Obama, Hollande help tilt G8’s balance to stimulus

U.S. President Barack Obama and French President Francois Hollande take time for a photo opportunity at Saturday's G8 summit at Camp David, Md.

Charles Dharapak/Associated Press

KEVIN CARMICHAEL

Globe and Mail Update

Published Saturday, May. 19, 2012 9:02PM EDT

Last updated Sunday, May. 20, 2012 5:04AM EDT

Economic stimulus is making a comeback.

The most notable thing about the Group of Eight Summit in Maryland on Friday and Saturday was the recognition that austerity isn’t a universal cure for what ails the global economy, especially Europe.

President Barack Obama and France’s newly elected Socialist President, François Hollande, were the rhetorical winners on the weekend.

They successfully watered down the German-led position that the best way to deal with a debt crisis is to quickly pay down debt by shifting the consensus to an acceptance that austerity is a means, not an end. Fiscal consolidation remains a priority, but not at the expense of economic growth, a new emphasis that could reshape governments’ approach to maintaining the recovery from the financial crisis.

“The global economic recovery shows signs of promise, but significant headwinds persist,” the G8 said in a statement. “We commit to take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses, recognizing that the right measures are not the same for each of us.”

The shift reflects the acute state of the European debt crisis, which Mr. Obama characterized on Saturday as a “serious” situation that could upend the global economic recovery. The G8 also said it stood ready to release strategic oil reserves if crude prices surge this summer, but it was the prospect of Europe sinking into a deeper downturn that most worried leaders.

British Prime Minister David Cameron told reporters that he detected a “growing sense of urgency that action needed to be taken” on the euro-zone crisis, Reuters reported. “Contingency plans need to be put in place and the strengthening of banks, governance, firewalls – all of those things need to take place very fast,” Mr. Cameron said.

Europe’s economy is stagnant, struggling to avoid recession amidst double-digit unemployment rates in most countries. Britain, which sits outside the euro zone, nevertheless counts the 17 members of the euro region as some of its main trading partners. Mr. Cameron, too, is fighting off recession. His cause hasn’t been helped by his decision to implement draconian spending cuts.

Germany is a notable exception, and its economic strength has given Chancellor Angela Merkel considerable clout in discussions on dealing with the troubles in the euro zone.

The German formula is simple: sacrifice. Using her country’s own history of fiscal discipline as reinforcement, Ms. Merkel insisted the international rescues of Greece, Ireland and Portugal came with tough budgetary conditions.

Other euro-zone countries, including Italy and Spain, have implemented austerity programs to keep nervous bond traders from driving up their borrowing costs. But these programs were implemented in part because Germany made clear it has little appetite for bankrolling more bailouts.

The apotheosis of austerity came at the Group of 20 Summit in Toronto in 2010, when Prime Minister Stephen Harper orchestrated a group pledge to halve budget deficits by next year.

Mr. Harper insisted Saturday that the Toronto austerity pledge remains valid.

“Fiscal discipline and economic growth go hand in hand,” Mr. Harper said when asked about the G8’s shift to a better balance between cost-cutting and more direct growth measures. “All of our discussions recognized that. Fiscal discipline is not sufficient for economic growth, but it is absolutely necessary. We will not emerge from what is now a debt-driven crisis unless that issue is addressed.”

The cost-cutting measures implemented in Europe since the Toronto summit caused considerable economic pain, and voters are rejecting the medicine.

Mr. Hollande was attending his first international summit after French voters earlier this month rejected Nicolas Sarkozy, who championed austerity. Greece will hold its second election in a month in June after pro- and anti-austerity parties split the vote earlier this month, leaving none with enough support to form a government. The June vote is being characterized as a referendum on Greece’s future as a euro country.

Facing an election of his own in November, the last thing Mr. Obama wants to contend with is a rupture of the euro zone, which at a minimum would shake global financial markets. Under Mr. Obama’s guidance at the Camp David presidential retreat, the G8 took the rare step of referencing an outside country by name, saying the group – the United States, Japan, Germany, Britain, France, Italy, Canada and Russia – desired Greece to stay in the euro zone.

With a debt well in excess of the size of its economy, and German voters resentful of their taxes being used to bailout nations they see as profligate, it’s unlikely the conditions of Greece’s rescue package will change significantly, if at all.

There is nothing binding about a G8 commitment, but countries do use them as political cover back home. European leaders are scheduled to meet in a few days, and it now seems likely that growth initiatives, such as a rumoured infrastructure program, stand a better chance of becoming reality.

“Today we discussed ways [Europe] can promote growth and job creation right now, while still carrying out reforms necessary to stabilize and strengthen their economies for the future,” Mr. Obama said at the end of the summit Saturday.

Ms. Merkel made the point that governments can enhance growth by other means than pumping taxpayers’ money into the economy. She said measures under consideration in Europe include investments in research and development, Internet networks, and infrastructure. “This doesn’t mean stimulus in the traditional sense,” Ms. Merkel said, according to the Associated Press.

There were other hints in the G8 statement about how European leaders will approach debt going forward.

The document said the G8 welcomed Europe’s commitment to fiscal consolidation, assessed on a “structural basis.” A “structural” assessment of budgets subtracts interest payments. The decision to write that into the final statement could reflect recognition that much of the pressure on budgets in Europe is the result of record-high borrowing costs.

G8 leaders also emphasized their pursuit of “bilateral, plurilateral and multilateral” free-trade agreements, suggesting they will seek to lower trade barriers in any way possible, rather than getting hung up on a big global agreement under the World Trade Organization.

The final statement also said efforts to overhaul financial regulations should result in “stronger systems over time while not choking off near-term credit growth,” language bank lobbyists will see as a willingness of by world major financial centres to slow the pace of regulatory reforms.

Source

I.M.F. Slashes Growth Outlook for U.S. and Europe

International Monetary Fund (IMF) Managing Director Christine Lagarde, center, arrives with unidentified aides at the G7 Finance meeting in Marseille, southern France, Friday, Sept.9, 2011. (AP Photo/Claude Paris)

By THE ASSOCIATED PRESS

Published: September 20, 2011

The International Monetary Fund sharply downgraded its outlook for the United States economy through 2012 because of weak growth and concern that Europe won’t be able to solve its debt crisis, the organization said in its economic outlook Tuesday.

The fund said it expected the American economy to grow just 1.5 percent this year and 1.8 percent in 2012. That’s down from its June forecast of 2.5 percent in 2011 and 2.7 percent next year.

The International Monetary Fund also lowered its outlook for the 17 European Union countries that use the euro. It predicted 1.6 percent growth this year and 1.1 percent next year, down from its June projections of 2 percent and 1.7 percent, respectively.

The gloomier forecast for Europe was based on worries that Greece would default on its debt and destabilize the region.

“Fear of the unknown is high,” said Olivier Blanchard, the organization’s chief economist. “Strong policies are urgently needed to improve the outlook and reduce the risks.”

Over all, the International Monetary Fund predicted global growth of 4 percent for both years. Stronger growth in China, India, Brazil and other developing countries should offset weaker output in the United States and Europe.

American and European policy makers need to act more decisively to cut budget deficits, the report said, and European officials need to ensure that the region’s banks have enough capital to withstand the debt crisis.

The United States economy grew at an annual rate of just 0.7 percent in the first six months of the year. And the unemployment rate has stayed above 9 percent for all but two months since the recession officially ended two years ago.

Financial turmoil and slow growth are feeding on each other in both the United States and Europe, fund officials say. Europe’s debt crisis is causing banks to reduce lending and hold onto cash. Sharp stock market drops in the United States over the summer hurt consumer and business confidence and will likely reduce spending. That slows growth, which leads many investors to shift money out of stocks and into safer investments, like Treasury bonds. In Europe, slower growth will make it harder for stressed nations to get their debt under control.

President Obama’s proposal to cut taxes and spend more on infrastructure should provide much-needed short-term stimulus, the report said. But that initiative needs to be paired with a longer-term plan to reduce the deficit, the report said. The timing of the budget cuts is key, Mr. Blanchard said.

Budget cuts “cannot be too fast or it will kill growth,” Mr. Blanchard said in a statement. “It cannot be too slow or it will kill credibility.”

The 187- nation International Monetary Fund conducts economic analysis and lends money to countries in financial distress. It will hold its annual meetings with the World Bank later this week in Washington.

Source

Obama Team Stood by Solyndra as Troubles Mounted

President Obama, center, is given a tour of Solyndra by Executive Vice President Ben Bierman, right, as Chief Executive Officer Chris Gronet, left, walks along at Solyndra Inc. in Fremont, Calif. FBI spokesman Peter Lee says agents executed multiple search warrants on Thursday morning as part of an investigation with the Department of Energy's Office of Inspector General. (AP Photo/Paul Chinn, Pool, File)

Photo (Coutesy) http://fuelfix.com/blog/2011/09/12/republicans-take-aim-at-solyndra/#loopbegin

By Jim Snyder and Christopher Martin - Sep 12, 2011 12:59 PM ET

Solyndra LLC’s workers making solar-power panels in a California factory subsidized by U.S. taxpayers showed “the promise of clean energy isn’t just an article of faith,” President Barack Obama said on a visit to the company in May 2010.

Two months before Obama’s visit, accounting firm PricewaterhouseCoopers LLP warned that Solyndra, the recipient of $535 million in federal loan guarantees, had financial troubles deep enough to “raise substantial doubt about its ability to continue as a going concern.”

The Obama administration stood by Solyndra through the auditor’s warning, the abandonment of a planned initial public offering and a last-ditch refinancing where taxpayers took a back seat to new investors. That unwavering commitment has come under increasing scrutiny since the company’s travails culminated in its filing for bankruptcy protection on Sept. 6 and a raid on its headquarters by the Federal Bureau of Investigation two days later.

“People including our government put blinders on and did not want to believe in the obvious,” Jonathan Dorsheimer, an analyst in Boston for Canaccord Genuity Inc. of Vancouver, said in an interview with Bloomberg Government. “The fact that the government chose Solyndra as their white horse is mind- boggling.”

‘Merit-Based Decision’

Selection of companies to receive U.S. backing are “merit- based decisions made by career staffers at the Department of Energy, and the process for this particular loan guarantee began under President George W. Bush,” Eric Schultz, a White House spokesman, said in an e-mailed statement Sept. 1. “Every project that receives financing through the Energy Department goes through a rigorous financial, legal and technical review process.”

The House Energy and Commerce Committee, which has been investigating the Solyndra award since February, has scheduled a hearing on the loan guarantees for Sept. 14.

“We smelled a rat from the onset,” Representatives Fred Upton, a Michigan Republican and the committee chairman, and Cliff Stearns, a Florida Republican and chairman of the investigation subpanel, said in a statement Aug. 31 when the company announced it had dismissed 1,100 employees and planned to file for Chapter 11 bankruptcy reorganization.

A day before Solyndra ceased operations, the Energy Department turned down the company’s request to renegotiate the U.S. loan agreement, saying “a second restructuring was not feasible,” according to a memo from committee Republicans.

Stimulus Legislation

Originally authorized by Congress in a 2005 energy law, the loan guarantee program to encourage the development of clean- energy sources didn’t choose its first recipient until it was revamped under Obama’s 2009 stimulus legislation. Trade groups such as the Solar Energy Industries Association and the American Wind Energy Association lobbied Obama, urging in a letter that he prevent “further delay.”

Energy Secretary Steven Chu pledged during his Senate confirmation hearing to speed the approval of applications for the federal backing.

Solyndra, identified during Bush’s administration as a promising applicant, received the Energy Department’s first loan guarantee after Obama took office. Solyndra was given conditional approval in March 2009 and the award became final that September.

Easier, Lighter

The goal was to help the Fremont, California-based company develop its cylinder-shaped solar devices, which convert sunlight into electricity using a thin film made mainly of copper, indium, gallium and selenium. Standard solar panels are flat and made from silicon.

The company said its product was easier to install and lighter, giving it an edge over conventional panels, especially for large rooftops that can’t handle the weight of flat panels.

Solyndra used the U.S. backing to build the manufacturing plant Obama visited, shutting an older facility executives said couldn’t produce panels efficiently enough to compete in a market increasingly dominated by cheaper Chinese imports.

The company disclosed the “going concern” warning by PricewaterhouseCoopers, its accounting firm, in a Securities and Exchange Commission filing on March 16, 2010.

“The company has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit,” PricewaterhouseCoopers said.

In June 2010, the month after Obama’s visit, Solyndra executives withdrew a planned $300 million initial public offering.

Value ‘Evaporated’

The challenge facing Solyndra only increased as prices of the silicon used in conventional solar panels from China fell, declining 30 percent this year, according to Bloomberg New Energy Finance.

“When polysilicon prices dropped Solyndra’s value proposition evaporated,” Joseph Berwind, managing partner of Alternative Energy Investing LLC in Summit, New Jersey, and the author of “Investing in Solar Stocks,” said in an interview.

By December 2010, Solyndra was a month away from running out of cash, according to a government document obtained by Bloomberg News.

In what turned out to be a final effort to save the company, the Energy Department agreed to take a back seat to funds from new investors to keep the solar plant operating.

Public, Private Investors

Under the terms, $75 million in private financing will be paid ahead of all but $150 million of the federal government’s stake from any revenue from the sale of the company or its assets if Solyndra is liquidated, according to the January document. The government loaned about $527 million to the company by the time it shut down.

Solyndra also put up more collateral to the government, including intellectual property.

After “a due-diligence effort” to “determine if the company still had a viable business” the Energy Department concluded it “believes that the restructuring plan represents the best possible course of action to achieve the highest return on its invested capital,” according to the document.

House Republicans noted Solyndra’s financial troubles in a February 17 letter to Energy Secretary Chu announcing their investigation into the loan-guarantee program.

Kaiser Investment

Since then, Republicans have pointed to connections between Solyndra and billionaire George Kaiser, an Obama campaign fundraiser. The George Kaiser Family Foundation, a charitable organization based in Tulsa, Oklahoma, holds about 36.7 percent of the company, according to a filing with the Securities and Exchange Commission. Kaiser made 16 visits to the president’s aides since 2009, according to White House visitor logs.

“George Kaiser is not an investor in Solyndra and did not participate in any discussions with the U.S. government regarding the loan,” the foundation said in an e-mailed statement on Sept. 1.

As Solyndra struggled to stay afloat, it worked to reassure lawmakers. The company spent $480,000 this year to lobby Congress, according to Senate records.

In July, days after Republicans on the House Energy and Commerce Committee subpoenaed the White House for documents related to the loan guarantee, Solyndra retained Glover Park Group LLC, a public relations and lobbying firm of former congressional and White House aides based in Washington, to introduce executives to members of the committee, according to Senate records.

Solyndra Forecasts

A July 13 letter from Solyndra to the Energy committee said revenue had increased to $140 million from $6 million in 2008 and was projected to almost double again in 2011.

On July 21, at a news conference at Glover Park’s offices, Solyndra Chief Executive Officer Brian Harrison said policy makers should “separate Solyndra and its business results from the political process that is ongoing.”

Democratic Representatives Henry Waxman of California and Diana DeGette of Colorado said in a letter Sept. 8 that Harrison assured them in a meeting less than two months ago that the company was in a “strong financial position.”

The House Energy panel has asked Harrison to testify at this week’s hearing along with Jonathan Silver, who heads the Energy Department’s loan program, and Jeffrey Zients, deputy director of the White House Office of Management and Budget.

To contact the reporters on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net; Christopher Martin in New York at cmartin11@bloomberg.net

To contact the editors responsible for this story: Larry Liebert at lliebert@bloomberg.net; Reed Landberg at landberg@bloomberg.net

Source

Related:  Staff finds contradictions in company's finances

Bernanke Offers No Plan for New Stimulus

By BINYAMIN APPELBAUM
Published: August 26, 2011

JACKSON HOLE, Wyo. — The Federal Reserve chairman, Ben S. Bernanke, said Friday that the economy was recovering and the nation’s long-term prospects remained strong, an upbeat assessment that offered little indication of any plans for additional measures to bolster short-term growth.

Reed Saxon/Associated Press

Federal Reserve Chairman Ben S. Bernanke, right, and Jean-Claude Trichet, head of the European Central Bank, at Jackson Hole, Wyo., on Friday.

Mr. Bernanke’s much-anticipated remarks follow the Fed’s announcement earlier this month that it intended to hold short-term interest rates near zero until at least the middle of 2013, a reflection of its view that growth will not be fast enough during that period to drive up wages and prices.

“With respect to longer-run prospects, however, my own view is more optimistic,” Mr. Bernanke said in his prepared remarks. “The growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years.”

Mr. Bernanke was careful to note that the nation faces significant challenges, including high unemployment and an unsustainable federal debt. But the speech, delivered at a policy conference held each August in Grand Teton National Park, marked a return to the Fed’s position earlier this year that the Fed has done most of what it can, and that the rest of the government must do more.

Indeed, Mr. Bernanke devoted much of his speech to fiscal policy, rather than the monetary policy that is the Fed’s primary responsibility. And he offered an unusual critique of the government’s handling of those issues.

“The country would be well-served by a better process for making fiscal decisions,” he said, noting that the political battle over raising the debt-ceiling had disrupted the financial markets “and probably the economy as well.”

Mr. Bernanke suggested a different process, involving “clear and transparent budget goals, together with budget mechanisms to establish the credibility of these goals.”

The conference, held each August at a resort in Jackson Hole, has become a key event on the Fed’s annual calendar, in part because Mr. Bernanke and his predecessors have made a habit of coming here to clarify their views and intentions.

Last year Mr. Bernanke used his remarks to provide the first clear indication that the Fed intended to launch a second round of asset purchases. The Fed went on to buy $600 billion in Treasury securities between November and June, increasing its total portfolio of Treasuries and mortgage securities to more than $2.5 trillion.

This year’s speech offered little if any indication that something similar is in store. Mr. Bernanke made his standard announcement that the Fed would take any steps necessary to help the economy, and he said the issue would be discussed at the next meeting of the Fed’s policy-making board, in late September. But noticeable by its absence was a list of the measures the Fed might take, something Mr. Bernanke has provided on several occasions earlier this year.

“Most of the economic policies that support robust economic growth in the long run are outside the province of the central bank,” he said.

The Fed is operating in an unusually charged political environment. Several Republican candidates for president have sharply criticized the Fed’s existing efforts and expressed disapproval of any new steps. Mr. Bernanke opened the conference Wednesday night with a brief speech, during which he mentioned that he had attended a rodeo with his wife earlier this week. The announcer, he said, asked the crowd to sing the national anthem even though many of them were angry about decisions made by people in Washington.

Mr. Bernanke has previously described other steps that the Fed could take. Perhaps the most modest would be a similar commitment to maintain the size of the Fed’s investment portfolio for a fixed period. The central bank has accumulated more than $2 trillion in low-risk mortgage securities and Treasuries in an effort to reduce longer-term interest rates and to push investors to buy riskier assets, such as stocks and corporate debt.

A related but more aggressive step would involve changing the kinds of assets that the Fed owns while maintaining the size of the portfolio. By selling bonds that mature in the near future, and buying bonds with more distant maturities, the Fed might be able to increase the downward pressure it is exerting on longer-term rates.

The most dramatic option available to the central bank would be an announcement that it intends to increase the total size of the portfolio. This is what markets refer to as “QE3,” meaning that it would represent a third round of the strategy known as quantitative easing.

There are other actions the Fed could take that are not directly related to its portfolio. The central bank pays interest on the reserves that banks keep on deposit with the Fed. Reducing those rates, an option Mr. Bernanke and others have mentioned, could give banks a greater incentive to lend. But banks already are awash in cash and most economists — including Fed officials — doubt the utility of such a step.

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New Data Show Extent of Fed’s Free Money Programs

Posted on Dec 1, 2010

Wikimedia Commons / Robert Mihaly (CC-BY-SA)
Federal Reserve Chair Ben Bernanke as king of Central Banking.


Thanks to Bernie Sanders and the new financial regulation passed by Congress, we’re learning more about the Federal Reserve’s $3.3 trillion bailout of Wall Street in 2008. It turns out the Fed lent money not just to the likes of Goldman Sachs (which desperately needed it) but also to companies such as Verizon and Toyota, as well as to foreign financial institutions.

Essentially the Fed lent money at almost zero interest to, well, just about everybody.

Bernie Sanders, take it away… —PZS

The Washington Post:

But the extent of the lending to major banks—and the generous terms of some of those deals—heighten the political peril for a central bank that is already under the gun for a wide range of actions, including a recent decision to try to stimulate the economy by buying $600 billion of U.S. bonds.

“The American people are finally learning the incredible and jaw-dropping details of the Fed’s multitrillion-dollar bailout of Wall Street and corporate America,” said Sen. Bernie Sanders (I-Vt.), a longtime Fed critic whose provision in the Wall Street regulatory overhaul required the new disclosures. “Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations. As a result of this disclosure, other members of Congress and I will be taking a very extensive look at all aspects of how the Federal Reserve functions.”

Read more

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By eir, December 2 at 1:40 pm Link to this comment
Eliot Spitzer: “The Federal Reserve Is A Ponzi Scheme” (Inside The Fed’s Secret Pile Of Trash With Ratigan, Spitzer & Toure)
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Will Obama's Spending Plan Boost the Economy?

President Obama is unveiling this week what some have dubbed his "second stimulus". There's $50 billion more...

Read more: http://www.dailyfinance.com/story/obamas-infrastructure-plan-boost-the-economy/19623937/?icid=main%7Chtmlws-main-n%7Cdl4%7Csec3_lnk1%7C169006

P.S.

Folks, once again we're being sold a bill of goods. Once again, we'll be left holding the bag.

Wasn't the $800 Billion "stimulus" supposed to fix the infrastructure, and put America on a road to recovery? Where are all the 'shovel ready' jobs promised?

Now they want more money?

Now you want to fix roads, runways, and railways...

This proposition is more like Trains, Planes and Automobiles: A chaotic comedy.

I believe this is just another, flimflam, pipe dream. We're gonna' get bamboozled, hoodwinked, ram shackled and Shanghaied, one more time.

Those boots on the ground ought to get to steppin'; stepping-off.

Go away, we already gave!

Arsenio.
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Romer Calls for More Stimulus

Bloomberg News
CEA Chairman Christina Romer

September 1, 2010, 1:06 PM ET.

By Jared Favole

U.S. Council of Economic Advisers Chairman Christina Romer, in her final speech before stepping down, called on the country to stomach new stimulus measures to lift the lackluster economy, even in the face of growing fears about the nation’s deficit.

“Concern about the deficit cannot be an excuse for leaving unemployed workers to suffer,” she will say at the National Press Club on Wednesday, according to a copy of her prepared remarks. She will add, “We have tools that would bring unemployment down without worsening our long-run fiscal outlook, if we can only find the will and the wisdom to use them.”

Her scheduled speech comes a day after President Barack Obama, in addressing the nation on the end of combat missions in Iraq, pledged a renewed focus to lift the economy. Obama has said his economic team, which includes Romer, is hunkered down trying to determine new measures to spur growth. It’s unclear what new ideas the administration is considering, but The Wall Street Journal reported the administration is considering tax cuts and a new nationwide infrastructure program.

Romer will defend the administration’s economic policies in the face of what she will characterize as an unprecedented, “terrifying” and “difficult-to-cure” recession. While other recessions, she will say, were caused by deliberate monetary policy actions this one began with low interest rates. She blamed the recession on a mix of regulatory failures, unsound practices and the mortgage crisis.

She said the administration had to act swiftly. “Had the Federal Reserve not responded as rapidly and creatively as it did, the crisis would have been catastrophic,” she will say.

Her speech is titled “Not My Father’s Recession: The Extraordinary Challenges and Policy Responses of the First Twenty Months of the Obama Administration.” She will say the recession destroyed $13 trillion of wealth in 2008.

Romer is leaving the administration this week to return to a teaching post at the University of California at Berkeley.

The administration, and particularly Romer, have come under fire for making what turned out to be rosy projections about the effect stimulus efforts would have on keeping down the unemployment rate. The unemployment rate now stands near 10%.

Republicans have latched onto some of the administration’s predictions and used them to argue that stimulus efforts have failed. The Congressional Budget Office, meanwhile, has said that the Obama administration’s recovery efforts increased employment by between 1.4 million and 3.3 million new jobs.

Romer will answer her critics. She will say the financial shocks the U.S. faced were so rare “there were no reliable estimates of the likely impact. To this day, economists don’t fully understand why firms cut production as much as they did, and why they cut labor so much more than they normally would, given the decline in output.”

Romer will say while real gross domestic product is growing, it isn’t doing so fast enough create the hundreds of thousands of jobs each month needed to return employment to its pre-crisis level.
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Source:
http://blogs.wsj.com/economics/2010/09/01/romer-calls-for-more-stimulus-in-final-speech/
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Orszag Leaves, Red Ink Remains

by Pejman Yousefzadeh

Now that the Obama Administration is going to see its sexiness quotient go down, it is time to consider just what Peter Orszag’s legacy to the nation is. Unfortunately, in considering that legacy, we see that the bad outweighs the good.

As Jonathan Weisman notes, the most obvious Orszagian legacy is a debt of $1 trillion. That’s right; trillion. With a T. The natural consequences of that debt will be higher interest rates, a decreased capacity to borrow when we really need to borrow, and a coming era of austerity that will lead to economic stagnation, and even recession, as we grapple with the debt that Orszag and the Obama Administration bequeathed to us. The parlous fiscal situation in which we find ourselves could have been avoided if only we chose not to implement a stimulus that isn’t working, and a health care plan we plainly cannot afford. To be sure, the Bush Administration’s fiscal policy did not help matters, but the current Administration will outspend its predecessor–and put the country even more deeply in the hole as a consequence–by a significant amount. It’s impossible for the current Administration to blame its predecessor for the budgetary morass; indeed, blame cannot even be transferred with a straight face anymore.

Just as lamentable is Orszag’s record as a cheerleader for health care reform. While he helped successfully drive the effort to change the health care system, he did so at the expense of actually instituting good policy. As James Pethokoukis writes, the drive for health care reform was fueled by massive amounts of intellectual dishonesty which we will all pay for:
. . . Orszag made the case to the president that reducing healthcare costs was an important element to slashing the long-term budget deficit. More importantly, he persuaded Obama the U.S. healthcare system was so inefficient, overall spending could be restrained while also providing near-universal health insurance coverage. In effect, “bending the curve” was a free lunch. Or at least close enough for government work.

It was an audacious claim, mostly based on a single controversial academic study. Republicans never bought into the theory, and neither did Orszag’s successor at the Congressional Budget Office, Uncle Sam’s fiscal scorekeeper. In the end, Obama was forced to cut future Medicare spending and raise taxes to make the numbers balance out — at least on paper. Few Washington observers think those cuts will happen, meaning that the budget deficit could explode if Orszag’s novel theories don’t pan out. And even if the cuts occur, many budget hawks were counting on them to make Medicare sustainable over the long-term, not create a new entitlement.

Speaking of intellectual dishonesty, in what parallel universe is it acceptable to introduce a budget that neglects to mention a whopping $3.6 trillion in liabilities? Again, this would be trillion. With a T. Any business that pulled such a stunt would have found itself answering to people called “prosecutors,” and “class action attorneys.” One doesn’t wish Peter Orszag legal trouble–despite the manifest policy failings he is responsible for, he certainly seems like a nice guy–but it is worth noting that after leaving the Office of Management and Budget, Orszag will land some cushy, remunerative position in a think tank, or a private sector company, or both. Is this the price one pays for perpetrating budgetary fraud and chicanery upon the United States of America?

Orszag’s announced departure as Budget Director has set off speculation as to who his successor will be. Whoever ends up taking the job will need a strong sense of duty and patriotism, a strong stomach, and just the right amount of insanity to want to try to whittle around the gigantic budget deficit, and the truly terrifying national debt left to use by Orszag, and by the President he has served. About the only thing that we can hope for is that whatever sexiness quotient the next Budget Director lacks, he or she will make up for with a commitment to responsible policymaking. After having had to put up with Peter Orszag’s bad calls on the budget, and on health care reform, we are due for some competence at the Office of Management and Budget.
Is it possible that we will get competence? Possibly; Orszag has set the bar so low, that his successor will have to work extra hard to fail to clear it. Of course, the setting of that low bar is the source of many of our problems, now isn’t it?

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Source: http://newledger.com/2010/06/orszag-leaves-red-ink-remains/

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Senate Candidates Split Over Second Stimulus

LISTEN NOW
By CURT NICKISCH
Published November 23, 2009 UPDATED 12:07 PM

BOSTON — If the first stimulus was like an alarm that was supposed to wake up the economy and get it back on its feet, the economy slept right through it.

Some economists says it may not have been set loud enough.

“We’ve not done as good a job with the stimulus as we could have,” said Northeastern University labor market professor Andrew Sum. “It’s not been very well targeted. It’s not been very transparent.”

With the economy basically hitting snooze, the question facing Congress is: Let the economy wake up on its own, or give it another buzz by funding a second federal stimulus package?

Of all the candidates for Massachusetts’ open U.S. Senate seat, Democrat Alan Khazei wants to turn it up the loudest.

“I believe we need an aggressive jobs program,” Khazei said.

Khazei wants tax cuts to spur businesses to hire and invest. He also wants a slew of stimulus spending, like more national service jobs for college grads. But other candidates say Khazei has it all wrong.

“I’m definitely against a second stimulus,” said Republican Jack E. Robinson. “The only thing the stimulus stimulated was the government. And the only way to create jobs is to stimulate the private sector.”

Robinson’s idea is to drop the capital gains tax next year to coax companies into spending more on property and equipment.

His Republican primary opponent, State Sen. Scott Brown, wants to keep the tax code where it is by making President Bush’s tax cuts permanent. Brown does not want more stimulus spending.
“In Massachusetts, we’re 49th out of 50 (states) in actually releasing the money,” Brown said. “So why would we do another stimulus when we haven’t even done the first one?”

In contrast, Attorney General Martha Coakley, a Democrat, is not ruling out a second stimulus package. However, she’s not ruling one in, either.

“I’d want to make sure, before we use dollars, that we’d make sure what worked and what didn’t on Stimulus one,” Coakley said. “Particularly in Massachusetts.”

Like Coakley, Democrat Steve Pagliuca is noncommittal about a second round.

“We already have a national debt of over $12 trillion,” Pagliuca said. “That’s a scary number.”
What Pagliuca wants to do is take money from the first stimulus that hasn’t been spent yet and put those couple hundred billion dollars more directly toward job training and creation.

But Democrat Rep. Michael Capuano defends the first stimulus for saving more jobs than people realize, even if it’s not creating many. Capuano did, after all, vote for it. He is a congressman. And he says he’d vote for a second.

“The next one probably won’t be called stimulus because this one has kind of a bad name,” Capuano said. But that doesn’t bother him. “Whatever they come up with, that’s fine, I’ll use whatever term they want, he said. “If it creates jobs, I’ll be for it.”

So consider again the analogy of stimulus spending as an alarm clock that jolts the economy awake. Two Senate candidates, both Democrats, want to set the alarm again: Michael Capuano and Alan Khazei, who wants to turn it up.

The two Republicans, Scott Brown and Jack E. Robinson, want to turn it off. They say it’s too expensive and doesn’t really work.

And then Democrats Steve Pagliuca and Martha Coakley are iffy about setting it again. They’re gonna sleep on it.

Source: http://www.wbur.org/2009/11/23/senate-issues-economy

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NY Times: Second Stimulus Necessary

Monday, November 2, 2009 10:56 AM

By: Dan Weil

The consensus among mainstream economists is that another fiscal stimulus package isn’t needed yet.

The New York Times editorial page disagrees.

The majority view is that the impact of February’s $787 billion package hasn’t been fully felt yet, and the economy is headed for growth in the second half of this year in any case.

But The Times says, “The consensus among economists is that the recession is over, and, technically, the herd is probably right. Corporate profitability has been boosted by job cuts, pay cuts and a drive to restock depleted inventories. Immense federal stimulus has jolted the economy.”

But what happens next, The Times asks.

“The economy is going to need more government support, or it is bound to be very weak for a very long time — and vulnerable to a relapse into recession.”

The problems include growing joblessness, an increase in foreclosures, continued bank failures and budget crises at the state and local levels.

“Yet Washington is not providing a coherent plan for effective stimulus.”

Of course there is a reason for that. Treasury Secretary Tim Geithner told CNBC that a second stimulus package isn’t needed.

The first stimulus and the bank bailouts have worked to stabilize the economy, he said.
And a stealth stimulus package is being adopted anyway, in pieces, CNNMoney.com points out. These measures, including extension of unemployment benefits and a job creation tax credit, could total $84 billion, it estimates.

© 2009 Newsmax. All rights reserved.

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Source: http://moneynews.newsmax.com/streettalk/times_second_stimulus/2009/11/02/280360.html

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Across US, Infrastructure Is Crumbling

David Knowles

Posted: 10/29/09

SAN FRANCISCO (Oct. 29) -- Billions of dollars from the American Recovery and Reinvestment Act of 2009 are being spent on infrastructure projects across the country, but as this week's closing of the San Francisco-Oakland Bay Bridge shows, for every problem that gets addressed, it seems like 10 more are waiting.

Built in 1936, and severely damaged in1989 by the Loma Prieta earthquake, the Bay Bridge closed over Labor Day weekend for retrofitting designed to help it withstand further quakes. In the process of the repairs, an enormous crack was found in an I-bar, requiring further fixes.

On Tuesday, a portion of the second emergency repair gave way, sending steel cables onto the roadway, damaging cars and closing the bridge to traffic once more.

Bridge safety is by no means an isolated issue, however. According to the American Society of Civil Engineers, more than 26 percent of the country's bridges were found to be either structurally deficient or functionally obsolete.

Minneapolis Mayor R.T. Rybak has personally witnessed the consequences of putting off infrastructure repair and maintenance. On Aug. 1, 2007, his city's I-35W Bridge over the Mississippi River collapsed, killing 13 people and injuring 145.

Stacy Bengs, AP
On Aug. 1, 2007, the I-35W Bridge collapsed in Minneapolis during the evening rush hour, killing 13 people and injuring 145.

That episode briefly galvanized political will, according to the mayor's spokesman, Jeremy Hanson. "Congress was moved to act," Hanson said. And with federal funds, the bridge was rebuilt in just over a year from the time it fell, at a cost of $234 million.

Now Minneapolis is using $10 million in stimulus funding to refurbish Camden Bridge, another of the city's Mississippi River crossings. Built in 1975, the bridge had deteriorated to the point that it was no longer safe for traffic and was shut down. "It's a major bridge," Hanson said. "And without the stimulus funds, we would not be able to do the project."

For Wayne Klotz, president of the American Society of Civil Engineers, any money allocated to updating the country's infrastructure is welcome. But he's also realistic about just how much the American Recovery and Reinvestment Act can do.

"Only 10 percent of the stimulus package went toward infrastructure. The percentage was relatively small. The primary purpose of the stimulus was to create jobs, not to improve infrastructure," he said.

Asked to prioritize which areas of infrastructure he thinks need immediate attention, Klotz laughed.

"It's kind of like if your kid comes home with a report card with straight D's. Which subject do you start with? Take your pick. We've followed a 'patch and pray' method of infrastructure maintenance in this country. We don't have a single category that has a passing grade."

President Barack Obama recently described the Recovery Act as "the largest investment in the nation's infrastructure since President Eisenhower built the Interstate Highway System." The stimulus plan targets "shovel ready" programs, those that don't require new permits or exhaustive planning. As a result, Klotz said, the approach provides much needed maintenance, but still misses the bigger mark.

"Back in the '50s, '60s and even the first part of the 1970s, the percentage of money we used to spend on infrastructure was 5 to 7 percent of the budget," Klotz said. "We built the best infrastructure system in the world. Now, we're lucky if we spend 1 to 2 percent."

California is one state looking to take full advantage of the Recovery Act money. The nation's leading recipient of stimulus dollars, California recently applied for a $4.7 billion allocation to help pay for a high-speed rail system. That money would be in addition to the billions it is already using to rebuild roads, airports, existing rail lines and, yes, bridges.

But Ross McKeown, a spokesman for the Metropolitan Transportation Commission, the agency charged with planning and financing infrastructure projects in the San Francisco Bay Area, said California's stimulus funds are not sufficient to meet the challenges that drastically falling revenues and neglected infrastructure maintenance have brought.

"The stimulus is a one-time, stop-gap measure that doesn't come close to solving the larger issue," McKeown said. "Really, it's just a drop in the bucket."

As Klotz sees it, such steps are vital if we intend to see our economy thrive in the future. "Transportation is our economy," he said. "If our transportation system doesn't work, our economy doesn't work."


Source: http://www.sphere.com/2009/10/29/across-us-infrastructure-is-crumbling/

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Republicans call Obama’s stimulus plan a flop, oppose a second package

By Associated Press
July 13, 2009

WASHINGTON - Republicans lined up yesterday to oppose a second economic stimulus package, a demonstration of unity from an out-of-power party in search of a rallying cry against President Obama.

Republicans called Obama’s $787 billion spending plan a “flop’’ and said it hasn’t fulfilled its hype. They criticized the White House for increasing the federal deficit and doing little to combat an unemployment rate that hit 9.5 percent in June.

“The reality is it hasn’t helped yet,’’ said Senator Jon Kyl, Republican of Arizona. “What I proposed is, after you complete the contracts that are already committed, the things that are in the pipeline, stop it.’’

Obama urged patience with his program, which administration officials acknowledge was designed with incorrect or incomplete economic data.

Yet the stimulus package “is working exactly as we had anticipated,’’ Obama told CNN. “We always anticipated that a big chunk of that money then would be spent not only in the second half of the year, but also next year. This was designed to be a two-year plan and not a six-month plan,’’ he said.

Republicans, though, were not willing to sit by.

“I do think it is fair to say that the stimulus is a flop,’’ said Representative Eric Cantor, a Virginia Republican. The goal, he said, “was unemployment wouldn’t rise past 8.5 percent, and what we see now is businesses just aren’t hiring. Even the best projections have us losing 750,000 more jobs this year.’’

Billionaire Warren Buffet and other have called for a second round of spending to steady the economy. Obama has said it’s too early to decide.

Kyl appeared on ABC’s “This Week,’’ and Cantor on “Fox News Sunday.’’

Source: http://www.boston.com/business/articles/2009/07/13/republicans_call_obama8217s_stimulus_plan_a_flop_oppose_a_second_package/

P.S.

1. Bolds added for emphasis.

2.I hate to say, I told you so! But, I had a premonition that there would be another bail-out scheme once President Obama returned from his Educational Foray abroad. It's the next 'boot to drop'.

More billions will be printed by the Treasury, then the Federal Reserve will "lend" it to the U.S.

Brace yourselves for mega-hyper-inflation!

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Bank of America Needs $33.9 Billion, U.S. Says

By LOUISE STORY and ERIC DASH
Published: May 5, 2009

Related
Bank of America Mulls Sale of Stake in China’s Second-Largest Bank (May 6, 2009)
Times Topics: Bank of America Corporation

The government has told Bank of America it needs $33.9 billion in capital to withstand any worsening of the economic downturn, according to an executive at the bank.

If the bank is unable to raise the capital cushion by selling assets or stock, it would have to rely on the government, which has provided $45 billion in capital through the Troubled Asset Relief Program.

It could satisfy regulators’ demands simply by converting non-voting preferred shares it gave the government in return for the capital, into common stock.

But that would make the government one of the bank’s largest shareholders.

Executives at the bank, one of the largest being examined, sparred with the government over the amount, which is higher than executives believed the bank needed.

But J. Steele Alphin, the bank’s chief administrative officer, said Bank of America would have plenty of options to raise the capital on its own before it would have to convert any of the taxpayer money into common stock.

“We’re not happy about it because it’s still a big number,” Mr. Alphin said. “We think it should be a bit less at the end of the day.”

The government’s determination that Bank of America doesn’t need as much capital as it has already received from taxpayers is an indication that even some of the most troubled banks may not need more government money than has been allocated to them.

The Treasury Department declined to comment on Tuesday evening.

Citigroup, by contrast, has already decided to allow the government to convert some of its investment into common stock.

Under the arrangement worked out between the Treasury and Citigroup earlier this year, the Treasury will receive mandatory convertible preferred shares, meaning preferred shares that can be converted to voting shares of common stock at the will of the government.

If Bank of America relied on that conversion for the majority of the capital it needs to maintain, the government would become one of the bank’s largest shareholders.

Regulators have told the banks that the common shares would bolster their “tangible common equity,” a measure of capital that places greater emphasis on the resources that a bank has at its disposal than the more traditional measure of “Tier 1” capital.

Citigroup, the largest and most deeply troubled of the banks, is expected to need to raise capital as insurance against any further downturn in the economy.

The government told the bank it would need $50 billion to $55 billion in capital, a requirement that would force it to raise $5 billion to $10 billion in new capital, according to people briefed on the final results.

Citigroup executives say the bank can easily cover any shortfall, and is considering several options to close that gap.

The Obama administration plans to publicize the results of stress tests on Thursday.

The results are expected to reveal that a number of them need additional capital, and many banks have negotiated with the government on what the actual capital requirements should be since they learned of the preliminary findings last week.

The tests are also expected to show that several banks, including Bank of New York Mellon, Goldman Sachs and JPMorgan Chase, are healthy enough to repay TARP funds.

Mr. Alphin noted that the $34 billion figure is well below the $45 billion in capital that the government has already allocated to the bank, although he said the bank has plenty of options to raise the capital on its own.

“There are several ways to deal with this,” Mr. Alphin said. “The company is very healthy.”

Bank executives estimate that the company will generate $30 billion a year in income, once a normal environment returns.

The company has faced criticism over its acquisition of Merrill Lynch, the troubled investment bank, and last week, shareholders voted to strip the bank’s chief executive, Kenneth D. Lewis, of his title as chairman of the board. The board said last week that it still unanimously supports Mr. Lewis in his role as chief executive.

Mr. Alphin said since the government figure is less than the $45 billion provided to Bank of America, the bank will now start looking at ways of repaying the $11 billion difference over time to the government.

In the case of Citigroup, which has also received two taxpayer lifelines, executives say the bank can easily cover any shortfall, and is considering several options to close that gap.

Among them are efforts to accelerate the sales of several businesses within Citi Holdings, a holding tank for assets it plans to shed, or to expand its common stock conversion plans to a broader base of private investors who hold Citigroup preferred stock. Both measures would avoid an increase in the government’s expected 36 percent ownership stake.

Taxpayer-supported Banks have been eager to wean themselves from the government’s purview, and many analysts have questioned how useful the stress tests will be in assessing their true health.

Also Tuesday, senior government officials said the Treasury Department is planning to require taxpayer-supported banks seeking to free themselves from the government’s grip to show that they can repay the lifelines without additional subsidies that have helped them survive the financial crisis.

Banks have had an indirect subsidy adopted by the government last fall that allows them to issue debt cheaply with the backing of the Federal Deposit Insurance Corporation.

The Treasury is expected to announce as early as Wednesday that healthier banks must show that they can issue debt without the guarantees before they are allowed to exit the Troubled Asset Relief Program, or TARP.

The banks also must demonstrate that they will be able to sell stock to private investors and pass a government stress test to show that they are healthy enough to survive without the taxpayer aid.

Edmund L. Andrews contributed reporting.

Source:http://www.nytimes.com/2009/05/06/business/06stress.html?_r=1&hpw

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p.s. So, Bancof america needs $33.9 BILLION?

TESTING: IS ANYONE LISTENING?

I say let them go broke! If it takes money, that much money to make them "survive"; Perhaps they shouldn't exist. Afterall, what does a bank produce? They are not part of the infrastructure. So, if a bank needs money to exist, maybe, they should just close down. Why would you feed an entity a new lease on life, if they can't remain solvent?

Banks needing money? This one defies all logic!

Is everyone strung out on prozac, cyalis, ambien, oxycontin, and caffeine that they can't dsitinguish a scam when they hear of one? This scam takes the cake; A Jesuit influenced bank asking for hard-earned tax-payer provided money to further bankrupt the free-enterprise Protestant Republic of the United States; Seems like the Vatican (design) looting has almost achieved its ultimate goal of ram-sacking the sole bastion of Protestant free-enterpise!

Arsenio.

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Global Economy Called Worst Since 1945

Joshua Roberts/Bloomberg News
Olivier Blanchard of the International Monetary Fund.

By BRIAN KNOWLTON
Published: April 22, 2009

WASHINGTON — The global economy will most likely contract this year for the first time since World War II, and the recovery will take longer than expected, the International Monetary Fund said Wednesday.

The I.M.F. projected a 1.3 percent decline in global economic activity for 2009, down sharply even from the modest 0.5 percent growth it had projected in January. In the United States, still the “epicenter” of the crisis, according to the fund, economic contraction would be even greater, at 2.8 percent this year, with zero growth for 2010.

Separately, the Treasury secretary, Timothy F. Geithner, cautioned against expecting a quick recovery, underscoring the complications of the world’s increasingly interwoven economies and financial systems.

“Never before in modern times has so much of the world been simultaneously hit by a confluence of economic and financial turmoil such as we are now living through,” he said in a speech before the Economic Club of Washington.

The international fund said that it expected global growth to resume in 2010, but only at a 1.9 percent rate, notably sluggish compared with past recoveries. In normal times, growth would be closer to 4 percent.

“The recovery may actually be slower than usual, leading to a slow decrease in unemployment,” said Olivier Blanchard, director of the I.M.F.’s research department, at a news conference at the fund’s headquarters in Washington. “Our forecasts imply that unemployment will crest only at the end of 2010.”

Mr. Blanchard, in unveiling the World Economic Outlook, said that the United States unemployment rate was likely to peak around 10 percent. It is currently 8.5 percent, after months of relentless job losses. The International Labor Organization has estimated that world unemployment could rise to 7 percent this year, up from about 6 percent in 2008.

“The current outlook is exceptionally uncertain,” said the executive summary of the I.M.F. report, “with risks still weighing to the downside.”

The report was issued as finance ministers and central bankers from around the world were beginning to gather in Washington for the spring meetings of the I.M.F. and the World Bank. On the sidelines of those meetings, officials of the Group of 7 industrialized nations and the Group of 20, an expanded group that also includes the major emerging economies, will meet for continued discussions on the economic crisis.

Even among the details of a largely cautionary report, I.M.F. officials saw some signs of hope, largely because of the forceful fiscal steps and other measures taken by the United States, some European governments, and also by China.

Mr. Blanchard said that the fiscal responses of several major countries had made “a gigantic difference.”

“If there had been no fiscal stimulus across the world, world growth in 2009 would be 1.5 to 2 percent less,” he said. “We would be in the middle of something very close to a depression.”

While saying that “there is light at the end of this long tunnel,” he cautioned against seeing, in mixed economic data, reason for complacency. “The need for strong policies on both the macro and especially the financial fronts is as acute as ever,” he said.

Mr. Geithner said that only 17 of the 182 economies followed by the I.M.F. are expected to grow at faster rates this year than last, and 30 of the 34 advanced economies are expected to shrink, amid a collapse in world trade that “will likely be the worst since the end of World War II.”

Even as globalization speeds the flow of economic benefits in good times, he said, “now we are learning that in times of contraction, globalization transmits trouble with enormous speed and force, affecting economies around the world — the relatively strong as well as the more vulnerable.”

Source: http://www.nytimes.com/2009/04/23/business/economy/23outlook.html?_r=1&ref=world

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Jekyll & Hyde Obama: Protectionist or Free Trader?

Jekyll & Hyde Obama: Protectionist or Free Trader?

By Dana Gabriel

http://www.borderfirereport.net/dana-gabriel/jekyll-hyde-obama-protectionist-or-free-trader.php


NAFTA partners may be confused, as to the mixed signals being sent by President Barack Obama in regards to trade. The Buy-American provision which was part of the stimulus package, alarmed Canadians, as well as many others. The Obama administration managed to outrage Mexico by ending a cross-border trucking program. Like most politicians, Obama is speaking out of both sides of his mouth. He is pandering to some of his core support while at the same time, trying to uphold the U.S. as a global leader in trade initiatives.

When the Buy-American provision was first announced, both Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon, warned of the dangers of protectionism. Although the language that passed as part of the stimulus package was softened, Canadian officials remain concerned. Canada has every right to be worried about American protectionism considering that 80% of its exports flow across the border. During his February trip, Obama reassured Canadians that he was committed to NAFTA and that the U.S. would honor all its trade obligations. He also discussed plans to place NAFTA’s labour and environmental side deals into the main body of the agreement, which in actuality would accomplish very little. This is a far cry from a man who at one time, threatened to tear up the trade accord. He has all but abandoned his promise to truly fix NAFTA and make it fairer for American workers.

The House Democrat fiscal 2009 spending bill, effectively ended the controversial Bush administration cross-border trucking program. As a result, Mexico retaliated by slapping tariffs on many U.S. imports. Allowing Mexican long-haul trucks full access into the U.S. is a provision of NAFTA. Many contend that it is because of protectionism, not safety and security concerns, that Mexican trucks have been restricted across the border. Before his scheduled trip to Mexico in mid April, Obama could propose a new trucking program that attempts to satisfy both the Mexican government, as well as critics of the former cross-border project. Considering the growing drug violence in Mexico, this might not be an appropriate time to introduce any type of cross-border initiative.

In early March, Treasury Secretary Timothy Geithner announced that the Obama administration would work with Congress to establish benchmarks, so that long-stalled free trade agreements with Colombia and South Korea could move forward. Obama opposed both trade deals during the presidential election campaign last year. At that time, he said that he wanted to see a reduction in violence against trade unionists in Colombia. He also wanted to renegotiate some provisions of the South Korean trade agreement which he felt were bad for U.S. automakers and other manufacturers. There might not be an auto industry left to protect. Obama has taken money that could have been used to stimulate the real economy and instead has given it to the bankers. This is a Wall Street takeover. Through all the bailouts and corporate looting, the only path being set forth by which the U.S. economy can recover is through more globalization.

Just ahead of the G-20 Summit, José Manuel Barroso, President of the European Commission, warned against de-globalization, protectionism and economic nationalism. He advocated reshaping globalization as a solution to the worldwide economic crisis. At the G-20 Summit in London, leaders pledged to work together to rebuild confidence and trust in the financial system and kickstart international trade. As a result, a new Financial Stability Board has been established to unite regulators. The IMF has been given more money and power in order to boost the economies of the world. Obama proclaimed that the summit represented a turning point in global economic recovery. UK Prime Minister Gordon Brown called it the start of a new global financial architecture and said that out of the economic crisis, a New World Order is emerging. The U.S. has been used as an engine for world government and their markets will now play a lesser role in the global economy, as they surrender more sovereignty to this new system.

Obama is a tool of the global elite and giving him labels only serves to provide him with cover. He is not looking out for the best interests of American workers, the poor or the middle class. He is of the bankers, by the bankers and for the bankers. Many of the same people who are responsible for past failed U.S. economic policies, have been rewarded with a spot in the Obama administration. They will finish what they started—the destruction of the U.S. economy. This amounts to economic terrorism. We stand on the dawn of a new global economic order. Will the American people be suckered and buy into this system?

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Preparing for Civil Unrest in America

Legislation to Establish Internment Camps on US Military Bases
by Michel Chossudovsky

The Economic and Social Crisis

The financial meltdown has unleashed a latent and emergent social crisis across the United States.

What is at stake is the fraudulent confiscation of lifelong savings and pension funds, the appropriation of tax revenues to finance the trillion dollar "bank bailouts", which ultimately serve to line the pockets of the richest people in America.

This economic crisis is in large part the result of financial manipulation and outright fraud to the detriment of entire populations, leading to a renewed wave of corporate bankruptcies, mass unemployment and poverty.

The criminalization of the global financial system, characterized by a "Shadow Banking" network has resulted in the centralization of bank power and an unprecedented concentration of private wealth.

Obama's "economic stimulus" package and budget proposals contribute to a further process of concentration and centralization of bank power, the cumulative effects of which will eventually resul in large scale corporate, bankruptcies, a new wave of foreclosures not to mention fiscal collapse and the downfall of State social programs. (For further details see Michel Chossudovsky, America's Fiscal Collapse, Global Research, March 2, 2009).

The cumulative decline of real economic activity backlashes on employment and wages, which in turn leads to a collapse in purchaisng power. The proposed "solution" under the Obama administration contributes to exacerbating rather than alleviating social inequalities and the process of wealth concentration.

The Protest Movement

When people across America, whose lives have been shattered and destroyed, come to realize the true face of the global "free market" system, the legitimacy of Wall Street, the Federal Reserve and the US administration will be challenged.

A latent protest movement directed against the seat of economic and political power is unfolding.

How this process will occur is hard to predict. All sectors of American society are potentially affected: wage earners, small, medium and even large businesses, farmers, professionals, federal, State and municipal employees, students, teachers, health workers, and unemployed. Protests will initially emerge from these various sectors. There is, however, at this stage, no organized national resistance movement directed against the administration's economic and financial agenda.

Obama's populist rhetoric conceals the true nature of macro-economic policy. Acting on behalf of Wall Street, the administration's economic package, which includes close to a trillion dollar "aid" package for the financial services industry, coupled with massive austerity measures, contributes to precipitating America into a bottomless crisis.

"Orwellian Solution" to the Great Depression: Curbing Civil Unrest

At this particular juncture, there is no economic recovery program in sight. The Washington-Wall Street consensus prevails. There are no policies, no alternatives formulated from within the political and economic system. .

What is the way out? How will the US government face an impending social catastrophe?

The solution is to curb social unrest. The chosen avenue, inherited from the outgoing Bush administration is the reinforcement of the Homeland Security apparatus and the militarization of civilian State institutions.

The outgoing administration has laid the groundwork. Various pieces of "anti-terrorist" legislation (including the Patriot Acts) and presidential directives have been put in place since 2001, largely using the pretext of the "Global War on Terrorism."

Homeland Security's Internment Camps

Directly related to the issue of curbing social unrest, cohesive system of detention camps is also envisaged, under the jurisdiction of the Department of Homeland Security and the Pentagon.

A bill entitled the National Emergency Centers Establishment Act (HR 645) was introduced in the US Congress in January. It calls for the establishment of six national emergency centers in major regions in the US to be located on existing military installations. http://www.govtrack.us/congress/billtext.xpd?bill=h111-645

The stated purpose of the "national emergency centers" is to provide "temporary housing, medical, and humanitarian assistance to individuals and families dislocated due to an emergency or major disaster." In actuality, what we are dealing with are FEMA internment camps. HR 645 states that the camps can be used to "meet other appropriate needs, as determined by the Secretary of Homeland Security."

There has been virtually no press coverage of HR 645.

These "civilian facilities" on US military bases are to be established in cooperation with the US Military. Modeled on Guantanamo, what we are dealing with is the militarization of FEMA internment facilities.

Once a person is arrested and interned in a FEMA camp located on a military base, that person would in all likelihood, under a national emergency, fall under the de facto jurisdiction of the Military: civilian justice and law enforcement including habeas corpus would no longer apply.

HR 645 bears a direct relationship to the economic crisis and the likelihood of mass protests across America. It constitutes a further move to militarize civilian law enforcement, repealing the Posse Comitatus Act.

In the words of Rep. Ron Paul:

"...the fusion centers, militarized police, surveillance cameras and a domestic military command is not enough... Even though we know that detention facilities are already in place, they now want to legalize the construction of FEMA camps on military installations using the ever popular excuse that the facilities are for the purposes of a national emergency. With the phony debt-based economy getting worse and worse by the day, the possibility of civil unrest is becoming a greater threat to the establishment. One need only look at Iceland, Greece and other nations for what might happen in the United States next." (Daily Paul, September 2008, emphasis added)

The proposed internment camps should be seen in relation to the broader process of militarization of civilian institutions. The construction of internment camps predates the introduction of HR 645 (Establishment of Emergency Centers) in January 2009. There are, according to various (unconfirmed) reports, some 800 FEMA prison camps in different regions of the U.S. Moreover, since the 1980s, the US military has developed "tactics, techniques and procedures" to suppress civilian dissent, to be used in the eventuality of mass protests (United States Army Field Manual 19-15 under Operation Garden Plot, entitled "Civil Disturbances" was issued in 1985)

In early 2006, tax revenues were allocated to building modern internment camp facilities. In January 2006, Kellogg Brown and Roots, which at the time was a subsidiary of Halliburton, received a $385 million contract from the Department of Homeland Security's Immigration and Customs Enforcement (ICE):

"The contract, which is effective immediately [January 2006], provides for establishing temporary detention and processing capabilities to augment existing ICE Detention and Removal Operations (DRO) Program facilities in the event of an emergency influx of immigrants into the U.S., or to support the rapid development of new programs...

The contract may also provide migrant detention support to other U.S. Government organizations in the event of an immigration emergency, as well as the development of a plan to react to a national emergency, such as a natural disaster. (KBR, 24 January 2006, emphasis added)

The stated objectives of U.S. Immigration and Customs Enforcement (ICE) are to:

"protect national security and uphold public safety by targeting criminal networks and terrorist organizations that seek to exploit vulnerabilities in our immigration system, in our financial networks, along our border, at federal facilities and elsewhere in order to do harm to the United States. The end result is a safer, more secure America" (ICE homepage)

The US media is mum on the issue of the internment camps on US soil. While casually acknowledging the multimillion dollar contract granted to Halliburton's subsidiary, the news reports largely focused their attention on possible "cost overruns" (similar to those which occurred with KBR in Iraq).

What is the political intent and purpose of these camps? The potential use of these internment facilities to detain American citizens under a martial law situation are not an object of media debate or discussion.

Combat Units Assigned to the Homeland

In the last months of the Bush administration, prior to the November 2008 presidential elections, the Department of Defense ordered the recall of the 3rd Infantry’s 1st Brigade Combat Team from Iraq. The relocation of a combat unit from the war theater to domestic front is an integral part of the Homeland Security agenda. The BCT was assigned to assist in law enforcement activities within the US.

The BCT combat unit was attached to US Army North, the Army's component of US Northern Command (USNORTHCOM). The 1st BCT and other combat units would be called upon to perform specific military functions in the case of civil unrest:

The 1st BCT’s soldiers also will learn how to use “the first ever nonlethal package that the Army has fielded,” 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.(

(See Gina Cavallaro, Brigade homeland tours start Oct. 1, Army Times, September 8, 2008).

Under the proposed withdrawal of US forces from Iraq under the Obama administration, one expects that other combat units will be brought home from the war theater and reassigned in the United States.

The evolving national security scenario is characterized by a mesh of civilian and military institutions:

-Army combat units working with civilian law enforcement, with the stated mission to curb "social unrest".

- the establishment of new internment camps under civilian jurisdiction located on US military facilities.

The FEMA internment camps are part of the Continuity of Government (COG), which would be put in place in the case of martial law.

The internment camps are intended to "protect the government" against its citizens, by locking up protesters as well as political activists who might challenge the legitimacy of the Administration's national security, economic or military agenda.

Spying on Americans: The Big Brother Data Bank

Related to the issue of internment and mass protests, how will data on American citizens be collected?

How will individuals across America be categorized?

What are the criteria of the Department of Homeland Security?

In a 2004 report of the Homeland Security Council entitled Planning Scenarios, pertaining to the defense of the Homeland, the following categories of potential "conspirators" were identified:

"foreign [Islamic] terrorists" ,

"domestic radical groups", [antiwar and civil rights groups]

"state sponsored adversaries" ["rogue states", "unstable nations"]

"disgruntled employees" [labor and union activists].

In June of last year, the Bush administration issued a National Security Presidential Directive (NSPD 59- HSPD 24) entitled Biometrics for Identification and Screening to Enhance National Security (For Further details see Michel Chossudovsky, "Big Brother" Presidential Directive: "Biometrics for Identification and Screening to Enhance National Security", Global Research, June 2008)

Adopted without public debate or Congressional approval, its relevant procedures are far-reaching. They are related to the issue of civil unrest. They are also part of the logic behind the establishment of FEMA internment camps under HR 645. .

NSPD 59 (Biometrics for Identification and Screening to Enhance National Security) goes far beyond the narrow issue of biometric identification, it recommends the collection and storage of "associated biographic" information, meaning information on the private lives of US citizens, in minute detail, all of which will be "accomplished within the law":

"The contextual data that accompanies biometric data includes information on date and place of birth, citizenship, current address and address history, current employment and employment history, current phone numbers and phone number history, use of government services and tax filings. Other contextual data may include bank account and credit card histories, plus criminal database records on a local, state and federal level. The database also could include legal judgments or other public records documenting involvement in legal disputes, child custody records and marriage or divorce records."(See Jerome Corsi, June 2008)

The directive uses 9/11 and the "Global War on Terrorism" as an all encompassing justification to wage a witch hunt against dissenting citizens, establishing at the same time an atmosphere of fear and intimidation across the land.

It also calls for the integration of various data banks as well as inter-agency cooperation in the sharing of information, with a view to eventually centralizing the information on American citizens.

In a carefully worded text, NSPD 59 "establishes a framework" to enable the Federal government and its various police and intelligence agencies to:

"use mutually compatible methods and procedures in the collection, storage, use, analysis, and sharing of biometric and associated biographic and contextual information of individuals in a lawful and appropriate manner, while respecting their information privacy and other legal rights under United States law."

The NSPD 59 Directive recommends: "actions and associated timelines for enhancing the existing terrorist-oriented identification and screening processes by expanding the use of biometrics".

The procedures under NSPD 59 are consistent with an earlier June 2005 decision which consisted in creating a "domestic spy service", under the auspices of the FBI. (For further details see Michel Chossudovsky, Bush Administration creates "Secret State Police", June 30, 2005)

Working hand in glove with Homeland Security (DHS), the proposed "domestic intelligence department" would combine FBI counterterrorism, intelligence and espionage operations into a single service.

The new department operating under the auspices of the FBI would have the authority to "seize the property of people deemed to be helping the spread of WMD": They would be able to "spy on people in America suspected of terrorism or having critical intelligence information, even if they are not suspected of committing a crime." (NBC Tonight, 29 June 2005).\
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Source:http://www.globalresearch.ca/index.php?context=viewArticle&code=CHO20090318&articleId=12793

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P.S. Text of H.R. 645: National Emergency Centers Establishment Act:

@http://www.govtrack.us/congress/billtext.xpd?bill=h111-645]

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