This is disturbing. Obama meets with various CEOs on how to get out of the financial mess.
Obama is seeking support for his plan to stabilize the U.S. financial system and move beyond the furor over bailouts and bonuses. He met with CEOs including Jamie Dimon of JPMorgan Chase & Co., John Mack of Morgan Stanley, Vikram Pandit of Citigroup Inc. and Lloyd Blankfein of Goldman Sachs Group Inc.
The meeting began with a discussion about the need to deal with toxic assets and increase bank lending, then moved onto Obama’s plan to resolve the housing crisis, and his proposals for revamping regulations and executive compensation, White House Press Secretary Robert Gibbs said.
Former IMF chief Simon Johnson's Atlantic Monthly article, The Quiet Coup is not exactly subtle about what is happening to the United States:
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
Now, a lot of the outsourcing that was referred to in the question really has to do with the fact that our economy -- if it's dependent on low-wage, low-skill labor, it's very hard to hang on to those jobs because there's always a country out there that pays lower wages than the U.S. And so we've got to go after the high-skill, high-wage jobs of the future. That's why it's so important to train our folks more effectively and that's why it's so important for us to find new industries -- building solar panels or wind turbines or the new biofuel -- that involve these higher-value, higher-skill, higher-paying jobs.
U.S. Treasury Secretary Timothy Geithner said regulation of the U.S. financial system needs a broad overhaul to heal a crippling lack of confidence caused by the credit crisis.
...
Geithner’s proposals would bring large hedge funds, private-equity firms and derivatives markets under federal supervision for the first time. A new systemic risk regulator would have powers to force companies to boost their capital or curtail borrowing, and officials would get the authority to seize them if they run into trouble.
On another blog I responded to a challenge to describe an alternative to the approach Obama has chosen with Larry Summers and William Geithner. What I said there (with a little modification and expansion) is worth repeating here:
1. (After firing Summers and Geithner,) I would appoint Kansas City Fed Chief Tom Hoenig, who said that the "too big to fail" doctrine was a failure, as Chief Economic Advisor; and UMB President William Koenig, whose bank was well managed, avoided toxic debt instruments, and turned down Tarp money, as Secretary of the Treasury.
2. I would charge them to implement an FDIC/RTC style receivership plan immediately, to rid the banking system of toxic assets.
The United States wouldn't even be eligible to enter the European Union if it wanted to because of its debt levels, Sen. Judd Gregg (R-N.H.) claimed Thursday.
"We won't even be able to get into the EU if we wanted to," Gregg said this morning on MSNBC, "because our government is so large and so huge."
The European Union's Stability and Growth Pact (SGP) adopted in 1997 requires a budget deficit to be less than three percent, and requires a national debt beneath 60 percent of Gross Domestic Product (GDP).
"We've been lectured by France on the fact that we're not fiscally responsible right now," Gregg, the would-be commerce secretary, noted with incredulity.
New claims for unemployment benefits last week rose to a seasonally adjusted 652,000 from the previous week's revised figure of 644,000, the Labor Department said Thursday. The total number of people claiming benefits jumped to 5.56 million, worse than economists' projections of 5.48 million, a ninth straight record and the highest total on records dating back to 1967.
and.....they had to revise last months 6.2% drop in GDP to 6.3%:
The dismal job news is one indicator of the overall economic pain Americans have endured early in the new year. The Commerce Department said Thursday that the economy shrank at a 6.3 percent annual pace at the end of 2008, the worst showing in a quarter-century, and a bit faster than the 6.2 percent drop estimated a month ago
This is one hell of a story. The New York Post is reporting:
As Treasury Secretary Tim Geithner orchestrated a plan to help the nation's largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post.
Both Citi and BofA each have received $45 billion in federal rescue cash meant to help prop up the economy and jumpstart the housing market.
But the banks' purchase of so-called AAA-rated mortgage-backed securities, including some that use alt-A and option ARM as collateral, is raising eyebrows among even the most seasoned traders. Alt-A and option ARM loans have widely been seen as the next mortgage type to see increases in defaults.
Tell us something we don't know. Bloomberg is reporting the first up for any Stimulus contracts are those with Lobbyists:
At first glance, SmartSpark Energy Systems looks like a lot of technology startups. It raised $6 million in venture capital, employs 24 people and doesn’t make any money.
What sets the company apart: It has two teams of lobbyists.
The first jobs of the federal clean-energy stimulus plan are here -- and they’re for lobbyists. SmartSpark is part of a stampede of technology companies hiring insiders in Washington and state capitals to gain influence. They’re vying for a piece of last month’s $787 billion stimulus package.
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