Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Thurs 01.29.2009
Nation's economic mood darkens Americans appear unwilling to spend our way out of recession This is one recession Americans aren't going to spend their way out of. The Conference Board said Tuesday its Consumer Confidence Index edged down to 37.7 this month, a record low, from a revised 38.6 in December. It stood at about 87 just a year ago. Americans are battered by headlines about massive job cuts, including thousands at Home Depot, Corning, General Motors and Caterpillar in just the past two days, and are still watching the values of their homes and retirement funds dwindle. "Virtually, there is no confidence out there," said Bernard Baumohl, chief global economist at The Economic Outlook Group LLC. "Household anxiety has reached a point that we can count them out to get us out of the recession."
Economic pain to be 'worst for 60 years' The world economy will this year suffer its worst performance for more than 60 years with a serious risk that 50m people will lose their jobs, international organisations warned on Wednesday. The warnings came as the Federal Reserve expressed fresh concern about deflation, noting that the US economy had "weakened further" since its last policy meeting in December. The US central bank made no immediate move to purchase Treasury securities - disappointing some in the markets - and signalled that its preference is to expand targeted credit operations instead. The Fed said it would "assess whether expansions of or modifications to lending facilities would serve to further support credit markets".
Fed Adopts Policy to Modify Mortgages, Stem Home Foreclosures The Federal Reserve will ease terms on residential mortgages acquired in the rescues of Bear Stearns Cos. and American International Group Inc., seeking to stem foreclosures. The Fed policy is targeting borrowers who are 60 days or more overdue on loan payments and covers modifications of interest rates and payment plans. The program uses the Fed’s authority in the $700 billion Troubled Asset Relief Program and was released today by the House Financial Services Committee.
Roubini: A Severe Global Economic Contraction Nowhere to hide!
NYU's Roubini: "Nowhere to Hide" from Global Slowdown Nouriel Roubini of NYU’s Stern School of Business is making fresh headlines, as he's forecasting an even more dire outlook for the global economy. In an interview yesterday with Bloomberg News in Zurich, Roubini said: The U.S. will lose 6 million jobs with unemployment reaching at least 9 percent.
The U.S. economy will expand 1 percent at most in 2010.
Economic growth in China will slow to less than 5 percent.
He reiterated his statements that the biggest U.S. banks are insolvent, and that losses could reach $3.6 trillion, far exceeding his original estimates. Is Roubini -- nicknamed "Dr. Doom" for his pessimistic yet accurate forecasts in recent years -- off the mark? We ask colleague and fellow NYU economist Lawrence White. One message from White is clear. Acknowledge losses swiftly or we risk a Japan-like drawn-out recession with no near-term recovery in sight. Yesterday, White and Henry Blodget also discussed:. . .
House OKs $819B stimulus bill with GOP opposition Democratic-controlled House OKs $819 billion stimulus bill with GOP in unanimous opposition In a swift victory for President Barack Obama, the Democratic-controlled House approved a historically huge $819 billion stimulus bill Wednesday night with spending increases and tax cuts at the heart of the young administration's plan to revive a badly ailing economy. The vote was 244-188, with Republicans unanimous in opposition despite Obama's frequent pleas for bipartisan support. "This recovery plan will save or create more than three million new jobs over the next few years," the president said in a written statement released moments after the House voted. Still later, he welcomed congressional leaders of both parties to the White House for drinks as he continued to lobby for the legislation.
Obama's Stimulus: Good For Government, Bad For the Economy
US stimulus bill forced through by Democrats The House of Representatives on Wednesday night approved its version of the proposed US fiscal stimulus with overwhelming Democratic support but, in an early setback for Barack Obama, not a single Republican backed the $825bn plan. The president has spent much of his first week in office reaching out to Republicans in a bid to forge a bipartisan consensus behind the stimulus but the House vote indicated that opposition is hardening. The White House welcomed the 244-188 vote as an "important first step" towards final legislation, which Mr Obama wants to sign into law by mid-February, but the president also made clear he was open to changes as debate shifts to the Senate. "I hope that we can continue to strengthen this plan before it gets to my desk," Mr Obama said in a statement. "But what we can't do is drag our feet or allow the same partisan differences to get in our way."
Today's Commodity Prices Forecast Tomorrow's Inflation I know this is a hard one to believe, being that we are obviously in the middle of a deflationary period, but savvy institutional players are already starting to position themselves for inflationary times ahead. Inflation! Have I lost my mind? Actually, no... Let me explain what I mean. Former central banker Volcker (who is on Obama’s economic team) is prepping the world for deficits of $2 to $3 trillion dollars as the U.S. goes into one of the biggest spending sprees that (believe it or not) will make George Bush’s spending look like child’s play. The financial world is listening. They’ve seen the leading indicators of the economy in the beginning stages of perking up. They’ve seen stocks stabilize and they’ve seen the down draft in commodities halt.
Treasury Weighs Hard Choices To Save Banks Any Path Carries Risk of Failure President Obama's top advisers are in the final stages of debating several perilous options to right the financial system, all of which are likely to prove unpopular and in some cases carry a significant risk of failure, according to sources in contact with the officials. The rapid deterioration of the economy has accentuated these hard choices. The health of many banks is getting worse, not better, as the downturn makes it difficult for all kinds of consumers and businesses to pay back money they borrowed from these financial firms. Conservative estimates put bank losses yet to be declared at $1 trillion.
Edmund Phelps Says U.S. Needed 'More Coherent' Stimulus Edmund Phelps, a professor at Columbia University and winner of the 2006 Nobel Prize in economics, talks with Bloomberg's Francine Lacqua and Erik Schatzker about the U.S. government's plans to stimulate the economy and ease the credit crisis. Phelps, speaking at the World Economic Forum meeting in Davos, Switzerland, also discusses measures to remove toxic assets from banks' balance sheets and the outlook for U.S. housing.
FDIC May Run ‘Bad Bank’ in Plan to Purge Toxic Assets The Federal Deposit Insurance Corp. may manage the so-called bad bank that the Obama administration is likely to set up as it tries to break the back of the credit crisis, two people familiar with the matter said. U.S. stocks gained, extending a global rally, on optimism the bad-bank plan will help shore up the economy. The Standard & Poor’s 500 Stock Index rose 1.9 percent to 861.63 as of 9:54 a.m. in New York. Bank of America Corp., down 54 percent this year before today, rose 87 cents, or 13 percent, to $7.37. Citigroup Inc., which had fallen 47 percent this year, climbed 18 percent. FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks’ balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said. President Barack Obama’s team may announce the outlines of its financial-rescue plan as early as next week, an administration official said.
Soros urges U.S. to create "good bank" as aggregator DAVOS, Switzerland (Reuters) - The United States needs to recapitalize its banks but should consider the creation of a "good bank" when considering how to deal with the toxic assets, hedge fund manager George Soros said on Wednesday. Speaking to Reuters Television at the World Economic Forum in Davos, Soros said the planned U.S. fiscal stimulus and proposals for creating a "bad bank" to pool banks' bad loans and assets may help ease the economic crisis stateside. But he said these were "only palliatives." "They need a thorough reorganization of the mortgage system and you have replenish the equity of the banks," Soros told Reuters. "That now would require an injection of about a trillion and half dollars -- much more than if they had done it previously under the TARP (the $700 billion Troubled Asset Relief Program agreed by Congress last year)."
Currencies and the Bad Bank Plan . . . . . . Bad Bank Plan - There is no question that equities are still leading currencies for the time being and over the next few weeks, the Obama Administration could announce a plan to create an “aggregator bank” that would soak up the bad debt sitting on bank balance sheets. This would free up capital for the banks which would hopefully encourage lending and restore investor confidence. If Obama announces a bad bank plan, it could squeeze shorts in financial stocks and take the entire index higher. Since currencies are still moving in lockstep with equities, a rebound in stocks could help reduce risk aversion and take some of the steam out of dollar rally.
Focus on question of Fed Treasury buys, FOMC comment Wed
Record $40 billion 2-year note auction looms
U.S. Treasury debt prices rebounded on Tuesday, after a week of steep losses made bond investors consider at what point the Federal Reserve might step in to support the market by buying longer-dated Treasuries. Treasury bonds have been losing ground due to the prospect of a huge wave of U.S. government debt issuance, which has increasingly started to weigh on bond prices and push yields higher. However, with the Federal Reserve starting a two-day policy meeting on Tuesday, the market began to anticipate whether the central bank might use the opportunity to shed some light on whether or when it might start buying longer dated Treasuries. Chairman Ben Bernanke signaled in December that the central bank is considering doing so.
Central banks were not the big buyers of synthetic triple AAA … Ricardo Caballero argues that the current crisis stems from (flawed) efforts to construct safe assets out of risky assets in order to meet a surge in investor demand for safe assets. He is on to something. There was a surge in demand for safe assets that pushed yields on Treasuries (and Bunds, OATS and Gilts) down at the peak of the boom. And investment banks – with help from the rating agencies — did respond by constructing new kinds of products that combined higher yields than Treasuries (or Agencies) and the appearance of safety. Caballero thinks the banks constructed these securities to meet demand from central banks and sovereign funds.
Will the FOMC Raise Rates? Will they or won't they? That's the question du jour, at least with respect to today's FOMC announcement. There's obviously nothing they can do on rates, so the big issue is whether the Fed takes the leap and announces a program to buy longer-dated Treasuries. Such an outcome would hardly be unprecedented; the BOJ, for example, has purchased JGBs in the secondary market for more than a decade via its rinban program. For the Fed, it would seem to be more a matter of "when", rather than "if", they pursue such a policy; after all, buying government duration is part of the "Bernanke QE playbook" that he's been following to a tee so far.
Fed signals low rates will continue Conceding that the economy is still spiraling downward on most fronts, the Federal Reserve signaled on Wednesday that it would expand its use of unconventional measures to directly prop up lending for mortgages, consumer loans and businesses. "The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," the Fed said Wednesday in its statement. The Fed has already been buying mortgage-backed securities and said in its statement that it would expand its intervention as needed. The committee also served notice that it would purchase longer-term Treasury bonds, a move that would drive down long-term interest rates of all types.
Dollar Gains as Fed Runs Out of Room to Cut Rates The Federal Reserve has officially run out of room to cut interest rates. For the first time since August 2007, they left interest rates unchanged at a target range of 0 to 0.25 percent. The dollar rallied because the Fed did the minimum of what was needed to pacify the market, which was to say that they could purchase Treasuries but are not going to do so right now.
Fed to Try Additional Unusual Methods It Could Buy Up Long-Term Bonds The Federal Reserve yesterday indicated that it will pursue further unconventional steps to try to stimulate the economy, as it left the interest rate it controls essentially at zero. With its main tool for managing the economy spent, the Fed has been finding new ones -- and shows every indication of continuing the practice as it tries to grapple with a rapidly deteriorating economy. The Federal Open Market Committee said it stands ready to buy up more mortgage-backed securities, could start buying long-term government bonds, and may take further steps to make loans more widely available. Those measures would push down the interest rates on loans that consumers take out to buy homes or cars or that businesses take out to buy new equipment.
Morgan Joseph: Fixing Financials: Nationalizing banks is not a good idea
Banks boosted as Geithner talks of a clean-up Beaten-down US bank stocks surged on Wednesday as new Treasury secretary, Tim Geithner, played down talk of nationalisation, fuelling hopes for a comprehensive clean-up of toxic assets on terms palatable to investors. Mr Geithner told reporters: "We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system." The Treasury secretary said the Obama administration was "looking at a range of options" for dealing with toxic assets clogging up bank balance sheets. He said: "We hope to be in a position relatively soon to lay out what we believe is a viable programme."
Geithner: hope to unveil recovery plan soon Treasury Secretary Timothy Geithner said on Wednesday the Obama administration was working on a plan to repair the battered financial system and boost recovery that should be ready fairly soon. "We are looking at a range of options," Geithner said as he started a meeting with department officials charged with oversight of the Troubled Asset Relief Program (TARP), adding: "We hope to make decisions and be in a position relatively soon" to make them public.
Billions more needed for financial rescue Next financial rescue, including asset purchases, could cost hundreds of billions more The Obama administration is developing proposals to help rescue the banking system that could cost taxpayers hundreds of billions of dollars beyond the $700 billion bailout Congress already has approved. Details are still being worked out. But the administration is looking to spend hundreds of billions more to address the foreclosure crisis, help banks get out from under weighty bad assets and expand liquidity programs. Looming above these is a proposal to set up a federal bank -- dubbed a "bad bank" -- that would buy troubled assets clogging financial institutions' balance sheets. This would free the institutions to lend money and would entice wary investors back into the market, proponents say.
Bob Dole: 'Somebody Has to Pay Someday' for Bailouts Bob Dole told CNSNews.com that 'somebody has to pay some day' for the massive spending President-elect Obama has planned and the enormous deficit and debt he has inherited. He also said the U.S. cannot spend its way out of a recession.
Schiff Still Has One Thing Right Our colleague Mish Shedlock did quite a hatchet job on hyperinflationist Peter Schiff the other day - much of it deserved, if the evidence that Mish presented is to be believed. The two have never seen eye to eye, since Mish, like us, is an unreconstructed deflationist. But his indictments against Schiff have less to do with the Inflation vs. Hyperinflation argument than with allegations that Schiff's actual performance as an investment advisor has not been so stellar as one might have inferred from his high-profile exposure as a doomsdayer. Mish says that while Schiff has been essentially correct about doomsday, his actual investment portfolio got the details completely wrong, especially in its short-dollar orientation. (The same could probably be said of another world-class self-promoter, Jimmy Rogers.)
Dow considers first dividend cut since 1912 Dow Chemical on Tuesday said it was considering breaking one of the longest streaks in US corporate history of consistent dividends by making its first cut to pay-outs to investors since 1912. In a reversal of its pledge not to cut its $1.6bn-a-year dividend, Dow said it was prepared to consider reducing the pay-out to help pay for the $15bn takeover of US rival Rohm & Haas. The news came as it emerged that Saudi Aramco, the kingdom's national oil group, was one of the companies talking to Dow about a joint venture for its plastics business. The venture has been in disarray since last year when Kuwait's state-controlled oil company pulled out at the last minute, leaving Dow without a key funding source for the Rohm & Haas deal. Dow declined to comment on the plastics joint venture and Saudi Aramco could not be reached.
Real estate agents say home-price tide has turned, sellers are capitulating How low can they go? More than a year after housing prices began to consistently fall in the Chicago area, it's still the unanswered question on the minds of home buyers, sellers, real estate agents and economists, as one report after another confirm a residential real estate market in dire shape. There's no magic answer, but the general consensus is that the declines aren't over yet. On Tuesday, a key index showed that Chicago-area home values in November posted the biggest one-month decline on record. The latest drop in the S&P/Case-Shiller Home Price index has all but wiped out the local market's gains and returned prices to May 2004 levels.
S&P Case/Shiller Index Drops 18.2% in November Interview with Index Co-Creator Karl Case, Also Economics Professor at Wellesley College
Toll on 401(k) Savings Adds Years More of Toil Millions of Americans lost more than a quarter of their 401(k) retirement savings in 2008 because of the stock market's collapse, a setback that could force them to work longer or severely curtail their spending as they grow older. In an analysis of their participants' accounts, Fidelity Investments, Vanguard and T. Rowe Price -- three of the nation's largest 401(k) plan providers -- also found that some employees were further eroding their savings by taking hardship withdrawals to pay for current financial needs. Many Americans have seen their wealth evaporate with the drop in home values, the rise in the cost of living and the stagnation of wages. Now, as they tap into nest eggs to pay bills, they face leaner retirements as well. Particularly vulnerable are baby boomers who expected to retire in the next few years.
SOUTH FLORIDA Experts share grim outlook on economy Rising unemployment will make 2009 a painful year for tens of thousands of South Florida families. And the pain could continue into 2010 or even 2011. As bad as 2008 was for the region's economy, our troubles won't be ending anytime soon. The earliest economists foresee a recovery is the middle of this year, and most think that's optimistic. The end of 2009 or the first half of 2010 is more likely. But the start of a recovery won't mean an instant shift from cloudy skies to sunshine. Economists worry that this recession could resemble an ''L'' more than a ''U.'' In other words, when the economy stops declining, it could start moving sideways rather than sharply upward.
Government to examine ways to unblock car finance The government and car makers said on Wednesday they were urgently trying to find ways to work around a rule that stops car financing companies getting direct access to credit from the Bank of England. The move came as the two sides discussed the government's 2.3 billion pound package of loan guarantees, designed to rekindle demand as the financial crisis hammers sales in one of Britain's key manufacturing sectors. Also on Wednesday, Toyota joined the growing list of auto firms seeking ways to cut costs at its British plants, and the Italian government sat down with manufacturers to discuss possible rescue measures.
New York City fears return to 1970s While many U.S. cities worry that their economies are deteriorating to the level of the 1930s Great Depression, New York City fears reliving a more recent decade that features strongly in city lore. The 1970s were a low point in city history as a fiscal crisis almost pushed it into bankruptcy, crime rates soared, and homeless people crowded sidewalks as public services crumbled. Almost a million people fled New York's Mean Streets during the decade for the safer, more stable suburbs, a population decline that took more than 20 years to reverse. When discussing the current crisis, Mayor Michael Bloomberg, now seeking a third term, promises that he will not allow the city to return to the darkness of those days, although he stresses that it faces "giant financial problems."
Senate GOP Leader Warns of ‘Looming Entitlement Crisis’ – $495K Per Household Americans face a ‘looming entitlement crisis’ in which every American household already shares nearly $500,000 in debt, Senate Minority Leader Mitch McConnell (R-Ky.) said Friday at the National Press Club. McConnell, who became the most powerful Republican in Washington with the departure of former President Bush on Tuesday, called on Democrats to use their expanded powers to address the entitlements problem. “The expansion of entitlement spending is a looming crisis that has been overlooked for too long,” said McConnell. “With control of the White House and big majorities in Congress, Democrats now owe it to the American people to put their power to work on this vital issue.”
Market Outlook: Seeing Continued Deflation as We Face a "Government Bubble"
SCHIP Expansion Amounts to ‘Socialized Medicine’ Senate Republicans Say Senate Republicans say expansion of the State Children’s Health Insurance Program (SCHIP) amounts to an attempt by congressional Democrats to socialize the nation’s health-care system. “One could certainly conclude that,” Sen. Jon Kyl (R-Ariz.), said in response to questions from CNSNews.com. “This is yet one more way to get people off of private coverage and onto government coverage so that little by little you eventually end up with a majority of people on government coverage.” SCHIP, or the State Children’s Health Insurance Program, is a joint federal-state program designed to provide healthcare coverage to children whose parents cannot afford private coverage.
Paul McCulley: Housing, Fed, and Bonds
Fed moves to help distressed homeowners Federal Reserve moves ahead on plan to provide foreclosure relief With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes. Under the program, the Fed has a number of options to provide relief, including lowering the amount the homeowner owes on the mortgage, reducing the interest rate or lengthening the term of the loan. It's unclear how many homeowners would benefit. However, the relief plan would apply to the billions of dollars of mortgage assets the Fed is holding on its books because of last year's bailouts of Bear Stearns and insurer American International Group. In general, a borrower must be at least 60 days delinquent to qualify for help, although the Fed has leeway to make some exceptions. A 2008 law that set up the $700 billion bailout fund instructed the Fed to take such foreclosure relief action.
IBM layoffs now 4,200 -- may go higher IBM won't disclose plan, but union fears as many as 16,000 may lose their jobs IBM's not-so-secret layoffs may have reached 4,200 today, according to Alliance@IBM, which believes that thousands of other employees will be losing their jobs as well before the cuts end. IBM isn't discussing its job actions and that has made the union the primary source of information about the layoffs. The union's Web site has been so busy with traffic that its server was knocked offline this afternoon from the load, according to Lee Conrad, a former IBM employee who is now the national coordinator of Alliance@IBM.
Banks, credit unions scramble in wake of Heartland breach Several have begun reporting fraud associated with exposed cards In the first real indication of the scope of the recently disclosed data breach at Heartland Payment Systems Inc., banks and credit unions from Washington to Maine have begun to reissue thousands of credit and debit cards over the past few days. Several have also begun disclosing fraud associated with payment cards that were reported to them by Visa and MasterCard as having been exposed in the breach. A Pennsylvania law firm today filed the first class-action lawsuit related to the breach. Chimicles & Tikellis LLP in Haverford, Pa., filed the lawsuit on behalf of Alicia Cooper, a resident of Woodbury, Minn., and others who might have been affected by the breach.
Corporate Aviation: Don't Come fly with the CEOs
Boeing Plans to Cut 10,000 Jobs as Demand Slows Boeing Co. said it plans to cut 10,000 jobs, or about 6 percent of its workforce, after a strike, program delays and a global recession contributed to a fourth- quarter loss. The job reductions, disclosed on a conference call today, include 4,500 that were previously announced in the commercial- plane half of Boeing's business. Earlier the Chicago-based company reported a net loss of $56 million, or 8 cents a share, compared with profit of $1.03 billion, or $1.36, a year earlier. Boeing faces a potential increase in canceled or deferred orders this year as airlines cope with a drop in travel demand and tight credit. It also must carry development costs on the delayed 787 Dreamliner, which is now due to reach the first customer in early 2010, about two years later than planned.
Obama says tough decisions soon on Iraq, Afghan wars The United States must make tough decisions soon about the wars in Iraq and Afghanistan, President Barack Obama said on Wednesday after receiving his first briefing from the heads of the U.S. armed forces. Obama, who is weighing accelerating the withdrawal of troops from Iraq and boosting U.S. forces in Afghanistan, was speaking after a nearly two-hour meeting with Defense Secretary Robert Gates and the Joint Chiefs of Staff at the Pentagon. "We are going to have some difficult decisions that we are going to have to make, surrounding Iraq and Afghanistan most immediately," the president said.
Israeli warplane bombs Gaza tunnels as US envoy George Mitchell warns over ceasefire Israel has resumed its bombing of part of the Gaza Strip known to contain smuggling tunnels to Egypt. The strikes, which threaten to derail the fragile ceasefire, come after Israel said a rocket was fired from Gaza towards the town of Ofakim, falling in an unpopulated area. The rocket attack was claimed by the Al-Aqsa Martyrs Brigades, an offshoot of moderate Palestinian president Mahmud Abbas's Fatah faction. An Israeli army spokesman confirmed a warplane had bombed the tunnels.
Hamas undermines the ceasefire:
Egypt attacks Iran and allies in Arab world CAIRO (Reuters) - Egypt aired its grievances against Iran, the Palestinian Islamist movement Hamas and the Lebanese Shi'ite group Hezbollah, saying they worked together in the fighting over Gaza to provoke conflict in the Middle East. "(They tried) to turn the region to confrontation in the interest of Iran, which is trying to use its cards to escape Western pressure ... on the nuclear file," Foreign Minister Ahmed Aboul Gheit said in an interview with Orbit satellite channel broadcast Wednesday. Aboul Gheit also said that Egypt undermined Qatar's attempts to arrange a formal Arab summit on Gaza earlier this month, arguing that it would have damaged "joint Arab action." "Egypt made the summit fail... This summit, if it had taken place as an Arab summit with a proper quorum, would have damaged joint Arab action. We can see what others do not see," he said.
U.S. envoy tries to shore up Gaza ceasefire JERUSALEM (Reuters) - President Barack Obama's Middle East envoy called on Wednesday for a Gaza ceasefire to be strengthened and extended, and promised after talks in Israel and Egypt that Washington would pursue Middle East peace vigorously. A surge of violence has threatened the fragile separate truces that Israel and the Gaza Strip's Hamas rulers put into effect on January 18 after a 22-day Israeli offensive. Israeli aircraft bombed smuggling tunnels under the Gaza-Egypt border in a response to the killing on Tuesday of an Israeli soldier on patrol along Israel's frontier with the coastal enclave.
Iran: American apology in order Perhaps this is what happens when the United States attempts to open a dialog with Iran: Mahmoud Ahmadinejad demands an apology. The vituperative Iranian president, delivering his first public address since President Barack Obama's inauguration last week and Obama's own overture to the Muslim world this week, suggested today that the "change'' which Obama promised in his campaign means that the new American leader must apologize for U.S. "crimes" against Iran, including American support for the 1953 coup in Tehran and the backing of Iraq during the war between Iraq and Iran. "We welcome change, if it's fundamental and in the right direction," Ahmadinejad said today in a televised speech. "Real change is change in the tone of talks with people, to enter from the door of respect, and not to pursue expansion and imperialism."
Obama Tells Muslim World that America is a Nation of ‘Muslims, Jews, Christians’ -- and Infidels? In his interview with al-Arabiya on Tuesday, President Obama said he intended to send a message that America is willing to forge a new partnership with the Arab world. “(W)hat I want to communicate is the fact that in all my travels throughout the Muslim world, what I've come to understand is that regardless of your faith -- and America is a country of Muslims, Jews, Christians, non-believers -- regardless of your faith, people all have certain common hopes and common dreams,” Obama told Hisham Melhem, the Washington Bureau Chief for al-Arabiya. But mentioning “non-believers” to a Muslim audience was dicey, according to some experts on Arabic and Arab culture, given the fact that to some Muslims and nations, “non-believer” is synonymous with “infidel.”
Obama Al-Arabiya Full Interview
Davos . . . .
Davos '09 and the Failure of Leadership The crisis the world is suffering through now is a failure of leadership. The leaders of the world are in Davos. If the world is watching what happens here this week, it will be to hear solutions and see responsibility and accountability. I'd say that's not off to a great start, at least on the latter. This morning, I started my Davos week with talk of trust. The Edelman Trust Barometer presentation revealed plummeting trust in financial, government, and journalistic institutions: 62% of adults in 20 countries trust companies less than they did a year ago. Trust in government is even lower. Nonetheless, the first trend I spot here: the rise of government. News reports have been saying that this will be a dialed-down Davos, but I don't see that; it's the same Davos with the same pastries and parties. The change I do sense is less of a presence and apparent swagger from business and more from government. "Power has shifted from Wall Street to Pennsylvania Avenue," said a speaker at the Edelman event.
FT's Barber Says Obama Advisers `Right' to Miss Davos
Economists Sound Off at Davos Reporting from the World Economic Forum in Davos, CNBC interviewed a number of prominent economists and business leaders about the global financial crisis and what can be done. Robert J. Shiller, a professor of economics and finance at Yale, said there might be a much-needed silver lining to the dark clouds hanging over Switzerland. "I am hopeful that we will respond to this crisis," he said. "This is creative destruction, and something creative will come out of it." Mr. Shiller added that first and foremost, the stimulus package currently being debated in Congress needs to restore confidence in the economy. On the other hand, Nouriel Roubini, an economist at N.Y.U., stayed true to his nickname of Dr. Doom. "For now the only light at the end of the tunnel is the incoming train wreck," he said, predicting that the crisis would worsen in coming months.
Confidence evaporates, currency row brews at Davos Delegates in Davos were united in the view that an economic upturn is some way off. Lars Thunnel, head of the International Finance Corporation, the private arm of the World Bank, said he expected economic malaise sparked by the credit crisis to linger. Stephen Roach, Morgan Stanley's Asia chairman, agreed the next three years would be tough. "The concept of a vigorous 'V'-shaped recovery is for business cycles of the past but not for this post-bubble, post-crisis business cycle. It is going to be a long slog in 2010, in 2011," he told Reuters. That grim scenario has left sovereign fund Dubai International Capital wary of making big long-term investments even though it sees asset prices at reasonable levels.
SOROS AT DAVOS 2009
Gloom Deepens Among Executives, Economists at Davos Gloom is deepening among business leaders and economists, casting a pall over this year’s World Economic Forum in Davos, Switzerland. “The crisis is getting worse,” Rupert Murdoch, chief executive officer of News Corp., said at a press conference to kick off the five-day event today. “It’s going to take very drastic action to turn that around, if it can be turned around, quickly. I believe it will take quite a long time.” Concerns over the economic outlook are virulent as executives from JPMorgan Chase & Co.’s Jamie Dimon to Stephen Green of HSBC Holdings Plc join more than 2,500 counterparts, academics and policy makers in the ski resort for five days of soul-searching and deal-making.
AIG's Frenkel Says 2009 `Will Be A Bad Year' Worldwide
Russia and China blame capitalists for crisis DAVOS, Switzerland: The leaders of the former bastions of the Communist bloc took the stage here on Wednesday to rebuke their capitalist brothers for dragging the world into crisis but also to assure them that, working together, they can rapidly restore the global economy to health. In the official opening address of the World Economic Forum, Prime Minister Vladimir Putin of Russia spoke of a financial "perfect storm" that has decimated the old system, rendering it obsolete. "A year ago, American delegates speaking from this rostrum emphasized the U.S. economy's fundamental stability and its cloudless prospects," he said, speaking through a translator. "Today, investment banks, the pride of Wall Street, have virtually ceased to exist."
Wen and Putin lecture western leaders The leaders of China and Russia on Wednesday turned the tables on their western counterparts who have dictated the world's economic agenda, lecturing them for policy failures they said had led to the global financial crisis. Wen Jiabao, the Chinese premier, and Vladimir Putin, Russia's prime minister, used the World Economic Forum in Davos to argue that the two rising powers must play a bigger role in a new economic order. Mr Putin mocked American delegates who had talked at last year's Davos gathering about the US economy's "fundamental stability and its cloudless prospects", saying that "investment banks, the pride of Wall Street, have virtually ceased to exist".
Putin's View: 'We're All in the Same Boat' Making his first appearance as Russian leader before the annual gathering of business and political leaders in Davos, Switzerland, Prime Minister Vladimir V. Putin struck a conciliatory tone toward the West. He explicitly wished the new administration of President Obama well, and urged cooperation on energy security, the economy and even disarmament. Mr. Putin used a 30-minute speech before a packed auditorium on Wednesday to paint Russia as a reliable partner in energy, trade and politics amid the widening global economic crisis. "We can't afford being isolationist or economically selfish," Mr. Putin said. Describing the world financial crisis as a "perfect storm," he added: "We are all in the same boat."
Putin Says Global Economy Needs `Common Standards'
Putin Turns Down Michael Dell's Aid Offer at Davos Perhaps Vladimir V. Putin is more of a Mac man. After a speech Wednesday at the World Economic Forum in Davos, Mr. Putin, Russia's prime minister, took some questions from Davos attendees. Michael Dell, the founder and chief executive of Dell, posed the first query. He asked how technology companies could help Russia make the best use of its talent and technology. Mr. Putin appeared less than impressed with the question. "You see, the trick is that we don't need any help," Mr. Putin said, according to a video of the event on YouTube. "We are not invalids. We do not have limited capacity." Reports from the event suggest that the audience was taken aback by Mr. Putin's aggressive remarks. The version of the event on YouTube, however, seems to put things in a less caustic light. (The reports also have Mr. Putin saying Russia does not have "limited mental capacity" rather than just "limited capacity" in an infrastructure sense, as the translation seems to imply.)
Trichet says system fragile as confidence melts DAVOS, Switzerland (Reuters) - Confidence among the world's top bosses meeting in Davos has evaporated and European Central Bank chief Jean-Claude Trichet said on Wednesday a too fragile financial system needed reform. But a brewing currency row between the United States and China cast doubt on the political will to act in concert. Chinese Premier Wen Jiabao and Russian Prime Minister Vladimir Putin will both address business and political leaders in the Alpine ski resort later on Wednesday, to offer their remedies for the worst economic crisis in 80 years. Business chiefs and policymakers here for the four-day World Economic Forum said there was no easy solution to the credit crisis that has torpedoed global growth and major government programmes are needed.
Trichet Says Next Important Rate Meeting Is in March
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