Monday, March 17, 2008


It is clear that the downright dastardly Clinton campaign was behind NAFTAgate as a way of derailing Obama's campaign leading up to the Texas and Ohio primaries:

Per the Toronto Globe and Mail, in a story that was the lead on the paper’s front page today, that call to the Canadian embassy was actually from the Clinton campaign, not Obama’s:

“Mr. [Ian] Brodie, [PM Harper’s chief of staff], during the media lockup for the Feb. 26 budget, stopped to chat with several journalists, and was surrounded by a group from CTV. The conversation turned to the pledges to renegotiate the North American free-trade agreement made by the two Democratic contenders, Mr. Obama and New York Senator Hillary Clinton.

“Mr. Brodie, apparently seeking to play down the potential impact on Canada, told the reporters the threat was not serious, and that someone from Ms. Clinton's campaign had even contacted Canadian diplomats to tell them not to worry because the NAFTA threats were mostly political posturing. The Canadian Press cited an unnamed source last night as saying that several people overheard the remark.

How Bad is the Mortgage Crisis Going to Get?

Paul Krugman is another leading economist who thinks things are going to get worse:

What started in subprime is likely to continue cascading into the markets and keep the economy down until 2010, economist Paul Krugman forecasts. Bottom line for homeowners: An average drop of 25%.

If the government could bail out Bear Stearns why can't they bail out the American people:
Fortune: By year-end, 15 million Americans could have mortgages worth more than the value of their homes. What happens then?

Krugman: Actually, I think home prices will fall enough for us to produce about 20 million people with negative equity. That's almost a quarter of U.S. homes. If home prices are rising, or if there's positive equity, you can refinance or sell. But if you have negative equity, you can end up being foreclosed on, and then some people will just find it to their advantage to walk away. We're probably heading for $6 trillion or $7 trillion in capital losses in housing. Some fraction of that will fall on owners of mortgages. I still think the estimates people are putting out there - $400 billion or $500 billion in losses - are too low. I think there'll be $1 trillion of losses on mortgage-backed securities showing up somewhere.

What if it isn't enough:
Not since the 1930s. They didn't have the Fed funds target rate back then, but effectively we had a zero-interest-rate policy for a good part of the '30s. If the Fed responds this time with as much cutting as it did in the last two recessions, we get to zero. And then the problem is, What if that isn't enough? And there's a pretty good chance it won't be.

But what about the government stimulus plan:
I wasn't happy with it. Most of the money is given to people who are not much inclined to spend it, people who are not in financial difficulty. And therefore they will just put it in the bank or pay down credit card debt. I've been trying to make the case that since this thing is going to go on for a long time, effectiveness is more crucial than speed. I'm actually for public investment now - repairing bridges, building infrastructure. Normally people say if you try to do any public investment to stimulate the economy, the recession will be over before it can come online. But I don't think that's a problem this time.

- Read the entire article...

Greenspan: Economy Worst Since WWII

It is clear at this point that we are in a full fledged crisis. Unfortunately we are still acting as if this were just a typical temporary downturn in the economy, as the President is arguing. There are some prominent persons whom are responsible enough to tell the truth. Will it be enough? Are we in denial? Has anyone heard from the Presidential candidates lately on the crisis?:

Today's economic condition could likely be seen as "the most wrenching since the end of the second world war," wrote former Federal Reserve chairman Alan Greenspan in the Financial Times on Monday.

The U.S. financial crisis won't end until housing prices stabilize, but that won't happen for months, wrote Greenspan.

The models used by the finance industry to determine risk and measure economic strength are too simple to fully account for human responses, he said. "We cannot hope to anticipate the specifics of future crises with any degree of confidence," he wrote.

Many Voting for Clinton to Boost GOP

Just another reason not to vote for Hillary Clinton:

For a party that loves to hate the Clintons, Republican voters have cast an awful lot of ballots lately for Senator Hillary Clinton: About 100,000 GOP loyalists voted for her in Ohio, 119,000 in Texas, and about 38,000 in Mississippi, exit polls show.

[...]Spurred by conservative talk radio, GOP voters who say they would never back Clinton in a general election are voting for her now for strategic reasons: Some want to prolong her bitter nomination battle with Barack Obama, others believe she would be easier to beat than Obama in the fall, or they simply want to register objections to Obama.