21/02/2009
Obama About Recession - Video!
Obama speaks about recession and warns about immediate actions needed.
01/02/2009
US Debt May Be up to $2 mln in 2009 - Obama Fights Recession
With President-elect Barack Obama and congressional Democrats are considering the massive spending package aimed at pulling the nation out of recession, the public debt is projected to jump by as much as $ 2 trillion in the year of unprecedented
Currently, investors feverishly stuffing money into the relative safety of the U.S., which was to serve as the world's mattress in troubled times. Interest rates on Treasury bills has fallen to its lowest ever level, with some short-term investors just the provision of public money for free.
However, about 40 percent of the debt held by private investors will mature in one year or less, according to Treasury officials. When the timing of these loans, the Treasury will borrow more money to repay them, even as he runs, perhaps the most aggressive expansion of U.S. debt in recent history.
What the Government is planning to roll over short-term loans to more stable, long-term securities, experts say investors may require greater returns on their money, saddling taxpayers with a huge interest payments for years to come. Some analysts also fear that foreign investors, the largest U.S. lenders, may not be able to absorb sharp increases in debt, thus undermining the credibility of the United States as the foundation of the world financial system.
While the current market Treasurys rapidly, whether the demand for debt may be sustainable, said Lou Crandall, chief economist at Wrightson ICAP, which analyzes trends in the financing of the Treasury.
"There, in a time-bomb there is", Crandall said, "but we do not know exactly where he planted it in the calendar."
Government hunger for cash began to grow exponentially, as a nation facing economic recession as a result of foreclosure housing crisis a year ago. Washington has already approved $ 168 billion in spending to stimulate economic activity, $ 700 billion to prevent collapse of the U.S. financial system, and the multibillion dollars of bailouts to a number of financial institutions, including insurance giant American International Group and mortgage financiers Fannie Mae and Freddie Mac.
Despite these measures, the economic outlook continues to darken. Now, Obama and Democrats in Congress are discussing as $ 850 billion in new federal spending and tax cuts for the creation or retention of jobs and slow grim, up March unemployment rate, which in November stood at 6.7 percent.
Congress has no plans to raise taxes and cut spending to cover the costs of these programs, as well as the economists say it will contribute to slower economic activity. This means that the government should take the money.
Some of these borrowings had been made during the fiscal year, which ended in September, when the Treasury has added almost $ 720 billion public debt. But the big drawing drink comes in during the current fiscal year, when the cost of bailouts, plus another package of incentives, coupled with a slowdown in tax revenue will force governments to increase the debt by as much as $ 2 trillion to finance its obligations, in accordance with Treasury bonds poll dealers and other market analysts.
According to the latest data, foreign investors held about $ 3 trillion in U.S. debt at the end of October. China, who in October replaced Japan as the United States, the largest lender, increased its holdings by 42 percent over the past year, the UK and the Caribbean banking more than doubled their holdings.
Currently, investors feverishly stuffing money into the relative safety of the U.S., which was to serve as the world's mattress in troubled times. Interest rates on Treasury bills has fallen to its lowest ever level, with some short-term investors just the provision of public money for free.
However, about 40 percent of the debt held by private investors will mature in one year or less, according to Treasury officials. When the timing of these loans, the Treasury will borrow more money to repay them, even as he runs, perhaps the most aggressive expansion of U.S. debt in recent history.
What the Government is planning to roll over short-term loans to more stable, long-term securities, experts say investors may require greater returns on their money, saddling taxpayers with a huge interest payments for years to come. Some analysts also fear that foreign investors, the largest U.S. lenders, may not be able to absorb sharp increases in debt, thus undermining the credibility of the United States as the foundation of the world financial system.
While the current market Treasurys rapidly, whether the demand for debt may be sustainable, said Lou Crandall, chief economist at Wrightson ICAP, which analyzes trends in the financing of the Treasury.
"There, in a time-bomb there is", Crandall said, "but we do not know exactly where he planted it in the calendar."
Government hunger for cash began to grow exponentially, as a nation facing economic recession as a result of foreclosure housing crisis a year ago. Washington has already approved $ 168 billion in spending to stimulate economic activity, $ 700 billion to prevent collapse of the U.S. financial system, and the multibillion dollars of bailouts to a number of financial institutions, including insurance giant American International Group and mortgage financiers Fannie Mae and Freddie Mac.
Despite these measures, the economic outlook continues to darken. Now, Obama and Democrats in Congress are discussing as $ 850 billion in new federal spending and tax cuts for the creation or retention of jobs and slow grim, up March unemployment rate, which in November stood at 6.7 percent.
Congress has no plans to raise taxes and cut spending to cover the costs of these programs, as well as the economists say it will contribute to slower economic activity. This means that the government should take the money.
Some of these borrowings had been made during the fiscal year, which ended in September, when the Treasury has added almost $ 720 billion public debt. But the big drawing drink comes in during the current fiscal year, when the cost of bailouts, plus another package of incentives, coupled with a slowdown in tax revenue will force governments to increase the debt by as much as $ 2 trillion to finance its obligations, in accordance with Treasury bonds poll dealers and other market analysts.
According to the latest data, foreign investors held about $ 3 trillion in U.S. debt at the end of October. China, who in October replaced Japan as the United States, the largest lender, increased its holdings by 42 percent over the past year, the UK and the Caribbean banking more than doubled their holdings.
09/12/2008
Recession falls on NY and Christmas: 67% Americans cutting back on holiday spending
Poll: 67% reduction in the cost of holiday
More than two-thirds of those surveyed in the CNN poll reporting belt-tightening.
Washington (CNN) - Americans say sagging economy makes the 2008 holiday season more stressful than in previous years, according to CNN poll on Monday, up to two-thirds of them reporting some belt-tightening.
Four in 10 people questioned in the CNN / Opinion Research Corp. survey said, adding the downturn to underline their holiday season. The survey found 67% of the 1,096 adults questioned said that they are sharply the amount they plan to spend on Christmas gifts or Chanukah, and 65% said they are short for leisure travel, dining, or going to movies.
"This means that the reduction in the number one holiday the way Americans react to the recession," CNN poll director Keating Holland said. "More Americans are sharply their gift budget, which sharply back into any other category of expenditure, from entertainment, like going to movies or restaurants, clothing for large purchases such as furniture or appliances."
In the poll, 31% of respondents said that they were reduced to necessities such as food or medicine, and 38% said they were reducing or electric heating bills. Half said they postponed big purchases like furniture or appliances - always a bad sign for the economy.
"No wonder so many Americans, who stressed this holiday season," said Holland.
CNN / Opinion Research Corp. poll was conducted December 1-2, with a sampling error of 3 percentage points. Back to top
More than two-thirds of those surveyed in the CNN poll reporting belt-tightening.
Washington (CNN) - Americans say sagging economy makes the 2008 holiday season more stressful than in previous years, according to CNN poll on Monday, up to two-thirds of them reporting some belt-tightening.
Four in 10 people questioned in the CNN / Opinion Research Corp. survey said, adding the downturn to underline their holiday season. The survey found 67% of the 1,096 adults questioned said that they are sharply the amount they plan to spend on Christmas gifts or Chanukah, and 65% said they are short for leisure travel, dining, or going to movies.
"This means that the reduction in the number one holiday the way Americans react to the recession," CNN poll director Keating Holland said. "More Americans are sharply their gift budget, which sharply back into any other category of expenditure, from entertainment, like going to movies or restaurants, clothing for large purchases such as furniture or appliances."
In the poll, 31% of respondents said that they were reduced to necessities such as food or medicine, and 38% said they were reducing or electric heating bills. Half said they postponed big purchases like furniture or appliances - always a bad sign for the economy.
"No wonder so many Americans, who stressed this holiday season," said Holland.
CNN / Opinion Research Corp. poll was conducted December 1-2, with a sampling error of 3 percentage points. Back to top
07/12/2008
How long will the 2008 recession last? US Perspectives
NEW YORK (Fortune) - Well, now it's official: we are in recession. And we know where it began: in December 2007, according to official arbiter of business cycles, the National Bureau of Economic Research (NBER), which issued a statement Monday. Now the question is: when will end, and how deep will it get?
There is good reason to worry about these two dimensions of headwinds, facing the economy are really powerful. But that is all it can to resist the temptation to provide projections of absolute darkness and dispassionate look at how this decline compares still many other recessions we survived.
On the likelihood of deep recession, it is often said that this could be the most serious recession in decades. " This statement is almost certainly true, but not particularly informative, and the last two recessions in 1990-91 and 2001, has known mild and short-lived by historical standards. Therefore, the real question remains: "deepest recession" is exactly how many years?
The most obvious and legitimate link 1981-82 recession, which lasted longer than the average for 16 months and led to a peak of 10.8% unemployment - by all standards, very serious matter. Nevertheless, it will take extraordinary amount of additional serious harm to today's economy for a sufficiently long period to drive unemployment from its current 6.5% to double-digit territory.
It is also important to remember that the 1981-82 recession was almost deliberately caused by sky high interest rates, in the titanic struggle Federal Reserve Chairman Paul Volcker to drive inflation from the system. Unlike the Federal Reserve in response Now was to withdraw all the stops in a different direction, including a sharp decline in short-term interest rates and a barrage of other actions. Several more likely than the current recession, is the 1973-75 recession, usually linked to a surge in oil prices, at the time. This one lasted longer than the average for the 16 months that led to 9% in the peak level of unemployment.
A direct comparison with the Great Depression have become more frequent in recent weeks, given the collapse of the stock market and consumer spending. But those comparisons overlook many key facts. During the Great Depression, unemployment rose to 25%, while GDP fell by 28% between 1930 and 1932, it was inconceivable prospects in the current environment, thanks to the long list of fundamental differences between then and now.
For example, the banking system collapsed in its entirety during the Great Depression and the lack of insurance of bank deposits at that time as a result of catastrophic erosion for domestic wealth and consumption. Today, FDIC insurance (and recently increased the limit to $ 250,000) provided a significant cushion; reaction of economic policy, is immeasurably faster and more aggressive now, and coordinated action among the major economies today to address the root causes of the current episode is so impressive, and absolutely unprecedented.
How long will it last? The prevailing view: possibly through mid-2009. Two points to highlight here:
First, such a forecast is not based on any particular refined to understand that economic forecasts are dynamic in the current downturn. In the end, economic forecasting is a well-deserved reputation obviously imperfect art (most definitely not a science).
Projections about this recession lasting through mid-2009, largely based on the following simple calculation: Do NBER announced on Monday, the prevailing view that the recession began, perhaps, at some point last summer, and it is likely to be about medium length, by historical standards. Given that the average duration of ten recession since the Second World War was 10.4 months and ranged from 6 months in 1980 recession for 16 months in 1981-82 alone, natural "filler" Timing the end of the recession, it seems, in the middle 2009.
However, the fact that a recession is now 12 months, and apparently not close to its trough yet, there are different perspectives that it will exceed the length of 1973-75 and 1981-82 recession (16 months) that makes this the longest since the Great Depression (43 months from August 1929 to March 1933). The crowd loves to make a comparison with the Great Depression would quickly announce a victory at this.
Secondly, a forecast that the slowdown could end in about mid-2009 is not unreasonable, but even if it hides the exact critical question: What kind of recovery will likely follow? Answer: possibly gradual, unlike the more typical (but not universal) model of the economy emerging from the most recent recession roaring ahead, propelled by pent-up consumer demand.
The process of healing is deeply wounded banking system, which has already led to nearly $ 1 trillion write downs, will act as a weight around the neck of an economic recovery in late 2009. Banks are likely to continue the slow process of recapitalization and clean up mountains of toxic assets on their balance sheets for the period more than just the next few quarters.
That task becomes even more difficult in the coming months, a recession, as a would generate an additional amount of toxic assets in their portfolios, impairing their ability to resume a more normal pace of lending. So, even though the economy may technically withdraw from the economic recession in the second half of 2009, the rise in the first stage could be more a question of semantics rather than sound twist in economic activity.
To be sure, this is a major recession and the reduction of risks in a highly volatile financial market environment should not be underestimated. There are reasons, however, believe that its severity and duration, will ultimately provide an unprecedented range of economic policy measures, some of them are already in place, others are under development.
Despite a series of false starts with some of these measures by the Treasury, the Fed seemingly limitless reserves of innovation and commitment to the incoming administration in particular, aggressive fiscal stimulus package should gradually gain some traction, which will help stabilize the economy within the next Three-quarters or so.
There is good reason to worry about these two dimensions of headwinds, facing the economy are really powerful. But that is all it can to resist the temptation to provide projections of absolute darkness and dispassionate look at how this decline compares still many other recessions we survived.
On the likelihood of deep recession, it is often said that this could be the most serious recession in decades. " This statement is almost certainly true, but not particularly informative, and the last two recessions in 1990-91 and 2001, has known mild and short-lived by historical standards. Therefore, the real question remains: "deepest recession" is exactly how many years?
The most obvious and legitimate link 1981-82 recession, which lasted longer than the average for 16 months and led to a peak of 10.8% unemployment - by all standards, very serious matter. Nevertheless, it will take extraordinary amount of additional serious harm to today's economy for a sufficiently long period to drive unemployment from its current 6.5% to double-digit territory.
It is also important to remember that the 1981-82 recession was almost deliberately caused by sky high interest rates, in the titanic struggle Federal Reserve Chairman Paul Volcker to drive inflation from the system. Unlike the Federal Reserve in response Now was to withdraw all the stops in a different direction, including a sharp decline in short-term interest rates and a barrage of other actions. Several more likely than the current recession, is the 1973-75 recession, usually linked to a surge in oil prices, at the time. This one lasted longer than the average for the 16 months that led to 9% in the peak level of unemployment.
A direct comparison with the Great Depression have become more frequent in recent weeks, given the collapse of the stock market and consumer spending. But those comparisons overlook many key facts. During the Great Depression, unemployment rose to 25%, while GDP fell by 28% between 1930 and 1932, it was inconceivable prospects in the current environment, thanks to the long list of fundamental differences between then and now.
For example, the banking system collapsed in its entirety during the Great Depression and the lack of insurance of bank deposits at that time as a result of catastrophic erosion for domestic wealth and consumption. Today, FDIC insurance (and recently increased the limit to $ 250,000) provided a significant cushion; reaction of economic policy, is immeasurably faster and more aggressive now, and coordinated action among the major economies today to address the root causes of the current episode is so impressive, and absolutely unprecedented.
How long will it last? The prevailing view: possibly through mid-2009. Two points to highlight here:
First, such a forecast is not based on any particular refined to understand that economic forecasts are dynamic in the current downturn. In the end, economic forecasting is a well-deserved reputation obviously imperfect art (most definitely not a science).
Projections about this recession lasting through mid-2009, largely based on the following simple calculation: Do NBER announced on Monday, the prevailing view that the recession began, perhaps, at some point last summer, and it is likely to be about medium length, by historical standards. Given that the average duration of ten recession since the Second World War was 10.4 months and ranged from 6 months in 1980 recession for 16 months in 1981-82 alone, natural "filler" Timing the end of the recession, it seems, in the middle 2009.
However, the fact that a recession is now 12 months, and apparently not close to its trough yet, there are different perspectives that it will exceed the length of 1973-75 and 1981-82 recession (16 months) that makes this the longest since the Great Depression (43 months from August 1929 to March 1933). The crowd loves to make a comparison with the Great Depression would quickly announce a victory at this.
Secondly, a forecast that the slowdown could end in about mid-2009 is not unreasonable, but even if it hides the exact critical question: What kind of recovery will likely follow? Answer: possibly gradual, unlike the more typical (but not universal) model of the economy emerging from the most recent recession roaring ahead, propelled by pent-up consumer demand.
The process of healing is deeply wounded banking system, which has already led to nearly $ 1 trillion write downs, will act as a weight around the neck of an economic recovery in late 2009. Banks are likely to continue the slow process of recapitalization and clean up mountains of toxic assets on their balance sheets for the period more than just the next few quarters.
That task becomes even more difficult in the coming months, a recession, as a would generate an additional amount of toxic assets in their portfolios, impairing their ability to resume a more normal pace of lending. So, even though the economy may technically withdraw from the economic recession in the second half of 2009, the rise in the first stage could be more a question of semantics rather than sound twist in economic activity.
To be sure, this is a major recession and the reduction of risks in a highly volatile financial market environment should not be underestimated. There are reasons, however, believe that its severity and duration, will ultimately provide an unprecedented range of economic policy measures, some of them are already in place, others are under development.
Despite a series of false starts with some of these measures by the Treasury, the Fed seemingly limitless reserves of innovation and commitment to the incoming administration in particular, aggressive fiscal stimulus package should gradually gain some traction, which will help stabilize the economy within the next Three-quarters or so.
25/11/2008
FRB Plans to Lend up to $200 Billion to US Credit System
The Federal Reserve Board on Tuesday announced the creation of the Term Asset-Backed Securities Loan Facility (TALF), a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).
Under the TALF, the Federal Reserve Bank of New York (FRBNY) will lend up to $200 billion on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans. The FRBNY will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. The U.S. Treasury Department--under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008--will provide $20 billion of credit protection to the FRBNY in connection with the TALF. The attached terms and conditions document describes the basic terms and operational details of the facility. The terms and conditions are subject to change based on discussions with market participants in the coming weeks.
New issuance of ABS declined precipitously in September and came to a halt in October. At the same time, interest rate spreads on AAA-rated tranches of ABS soared to levels well outside the range of historical experience, reflecting unusually high risk premiums. The ABS markets historically have funded a substantial share of consumer credit and SBA-guaranteed small business loans. Continued disruption of these markets could significantly limit the availability of credit to households and small businesses and thereby contribute to further weakening of U.S. economic activity. The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business ABS at more normal interest rate spreads.
Source: Federalreserve.gov
Under the TALF, the Federal Reserve Bank of New York (FRBNY) will lend up to $200 billion on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans. The FRBNY will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. The U.S. Treasury Department--under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008--will provide $20 billion of credit protection to the FRBNY in connection with the TALF. The attached terms and conditions document describes the basic terms and operational details of the facility. The terms and conditions are subject to change based on discussions with market participants in the coming weeks.
New issuance of ABS declined precipitously in September and came to a halt in October. At the same time, interest rate spreads on AAA-rated tranches of ABS soared to levels well outside the range of historical experience, reflecting unusually high risk premiums. The ABS markets historically have funded a substantial share of consumer credit and SBA-guaranteed small business loans. Continued disruption of these markets could significantly limit the availability of credit to households and small businesses and thereby contribute to further weakening of U.S. economic activity. The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business ABS at more normal interest rate spreads.
Source: Federalreserve.gov
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