Credit Crisis Over? — Not by a Long Shot

As you can imagine I get emails and comments from hundreds of people seeking help and whose houses are going into sale or foreclosure, most of whom are completely unaware that they have rights superior to the lender, if they can find someone to help them like www.repairyourloan.com. 

Lawyers won’t help you until you get the mortgage audit completed. It is then that you will know the extent of your claims and what you do to stop the foreclosure, the eviction or even extinguish the mortgage and release yourself from liability on the mortgage note. 

Here is an article which illustrates why you need to beware of both the government and the lenders. They are trying to give the impression that the credit crisis is (a) not as bad as people thought and (b) over. What they are really trying to do is pivot your attention away from the fact that the massive mortgage meltdown has caused a meltdown in all the credit markets. It has caused a massive meltdown in asset values for individuals, corporations and government entities. 

This is not the beginning of the end. It is, as Winston Churchill said in World War II “the end of the beginning.” We have years to go before this shakes out just in terms of education of the public. And we have decades to go to recover from this utter failure of government to do its job — to referee between those who know things and those who don’t. 

In the process the government, the corporations and the individuals owning houses or doing their jobs have all been smacked in the face, really hard and have snapped out of their wishful confidence in their government and in the “good faith” of a good faith estimate before closing on a loan.

Credit Crisis

Congress And The Credit Crisis

Joshua Zumbrun 05.14.08, 6:00 AM ET

Washington, D.C. - 

A congressional panel meets Tuesday morning looking to answer two big questions about the economy: Is the credit crisis over? And can anything be done to prevent another crisis in the future? 

To both questions, the answer is “No. And proceed with great caution.”

For the credit crisis, reasons for optimism are emerging. Monday morning, Federal Reserve Chairman Ben Bernanke outlined positive signs: confidence between banks has risen, the market for repurchase agreements of Treasury securities has improved, secondary markets even for troubled mortgage-backed securities have more liquidity than they did in May.

“These are welcome signs, of course, but at this stage conditions in financial markets are still far from normal,” Bernanke cautioned. (See “Recovery: Are We There Yet?”)

Still, the battered housing market continues to drag. Data released Monday from the National Association of Realtors showed that home prices are still falling. In the first quarter of this year, the median home price dropped 7.7% from a year ago–the biggest decline in the 29 years NAR has compiled the prices.

The number of borrowers who owe more than their house is worth is still growing. Loan defaults and foreclosures are likely to continue, as will losses to the lenders. Foreclosures tend to drag down the prices of their entire neighborhoods. But even here, Lawrence Yun, chief economist of the National Association of Realtors, sees some signs of optimism: “Neighborhoods with little subprime exposure are holding on very well.” And at least banks are not originating new subprime loans.

Now for the second question: How to prevent risk in the future. That’s what makes Tuesday morning’s hearing significant. The early advice Congress receives could shape regulation of banks and the financial market for years or even decades. And, as Treasury Secretary Henry Paulson noted in proposing a series of regulatory reforms in March, “few, if any, will defend our current balkanized system as optimal.”

The March collapse of Bear Stearns exposed a weakness in the Gramm-Leach-Bliley Act, a 1999 law that removed the barriers between commercial banks, investment banks and insurance companies. The amount of systemic risk was not recognized until too late.

After Gramm-Leach-Bliley, banks and insurance companies were allowed to undertake the same activities, but they still answered to their old regulators. Five federal regulators oversee deposits, in addition to regulation from state governments. Futures and securities are regulated by separate agencies. Insurance regulation is spread across more than 50 regulators.

The result was a confused alphabet soup–SEC, CFTC, OCC, NCUA, FDIC–with muddled boundaries or, as SEC Chairman Christopher Cox described the result, “a statutory no-man’s land.”

But regulation presents pitfalls as well. It must be considered not in terms of more or less regulation but rather in terms of flexibility and efficiency. 

“In the wake of a bust, there is always a predictable series of political activities,” says Alex Pollock, former president of the Federal Home Loan Bank of Chicago, who will testify before the committee. “First, the search for the guilty; second, the fall of previously esteemed heroes; and third, legislation and increased regulation to ensure that ‘this will never happen again.’ But, with time, it always does happen again.”

The guilty have been identified as the twin bogeymen of the subprime underworld: “speculators” and “unscrupulous lenders,” enabled by banks unable to price risk and an irrational belief that home prices would always rise. The esteemed heroes have fallen: the collapse of Bear Stearns, disappointing results from Wall Street’s banks. Even Alan Greenspan has lost some of his luster.

The third act at the boom and bust theater is well under way. This week the Senate is ironing out its companion legislation to the House’s Foreclosure Prevention Act, which passed last week with a 266-154 margin. The president has indicated he would veto the bill’s current incarnation but could support a toned-down version. All that remains is the predictable regulatory overhaul and then a long wait for the inevitable cycle to begin in the future. 

Another casualty of the Mortgage Meltdown induced paranoia that is sweeping the credit and money markets: Banks no longer trust the indexes which they have relied upon for decades. In other words, they don’t trust each other. And they don’t trust the people who report on what is happening out in the financial marketplace. The simple fact is that they do NOT know how much they are paying or how much they are going to pay, or the actual trend lines in inter-bank lending. This basically slips the rug out of the entire credit infrastructure. 

What this means to the average Joe or Jane is that it adds uncertainty to an already chaotic marketplace. Uncertainty produces fear and fear produces increased risk aversion. Bottom Line: Interest rates are going up no matter what the central banks do. Loans will be harder to get. Asset values will decline because of the difficulty in obtaining financing that is usually associated with the purchase of those assets — like housing and mortgages. 

In terms of policy, it means that decision-makers in government and the private sector need to be honest and straightforward in their reporting of data.

Making lemons appear to be lemonade is going to further erode trust and confidence in the financial systems.

THOSE WHO COUNSEL CAUTION IN GIVING THE PUBLIC THE REAL FACTS ARE PROLONGING THE AGONY. HISTORY SHOWS THAT WHEN THE BAD NEWS IS OUT AND THE PUBLIC BELIEVES THAT IT IS ALL OUT, THE PROCESS OF HEALING AND REJUVENATION BEGINS. Until then, we are headed at best for a limping economy, with declining prospects. 

Pointing out sectors that have upticks does nothing to restore confidence in the overall system. Everyone understands that the failure here was systemic, not economic. Failure to address that issue will simply produce declining confidence in the markets until people start believing what they are told. They won’t believe it unless they can confirm it. And we all have access now to information that will confirm or deny the spin or reports that government and private sector leaders publish.

Time to fess up boys!!!!

SAN FRANCISCO (MarketWatch) — A New York-based measure of how much it costs banks to borrow money will try to circumvent problems dogging Libor, the London benchmark that sets rates for everything from adjustable-rate mortgages to interest rate futures.

Successful avoidance of some pitfalls that have undermined bankers’ trust in Libor, however, is unlikely to prevent ICAP Plc’s New York Funding Rate from mimicking at least one of its London counterparts’ key traits. That is, a gap with other interest rates that suggests borrowing conditions for the world’s largest banks are still quite stressed.

“At this point, the U.S. index won’t make much difference, but it may be a good idea six months from now,” said Brendan Brown, head of research at Mitsubishi (UFJ) Securities International, in London.

Bankers point to a raft of other indicators, from currency forward rates to swap spreads, to show that bank borrowing costs are still high even while other measures of credit risk have fallen. That discrepancy has been a source of nagging worry for investors and economists looking for proof that the worse of the credit crisis has truly passed.

In fact, an interest rate that side-steps some of the problems that have recently undermined investors’ trust in Libor may even show banks are paying higher rates than shows up in Libor.

A month ago, Libor made its steepest five-day advance since August after concerns emerged that some banks had been underreporting their rates, out of fear they would be penalized if outsiders knew how much they were paying for funding.

Icap (UK:IAP: news, chart, profile) , a London-based inter-dealer broker that specializes in handling over-the-counter transactions like currencies and interest rates, is trying to discourage banks from fibbing about their borrowing costs by making its survey of 40 global banks anonymous.

Plus, rather than ask banks for the rate at which they can borrow short-term, unsecured loans — as the British Bankers Association does — ICAP will ask banks for their estimates of what the going rate is for the average bank.

There’s some urgency among banks, borrowers and the Federal Reserve to know just how costly it is for banks to tap the money market for their borrowings.

These funds are one of the main ways U.S. and overseas banks get capital for their own lending activities. If their costs are running high, they are likely to lend less, a headache for consumers and businesses that rely on flush conditions at banks to fund new mortgages, new auto loans, student loans, acquisitions and expansions.

And if the new measure does show Libor has been printing lower than the true cost of interbank borrowings, a lot of consumers and businesses with loans tied to Libor could get a nasty shock. It’s been estimated that loans and derivative contracts totaling roughly $150 trillion (more than $20,000 for every person on earth) are indexed or tied to Libor in some way.

In fact, the universe of financial instruments tied to Libor is so huge that some bankers are nervous that any efforts to tweak the way Libor is collected could make a bigger mess.

Libor “is extremely important,” said Terry Belton, head of fixed income strategy at J.P. Morgan Chase. “We would probably create more problems by changing it in a material way than we would solve,” he said.

Libor rises…

ICAP’s efforts to publish a new bank lending rate follows an unusual period where Libor as well as other bank lending rates have frequently topped central bank policy rates, meaning banks are paying more to borrow because of heightened credit and liquidity risk

The difference, or spread, between the three-month U.S.-dollar Libor and the effective federal funds rate rose to more than 80 basis points on Wednesday. Usually, dollar-denominated Libor tracks closely with the fed funds rate. See earlier story on Libor’s rise.

By other measures, costs for banks’ borrowing needs have also been rising. The spread between three-month Libor and overnight index swaps has been climbing since February. What’s known among credit analysts as the BOR-OIS spread gives a view of Libor that strips out expectations that central banks will raise or lower rates.

These spreads “are all signs that there is stress in the market,” said Eoin O’Callaghan, market economist for BNP Paribas in London.

Such signs of stress are worrisome for the Fed, which has $462 billion in special lending programs to financial institutions as it tries to get money flowing in frozen pockets of the credit market.

Notwithstanding efforts by the Fed and other central banks to “meet panic demands for liquidity” by making more funds available to financial institutions, still “many markets are not functioning normally,” noted Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, in a speech Tuesday.

In contrast to rates that reflecting bank costs, indexes that track perceived credit risk and rates paid by corporations have been tumbling. Markit’s index of high-grade, North American credit default swaps has fallen about 27% since late-March. The spread between safe-haven 10-yield Treasury notes and bonds issued by companies with Baa ratings, which indicate riskier but still investment-grade companies, has also narrowed since mid-March.

… But not by enough?

Amid these concerns, other measures of short-term borrowing, such as the over-the-counter market to buy currencies like euros or sterling for future delivery, also suggest Libor just may not be high enough.

The British Bankers Association gets the Libor “fix” by polling global banks including Citigroup’s Citibank (C

) and Lloyds TSB Group (UK:LLOY: news, chart, profile) every day on what they are paying for funds.

The group says it doubts its Libor panel banks are contributing to deliberate distortions of the rate. Still, it has brought forward a review of how the rate gets calculated. See related story. And banks may be paying more for their loans than Libor suggests for purely innocent reasons.

It’s just not that liquid a market, bankers note.

Plus, the massive and surprise losses resulting from the U.S. housing market collapse have created a lot of variation among financial institutions when they try to borrow money. Banks that are light on funding or carry poor credit are likely to pay a far higher rate in the forward currency market, for instance, than the Libor panel would reflect.

“This is a problem that is temporary in nature and reflects the dislocation in the financing market,” J.P. Morgan Chase’s Belton said. He predicts that as central banks inject more money into the financial system “and as things there improve, we’ll move back to a world where all banks in panel have similar financing rates.”

Banks are likely paying more to borrow money, whether that’s reflected in Libor or another indicator, simply because supply has dried up. Banks, mutual funds and corporations that lend in the bank borrowing market are keeping more cash to themselves.

“Confidence in and between banks has been dented significantly after the Bear Stearns Cos. (BSC

) episode. Investors and banks are reluctant to lend cash to banks, effectively wondering who the next casualty will be,” said economists at Societe Generale in a report.

In mid-March, Bear Stearns came close to collapse, causing fears of a run on Wall Street.

“Also, money market funds, which are liquidity providers, continue to fear redemptions and invest at very low maturities,” they noted.

New York fixing

Since the NYFR will be based on a survey, rather than actual transactions, there still will be no way of telling if banks are giving an honest assessment of borrowing costs.

“There’s not really an ultimate check on whether the rates banks are reporting are the right rates,” said Brown of Mitsubishi Securities.

One thing that will change, however, is the time zone.

The British Bankers Association gets the so-called fixing of rates at 11 a.m. London time, or about 6 a.m. New York time. That’s about three hours before banks in the United States can start borrowing money in U.S. dollars, so may not accurately reflect the price of costs facing banks trying to tap these dollar markets.

ICAP’s planned NYFR rate instead will query banks at 9:30 a.m. New York time.

ICAP’s planned rate will also attempt to give a better view of what’s going on in the market for dollar-based bank borrowing than one of its current measures, eurodollar deposits. It gets this data from bid-ask spreads ICAP users provide for these deposits and supplies it to the Fed, which publishes the bid rate daily on its H. 15 statistical release. Go to the Fed’s Web site.

As the financial markets have convulsed, those eurodollar deposit rates have increasingly reflected a wider bid-ask spread, perhaps skewing the published rate.

“Since August, and especially since Bear Stearns, our desk has been setting that range very wide to reflect that trading is a lot messier,” said Lou Crandall, chief economist at Wrightson ICAP, the New York research arm of ICAP.

“It made us look for a more objective way to say where rates are trading,” he said.

NYFR is designed to give a clearer snapshot of bank borrowing costs. But it’s not designed to become the next Libor, which is the benchmark for so many loans and derivatives, Crandall stressed.

“This is designed to supplement Libor, not replace it,” Crandall said. “The series we had been publishing was no longer adequate for that purpose.” 

Laura Mandaro is a reporter for MarketWatch in San Francisco.

Every one of the facts stated here are verifiable from multiple sources and are NOT disputed. The only policy question that is relevant is WHETHER WE PUT PEOPLE OR BIG BUSINESS FIRST in our priorities. The rest is obvious. HERE ARE SOME EXAMPLES:

1. HEALTHCARE: (AT LEAST $1 TRILLION IN DIRECT AND HIDDEN FAT IN THE SYSTEM). The U.S. health care system is a wealth transfer scheme, which takes money from the pockets of ordinary citizens and puts it in the hands of a few people who do nothing to earn it. This is a PRIVATE TAX that only exists because the government has interfered on behalf of big business starting with Keiser Permanente.

          a. We spend, on average anywhere from 5 to 40 times what other countries spend on drugs for two reasons (1) we are prescribed too many drugs and (2) we pay much higher prices from the same companies that sell the same drugs in other countries.

Instead of the money going through the government to the insurers, pharmaceutical companies and medical service providers, the government mandates the money go directly to these cartels.

These companies have applied a substantial portion of their excess profits towards placement of “news stories”, advertisements and other propaganda that have convinced most Americans that the U.S. health care system, while faulty, is still better than other countries. THIS IS A LIE. Check it out using any statistic you like.

• THE U.S. SPENDS 15.4% OF ITS GDP on heath care plus capital expenditures for equipment and buildings which brings it to around 18.5%. The amount of money spent is therefore $2,400,000,000 ($2.4 trillion dollars).
• U.S. patients take 65% more medication than any other country on earth because only our system allows access and payment for INTERVENTION and allows nothing for for PREVENTION and MAINTENANCE. Most of these medications eventually increase the risk of death and/or other diseases. The Food and Drug Administration is staffed by and funded by Pharmaceutical company employees (either past, present or future). Access to PREVENTATIVE protocols is denied by the FDA, insurance company and the propaganda disseminated by the medical industrial cartel.
• Not only is there sufficient funding already in the system to provide health care to every man, woman and child, along with social services that would reduce living stress and increase productivity, hope and innovation in the U.S. economy, there is actually about $400 billion dollars left over to contribute to other social programs (education, police, fire) that would make it possible for every man, woman and child at any age to be educated and trained to be competitive in the global economy. 
• NO OTHER COUNTRY IN THE WORLD SPENDS MORE THAN 11% OF ITS GDP ON HEALTHCARE. 
• ALMOST EVERY OTHER WESTERN COUNTRY (INCLUDING THOSE WITH NATIONAL UNIVERSAL HEALTHCARE) HAS MORE PHYSICIANS AND MORE HOSPITAL BEDS PER PATIENT THAN THE U.S.
• THE DEATH RATE, INFANT MORTALITY RATE, “UNNECESSARY” DEATH RATE, AND EVEN HEIGHT IS WORSE IN THE U.S. THAN, ON AVERAGE, 40 OTHER MODERN WESTERN COUNTRIES. (we have lost three years of longevity in the last 50 years and we have lost one inch of height).
• NO OTHER COUNTRY ALLOWS PRIVATE INSURANCE AS THE MIDDLE MAN BECAUSE INSURANCE AND MANAGED HEALTHCARE PLANS ADD NO VALUE.
• EVERY OTHER COUNTRY EMPHASIZES PREVENTATIVE HEALTHCARE AND GIVES BONUSES TO HEALTHCARE PROVIDERS WHO IMPROVE THE HEALTH OF THEIR PATIENTS.
• The only rational conclusion is that by deleting private insurance as the middle man in providing access to a public need (like education, police, public libraries and fire) and enabling a single payer to negotiate reasonable prices, the problem, and the deficit caused by healthcare spending would be eliminated. 

2. CREDIT AND DEBT: The U.S. credit and monetary system is a wealth transfer scheme, which takes money from the pockets of ordinary citizens and puts it in the hands of a few people who do nothing to earn it. This is a PRIVATE TAX that only exists because the government has interfered on behalf of big business starting with the credit card associations and companies that provide network access to credit imposing interest rates that have been known and understood for centuries to result in permanent debt.

It was once called USURY. Now it is called liquidity. The laws that made it illegal to charge rates of 35% on credit cards and 400% on payday advances were changed. So now it is still a crime under natural law but not under our legislative system. It’s government backed and therefore it is a PRIVATE TAX.

• Government spending, government subsidies to big business, and government laws allowing big business, large unregulated, to charge exorbitant interest rates has resulted in unprecedented consumer and government debt — Federal, State, local and individual — requiring SOMEBODY (either us or our children, grandchildren and great children) to pay interest amounting currently to more than $3 trillion dollars per year plus the loss of social services and safety nets that have existed for more than 50 years. 
• All of this debt has been funded by issuing U.S. currency equivalents that are now held in foreign investment vehicles, foreign exchange reserve accounts in central banks concentrated in the hands of China, South Korea and other countries whose commitment to the sovereignty and nationals security of the United States is best questionable.
• At least $1 trillion of interest, fees and costs associated with excess interest and/or excess debt could be eliminated from the expenditures of U.S. spenders, producing substantial capital for improvements to infrastructure, jobs, increased revenues from income taxes, sales taxes, excise taxes,etc., without raising the rate of taxation on any of these sources of revenue.
• The Mortgage Meltdown could be stopped by a commitment to keep people in their homes, preventing abandonment of homes that are not maintained. This would stop an ever-decreasing spiral of housing prices caused by REO homes coming onto the market at rates that demand could not possibly meet, reinstate the balance sheet of lenders and thus improve their capital position, and reinstate the balance sheet of investors who were tricked into buying junk securities which, with a little help and cooperation from business, government and people could be converted into ratable securities. 
• Devaluation of the dollar and inflation caused by devaluation would be slowed, stopped or even reversed if the U..> showed its resolve to responsible economic policies and responsible monetary management and responsible regulation of “securitization” which is merely a unregulated method of increasing monetary supply despite declining demand for the U.S. dollar.
• Reducing the debt service BY LAW to sustainable levels that would enable debtors to eliminate their debt. Banning advertisements that encourage consumers to buy goods and services they don’t need, or could wait to buy through savings, would convert a debt economy to a solid foundation of  savings economy. like many other countries in the world.

---

April 27, 2008

3 Candidates With 3 Financial Plans, but One Deficit

By LARRY ROHTER and MICHAEL COOPER

The Republican and Democratic presidential candidates differ strikingly in their approaches to taxes and spending, but their fiscal plans have at least one thing in common: each could significantly swell the budget deficit and increase the national debt by trillions of dollars, according to tax and budget experts.

The reasons reflect the ideological leanings of the candidates, with Senator John McCain proposing tax cuts that go beyond President Bush’s and the Democrats advocating programs costing hundreds of billions of dollars. But for fiscal experts concerned with the deficit, both approaches are worrisome.

With the national debt soaring to $9.1 trillion from $5.6 trillion at the start of 2001, in part because of the Iraq war and Mr. Bush’s tax cuts, a crucial question about the candidates to succeed him is “whether they are helping to fill the hole or make it deeper,” said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan organization that advocates deficit reduction. “With the proposals they have on the table, it looks to me like all three would make it deeper.”

Representatives of all three campaigns disputed such assessments, questioning the accounting methods analysts used to calculate the growing debt and saying they could enact their plans without making matters worse.

Mr. McCain’s plan would appear to result in the biggest jump in the deficit, independent analyses based on Congressional Budget Office figures suggest. A calculation done by the nonpartisan Tax Policy Center in Washington found that his tax and budget plans, if enacted as proposed, would add at least $5.7 trillion to the national debt over the next decade.

Fiscal monitors say it is harder to compute the effect of the Democratic candidates’ measures because they are more intricate. They estimate that, even taking into account that there are some differences between the proposals by Senators Hillary Rodham Clinton and Barack Obama, the impact of either on the deficit would be less than one-third that of the McCain plan.

The centerpiece of Mr. McCain’s economic plan is a series of tax cuts that would largely benefit corporations and the wealthy. He is calling for cutting corporate taxes by $100 billion a year. Eliminating the alternative minimum tax, which was created to apply to wealthy taxpayers but now also affects some in the middle class, would reduce revenues by $60 billion annually. He also would double the exemption that can be claimed for dependents, which would cost the government $65 billion.

“High tax rates are driving many businesses and jobs overseas — and, of course, our foreign competitors wouldn’t mind if we kept it that way,” Mr. McCain said, laying out his economic plan this month in Pittsburgh. “We’re going to get rid of that drag on growth and job creation.”

On the expenditure side, Mr. McCain has called not only for continuing an open-ended deployment of troops in Iraq, but also for spending $15 billion annually to expand the Army and the Marine Corps and to improve health care for veterans, among other programs.

Mr. McCain’s advisers have said the new tax cuts would be paid for by eliminating earmarks and making large spending cuts, but they have not identified specifics. And they have spoken vaguely about making entitlement programs like Social Security and Medicare less costly for the government. Mr. McCain’s chief economic adviser, Douglas Holtz-Eakin, said the campaign had simply presented its vision of what the tax code should look like and noted that some of the proposals would be phased in.

“I think what they ought to do is remember that the proposals are going to engender economic growth, which is the best thing you can do for near-term budget improvement,” Mr. Holtz-Eakin said, adding that Mr. McCain believed spending restraint was possible.

That vision for the tax code includes making permanent the Bush tax cuts, set to expire in 2010, which Mr. McCain once opposed in part because they were not accompanied by sufficient spending cuts.

“I voted against the tax cuts because of the disproportionate amount that went to the wealthiest Americans,” Mr. McCain said in 2004. “I would clearly support not extending these tax cuts in order to help address the deficit.”

In 2001 and 2003, Mr. Bush pushed through Congress tax cuts totaling nearly $2 trillion. The first set lowered income and estate taxes, and the second focused mostly on capital gains and dividends.

The McCain campaign does not figure the costs of extending the tax cuts into its deficit projections, although the Congressional Budget Office estimates that it would cost an extra $2.2 trillion over the next decade.

When Mr. McCain outlined his tax cut plan, he backed away from his pledge to balance the budget during his first term, but said that he would do so by the end of his second term. And in an interview last Sunday on “This Week With George Stephanopoulos” on ABC, Mr. McCain said he would push ahead with his tax cuts even if Congress did not approve his spending cuts.

Some conservative economists say that increased deficits in the short run are an acceptable tradeoff for tax cuts that they say will promote economic growth in the long run. And many liberal economists say that some of the Democratic spending proposals, like addressing the affordability of health care or improving education, are long-overdue investments that pay off handsomely even if they entail more red ink.

Mr. Obama and Mrs. Clinton have acknowledged that their various new programs would be costly but have outlined how to pay for them. But some fiscal monitors say they may be relying on overly rosy projections of how much savings their proposals would actually yield.

Mrs. Clinton has calculated that her universal health care plan would cost about $110 billion a year, while Mr. Obama’s somewhat more modest proposal would cost up to $65 billion annually, his advisers say. Both candidates have also talked of new government incentives and investment to encourage the development of alternative sources of energy, which would cost about $15 billion a year.

The Democratic candidates have suggested that they could finance these and other programs by allowing parts of the Bush tax cuts to expire. That, however, ignores projections of the Congressional Budget Office, which has already assigned those savings to deficit reduction.

In other words, unlike Mr. McCain, both Democrats say they would revoke the Bush tax cuts for the wealthy. “At a time of war and economic hardship, the last thing we need is a permanent tax cut for Americans who don’t need them and weren’t even asking for them,” Mr. Obama said.

But they would retain those reductions meant to benefit poor and “middle-class” families, which they defined as the 97 percent or so of the population that lives on less than $250,000 a year, and they would count the estimated $50 billion generated by higher taxes on the wealthy as new revenue.

“Remember, you can only use this money once,” said Mr. Bixby of the Concord Coalition, “and with all the Bush tax cuts scheduled to expire, that money is already scheduled to come into the Treasury. But on the campaign trail, this has become a source of new spending.”

Mrs. Clinton’s aides have been perhaps the most specific in explaining how they would offset the costs of their proposals, and her campaign speaks of moving toward balanced budgets. “We’re not going into debt for the war in Iraq and tax cuts for the wealthiest of Americans,” Mrs. Clinton has said, “but instead we are taking care of the needs of our people at home.”

Regarding gas taxes, Mr. McCain has proposed a one-time “tax holiday” for the summer. Mrs. Clinton also calls for suspending it in a new advertisement in Indiana, while Mr. Obama says that is a “bad idea” but opposes any increase in the tax.

On the spending side, Mr. Obama has argued that ending the Iraq war is one way to pay for some of the new programs, including creating a national infrastructure investment bank and increasing the foreign aid budget. But such savings, which Mrs. Clinton does not count on, would not immediately make their way into the Treasury, and some experts say it is not clear whether they would be sufficient to finance all the programs Mr. Obama has enumerated.

Mr. Obama has talked of spending that money on a variety of initiatives whose costs amount to about one-third of the war’s estimated annual cost of $150 billion. “It is clear that there ought to be some distinction between a candidate who says a withdrawal should start immediately and a candidate who says let’s maintain the war at the highest level,” said Austan Goolsbee, Mr. Obama’s senior economic adviser.

The fiscal outlook has been made even murkier by the explicit “no new taxes for the middle class” pledge that both Democratic candidates made at their debate in Philadelphia this month, exempting taxpayers making $250,000 a year or less from new levies.

Hearing such a promise “makes you very sad,” said Len Burman, director of the Tax Policy Center. “First of all, we don’t have enough revenue coming in to pay our bills.” In addition, he said, the notion that all the revenue that would be lost in a middle-class tax freeze can be made up by higher taxes on the wealthy “is not tenable.”

• Somehow, the housing trouble has to at least flatten out. As long as that is going on, I think the pressure on the credit system is going to persist. It is kind of the leading indicator. It is where the trouble started. We have to underpin the consumer. That is why this is different. That is why this is like nothing we have had before.

Here is a man who has “seen it all” and who doesn’t like what he sees. Echoing our continuous please for creating an atmosphere of safety or “amnesty”, Bernstein sees a long haul without much lift unless we address the etnire spectrum of risk-taking. Confidence levels are so low that it hard to imagine, each month, that they could go lower. But they they keep sinking. Bernstein’s vision is one of reality, encouraging us to “snap out of it” and hope, if we get our act together without tripping over ideological differences. 

	April 26, 2008

One Guy Who Has Seen It All  Doesn’t Like What He Sees Now By E.S. BROWNING April 26, 2008; Page B1 Peter Bernstein has witnessed just about every financial crisis of the past century. As a boy, he watched his father, a money manager, navigate the Depression. As a financial manager, consultant and financial historian, he personally dealt with the recession of 1958, the bear markets of the 1970s, the 1987 crash, the savings-and-loan crisis of the late 1980s and the 2000-2002 bear market that followed the tech-stock bubble. One of Peter Bernstein’s worries: ‘If China goes into a recession, God knows.’ Today’s trouble, the 89-year-old Mr. Bernstein says, is worse than he has seen since the Depression and threatens to roil markets into 2009 and beyond — longer than many people expect. Mr. Bernstein, whose books include “Against the Gods: The Remarkable Story of Risk,” sees two culprits. One is the abuse of securitization — the trend for banks to hold fewer loans on their books and instead turn them into securities that were sold to other investors. The other is simply years of overborrowing by financial institutions and consumers alike. Mr. Bernstein is hopeful that Federal Reserve intervention will prevent deflation and depression, but he says there is no guarantee. Excerpts of a recent interview: WSJ: Aside from securitization, what were the main causes of the problem? Mr. Bernstein: You don’t get into a mess without too much borrowing. It was sparked primarily by the hedge funds, which were both unregulated by government and in many ways unregulated by their owners, who gave their managers a very broad set of marching orders. It was a real delusion. It was like [former New York Gov. Eliot] Spitzer: “I am doing something dangerous, but because of who I am, and how smart I am, it is not going to come back to haunt me.” When you think about how all of this will work out in the long run, we are going to have an extremely risk-averse economy for a long time. The lesson has painfully been learned. That’s part of the problem going forward. You don’t have a high-growth exit from this, as you’ve had from other kinds of crises. We won’t have a powerful start, where the business cycle looks like a V. Here, the shape of the business cycle is like an L, where it goes down and doesn’t turn up. Or like a U, a flat U. The reason for that is that people aren’t going to get caught in this bind again. They will tell themselves, “I’m too smart to do that again.” And everyone else is going to be saying the same thing. It is, in fact, going to be a wonderful environment in which to take risk, because there aren’t going to be any excesses. I’m a child of the Depression, and I am thinking about what the early years were like after World War II. It took a very long time to get the memory of the Depression out of business decisions, and certainly banking decisions. I think this is going to be the same. The Fed, too, is going to be less decisive and is going to feel that what it should do is less clear. One of the things that gave people a sense that they could afford to take risks was the sense that the central bankers more or less know what they are doing. But I don’t think we are going to feel that way going forward. WSJ: You said that it could turn out that the smart thing to do is to take more risk, because everyone will be so risk-averse. What kinds of investments do you see as the big winners coming out of this? Mr. Bernstein: You could say: the things that have been beaten down the most, which would be real estate. But I think real estate is going to be under a cloud for so long, and you can’t buy real estate with cash, it is too much money. I think you should go with the stock market. If things are better, the stock market will go up, and if things are awful, the stock market is going to be way down. But it is a place where, if you want to take risks, you’ve got a wide range of choices. This is why I own stocks [in addition to other investments], because I don’t know where the bottom is going to come, and I want to be exposed to every kind of possibility I can think of. And, at least, if you pick the stock market and you are wrong, you can change your mind. There is some liquidity there. Stocks never became cheap, but they didn’t become crazy, the way other assets were. WSJ: How long do you think this whole process will take, before we get back to normal? Mr. Bernstein: Longer than people think. The people who think we will have turned in 2009 are wrong. There has to be a respite along the way. Nothing goes in one direction forever. But it will take longer than people think. If that weren’t the case, I would be talking entirely differently. I would be saying, “What an opportunity we have got.” And I just can’t believe that the opportunity is here yet. There is too much to unwind. WSJ: Can you explain the reason you think it will take a long time? Mr. Bernstein: We have to go back to a moment when people have the courage to borrow and lenders have the courage to lend. Until credit is going up instead of down, you can’t have growth. Housing has got to be a very important part of that; it always has been. You have to reach a point where somebody says, “This house is cheap, I am going to buy it,” or where some businessman says, “This is a great opportunity for us to expand our business. Everything is available to us.” If China goes into a recession, God knows. The Iraq war and the whole situation with terrorism, we really don’t know where that is going to come out. There are so many things that have got to get buttoned down before you say that the future looks good enough to take a risk. WSJ: What kind of indications are you looking for as signs that the economy is about to get better and that the stock market and the investment world are about to turn the corner? Mr. Bernstein: Somehow, the housing trouble has to at least flatten out. As long as that is going on, I think the pressure on the credit system is going to persist. It is kind of the leading indicator. It is where the trouble started. We have to underpin the consumer. That is why this is different. That is why this is like nothing we have had before. Before, it was investment that made the V at the bottom of the business cycle. I don’t see real investment turning enough without some sign from the consumer side. Maybe the foreign countries will do it for us. That is a substitute for consumption here. Maybe. But I think that they won’t do enough for us, and maybe will be too infected by us to do it. But maybe growth in Asia will help us. The Asian thing is tremendously exciting. Write to E.S. Browning at jim.browning@wsj.com1   URL for this article: http://online.wsj.com/article/SB120916592206646195.html   Hyperlinks in this Article: (1) mailto:jim.browning@wsj.com

RELATED ARTICLES FROM ACROSS THE WEB

Related Articles from WSJ.com

•  Recession? Think Stocks for Recovery  Apr. 07, 2008

•  U.S. Stocks Are Doing Better Than Most  Mar. 30, 2008

•  China Takes Steps To Ease Transfer Of Funds Overseas  Mar. 20, 2008

•  Commentary: The Weekend Interview  Mar. 15, 2008

Related Web News

•  What Warren thinks… - Apr. 14, 2008  Apr. 14, 2008  money.cnn.com

More related content Powered by Sphere 

I would give credit for the term “moral constipation” but I can’t remember where I heard it. I invite all who read this to give me the creator’s name so I can correct this blog and give him the attribution he deserves. 

It appears that we can all agree on one thing regardless of which candidate, party or ideology we subscribe to — The United States of America is on a path of moral bankruptcy, where ethical concerns and choices between right and wrong have been shoved off the table and instead convenience and self-aggrandizement is accepted by “we the people” with far more tolerance than is acceptable to me.

There is practically nothing so dear to me as my own opinion of my own intelligence. And yet I am dumfounded by the lack of outrage as corporate America and Government join hands in our pockets, in our lives, in our families, and in our minds. Protests erupt about the Olympic flame — but where is the outrage, the “I’m mad as hell and I won’t take it anymore” about the following:

1. Diesel fuel is $4 per gallon here but across the border in Mexico it is $2. Anyone care?
2. Real inflation for the Average American is in excess of 15% and climbing. Anyone interested?
3. Exxon made $11 billion last quarter. The rest of us made less at the end of the month because the money went to Exxon. Is there any connection between that fact and the Presence of an Oil man in the White House/ How about a vice President that headed up the very company that profited the most from the Iraq war? Is this so boring that MSM should be ignoring it just because nobody seems to want to anything about it?
4. By 2009, 1 person in 10 will be on food stamps in the United States. Shouldn’t that be interesting to both sides of the “Aisle?”
5. The average person in the United States is in debt on credit cards and other consumer and real estate loans in an amount that they can never repay, whereas no other modern country has that problem. Why?
6. Interest on debt accounts for more expenditure by government and individuals than anything else in the United States. Trillions of dollars of transfered wealth from those who now can’t eat to those who don’t know what to do with the money. What is being done about interests rates that guarantee non-payment and assure financial enslavement? (By the way medical care is second is now touted to be the “employer of last resort”).
7. Houses were appraised at $500,000 and within days were revealed to have values of less than 70% of that. People were prompted, tricked and coerced into signing mortgage documents they didn’t understand, in violation of law (not that anyone has been prosecuted), and now the borrowers are blamed for a scheme they still don’t understand. Now millions of American citizens are or will be broke, homeless and jobless. We know who did it and how it happened but MSM doesn’t care about that.
8. All of MSM (Main Street Media) is now controlled by a handful of people who let us hear only the things they want us to hear and only in the ways they want us to hear it. If you want news, go to the Internet, if you want infotainment watch TV or listen to radio. 
9. How many flag draped coffins can be hidden from view to keep the Iraq war “sanitary” and keep the public distanced from the gruesome reality of war, death, disfigurement, famine, disease and moral decrepitude? And why is MSM going along with  the ban on pictures of coffins? Isn’t the death of young loved members of families who made the ultimate sacrifice worth reporting?
10. How many veterans need to be homeless and wandering through the streets with head injuries before we think to ourselves “you know, there is something not quite right about this.”
11. We have outsourced the most sensitive manufacturing of top secret defense components to China which just happens to be the only real military threat to our national security. And we have financed their military expansion by encouraging their economic growth to the point where they now have a  stranglehold on our country — they own most of our debt, they manufacture most of our goods, they process most of our food, and they are the most prolific source of spying in the United States. Thus whatever they don’t get legally, they get illegally. 
12. MSM (main Street Media) has virtually eliminated their staff of reporters, because they get everything off the newswires and they make up the rest. Most of the time spent on “news” channels consists of opinions about gossip. Interesting, perhaps, but useless for those of us who would like to evaluate our options on voting on issues and candidates.
13. It is illegal to counterfeit money unless you are a foreign country (North Korea for example) or you are a Wall Street investment banking firm that creates money supply by calling them “derivatives, collateralized debt obligations” and such. Between North Korea’s supernote and and the $500 trillion (yes with a “T”) in derivatives, credit swaps etc. out there it can be no surprise that no government can control the effects on world monetary supply —- that has been outsourced to the private sector as well. 
14. MSM (Main Street Media) now presents us with pretty faces, some nice looking legs, a tempting bust line, and a teleprompter written by people who have not researched the validity of the reports in 10 years.
15. Prescription medications are “so dangerous” that you can’t get them without seeing a doctor, but they are advertised directly to consumers. Is this what we want our children to hear and see? You can get a Bud Lite or a Absolute martini without a doctor’s prescription and drink all you want. It’s only when you kill or main people with your driving or other physical abuse that you are held accountable. 
16. MSM (Main Stream Media) provides us with pundits and moderators who are undereducated, and inculcated with the sole core value of saying something that will increase the ratings and thus revenues of the media in which their comments appear. 
17. Prescription medications cost $20 per pill here and as little as $0.50 in other countries easily accessible from the U.S.
18. The total expenditures for medical care, drugs, products and associated services is around 2-3 times the amount spent by any other country or group of countries. The average U.S. Citizen is in constant danger of dying for lack of medical care because he/she is probably not covered entirely for the medical event, because he/she was never given a preventative regimen that is regularly followed in other countries, or because they are simply barred from access to medical system. 
19. Despite the amount we spend per person, we get less care, and suffer from shorter longevity, higher infant mortality, shorter height, than at least a dozen other countries and sometimes as high as 40 other countries depending upon which metric you are interested in. To say we lost our “lead” is not the point. 
20. The average person educated in the U.S. has slipped from 1st in world ranking to around 20th. Does that bother anyone?
21. Bullying has spread through every school, public and private and is spreading into the marketplace. Hello? Anyone there?
22. We have lost our way. We worship money in all its forms more than we worship God. Every day we perform acts that involve our worship, use and belief in money. Most of us spend at best one day per week for a couple hours worshipping God.
23. MSM (Main Street Media) thrives on conflict over minutia (bullets in Bosnia, a flag pin probably made with lead in China, and statements of “associates” that are made into controversial “positions”) rather than actual issues and characteristics about the candidates themselves. We allow this by talking about that the pundits tell us to talk about. And what we talk about causes us to vote against our own interests.  
24. When we tried importing from China and India the prescription drugs at a fraction of the cost that the drug companies were charging us, the government stepped in and said it was unsafe and  could result in tainted drugs. Now the drug companies have eliminated American jobs and outsourced the manufacture of the drugs to where? — India and China — and we have what — tainted, deadly drugs of dubious value to begin with and with side effects that include anal leakage and death. 
25. How many times do we need to hear that pharmaceutical companies spend $5,000 on every man or woman doctor in the U.S. to push their stuff before we make THAT an issue?
26. The war on drugs is making a fortune for people on both sides of the law, including the privatization of prisons and huge profits from private ownership of prisons, 75% of the inmates of which are there because of minor drug charges. There is no war on drug use and there is no war on drug supply. That is why we have drugs in America.
27. How many times do we need to be disappointed in a politician, whom we knew was taking money from the medical- pharma complex, insurance companies, oil companies and credit card companies? What makes us vote for these people?
28. Where is MSM “keeping them honest” by reporting discrepancies between promises and action?
29. How many dogs need to die before we accept that they are the canary in the mine shaft and that the rest of us are just as much at risk because the tainted, poisoned food is all coming from the same place now?

I could go on, but I invite you to add your own comments to the list. And while you are at it, why not answer this question: What specifically are you going to say to your friends and family about these issues and how will you vote?

EDITOR’S NOTE: As long as Central banks focus on the currency instead of the cause, these measures will at best delay an inevitable collapse. At the core of the problem is that unless people are kept in their homes, trillions of dollars of assets will fail. This is NOT an inevitable consequence. Plans abound to keep people in their homes, provide a foundation for recovery of these assets, and stabilize currency and the credit markets. It is much simpler than what they are making it. The only inevitable consequence is that if central bankers maintain their current course, the ripples will spread to doubt about the more than $500 trillion in Global derivative securities, many of which are solid.

CURRENCIES

Dollar under pressure after Bank of America misses

Pound pressured as Bank of England details swap plan

By William L. Watts, MarketWatch

Last update: 11:19 a.m. EDT April 21, 2008

SAN FRANCISCO (MarketWatch) — The dollar extended losses against most major counterparts Monday, after Bank of America Corp.’s earnings shortfall reminded investors that the U.S. financial sector is not out of the woods yet.

Bank of America Corp.’s first-quarter profit fell 77% as credit-loss provisions jumped $4.78 billion, driven by weakness in home-equity loans as well as credit extended to small businesses and home builders. See full story.

Hawkish comments from European Central Bank Governing Council member Axel Weber also supported the euro. Weber reportedly said inflation is likely to remain elevated and suggested the ECB might have to hike rates.

“Hawkish ECB rhetoric has underpinned the euro of late, though with the pairing so far unable to post new record highs, and the market seen as a bit overextended on the long side of the ledger currently, downside potential may be on the rise in the near term,” wrote currency analysts at Action Economics.

The dollar bought 103.25 yen, down from 103.47 yen in London earlier Monday, and the euro was at $1.5915, up from $1.5864. See real-time currency prices.

The dollar index, which tracks the greenback against a basket of six major currencies, was at 71.650, down 0.5%.

But the British pound sterling was under pressure itself, after the Bank of England announced details of a plan to let commercial banks use mortgage-backed securities as collateral for loans in an effort to thaw frozen credit markets. The pound was last trading at $1.9808, down from $1.9825 in London earlier Monday.

The pound fell prey to profit-taking, after the Bank of England announced details of a plan to let commercial banks use mortgage-backed securities as collateral for loans in an effort to thaw frozen credit markets.

If the effort manages to unclog credit markets it would presumably remove some of the impetus for aggressive cuts in response to tightening credit conditions, said Trevor Williams, chief economist at Lloyds TSB.

Commercial banks can tap the Bank of England over the next six months for around 50 billion pounds ($99.85 billion) in Treasury bills by swapping AAA-rated mortgage-backed securities. The swaps are set to last a year and can be renewed for up to three years. See full story.

Strategists said profit-taking pressures in the wake of the BOE announcement contributed to sterling’s softer tone.

The currency was buoyed late last week in anticipation of the program, briefly re-touching the $2 level against the greenback while sending the euro back below 80 pence after the single currency notched new all-time highs above that level.

Meanwhile, another house price index showed further weakness in the U.K. housing market. Rightmove said annual house price inflation, without seasonal adjustments, slowed to 1.3% in April from 5%, the slowest pace since July 2005.

The dollar was also buoyed late last week as equity markets gained ground after massive first-quarter losses by U.S. banking giants Citibank and Merrill Lynch weren’t any worse than expected, strategists said.

Still, the euro found support against the dollar after slipping into the low $1.57 area Friday, noted economists at KBC Bank. And the hawkish tone maintained by European Central Bank officials in the face of surging inflation pressures is likely to continue to make traders reluctant to press the dollar lower, they said, while a break above $1.60 will be difficult to achieve without help from weak economic data or another round of bad news from the credit markets. 

William L. Watts is a reporter for MarketWatch in London.

That’s Trillion with a “T”

• Most people agree that we can’t correct the problems that are still unfolding unless we admit the severity of the problem. The current estimates of a maximum of $450 billion damage are absolute lies designed to give reassurance to people who could and probably should cut and run. As long as we deny what is really happening, the real solutions will not emerge. The current group of proposals can be be all logged in under one word : patchwork. 
• The real solution is comprehensive political action together with regulatory reform that goes in an entirely different direction than allowing money to be controlled more by political force of individuals in power with their own private agendas.
• Here is a one page summary of the measurements of the actual damages caused by the sub-prime mortgage crisis, coupled with the effect of the sub-prime mortgage crisis on all mortgages and housing, coupled with the effect on inflation and private losses rippling out from the collapse of liquidity, credit, jobs, and social services. Some fo this information was taken from the BBC News Website.
• Mortgage Meltdown: The real measurements and statistics 

McCain’s Folly

The solution to the liquidity crisis continues to be a political agreement between government, business, borrowers and investors in which the obvious factors are directly addressed — overvaluation of home values, overvaluation of creditworthiness, and overvaluation of CMOs. Any plan which does not address those factors will merely be an attempt to sweep this one under a rug that isn’t big enough to hide the dust. All current plans are partial swings at a moving target, based upon the political points the author or speaker wishes to score rather than being based on the health, safety and welfare of the citizens of the United States of America.

The plain fact is that is the practically nobody in government anywhere knows, understands, or has developed any proficiency in developing an understanding of the economic world of their constituents. Upon cross-examination they would fold like a house of cards. 

Yet in an odd irony (redundant, I know) it is true that all economics is actually political and that all political decisions result in economic consequences. Hence we have put ourselves in the hands of a bunch of people, most of whom lack either the intelligence or the motivation to know what they are doing, and who are responding to the “information” given to them by their staff which gets most of its information from lobbyists, and the resulting legislation is passed without ANYONE ever reading it. 

Senator McCain is unfortunately one of the offenders for lack of actually reading the printed word. He reads nothing. He gets summaries orally on the run, and that is why he makes so many mistakes in his speeches. He spends no time in analysis or contemplation, not that he isn’t capable of it. He just doesn’t do it. And in our political world he has proven by getting the Republican nomination, that you don’t actually need actual policies in mind that serve as stepping stones to a better future — you just need votes, endorsements and money (not necessarily in that order).

In an effort to score political points, John McCain, presumably with the advice and counsel of prehistoric economic advisers, hawks the idiotic notion that government regulation is a bad thing in and of itself. Economists from all sides of the political spectrum admit that is wrong. Without a referee in the “free market place” we would all return to slavery or the dark ages of serfdom. We have recently gone too far in that direction, a fact which is obvious to about 80% of the American citizenry and even to young adults who ordinarily don’t even think of such things. The necessity of a referee (i.e., government) is completely unknown to McCain either in concept or reality. John McCain is decidedly not an idiot — but like most of his colleagues, he acts like one.

He said yesterday which much fanfare that it is not government’s job to bail out people, big or small. True enough — and it certainly plays well to those who blame the victims, as long as they are small victims rather than big companies whose stock is publicly held. 

According to the founding documents of this country, which are the Supreme Law of the land, it is government’s business to protect the health, safety and welfare of its citizens; and that means doing something to stop the current financial bleeding and slowing the American and worldwide tailspin that is destroying the paycheck of most American citizens increasingly each day, as the U.S. dollar reaches lower into the abyss and the price of gas now approaches 25% of the net paycheck of many workers. 

Bailout is one of the tools on the table and it is a good short-term and very small part of a total solution. The actual solution to the present crisis can only be reached through political consensus which thus far has not been the subject, much the less the focal point of discussions in the current emergency. To that end only Obama (and recently endorsed by Clinton) has proposed establishing an emergency commission not unlike the 911 Commission. 

A major bailout to everyone will only put the dollar, and thus the purchasing power of each citizen in further jeopardy. That is why Obama is right about limiting the resources applied to the bailout part of the equation. Stopping the foreclosures and evictions through political consensus is also a urgent requirement. Again Obama is right on the approach of consensus but probably wrong in his opposition to the 90 day freeze on foreclosures and evictions proposed by Clinton. 

We need some breathing space to show the world we are still in control here and that we understand the root problem — which is that prices became artificially inflated by high pressure sales tactics getting people to sign mortgage documents that could be sold to satisfy the last group of deals that were sold on terms that were impossible to sustain on their own. 

No bailout at all is government failing to do what it is there for — to referee between competing groups and interests and intervene when it gets out of hand.  

McCain is advocating (or more specifically parroting) the economics and the politics that got us into this mess. We had a Federal Reserve with no power to monitor or regulate the creation of money supply by the private sector. Paulson announced today he wants to change that and expand the Fed’s authority to acknowledge the obvious fact that investment banks have been creating more money supply than all the central banks put together. As a result, worldwide money supply from derivative security sales skyrocketed beyond the imaginable, with some estimates putting it at as much as $500 trillion.

That is why we keep saying here that the answer to the crisis lies in political consensus — as Obama preaches, and not in ideological fixed constructs like McCain and Clinton promote for political points. Paulson’s proposals will be helpful 30 years from now. Partisan solutions produce partisan fights resulting in gridlock. Americans need action now. Obama’s proposals should be looked at far more closely, and used as a point of discussion. We need help today, this minute.