow Jones industrial average up 258.30 to 9,034.69.

Broader indexes were also higher.

As the economy sputters through a recession that began in December 2007, no industry is proving resistant.

No sector reported overall growth in December.

Also, none reported growth in new orders, production, employment or prices, as businesses from tobacco to coal products to foodmakers saw declines.

Declining prices, coming after the summer's soaring market for commodities, have sent manufacturers -- especially in chemicals and metals -- reeling.

Century Aluminum last month cut production at a West Virginia plant and said that it might have to cease production at the plant entirely unless it cuts costs and prices stabilize.

LyondellBasell Industries, the third-largest independent chemical company in the world, said Wednesday that while several lenders had allowed it to postpone $160 million in loan payments, a Chapter 11 bankruptcy filing might still be an option.

The summer's commodity bubble was devastating for many food processors.

Pilgrim's Pride Corp., the nation's largest chicken producer, filed for Chapter 11 bankruptcy protection on Dec. 1.

With the overall unemployment rate at 6.7 percent in November, the highest in 15 years, manufacturing continues to be one of the hardest hit sectors.

The sector lost 85,000 jobs between October and November, according to the most recent data from the Bureau of Labor Statistics.

More losses are expected in coming months as demand continues to be weak.

The purchasing managers' employment index showed its lowest reading since 1982 as manufacturers across industries continue to cut jobs.

Western Digital Corp., which makes computer hard drives, said in December it plans to cut 2,500 jobs.

The drugmaker Bristol-Myers Squibb Co. said in December it would cut 800 jobs by the end of 2008.

Automotive supplier Visteon Corp. said Friday it will shift more than 2,000 workers to a four-day week and cut their pay by 20 percent as auto sales continue to founder.

General Motors Corp. on Wednesday received the first tranche of $9.4 billion in low-cost loans from the U.S. Treasury, part of a package designed to keep ailing automakers in business.

I read that in 2008, the stock market "lost" 7 TRILLION DOLLARS in "value".

So what's a trillion here or there, more or less?

Since the FED has the presses, and the world HAS TO ACCEPT $$$ for oil (and so many other things), let the presses ROLL.

And the money they produce will be worthless pieces of paper ....

FUNNY MONEY ....

A bushel basket-full to buy a loaf of bread ...

And so ...

"Failed IndyMac sold to investor group for $13.9B - Seven-member investor group buys IndyMac from FDIC for $13.9 billion"

By ALAN ZIBEL, Associated Press

Last updated: 6:05 p.m., Friday, January 2, 2009

WASHINGTON -- A seven-member group of investors has teamed up to buy the remnants of failed lender IndyMac Bank, a symbol of the housing boom and bust, for $13.9 billion, federal regulators said Friday.

IndyMac, which specialized in loans made with little down payment or proof of assets, was seized by the government in July after a run on the bank as the U.S. housing market collapsed.

The Federal Deposit Insurance Corp. said a holding company led by Steven Mnuchin, co-chief executive of private equity firm Dune Capital Management, agreed to buy IndyMac in a deal reached Wednesday and expected to close by early next month.

The investors have formed a partnership, called IMB Management Holdings LP, that includes Dell Inc. founder Michael Dell's investment firm, MSD Capital.

Once the deal closes, the investment group would pour $1.3 billion in new capital into IndyMac and continue to operate the Pasadena, Calif-based bank, the FDIC says.

"We have assembled a group of experienced private investors in financial services to acquire the former IndyMac and operate it under new management with extensive banking experience," Mnuchin said in a statement.

"We will inject significant private capital into IndyMac so that it can once again effectively serve its customers and communities."

Other investors in the partnership include five private equity firms or hedge funds: J.C. Flowers & Co.; Stone Point Capital; Paulson & Co.; a fund controlled by billionaire George Soros' Fund Management; and a fund controlled by Silar Advisors LP.

IndyMac has 33 bank branches in Southern California with about $6.5 billion in deposits, about half the company's total at the time of its failure.

Other IndyMac assets include a $157.7 billion loan servicing business, which collects mortgages and distributes them to investors, and a reverse-mortgage company, known as Financial Freedom.

As part of the deal, the FDIC agreed to assume losses on a portion of IndyMac's loans.

The new investors would shoulder the first 20 percent of the bank's loan losses, with the FDIC taking on the majority of any losses thereafter.

The FDIC used a similar loss-sharing agreement when Downey Savings and Loan Association failed in November.

In return, the IndyMac investors agreed to continue a closely watched home-loan modification program launched by FDIC Chairman Sheila Bair in August that has completed about 8,500 loan modifications so far.

The investors have received preliminary clearance from the federal Office of Thrift Supervision to run the bank as a federal savings association.

A final decision is expected in the coming weeks.

Thrifts have been the most troubled regulated institutions during the financial crisis and among the most spectacular failures.

By law, they must have at least 65 percent of their lending in mortgages and other consumer loans -- making them particularly vulnerable to the housing downturn.

FDIC officials noted that private equity firms have bought up failed institutions before.

In the early 1990s, two failed banks -- Bank of New England and CrossLand Federal Savings Bank -- were sold to private equity firms.

Dune Capital was founded in 2004 by former Goldman Sachs Group Inc. partners Mnuchin and Daniel Niedich.

Flowers, who launched, then dropped, a bid to buy student lender Sallie Mae last year, also is a former Goldman Sachs partner.

Paulson & Co. made billions in profits in recent years by betting on the failure of risky home loans.

The IndyMac deal comes as regulators have eased restrictions on such purchases.

Previously, private-equity firms could not hold more than a 24.9 percent stake in a bank without becoming a bank-holding company.

The failure of IndyMac, which had $32 billion in assets, was the second-largest last year, trailing only the September failure of Washington Mutual Inc.

Losses to the FDIC's bank insurance fund are expected to range between $8.5 billion and $9.4 billion.

The Seattle-based thrift was the biggest bank to collapse in U.S. history, with around $307 billion in assets.

Washington Mutual was acquired by JPMorgan Chase & Co. for $1.9 billion.

A total of 25 U.S. bank failures in 2008 compare with three for all of 2007 and are far more than in the previous five years combined.

Many more banks are expected to sink this year.

One unresolved issue is IndyMac's relationship with investors in mortgage-linked securities, including Fannie Mae and Freddie Mac, the government-controlled mortgage finance titans.

Fannie, Freddie and other investors have the right to try to return IndyMac loans if they claim they violate the terms under which they buy mortgages.

About $1 billion in loans owned or guaranteed by Fannie Mae are in question.

Fannie Mae "is working constructively with the FDIC and IndyMac to reach a resolution that is in the best interests of all parties involved," Fannie spokesman Chuck Greener said Friday.

Friday, January 02, 2009

Paulson and Co. Inc. Profile

Paulson and Co. Inc.

Run by: John Paulson

Claim to Fame: Made himself and investors in his funds billions of dollars when he correctly predicted a collapse in the United States housing market.

Paulson and Co. Inc. went short on CDO slices and bought credit-default swaps in anticipation of a collapse in the mortgage market.

Paulson started putting on these positions in 2005, and patiently waited as his (initially) losing positions became big winners.

2007 was a very big year for Paulson, as his predictions came to fruition and he became a multi-billionaire almost overnight.

The subprime mortgage market collapsed, and Paulson and his investors reaped the rewards.

The Paulson Credit Opportunities and Paulson Credit Opportunities II funds were two of the most successful hedge funds of 2007, as both capitalized on the imploding mortgage market.

John Paulson became a media sensation overnight.

Billions of dollars of new capital poured into his fund, and his company now manages approximately $35 billion dollars in total assets.

With many other hedge funds besieged by investor redemption requests, the money continues to pour into Paulson and Co.

The company is now one of the largest hedge fund operations in the world.

According to a recent article on Bloomberg.com, four of Paulson's funds were included in the list of the top performing hedge funds through the first three quarters of 2008.

Paulson's Advantage Plus Ltd fund is reportedly up 33% YTD, while the smaller Advantage LTD fund is up 21% YTD.

Recent News: Paulson recently announced that he sees "opportunities" this year to buy mortgage-backed debt.

John Paulson also recently appeared in front of the Committee on Oversight and Government Reform in Washington and offered testimony, along with a number of other high-profile fund managers.

http://www.davemanuel.com/hedge-fund-profi...son-and-co-inc/

"Obama's team polishing economic stimulus measure - Obama's huge economic recovery plan getting finishing touches as new Congress set to convene"

By ANDREW TAYLOR, Associated Press

Last updated: 6:25 p.m., Friday, January 2, 2009

WASHINGTON -- President-elect Barack Obama's transition team is putting the finishing touches on an economic recovery plan that could run from $675 billion to $775 billion.

Briefings for top congressional Democratic officials are likely this weekend or on Monday, a senior transition official said Friday.

Obama is slated to meet Monday with House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., in a session likely to focus on the economic recovery package.

Democrats had hoped to get the recovery plan set for Obama's signature as close to Inauguration Day as possible, but it's plain that the schedule is slipping.

When Congress convenes next week there will only be two weeks before the inauguration.

The earliest the measure could reach the House floor is the week of Jan. 12, said a Pelosi spokesman, and even that is looking doubtful.

Republican leaders have demanded time to scrutinize the measure, a request that seems likely to be granted, at least in part.

A separate Obama transition official promised "full transparency" in considering the plan.

The Senate's top Republican, Mitch McConnell of Kentucky, again protested Friday that his party and the public need time to scrutinize the Obama plan so that "every dollar needs to be spent wisely and not wasted in the rush to get it spent."

Congressional aides briefed on the measure say it's likely to blend tax cuts of $500 to $1,000 for middle-class individuals and couples with about $200 billion to help revenue-starved states with their Medicaid programs and other operating costs.

A large portion of the measure will go toward infrastructure projects, blending old-fashioned brick and mortar programs like road and bridge repairs and water projects with new programs such as research and development on energy efficiency and an expensive rebuilding of the information technology system for health care.

Despite the proposal's big price tag, a top lawmaker questioned whether the economic situation is so dire that Congress may not be able to pump money into the economy fast enough.

"My main worry is whether or not we can find enough places to responsibly put money so that you have a big enough effect to correct the problem or at least mitigate the problem," said House Appropriations Committee Chairman David Obey, D-Wis.

Obey said the focus is on getting taxpayer dollars into programs that can spend it quickly such as aid to states suffering massive budget gaps.

He declined to go into other specifics but said the measure won't lead to many permanent spending hikes.

"We are trying to focus on what can get out the fastest that will not be built into the budget baseline when the recession is over," Obey said.

Not true.

Cash is king.

You need US Dollars to buy OIL.

Yeah, jeffmoskin ....

I actually recall that ....

Not only do you need a bushelbasket of the stuff to buy bread, you needed a wheelbarrow load to buy gas and heating oil ...

And so ...

CASH IS KING, alright ....

KING of the BULL******** ....

And so ...

AND SPEAKING OF OIL, jeffmoskin ...

WHO IS BUYING THE **** THESE DAYS?

NOT ME, ANYWAY ....

**** THE ARABS, IF YOU KNOW WHAT I'M SAYING, AND THE SPECULATORS, AS WELL ...

AND **** THEM REAL HARD!

AS FOR ME, AS YOU CAN SEE, I AM QUITE COMFORTABLE SITTING HERE WITH ALL THAT I REALLY NEED IN LIFE ....

GOT NO MORTGAGE ....

GOT NO REAL BILLS ....

DON'T HAVE TO WORRY ABOUT PAYING FOR AN OIL DELIVERY, BECAUSE I WENT COLD TURKEY ON THE STUFF!

AS I SAID, **** THE ARABS!

WHO REALLY DOES NEED WHOM, EH?

And so .....

WHO NEEDS THE "STIMULUS PLAN" IS OBAMA SO THAT HE CAN NOW PAY OFF A LOT OF POLITICAL DEBTS THAT HE INCURRED ON THE WAY UP ...

HE PAYS BACK FAVORS ...

HE STICKS US WITH THE BILL ....

HIS PEOPLE RIDE ...

THE REST OF US GET TO WALK BEHIND THE BUS ...

OBAMA IS GOING TO BE THE KING OF THE HUCKSTERS AND FAST-TALKERS AND SCAMMERS AND CON MEN, IS WHAT I THINK ...

And so ...

"Obama: Country needs economic stimulus plan"

By PHILIP ELLIOTT and ANDREW TAYLOR, Associated Press Writers

3 JANUARY 2009

CHICAGO – President-elect Barack Obama urged congressional leaders Saturday to move quickly on an economic recovery plan, even as some Republicans are saying they want more time to review the details.

Obama said Congress should pass an American Recovery and Reinvestment Plan designed to create 3 million jobs.

The Democratic president-elect hasn't announced a final price tag on it, but aides said the cost could be as high as $775 billion.

"For too many families, this new year brings new unease and uncertainty as bills pile up, debts continue to mount and parents worry that their children won't have the same opportunities they had," Obama said in an address taped Friday and distributed on radio and posted on YouTube Saturday morning.

The nation's economy remains the top challenge facing Obama when he takes office on Jan. 20.

The Federal Reserve estimated that lenders were on track to initiate 2.25 million foreclosures this year, more than doubling the annual pace before the crisis set in.

One in 10 U.S. homeowners is delinquent on mortgage payments or in foreclosure.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., are to receive details on Monday.

Obama plans meetings next week with other congressional leaders — including Republican members whose support he will need — and made an effort not to blame his predecessor, the unpopular President George W. Bush.

"However we got here, the problems we face today are not Democratic problems or Republican problems," Obama said.

"The dreams of putting a child through college, or staying in your home, or retiring with dignity and security know no boundaries of party or ideology."

"... I am optimistic that if we come together to seek solutions that advance not the interests of any party, or the agenda of any one group, but the aspirations of all Americans, then we will meet the challenges of our time just as previous generations have met the challenges of theirs."

Obama aides had hoped to have an economic plan approved by the House and Senate before Obama takes office.

That timeline, though, appears unlikely as time is running out and Republicans have urged a delay to review the plans.

Sen. Mitch McConnell, the Republicans' top official, said the plan needs time so that "every dollar needs to be spent wisely and not wasted in the rush to get it spent."

Congressional aides briefed on the measure say it's likely to blend tax cuts of $500 to $1,000 for middle-class individuals and couples with about $200 billion to help revenue-starved states with their Medicaid programs and other operating costs.

A large portion of the measure will go toward infrastructure projects, blending old-fashioned brick and mortar programs such as road and bridge repairs and water projects with new programs such as research and development on energy efficiency and an expensive rebuilding of the information technology system for health care.

"Economists from across the political spectrum agree that if we don't act swiftly and boldly, we could see a much deeper economic downturn that could lead to double-digit unemployment and the American dream slipping further and further out of reach," Obama said.
___

Andrew Taylor reported from Washington.
___

On the Net:

Obama Address: http://change.gov/newsroom/entry/american_...d_reinvestment/

Whether there'll be a bailout bubble depends on how you define what's part of the bailout. Projects that need to be long term to make sense won't be a bubble and need to be done anyhow, among these are infrastructure modernization, infrastructure deferred maintenance, education improvements and energy projects as well as going back to strong support for research (I'd include things like space projects, they've always paid off in a huge way by providing technological advances). If you mean the bipartisan move to kick start economic activity and stop housing depreciation by lowering mortgage rates it redefines stupidity and actually has the goal of keeping the bubbly partly inflated.

WAKE UP, Obama ...

THE "AMERICAN DREAM" IS JUST A DREAM ...

IT COMES OUT OF A CRACK PIPE ....

OR AN OPIUM DEN ...

SO TELL US OLDER FOLKS HERE IN AMERICA ALL ABOUT IT, SONNY BOY ....

WE'RE ALL EARS ....

AND WE'RE NOT GOING ANYPLACE SOON ...

THANKS IN LARGE PART TO YOU GLUTTONOUS FOOLS DOWN THERE IN WASHINGTON, D.C. ...

SO WE GOT TIME TO LISTEN TO ALL YOUR DRIVEL ABOUT THE "AMERICAN DREAM" ...

And so ...

Whether there'll be a bailout bubble depends on how you define what's part of the bailout. Projects that need to be long term to make sense won't be a bubble and need to be done anyhow, among these are infrastructure modernization, infrastructure deferred maintenance, education improvements and energy projects as well as going back to strong support for research (I'd include things like space projects, they've always paid off in a huge way by providing technological advances). If you mean the bipartisan move to kick start economic activity and stop housing depreciation by lowering mortgage rates it redefines stupidity and actually has the goal of keeping the bubbly partly inflated.

I'm hoping that the first infrastructure project is getting the entire USA on high-speed fiber. Let people work from their homes, shop from there too. Think of the impact on gasoline consumption, traffic congestion, the need for child care, etc, etc.

THIS COULD BE HUGE.

And not cost all that much $$$

There is high-speed fiber-optic cable laid all over the place in NYS, jeffmoskin ....

It has spurred no revolution that I can see ....

Nor has it unclogged any highways ...

If it had, David Paterson would not be on his knees as a PENITENT begging Barack Obama for money to pay the state's bills with ...

And so ...

One space project that we countryfolks up here think would pay off real huge would be to bundle up Nancy Pelosi into the nose cone of a space rocket, and blast her off into space to hunt down Major Tom and find out what has really happened to him out there ....

And as to other technology, maybe they should spend some of that money trying to figure out how to grow tomatoes down in the American south-west ....

And so ...

Nelson Rockefeller

From Wikipedia, the free encyclopedia

Nelson Aldrich Rockefeller (July 8, 1908 – January 26, 1979) was the forty-first Vice President of the United States, the forty-ninth governor of New York, a philanthropist, and a businessman.

A leader of the liberal wing of the Republican Party, he was Governor of New York from 1959 to 1973, where he launched many construction and modernization projects.

A member of two of the world's richest and best known families, he failed repeatedly in his attempts to become president, but he was appointed Vice President in 1974.

He served from 1974 to 1977, but did not join the 1976 GOP national ticket with President Gerald Ford.

He retired from politics when his term as Vice President was over.

Massive construction programs

Rockefeller engaged in massive building projects that left a profound mark on the state of New York, so much so that many of his detractors claimed that he had an "Edifice Complex."

He was personally interested in planning, design, and construction of the many projects intitiated during his administration--consistent with his interest in art.

Rockefeller was the driving force in turning the State University of New York into the largest system of public higher education in the United States.

He demanded the imposition of tuition fees at the New York city colleges in return for conferring university status on them.

He also led in the creation and/or expansion of many major highways (such as the Long Island Expressway, the Southern Tier Expressway, the Adirondack Northway, and Interstate 81) which vastly improved road transportation in the state of New York.

To create more low-income housing, Rockefeller created the New York State Urban Development Corporation (UDC), with unprecedented powers to override local zoning, condemn property, and create financing schemes to carry out desired development.

(UDC is now called the Empire State Development Corporation, which forms a unit, along with the formerly independent Job Development Authority, of Empire State Development Corporation.)

In addition, Rockefeller's construction programs included the $2 billion South Mall in Albany, later renamed the Nelson A. Rockefeller Empire State Plaza.

It is a vast campus of government skyscrapers and plazas punctuated by an egg-shaped arts center.

The site is often referred to by locals as Rockefeller's "edifice complex".

He worked with the legislature and unions to create generous pension programs for many public workers, such as teachers, professors, firefighters, police officers, prison guards, in the state.

He pushed through the highest-in-the-nation minimum wage.

Public-benefit authorities (some 230 of them, like UDC) were brought into existence by Rockefeller.

They were often used to issue bonds in order to avoid the requirement of a vote of the people for the issuance of a bond; such authority-issued bonds bore higher interest than if they had been issued directly by the state.

The state budget went from $2.04 billion in 1959-60 to $8.8 billion in his last year 1973-74.

http://en.wikipedia.org/wiki/Nelson_Rockefeller

Empire State Plaza

From Wikipedia, the free encyclopedia

The Governor Nelson A. Rockefeller Empire State Plaza (commonly known as simply the Empire State Plaza and less formally as The South Mall) is a complex of several state government buildings in downtown Albany, New York.

Controversy

Not unexpectedly, the complex was a significant controversy around the time of its construction.

It was criticized for displacement of the former landowners (about 9,000 people were displaced, mostly from working-class and poorer sections of older Albany which was home to ethnic communities of Jews and Italians), the cost of its lavish architecture (the towers are covered in marble so that one cannot see the individual floors), its sheer size, and its period architecture.

The 1991 book, The Shock of the New, refers to the buildings as being in "The International Power Style of the Fifties", comparing the buildings to those built by Fascist governments.

Crossing through the plaza is the South Mall Arterial, a short highway artery connecting to the Dunn Memorial Bridge.

Construction of this highway destroyed many buildings in Albany's downtown.

In the initial proposal, the highway was to go from Interstate 90 in North Greenbush (current exit 8 to NY 43), through Rensselaer, under the plaza, and connecting to the also-cancelled Mid-Crosstown Arterial, which would have run from I-90 Exit 6, through the city, travelling underneath Washington Park, meeting with the South Mall Expressway in the process, and continuing on to the Thruway at Exit 23.

The current South Mall Arterial ends abruptly in a loop at Swan Street, with both eastbound and westbound lanes using the two outer portals of the four portal tunnel leading under the plaza.

(The inner two were to be express lanes to the Mid-Crosstown Arterial/SME interchange underneath the park.)

The only evidence of the original Mid-Crosstown Arterial is the four level stack interchange for I-90 at present day US 9.

http://en.wikipedia.org/wiki/Empire_State_Plaza

What is not discussed in these Wikipedia articles on Nelson Rockefeller and the South Mall is the devastation to upstate NY's economy once this massive project was completed ....

People had come from all over the USA to get some of this money in their pockets ....

Once the project was completed, there was NO WORK for these people ....

So they went on welfare, after their unemployment ran out ....

And here we now are today ....

Obama is the NEW NELSON ROCKEFELLER IN AMERICA ....

And so ...

"ROCKY'S LAST ERECTION - The Architectural, Economic, and Urban Planning Fiasco that is Albany's Empire State Plaza"

Lo Faber April 26, 2005

The true grandson of John D. Rockefeller, the Standard Oil tycoon who had price-gouged every competitor on the scene until he created the most powerful and detested monopoly in American history, Nelson understood the game of power as well as the most ruthless ward heeler.

He understood that to spend money was to increase power, and during his time in office the State's budget and debt alike would both quadruple.

He understood that personality was power, and cultivated an arrogance "easy, charming, gracious--the arrogance of a man handed at birth the power to enforce his will."

He knew that power in his own party was the necessary foundation of power outside it--but that was no problem, since, as Theodore H. White recalled, the New York Republican Party was essentially "a dependency of the Rockefeller family"; and for years Nelson kept a small blue folded piece of paper in his jacket pocket, which he would pull out on occasion to remind himself and others "precisely of the total the Party had cost the family over the years, a very large figure indeed."

http://www.lofaber.com/albany/essaymaking.html

"Banks borrow more, investment firms less from Fed - Banks borrow more, investment firms less from Fed's emergency lending program"

By JEANNINE AVERSA, Associated Press

Last updated: 5:25 p.m., Friday, January 2, 2009

WASHINGTON -- Commercial banks borrowed slightly more, while investment firms drew less over the past week from the Federal Reserve's emergency lending program.

The Fed report, released Friday, showed commercial banks averaged $86.6 billion in daily borrowing over the week ending Wednesday.

That was up from $86.3 billion in average daily borrowing logged over the week that ended Dec. 24.

Investment firms drew $38.5 billion over the past week.

That compared with an average of $45.7 billion the previous week.

This category includes any loans that were made to the U.S.- and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.

The Fed report also showed that its net holdings of "commercial paper" averaged $332.4 billion over the week ending Wednesday, an increase of $6.6 billion from the previous week.

Under the first-of-its-kind program started Oct. 27, the Fed is buying commercial paper -- the crucial short-term debt that companies use to pay everyday expenses.

The Fed has said about $1.3 trillion worth of commercial paper would qualify.

Squeezed banks and investment firms are borrowing from the Fed because they can't get money elsewhere.

Investors have cut them off, having shifted their money into safer Treasury securities.

Financial institutions are hoarding whatever cash they have, rather than lending it to each other or customers.

The lockup in lending has contributed to the recession that began in December 2007.

Investment houses in March were given similar emergency-loan privileges as commercial banks after a run on Bear Stearns pushed what was the nation's fifth-largest investment bank to the brink of bankruptcy and into a takeover by JPMorgan Chase.

The identities of commercial banks and investment houses that borrow are not released.

Commercial banks and investment companies now pay just 0.50 percent in interest for the emergency loans.

Critics worry the Fed's actions have put billions of taxpayers' dollars at risk.

The Fed's balance sheet has ballooned to $2.25 trillion, from just under $900 billion in September, reflecting the central bank's many unconventional efforts -- various programs to lend or buy debt -- to mend the financial system and jolt the economy out of recession.

The report also showed that insurance giant American International Group's loan from the Fed averaged $38.9 billion for the week ending Dec. 31.

That was down by $1.09 billion from the prior week's average.

HEY!

DID'JA HEAR?

OBAMA IS GOING TO PUT US ALL ON WELFARE HERE IN AMERICA ....

NOBODY IS EVER GOING TO HAVE TO WORK AGAIN FOR THE REST OF THEIR LIVES .....

And so ...

"Obama considering expanding jobless benefits: report"

Sun Jan 4, 12:09 am ET

NEW YORK (Reuters) – President-elect Barack Obama and Congressional Democrats are considering a major expansion of government-assisted health care insurance and unemployment benefits as part of a two-year economic recovery program, The New York Times reported in its Sunday editions.

Proposals included extending unemployment compensation to part-time workers, subsidizing employers who must continue health insurance benefits temporarily for laid-off and retired employees and allowing workers who lose jobs that did not include insurance to apply for Medicaid, the Times said.

The proposals would be included with other economic measures like ramping up spending on infrastructure and other public works projects meant to stimulate job growth, the Times said.

Democratic aides said the House of Representatives is not expected to vote until next week at the earliest on any stimulus plan, with final action now unlikely before February, the newspaper reported.

Citing Obama advisers, the newspaper said the package, which could face resistance from Republicans and conservative Democrats, would cost at least $775 billion.

"This has really forced people to think outside the box," the Times quoted a House Appropriations Committee aide as saying, "because this is more money than anybody expected to be spending."

Obama is also likely to propose a tax credit of $500 for eligible individuals and $1,000 for couples, the newspaper said.

Those earning too little to pay federal income tax would receive a check meant to offset Social Security retirement and Medicare payroll taxes.

"Hammered, then nailed, by debt - Bankruptcy filings in Capital Region for businesses, consumers are up from 2007"

By CATHY WOODRUFF, Business writer, Albany, New York Times Union

First published in print: Sunday, January 4, 2009

ALBANY — Check out a few of the documents on file at U.S. Bankruptcy Court here and you'll start to get the picture quickly enough.

A single woman in Schenectady with annual take-home pay of $20,450 lists $25,000 in debts, more than $20,700 of it charged on credit cards.

A divorced Rensselaer County woman with three children and annual take-home pay of $26,500 owes $80,605.

More than $61,700 of it stems from charges on credit cards issued by banks, department stores and clothing retailers.

You'll also find plenty of couples with incomes many would consider comfortable, who apparently were derailed financially by a failed small business or a job loss — sometimes exacerbated by mortgage payments on a house no longer worth as much as they owe on it.

While the Capital Region still isn't feeling as much disruption as other regions of the country from mortgage foreclosures and job layoffs, the financial hammer came down plenty hard on many residents as the economy soured last year.

Bankruptcy filings in the court's Albany office hit 4,355 in 2008, up more than 21 percent from 2007's total.

Nationally, bankruptcy filings were up 30 percent in the 12 months through Sept. 30.

Consumer bankruptcy filings were up more than 39 percent, according to the American Bankruptcy Institute, which tracks bankruptcy trends.

The increases in Albany include a sharp rise in Chapter 11 filings from businesses seeking court protection to continue operating while they restructure their debts.

2008 saw 29 Chapter 11 filings that included restaurants, builders and small family businesses.

In contrast, Chapter 11 filings numbered 17 in 2007 and 19 in 2006.

So-called consumer filings — petitions from individuals whose personal financial difficulties have spiraled beyond their ability to recover — are plentiful in the local court's caseload.

In the 11 months through November, consumer bankruptcies were already running nearly 9 percent ahead of the total for all of 2007.

"It's mostly people who have gotten over their head in credit cards," said Marc Ehrlich, a Troy attorney who represents bankruptcy clients and also acts as a trustee to oversee the liquidation of assets in bankruptcy proceedings.

More and more, he said, people "are trying to live a lifestyle using credit cards that their income doesn't justify."

Albany attorney Richard Croak estimated that his firm's bankruptcy work was up about 25 percent over 2007.

He said some 400 cases were filed last year, compared with closer to 300 the year before.

A big reason, he said, has been the burden of high mortgage payments as homeowners try to stave off foreclosure.

"A lot of these people are facing this problem with these adjustable-rate mortgages," he said, and even the drop in the prime rate last month won't necessarily help them soon enough.

"A lot of these mortgages are tied to rates that are not the prime rate," he said.

Between bankruptcies and foreclosures, Randy Passonno's Collar City Auction business is surging, too.

Bankruptcy auctions tapered off early this decade to about 10 percent of the Duanesburg auctioneer's business.

Now, Passonno said, it's probably closer to 25 percent, and his projections for 2009 put such auctions closer to 40 percent of his business.

Collar City will auction two grocery stores and a home in rural Franklin and St. Lawrence counties on Jan. 14 as a result of a family business bankruptcy, and is preparing to sell off inventory from an area flooring business on Jan. 17.

Passonno said he is hearing from banks, businesses and trustees across the country who need his company's services.

"I think that, over the last five years, many businesses and individuals have overextended because of the availability of credit that was out there," he said.

Recent Passonno auctions have included car dealerships in Kingston and on Long Island.

Passonno and others close to the bankruptcy scene say the signs are strong that this year will be even tougher.

"We expect a big 2009," said Croak, the Albany bankruptcy attorney.

"It's a terrible thing, and I don't see any end in sight."

Cathy Woodruff can be reached at 454-5093 or by e-mail at cwoodruff@timesunion.com.

I think the calender did. All can judge if we freshman
economic observers helped ready other folks. I thought I'd transition with
another warning as the market closed above 9,000 this week.




The roads and bridges look fine, but the other stuff...well...who makes it to the trough?



When this bill comes out we'll see what it includes...meanwhile...

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

http://www.marketwatch.com/news/story/Ex-F...p;dist=hplatest

Ex-Fed governor says crisis more complex than 1930s
By Greg Robb
Last update: 3:16 p.m. EST Jan. 4, 2009

SAN FRANCISCO (Market+atch) -- The financial shock that hit the U.S. this autumn was bigger than a similar shock during the Great Depression, former Federal Reserve governor Frederic Mishkin said Sunday. The recent shock "is much more complicated" and the clean up will be difficult to do, Mishkin said. The Fed is in "experimental mode," he said during a presentation to the American Economics Association. Mishkin said he was a strong supporter of the Fed's recent move of cutting interest rates to range to zero and pledging to use unconventional monetary policy. "The Fed doesn't want to be a deer in the headlights," he said.
----------------------

http://www.marketwatch.com/News/Story/Stor...7-8511FA33AF39}

Notion of fast U.S. recovery falls flat at parley
At annual meeting, economists see little chance recession will end in `09
By Greg Robb, MarketWatch
Last update: 11:16 a.m. EST Jan. 4, 2009

SAN FRANCISCO (MarketWatch) - The idea that the U.S. economy is going to recover in the next six months is given little credence
at a gathering of top academic economists here over the weekend.

A pickup sometime after June is still the Federal Reserve's quasi-official forecast. And leading institutional forecasters
surveyed by the Blue Chip Economic Indicators are optimistic.

But that forecast seemed woefully out of touch to many experts who spoke at the annual meeting
of the American Economics Association.

"People are getting nervous," said Adam Posen, deputy director of the Peterson Institute for International Economics.
The actions by the Federal Reserve and Treasury Department have driven home the point that policy makers are at their wits' end.
"We don't know what to do. It's really a throw-the-kitchen-sink-at-the-problem strategy. It is hard to argue with it in the middle of the crisis,
but you can bet everyone will 10 years from now," said Kenneth Rogoff, a former chief economist at the International Monetary Fund.

The Fed has indeed thrown the kitchen sink at the financial-market crisis, expanding its balance sheet by $1 trillion, to little obvious effect.
The Treasury Department's management of the $700 billion rescue plan for the financial markets has seemed capricious.
And it may just be the first of several rounds of life preservers for the shattered sector, experts said.

Despite all these efforts, the U.S. economy, hit by an oil shock, a credit crunch and the global downturn, seems to be on a steep slide.
Some argue that the recession has just begun, despite the formal ruling by the business-cycle-dating committee that it began in December 2007.

Alan Blinder, a former vice chairman of the Federal Reserve, said the recession began only in mid-September when Lehman Brothers collapsed.
"We are in a horrible mess. I believe it is very young and it is going to be long and deep," he said.

Even in the first quarter of 2010, the economy will likely be weak enough to need macro stimulus, he said.

Martin Feldstein, the prominent Harvard University economist, said there was no longer any basis for believing the recovery could start in the third quarter.
"I think we'll be lucky if by this time next year we see the economy hit the bottom and start turning up," Feldstein said.

"In terms of the level of activity, the end of 2009 is going to look lower than it is today," he said.

Former Clinton economic adviser Laura Tyson said it is too speculative to predict a turnaround.

"The slide may stop, but coming out [of the downturn] will not come until later," she said.
"It is very hard to predict when the situation will turn around," she said.

The downturn has become "self-reinforcing downward-spiral effects going on - from the housing market
to the credit market to the real economy and back to the housing market," she said.

Treasury Secretary Henry Paulson came under constant criticism for his handling of the financial-market crisis.
Rogoff, the former IMF chief economist, said Paulson's policy was similar to the "Wheel of Fortune" game show.
Some companies spun the wheel and got $300 billion bailouts. Others spun it and got nothing.

This just added to market insecurity and uncertainty, he said.
Rogoff said the U.S. is "running right along the tracks" of past financial crises in developing countries.
Based on experience, the U.S. housing-market collapse and stock-market weakness should continue until 2010, he said.

The U.S. unemployment rate should spike to 12% and those elevated levels should last until 2011, he said.

And in previous crises, the average rise in government debt was 86%, he said.

The root of the crisis remains the financial sector, Rogoff said. "We're going to be seeing second and third bailouts
of the big banks," he said.

The experts generally supported the Fed's unconventional monetary-policy moves to expand its balance sheet and try to shore up asset markets.
The Fed has quietly shifted its policy from supporting institutions to trying to get non-functioning markets back on track, Blinder said.
The central bank will start buying mortgage-backed securities issued by Fannie Mae and this has already brought mortgage rates down.
Soon, he said, the Fed will start buying consumer loans.

The Fed is likely to continue to add markets and could start buying municipal securities, he said.

But Rogoff said he was worried that these programs were simply keeping the financial sector on life support
and did not seem to curing the underlying problems.

The Fed programs seem to amount to "temporizing," he said.
In 2009, commercial real estate, private equity and hedge funds will suffer, he said.
And the "behemoths" of the financial sector are not really viable, he said.

Greg Robb is a senior reporter for MarketWatch in Washington.

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

Oil started climbing again this week, making things better for my homestate.
We budget based on $50 oil and are in the process of cutting a couple of
hundred million from the remaining six months of this fiscal year (through June 30).

---------------------------------
http://www.marketwatch.com/
2:57 p.m.
Feb. crude ends up $1.74, or 3.9%, at $46.34 a barrel
2:53 p.m.
DOE plans to fill 727-million barrel SPR in 2009
2:52 p.m.
DOE plans to buy 12 million barrels of oil for SPR

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

Again, the bricks and morter stuff - OK; the programatic stuff - Good Luck.

Subsidizing state Medicaid money with federal deficits dopesn't make sense to me.
And...tax cut? Keep it and stop spending like drunken sailors (with apologies to sailors).

My feeling about a bail-out bubble is that as people accept that Big Brother has to spend
ANOTHER trillion to keep us from going broke (does that make sense?) it will become
"normal", "expected" until the budget bubble bursts. And, the budget is swelling like
a teenager watching a Miss December photo-shoot. "Federal Budget Bubble" is probably more accurate.

(edit add: the "SPR" referenced above is The Stategic Petroleum Reserve)

"This isn't your grandmother's recession"

By KRISTI L. GUSTAFSON, Staff writer, Albany, New York Times Union

First published in print: Sunday, January 4, 2009

So you've reduced your stops at Starbucks to once a day, put off buying a new car and even canceled that cruise to the Bahamas.

At least you had those things to cut back on.

"For the past 20 or so years, we have been on a consumption kick that is out of proportion with anything we've had in history," says Scott Spiker, CEO of First Command Financial Services in Fort Worth, Texas.

"It's almost an opiate to which our society is addicted."

When Americans feel financial pressure, they scale back, eliminating not just big-ticket items like cars and homes but things as diverse as morning coffee, unnecessary clothing and high-end meats on the dinner table.

History shows luxuries are the first to go, says Adrian Masters, an associate professor of economics at the University at Albany.

In early December, high-ticket-price purchases posted a 34.5 percent drop from the same time period last year, according to MasterCard's SpendingPulse unit.

The division estimates total retail sales across all forms of payment, including cash and checks.

This is the greatest drop seen in this sector since tracking began in 2002.

In November, Seattle-based Starbucks said same-store sales in the U.S., or sales at locations open at least a year, dropped 8 percent during the company's fiscal fourth quarter as fewer customers came into the stores.

According to food marketing expert Phil Lempert, people are eating out less and supermarket sales are up nationwide.

"Instead of taking their kids to McDonald's for chicken McNuggets, people are choosing to buy Banquet frozen nuggets at the grocery store and get four times as much for the same price," he said.

According to a study conducted in October by an independent research group for ConAgra Foods, nearly one-quarter of employed Americans are bringing their lunches to work more often this year than they were last year, and 57 percent said given recent concerns about the economy, they are more inclined to do so.

In addition, two-thirds of the 1,000 Americans surveyed said the economy has them rethinking their day-to-day food purchases.

During the Depression, silk stockings were a hot and highly desired commodity people gave up, recalls Lillian Yonally, 86.

A resident of the Beltrone Living Center in Colonie, Yonally says that during the Depression, people watched what they ate and made new outfits from old clothes.

She remembers her childhood friends wearing "repurposed" clothing.

"Their mothers would take their fathers' coat and make it smaller," Yonally says.

"There was time to do things like that and not money to buy new ones."

While today's working mothers aren't likely to start ripping apart sport coats, they are likely to take a pair of shoes to a cobbler for new heels, or have the zipper repaired on an old purse, according to area shoe repairmen, who have seen increased business in recent months.

Vacations were a rarity during the '30s, Yonally says.

If anything, people took day trips rather than going anywhere that required an airline ticket or passport.

Now, annual vacations — however brief — are as common as a family having more than one car.

"By today's standard, what they gave up didn't look like luxuries, but to them they were luxuries," Masters says.

"We live in more affluent times, and there is a new set of affluent goods we could cut back on."

Big-ticket purchases such as cars, major appliances and even homes are being postponed — and the manufacturers of those items are suffering.

"People are nervous about going into debt, so items that require taking a loan are going to struggle," Masters says.

He points to the drowning automotive industry as the prime example.

Fancier cars will be hit harder than more basic models, but no manufacturer is going to thrive, he says.

Historically, people don't curb spending solely because they lack funds, says Mark Stevens, author of "Rich Is a Religion" and CEO of MSCO, a marketing firm based in Rye Brook, Westchester County.

Real cutting back results from being scared of the financial unknown.

Fear overcomes the desire to consume, Stevens says.

"Almost everything becomes a luxury, except what you need for your health or to eat."

And the Consumer Confidence Index fell to a historic low in December.

The index, measured by the Conference Board, a private research group, fell to 38 last month, the lowest point since the group began compiling the index in 1967.

One thing that makes the current economic crisis worse than the one in the 1930s is credit cards.

During the Depression, people who wanted to buy goods could do so only within their means.

On rare occasions, if they needed to stretch, they could have gotten credit at one store.

Today, consumers can rack up debt on credit cards, multiple personal loans and massive mortgages.

"We have the ability now to get in worse trouble than we even could then," Stevens says.

So what's going to lift us out of this barrel and get people spending again?

Time.

When consumer confidence rises and unemployment decreases, consumers pay off debt and stocks rebound.

Money is freed up for lenders to distribute and, in turn, more people have dollars to spend.

"They aren't going to go on spending sprees, but they'll spend incrementally and the economy will rebound," Stevens says.

Making something as simple as a venti latte seem like a necessity again.

Kristi Gustafson can be reached at 454-5494 or by e-mail at kgustafson@timesunion.com.

There is the point, IH, as I see it ....

It is not "accepted", it is becoming "EXPECTED" ....

AND ...

"BIG BROTHER" DOES NOT have that TRILLION .....

"BIG BROTHER" has to borrow that TRILLION ....

Which means that "BIG BROTHER" has to try and sell more debt on top of all the debt that "BIG BROTHER" is already trying to sell ....

Look at this above article: THE FED'S BALANCE SHEET HAS BALLOONED TO $2.25 TRILLION FROM JUST UNDER $900 BILLION IN SEPTEMBER ...

It is a snake eating its own tail ....

To keep from consuming itself, the snake has to grow faster than it can eat itself ....

But since it is eating itself, it can't grow ....

And so ...

Kinda like swapping ammo between units trying to guess where Charlie is gonna
hit. As long as you guess correctly it looks good...but there's a reckoning eventually.

(May of '69 Jeez-Louise...we were soldiers once and young)

There seems to be three major mistakes coming down the pike on the "stimulus":

The payoff of Democratic governors to the tune of $1 trillion (see Livyjr's post above),
the tax "credit" for 95% of the 65% of of Americans who pay taxes,
and the idea that helping homeowners with refinancing will stop the credit disaster.

First, where in the Hell does it say that governors' whose states supported the
president-elect should get anything more than those who did not? Talk about political pork!
Just how long is this first year bail-out last? Until the people of those states get flush?
Why NY, NJ, Ohio, WI, MA, CA and MI? Sounds like The Land o' Lincoln 4 Sho'.

Second, payroll tax credits...does that mean either $20 less is taken from every other paycheck of the
average worker...or that they can ask for $500 more back in their annual tax refund (in 2010)?
Neither sounds like it will make a dime's worth of difference 'til at least April of 2010.
That sounds more like a tease than simulus. And, the way I figure it, 95% of 65% = 61.75%.
So, less than 2 of 3 taxpayers get $500 more over 12 months - whoopie!

Then the final pie-in-the-sky is "helping homeowners":

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

http://money.cnn.com/2008/12/08/news/econo...sion=2008120917

Half of 'rescued' borrowers still default
Many modified mortgages in 2008 defaulted in 6 months, a top federal regulator says.
A new study raises concerns over the quality of such loan adjustments.

By Tami Luhby, CNNMoney.com senior writer
Last Updated: December 9, 2008: 5:11 PM ET

WASHINGTON, D.C. -- More than half of delinquent homeowners whose mortgages were modified earlier this year
ended up redefaulting within six months, a top bank regulator said Monday.

Some 53% of borrowers with loans modified in the first three months of 2008 and 51% of those with loans modified
in the second quarter could not keep up with payments within six months, according to U.S. Comptroller John Dugan,
who spoke at a housing conference.

The report, which will be released in full next week, covers nearly 35 million loans worth a total of $6 trillion - or 60%
of all primary mortgages in the United States.

The high redefault rate raises concerns about the long-term effectiveness of loan modifications, which many are pushing
as a key solution to the nation's financial crisis.

A record 1.35 million homes are in foreclosure, while the number of borrowers who have fallen behind on their payments
soared to a record 6.99%, the Mortgage Bankers Association said last week.

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

You might as well do infrastructure in states and keep it at that...
bailing out selected state budgets at varying amounts over an unknown
period of time is totally ridiculous - not to mention unfair and purely
political. You'd probably be better off sending everyone a check for $2,574.75
($775 Billion/301 million folks), but that would be far too democratic.

I wouldn't just leave it at infrastructure, at a bare minimum we need to be pumping a lot more into research and resource issues. Now those are all long term enough that they won't be a stimulus for this recession, but they're all vital for our long term well being.

No currently supported approach other than the FDIC proposal has a chance of easing the mortgage situation, piecemeal or targeted adjustments can only fail. Rewriting the principle on ALL mortgages and tax valuations to reflect the decline and outlawing residential ARMs would do the trick, but the banks won't go with that voluntarily (despite the fact that it's likely the least costly option for them, they still prefer gambling on a quick turnaround).

The states and cities probably do need help, large scale defaults on munis would be devastating for at least a decade or two.

This is the wrong time for tax cuts or tax increases, the cuts can't provide as much stimulus as they do debt and increases would prevent any chance of sectors recovering. Unfortunately politicians have to keep their tax cut promises, the people demand it even if it ruins them.

My premise is that the USA is INSANE ....

Mentally incompetent ....

Irrational ....

So we seem to be in agreement, tomhye, on your last point about the American people demanding that which will destroy them ....

And then they will be gone ....

We simply start anew ....

It's like burning the stubble off of a field before you replant ...

And so ...

"Obama weighs major tax move"

By Mark Trevelyan and Lincoln Feast

5 JANUARY 2009

LONDON (Reuters) – Cautious New Year optimism rippled through Asian and European stock markets on Monday as investors waited for news of tax cutting plans in Germany and the United States.

The upbeat mood was undented by war in the Middle East and further disruption of Russian gas supplies to Europe in a pricing dispute between Moscow and Ukraine.

U.S. President-elect Barack Obama is seeking as much as $310 billion in tax cuts as part of a massive stimulus plan to counter what senior policymakers warned could be a prolonged period of economic stagnation and deflation.

In Germany, conservative Chancellor Angela Merkel meets her Social Democrat coalition partners at 1300 GMT (8 a.m. EST) after bowing to pressure from her Bavarian sister party and reversing her previous stance on tax relief.

At talks on Sunday, she agreed to a tax easing she had previously ruled out until September's federal election.

The plans by the world's no. 1 and no. 3 economies mark the latest attempts to tackle a financial crisis that began with U.S. mortgage defaults in 2007 and now threatens much of the world with a deep and vicious recession.Along the way, it has reshaped the banking landscape and taken entire countries to the brink of bankruptcy.

Over the weekend, both Janet Yellen, president of the San Francisco Federal Reserve Bank, and Lucas Papademos, vice president of the European Central Bank, highlighted the risks of deflation -- an economically damaging spiral of falling prices and demand.

Investors have, however, begun to make tentative bets that the worst of the turmoil, which took a sharp turn for the worse in September with the collapse of investment bank Lehman Brothers, is over.

Kicking off the first full week of 2009, they pushed up stocks, the dollar and commodities while selling safe-haven plays such as government bonds and the Japanese yen.

Asian stocks hit a two-month high and the FTSEurofirst 300 was up more than 1.3 percent in morning trade.

Oil prices rose nearly 3 percent after a reported Iranian call for an oil boycott over Israel's offensive in the Gaza Strip.

They later eased, but were still firm.

In the latest fallout from the Russian-Ukrainian gas dispute, Bulgaria reported deliveries of Russian gas were down 10-15 percent, and Croatia said its supplies had fallen by 7 percent.

Several other nations have also reported falls which, if prolonged, could drive up demand for oil products.

JAPANESE GLOOM

With Japan already in recession, the Yomiuri newspaper reported that the country's central bank was likely to tear up its October forecast of 0.6 percent growth for the fiscal year beginning in April, replacing it with a likely contraction of around 1 percent, the biggest for a decade.

Auto sales in Japan, excluding 660 cc minivehicles, plunged 22 percent in December from a year earlier, hitting their worst level on record for the month.

"This is a bleak situation," said Takeshi Fushimi, director of the Japan Automobile Dealers Association.

Carmakers are far from alone in suffering a brutal hit from the downturn, which is forcing hard-pressed consumers to cut back on expensive and non-essential items.

Irish fine china and glassware group Waterford Wedgwood said on Monday a receiver had been appointed for the company, and some of its subsidiaries would shortly be placed into administration.

Elsewhere there were signs of greater stability.

South Korea, one of those countries that appeared to be on the brink of financial collapse, said its foreign exchange reserves rose in December for the first time in nine months.

Helping increase the appetite for riskier assets, senior Democratic aides said Obama planned to discuss his tax cut and stimulus package plans with Democratic and Republican leaders of the Senate and House of Representatives on Monday.

The tax relief proposals are designed to attract support from fiscal conservatives in Congress, who prefer cutting taxes to increasing federal spending.

Under Obama's proposal, about 40 percent of an economic package worth as much as $775 billion would be in the form of tax breaks for businesses and the middle class, one aide said.

The U.S. economy is in need of drastic measures.

U.S. jobs data at the end of the week are expected to show half a million jobs were lost in December alone, pushing the unemployment rate to 7 percent.

"The financial and economic firestorm we face today poses a serious risk of an extended period of stagnation," said Yellen, a voting member of the Federal Open Market Committee in 2009.

"I'm strongly supportive of a substantial fiscal stimulus package," she said at the annual meeting of the American Economics Association on Sunday.

The ECB's Papademos, meanwhile, said more interest rate cuts may be needed to support the euro zone economy and he vowed to keep deflation at bay.

(Reporting by Reuters bureaux worldwide; Writing by Mark Trevelyan, editing by Mike Peacock)

"Obama predicts quick OK on economic rescue plan - Obama embraces $300 billion in tax cuts, predicts quick passage of huge economic rescue plan"

By STEVEN R. HURST, Associated Press

Last updated: 4:35 p.m., Monday, January 5, 2009

WASHINGTON -- President-elect Barack Obama declared the national economy was "bad and getting worse" Monday as he began crisis talks with congressional leaders on emergency action.

He predicted lawmakers would approve hundreds of billions of dollars in new spending and tax cuts within two weeks of his taking office.

"The economy is very sick," Obama said before meeting with Senate Democratic Leader Harry Reid.

"The situation is getting worse."

"... We have to act and act now to break the momentum of this recession."

Obama, whose inauguration is two weeks from Tuesday on Jan. 20, said he expected quick approval of rescue legislation by the new Congress.

"I expect to be able to sign a bill shortly after taking office," he said.

Pressed on the timing, he said, "By the end of January or the first of February."

Obama's proposal to stimulate the economy includes tax cuts of up to $300 billion, including $500 tax cuts for most workers and $1,000 for couples, as well as more than $100 billion for businesses, an Obama transition official said.

The total value of the tax cuts would be significantly higher than had been signaled earlier.

New federal spending, also aimed at boosting the moribund economy, could push the overall package to the range of $800 billion or so.

Obama met earlier in the day with House Speaker Nancy Pelosi, D-Calif., as he set a tone of urgency for dealing with a financial situation that he described as "precarious."

"The reason we are here today is because the people's business cannot wait," Obama said as he arrived on Capitol Hill for talks with Pelosi.

"The speaker and her staff have been extraordinarily helpful in working with our team so we can shape an economic recovery plan and start putting people back to work."

The tax cuts for individuals and couples would be similar to the rebate checks sent out last year by the Bush administration and Congress in a bid at that time to boost the slowing economy.

A key difference is that the tax cuts this time around may be awarded through withholding less from worker paychecks.

That provision would cost about $140-150 billion over two years.

For businesses, the plan would allow firms incurring losses last year to take a credit against profits dating back five years instead of the two years currently allowed.

Another provision brought to the negotiations by the Obama team would award a one-year tax credit costing $40-50 billion to companies that hire new workers, and would provide other incentives for business investment in new equipment.

"We've got an extraordinary economic challenge ahead of us," Obama said.

"We're expecting a sobering job report at the end of the week."

Said Pelosi:

"It is a great honor and personal privilege to welcome you to this office."

"Tomorrow we will swear in a new Congress and we will hit the ground running on the initiatives ... to ease the pain being felt by the American people."

Before meeting with Reid, the Nevada Democrat, Obama said, "This is not a Republican problem or a Democratic problem at this stage."

"It is an American problem and we're going to all have to chip in and do what the American people expect."

Another provision brought to the negotiations by the Obama team would award a one-year tax credit costing $40-50 billion to companies that hire new workers, and would provide other incentives for business investment in new equipment.

"We've got an extraordinary economic challenge ahead of us," Obama said, and he predicted a jobs report at the end of the week would show new declines.

He had meetings with a broad array of House and Senate Democratic leaders and with a bipartisan group of key lawmakers.

He had hoped to have Congress enact the recovery plan in time for him to sign when he takes office Jan. 20, but no one thinks that will happen now.

Obama has insisted that bold and quick action is necessary if the nation is to rebound from the greatest economic crisis since the Great Depression.

He has said repeatedly he wants a plan that will create 3 million new jobs.

The economic teams of new presidents often work behind the scenes with congressional leaders before their administrations move in, but Obama's direct and public involvement is highly unusual.

He arrived Sunday night in Washington and spent all of Monday at the Capitol before returning to the hotel where he has set up shop for the two weeks before his inauguration.

Aides have said the package Obama has dubbed the American Recovery and Reinvestment Plan could cost as much as $775 billion.

The president-elect has refused to put a price tag on the plan, and some members of Congress expect it to go higher.

------

Associated Press Writer Charles Babington contributed to this report.

"Treasurys fall as investors brace for supply glut - Long-term Treasurys fall as investors see flood of government debt coming to market in '09"

By MADLEN READ, Associated Press

Last updated: 6:25 p.m., Monday, January 5, 2009

NEW YORK -- Longer-term Treasury bond yields extended their advance Monday as investors braced for the possibility that the government will have to issue even more debt than the market has anticipated.

If President-elect Barack Obama's planned tax cut of up to $300 billion is approved, the government will need to sell Treasurys to make up for the shortfall.

An increase in Treasury supply usually translates to a drop in prices and rebound in yields -- even if the economy remains weak.

"Unfortunately, macroeconomics has little to do with the interest rate call," said T.J. Marta, fixed-income analyst at RBC Capital Markets.

"You have to figure out what the government program is going to be."

The Treasury Department has already been selling record amounts of debt in recent weeks.

It said Monday it will auction $30 billion in three-year notes this week, and re-auction $16 billion in previously issued 10-year notes.

As more debt comes into the market, Treasury prices have fallen and yields have been rising from the record lows reached in December.

The 30-year bond yield was at 3.03 percent late Monday -- up from 2.81 percent on Friday and up from its December low of 2.51 percent.

That was the bond's lowest yield since the government started issuing it regularly.

"Treasurys may well have gotten ahead of themselves," said Mike Englund, chief economist at Action Economics.

The government is issuing debt to finance its various financial rescue efforts, because at the moment, taxes aren't enough to pay for it.

The government is already collecting fewer taxes from individuals and corporations than in previous years simply because they are making less money, and in some cases posting losses.

U.S. daily Treasury tax receipts tumbled 13 percent year-over-year in December, noted Englund -- even worse than November's 4.2 percent decline and October's 7.5 percent drop.

There are two major ways that a recovery in Treasury yields could be limited: if the recession is much worse than expected, and if the Federal Reserve starts buying a significant amount of Treasurys.

The Fed announced in November that it would buy mortgage-backed securities, and started doing so on Monday, stoking a rally.

Rates on those securities have been falling as investors pour money back into that market, and in turn, the actual mortgage rates that homeowners pay have also dropped.

The central bank said last month that it might decide to buy Treasurys, too.

This could happen, Marta said, if Treasury yields get too high compared to yields on other debt.

The Fed wants banks to boost lending, and banks will only have incentive to do so if there is a wide spread between yields on safe assets, like Treasurys, and yields on riskier assets.

Late Monday, the two-year Treasury note rose 3/32 to 100 5/32, and its yield fell to 0.78 percent from 0.86 percent late Friday.

But long-term Treasurys declined.

The 10-year note fell 1 8/32 to 111 1/32, and its yield rose to 2.48 percent from 2.39 percent.

The 30-year Treasury bond sank 5 10/32 to 128 12/32, and its yield rose to 3.03 percent from 2.81 percent, according to BGCantor Market Data.

The yield on the three-month T-bill, considered one of the safest investments, rose to 0.09 percent from 0.07 percent.

Its discount rate was 0.03.

In addition to the anticipation of more record auctions of Treasurys, investors found reason to sell off after the Commerce Department said construction spending fell by 0.6 percent, less than expected, in November.

Record activity on nonresidential construction helped offset another steep decline in housing activity.

Bank-to-bank lending rates have fallen since spiking last year, a good sign that financial institutions are more willing to lend to one another.

The cost of three-month dollar loans between banks rose modestly Monday by 0.01 percentage point to 1.42 percent, as measured by the British Bankers' Association's London Interbank Offered Rate, or Libor.

"Treasury provides $15B from bailout pot to 7 banks - Treasury announces $15 billion more released to 7 banks from $700 billion rescue fund"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:45 p.m., Monday, January 5, 2009

WASHINGTON -- The government said Monday it had supplied another $15 billion to seven banks in the latest round of payments from the $700 billion rescue fund.

The Treasury Department said the biggest payment in the new round totaled $7.58 billion to Pittsburgh-based PNC Financial Services Group Inc.

The latest payments bring the amount the government has committed to buying bank stock as a way of bolstering the financial system to $187.5 billion.

Treasury said it has provided support to financial institutions in 41 states and Puerto Rico.

Besides PNC, Treasury provided $3.41 billion to Fifth Third Bancorp of Cincinnati and $1.35 billion to Atlanta-based SunTrust Banks Inc.

The announcement Monday covered payments that were made on Dec. 31.

Under the law that established the $700 billion financial rescue program, Treasury has two business days after giving final approval to release the money to make that action public.

In many cases, the individual financial institutions publicize that they have received approval for financial rescue support before the official Treasury announcement.

The government is buying stock in banks in an effort to bolster the companies' balance sheets and spur them to step up lending to fight the worst financial crisis to hit the country since the 1930s.

But critics contend that many banks are not using the government funds for the purposes that Congress intended.

An Associated Press survey last month of 21 banks that had received at least $1 billion each in government support found that none of them would provide specific answers to how the money was used.

Besides purchasing bank stock, the government also has tapped the bailout fund to supply support to insurance giant American International Group, and last week released money to General Motors Corp. and its financing arm GMAC LLC.

Treasury also said it had provided an additional $20 billion to Citigroup Inc. on Dec. 31 under a program it has dubbed its "targeted investment program" to provide support for the banking giant.

It already had provided Citigroup an initial $25 billion.

Treasury Secretary Henry Paulson said last month when the Bush administration announced it would provide emergency loans to GM and Chrysler LLC that it had committed the first half of the $700 billion rescue program and Congress would need to authorize use of the final $350 billion.

That money cannot be tapped until the administration sends a report to Congress explaining how it plans to use the final $350 billion.

Treasury spokeswoman Brookly McLaughlin said Monday the administration was continuing to have conversations with the economic team of President-elect Barack Obama and with leaders in Congress about release of the final $350 billion.

She said no decision had been made on when the report requesting the next $350 billion would be sent to Congress.

Many lawmakers believe that request will be delayed until after Obama takes office on Jan. 20.

Lord...sometimes it helps to be closer to the woods (aka bush) than the penthouse...

http://www.nytimes.com/2009/01/07/business...ml?ref=business

Facing Losses, German Billionaire Takes Own Life

By CARTER DOUGHERTY
Published: January 6, 2009

FRANKFURT — Adolf Merckle, the German billionaire whose speculation in volatile Volkswagen shares pushed his sprawling business empire to the edge of ruin, has committed suicide, his family said Tuesday.

Merckle was ranked as the world's 94th richest person in 2008, according to Forbes magazine.

Mr. Merckle, 74, was found dead Monday night on railroad tracks near his villa in the southern German hamlet of Blaubeuren. German authorities in the nearby city of Ulm confirmed the death, saying there was no sign of foul play.

“The distress to his firms caused by the financial crisis and the related uncertainties of recent weeks, along with the helplessness of no longer being able to handle the situation, broke the passionate family businessman, and he ended his life,” the family said in a statement.

Forbes put Mr. Merckle’s fortune at $9.2 billion in 2008. A native of Dresden who made his way to the West after World War II, Mr. Merckle parlayed a family business in chemicals into one of the biggest pharmaceutical companies in the world. Ratiopharm, a maker of generic drugs that nonetheless became a recognized brand itself, became the pride of the family.

...


Somehow I'd have thought a native of Dresden could have survived losing his money.

http://www.marketwatch.com/news/story/Alco...CE2C3D30C5A5%7D

Alcoa slashes jobs, output to conserve cash
Aluminum giant to take four-quarter charge of at least $900 million
By Matt Andrejczak, MarketWatch
Last update: 4:36 p.m. EST Jan. 6, 2009

SAN FRANCISCO (MarketWatch) - Alcoa Inc. said Tuesday it is cutting 13% of its workforce, closing plants, and further curbing aluminum output to conserve cash as it battens down for a lengthy recession.

The company also said it will sell four businesses and is taking other steps that will result in a charge to fourth-quarter earnings of between $900 million and $950 million.

Alcoa said more than 13,500 employees will lose their jobs by the end of this year. The company is also jettisoning 1,700 contractor positions and instituting a global salary and hiring freeze.

In all, the Pittsburgh-based aluminum giant is cutting capital expenditures by 50% to $1.8 billion.

"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets," Alcoa Chief Executive Klaus Kleinfeld said in a statement.

Alcoa shares closed Tuesday at $12.12. The stock, a component of the Dow Jones Industrial Average, is down 65% over the pat year.

Matt Andrejczak is a reporter for MarketWatch in San Francisco.

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

But, the market gains and is above 9,000 again today...go figure...a mirage...

THE MARKET IS DRIVEN BY IRRATIONALITY ....

IN THE MEANTIME, WELCOME TO OUR FUTURE ...

And so ...

"Obama says expects deficit to approach $1 trillion"

By Steve Holland

6 JANUARY 2009

WASHINGTON (Reuters) – President-elect Barack Obama said on Tuesday that he expects to inherit a U.S. budget deficit approaching $1 trillion and that his administration would have to make some tough budget choices.

Just after meeting with his economic team, Obama said it was possible that trillion-dollar deficits could stretch into coming years and that he and his team want to instill a "sense of responsibility" about future budget choices.

Obama, who takes over from President George W. Bush on January 20, is seeking quick action from Congress on a package of spending and tax-cut measures that would total nearly $800 billion over next two years.

While many in the Democratic-led Congress are also eager to move swiftly on an economic stimulus, Republicans are insisting that the package receive careful scrutiny to avoid wasteful spending.

Any package would add to already spiraling budget deficits.

Obama spoke about the fiscal outlook a day before the Congressional Budget Office, the nonpartisan budget analyst for the U.S. Congress, plans to unveil its latest estimates on the budget deficit.

Private analysts expect the report to show a deficit of more than $1 trillion for the fiscal year 2009 that ends in September.

That would be more than double the roughly $400 billion shortfall of 2008.

Obama, who is trying to garner broad backing for the stimulus plan and has been courting Republicans as well as Democrats, said Americans who voted for him were "demanding that we restore a sense of responsibility," including on budget practices.

He said his pick to become the new White House budget director, Peter Orszag, was forecasting that the budget deficit would likely approach $1 trillion "before we've even started" and that more deficits could be coming in years ahead.

"The reason I raise this is because we're going to have to stop talking about budget reform" and realize it is "an absolute necessity."

He said a rescue package is needed but that "we're not going to be able to expect the American people to support" the rescue unless steps are taken to reform the budget.

Orszag, who attended the meeting that Obama held at his transition headquarters in Washington, has been head of the Congressional Budget Office for the past two years.

But the budget report to be issued on Wednesday will be prepared by acting CBO director Robert Sunshine.

(Reporting by Steve Holland and Caren Bohan; Editing by Sandra Maler and Cynthia Osterman)

"Economy in grip of recession, reports show - Weak economic reports suggest employers will shed many more jobs, analysts say"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:15 p.m., Tuesday, January 6, 2009

WASHINGTON -- Anyone looking for a bright spot in the recession might have pointed to a reading Tuesday of the nation's office workers, retailers and other service industries, which contracted at a slower-than-expected pace in December.

But even the closely watched gauge of activity in the service sector, where most Americans work, showed it was still shrinking.

And coupled with two bleaker economic reports, it suggested to analysts that the struggling economy is likely to shed many more jobs in the months ahead.

The Institute for Supply Management, a trade group of purchasing executives, said its service sectors index posted a small increase to 40.6 in December from 37.3 in November.

Economists had been looking for the index to slip further in December.

Any reading below 50 signals economic contraction.

Despite the better-than-expected reading, analysts said the overall index -- and its major components, such as employment prospects -- remained at recessionary levels.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, a private research firm in Valhalla, N.Y., said the reading on the employment component of the index was consistent with "massive job losses" of around 350,000 per month.

"This is not an indicator of recovery," Shepherdson said.

Other reports Tuesday on factory orders and pending home sales showed the economy's troubles have intensified since the worst financial crisis in seven decades erupted with fury in the fall.

Wall Street advanced moderately Tuesday, paring some earlier gains following the mixed economic readings but stocks still finished at their highest levels in two months.

The Dow Jones industrial average gained more than 62 points to 9,015.10, and broader indexes also rose.

Still, economists are predicting that December's unemployment report, which will be released Friday, will show the total economy lost a half-million jobs last month after a loss of 533,000 in November.

On Tuesday, Pittsburgh-based aluminum maker Alcoa Inc. said it will cut 13,500 employees, or 13 percent of its global work force.

A day earlier, Philadelphia-based managed care provider Cigna Corp. said the slumping economy was forcing it to cut roughly 1,100 jobs, about 4 percent of its work force.

The labor market is being slammed by a recession that already has lasted for a year, the longest stretch in a quarter-century.

The jobless rate, which jumped to a 15-year high of 6.7 percent in November, is expected to hit 7 percent in December.

Many analysts are worried that the jobless rate could top 8 percent later this year before the economy recovers enough to start generating better hiring prospects.

Federal Reserve Chairman Ben Bernanke and his colleagues also are concerned about the length and severity of the downturn, according to minutes of their closed-door deliberations released Tuesday.

The minutes of the Dec. 15-16 meeting showed that Fed officials feared that the economy could "remain weak for some time and that the downside risks to economic growth would be substantial" despite the central bank's aggressive actions to fight the downturn.

The Fed in December slashed a key lending rate to nearly zero and pledged to use other unconventional methods to fight the slump.

The Commerce Department reported Tuesday that orders to factories fell for a record fourth straight month in November, dropping by a bigger-than-expected 4.6 percent following a 6 percent plunge in October that was the biggest drop in more than eight years.

Meanwhile, pending home sales fell to their lowest level on record in November, according to a report from the National Association of Realtors.

The Realtors' 8-year-old index of pending sales dropped to 82.3, down from an October reading of 85.7.

Since there is typically a one- to two-month lag between when a contract and a completed sale, the bigger-than-expected fall in the pending sales index signaled anemic sales in coming months.

"Plain and simple, the economy is in the dumps," said Joel Naroff, chief economist at Naroff Economic Advisors.

But investors and businesses are hopeful that the new Congress that was installed Tuesday and President-elect Barack Obama will reach agreement in the next few weeks on a massive economic stimulus program.

Lawmakers in both houses pledged to move quickly on the stimulus program, which is expected to include $300 billion in tax cuts.

Various industries are hoping to be included in the new round of government stimulus, including the beleaguered housing sector, where the economy's troubles began more than two years ago.

Lawrence Yun, chief economist for the Realtors group, said the slump in pending home sales underscored that a "real estate-focused plan is urgently needed."

Despite the dismal news Tuesday, there were some glimmers that better days could be ahead, said Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Mass.

Recent substantial reductions in auto loan rates and some easing in credit standards may be pointing to stabilized consumer spending, which accounts for two-thirds of economic activity, and has been plunging in recent months.

But Bethune said Congress must come through quickly with another economic stimulus program to make the hopes of recovery a reality.

"A large dose of targeted tax relief, executed early in 2009, would be the most effective mechanism for jolting the economy out of the recessionary cycle quickly," Bethune said.

OMG!

http://www.usatoday.com/news/washington/20...a-economy_N.htm

Obama predicts $1 trillion deficits 'for years to come'

President-elect Barack Obama met with reporters at his transition office in Washington on Tuesday after discussions with his economic advisers.

By David Jackson, USA TODAY

WASHINGTON — President-elect Barack Obama warned Tuesday that the nation could face "trillion-dollar deficits for years to come" but vowed to pursue long-term budget changes as he presses for immediate new spending and tax cuts to jump-start the struggling economy.

Two weeks before he takes office, Obama said his budget aides told him that he will inherit huge deficits following the government's multibillion-dollar financial bailouts. He vowed to block pet projects sought by members of Congress, known as "earmarks," create an economic recovery oversight board and post details of all spending projects on the Internet.
"We're going to have to bring significant reform not just to our recovery and reinvestment plan, but to the overall budget process," Obama said after meeting with economic advisers at his transition office.

"We're going to have to stop talking about budget reform," he added. "We're going to have to totally embrace it."

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

If this is budget reform...I want no part of it...
buy a farmer's almanac, plant a garden, split some wood, go to barter...it's coming...

The "good news" of course is that we are now an EMPIRE, and we can print those trillions and the rest of the world HAS TO USE THEM. We are, in essence, going to bail out our greedy bank$ters on the backs of the world's poor.

Thank God for the poor, jeffmoskin ....

What would those GREEDY BANK$TER$ do without them ....

And so ...

May I wish you self sufficiecy...spell check...
take care of your folk...plant your future....

We are on our own...as a simple philosophy....
as a Whole Earth Strategy...get ready.

You are welcome...I plant and survive...there is space.

But WTF do I know? It don't mean nothin'...or everythin'.

That was the baseline deficit without stimulus, tax cuts or new projects, we're screwed but it doesn't tell me what he's doing. I think deficit wise it'll be horrible for 2 years, no clue beyond that.

Even with WWII, tomhye, the ill effects of the GREAT DEPRESSION lasted into the 1950's, it is said ...

And so ...

Correct, the baseline is without stimulus and tax cuts...which will balloon it IMO.
But, WTF do I know, I could be wrong and magic could be worked.

http://www.usatoday.com/news/washington/20...07-budget_N.htm

Jan. 7, 2009

Budget deficit to reach $1.2 trillion

By Richard Wolf, USA TODAY

WASHINGTON — The federal budget deficit will rise to a record $1.2 trillion this year, and a package of new spending increases and tax cuts planned by President-elect Barack Obama and congressional Democrats will push that figure higher, the Congressional Budget Office reported today.

In the first official reckoning of the damage caused by the severe recession, the report paints a bleak picture for 2009: a 2.2% drop in the size of the nation's economy, a jump in the jobless rate to 9.2% in early 2010, a 14% drop in home prices and a 1% decline in consumption.

The year-old recession, brought on by the slump in housing and its impact on financial institutions, "will probably be the longest and the deepest since World War II," the CBO said.

The budget deficit also will be the largest since World War II, and deficits will continue to haunt the federal government for the next decade, totaling $3.1 trillion. That's without any action by Obama and Congress to fix the economy, which will cause deficits to rise, the CBO said.

The report predicted that revenue will drop by $166 billion this year, or 6.6%. Spending will increase by more than $400 billion because of the government's takeover of the Fannie Mae and Freddie Mac housing corporations and the federal bailout of financial institutions.


Even when the recovery kicks in, it will be slow, the report concluded. The economy should increase by only 1.5% in 2010, it said.

"Although financial conditions are expected to improve, the pace of improvement will be restrained because it will take time for financial institutions to recover from losses due to loan defaults," the report said. "As a result, borrowers will continue to find the terms and availability of credit tight, which will increase the cost of capital and hold back the growth of investment and consumption, dampening economic activity for several years."

The report said the supply of vacant homes will slow the rebound in housing construction. "Spending also will be muted as households continue to adjust to the large declines in wealth of the past few years," the report said.

And foreign economies will not provide an offsetting boost in demand due to their own weakened conditions.

The report elicited gloom on Capitol Hill, where lawmakers nonetheless are planning about $800 billion in tax cuts and new spending to jump-start the economy.

"CBO's deficit projections are jaw-dropping," said Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee. "This is one of the worst budget forecasts I have seen in my lifetime. President-elect Obama is being handed an absolute fiscal disaster."

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



Smoke 'em if ya got 'em.

"Fed: Economic woes will last despite radical moves - Federal Reserve: Economic woes will last despite record-low interest rates, radical moves"

By JEANNINE AVERSA, Associated Press

Last updated: 3:15 p.m., Tuesday, January 6, 2009

WASHINGTON -- Even as Federal Reserve officials slashed their key interest rate to a record low and pledged to use other unconventional tools to fight the worst financial crisis since the 1930s, they still feared the economy would be stuck in a painful rut for some time.

Documents released Tuesday provided insights into the Fed's historic decision to ratchet down its rate to near zero from 1 percent at its Dec. 15-16 meeting.

In the first action of its kind in the Fed's 95-year history, Fed Chairman Ben Bernanke and his colleagues created a target range for its rate, putting it at zero to 0.25 percent.

Despite the aggressive action, "the economic outlook would remain weak for a time and the downside risks to economic activity would be substantial," according to the Fed document.

In fact, Fed officials expected the economy would "contract sharply" in the final three months of 2008 and in "early 2009," the document said.

Some participants suggested "the distinct possibility of a prolonged contraction, although that was not judged to be the most likely outcome."

Against that backdrop, Fed officials last month signaled rates would stay at record low levels for a while in an effort to cushion the blows from a recession that started in December 2007.

The housing, credit and financial debacles have badly hurt the economy.

Problems have fed on each other, a vicious cycle that Bernanke and other policymakers have been desperately working to break.

Unemployment bolted to a 15-year high of 6.7 percent in November and is expected to hit 7 percent in December when the government releases that report on Friday.

The economy has lost nearly 2 million jobs since the recession started.

And, the Dow Jones industrial plunged nearly 34 percent in 2008, the worst showing since 1931.

Vanishing jobs and shrinking nest eggs have forced consumers to cut back sharply, jolting the economy into reverse.

Many believe the economy fell backward at a rate of 5 to 6 percent in the final quarter of last year and is still shrinking.

Most Fed officials believed that the benefits of keeping rates "close to, but slightly above zero probably outweighed the adverse effects."

The Fed didn't discuss those adverse effects but they would include the potential for spurring inflation down the road.

Fed officials thought it was important to let investors know that rates "were likely to stay exceptionally low for some time" because it could lead to a much-desired drop in longer-term interest rates.

To that end, shortly after the Fed's December decision, mortgage rates started dropping sharply.

Rates on 30-year mortgages fell to 5.1 percent, the lowest on records dating back to 1971, Freddie Mac reported last week.

In discussing the best strategy on rates at the December meeting, some members wondered whether the Fed should not set a target for its key rate, which would focus attention on the Fed's other efforts to turn around the ailing economy.

But other members thought that not announcing a targeted interest rate might confuse investors.

In the end, the Fed officials agreed to create the new range -- from zero to 0.25 percent.

Fed officials decided it would be preferable to "communicate explicitly that it wanted federal funds to trade at very low rates."

In terms of other tools to aid the economy, the Fed discussed the benefits of buying longer-term Treasury and other securities.

Many officials also thought the Fed should consider whether expanding some of its existing programs to provide loans or to buy debt would be helpful or whether new programs should be created.

The Fed on Monday started buying mortgage-backed securities, part of a program announced in November to help bolster the crippled housing market.

Fed officials at the December meeting also discussed possible refinements to its economic projections.

It didn't provide details.

No decisions were made on that front.