Thursday, January 29, 2009
Monday, January 26, 2009
It has returned...
...ICE STORM WARNING IN EFFECT FROM 6 PM THIS EVENING TO 12 PM CST WEDNESDAY... ...WINTER STORM WATCH NO LONGER IN EFFECT...
THE NATIONAL WEATHER SERVICE IN FORT WORTH HAS ISSUED AN ICE STORM WARNING FOR SIGNIFICANT ICING ACROSS THE NORTHERN TWO THIRDS OF NORTH TEXAS FROM 6 PM THIS EVENING TO 12 PM CST WEDNESDAY. THE WINTER STORM WATCH FOR TUESDAY AND TUESDAY NIGHT IS NO LONGER IN EFFECT.
PERIODS OF FREEZING RAIN WILL DEVELOP LATE THIS EVENING AND OVERNIGHT ALONG AND NORTHWEST OF A LAMPASAS... HILLBORO...TO CANTON LINE. TEMPERATURES WILL REMAIN BELOW FREEZING THROUGH WEDNESDAY MORNING AND PERIODS OF LIGHT FREEZING RAIN WILL CONTINUE. TOTAL ICE ACCUMULATIONS OF ONE QUARTER INCH ARE LIKELY WITH ISOLATED ONE HALF INCH AMOUNTS.
ALL PRECIPITATION WILL END WEDNESDAY MORNING BUT TEMPERATURES SHOULD REMAIN BELOW FREEZING UNTIL AFTERNOON.
AN ICE STORM WARNING MEANS SEVERE WINTER WEATHER CONDITIONS ARE EXPECTED OR OCCURRING. SIGNIFICANT AMOUNTS OF ICE ACCUMULATIONS WILL MAKE TRAVEL EXTREMELY DANGEROUS OR IMPOSSIBLE.
By DAVID E. SANGER
Published: January 25, 2009
WASHINGTON — Only five days into the Obama presidency, members of the new administration and Democratic leaders in Congress are already dancing around one of the most politically delicate questions about the financial bailout: Is the president prepared to nationalize a huge swath of the nation’s banking system?
Privately, most members of the Obama economic team concede that the rapid deterioration of the country’s biggest banks, notably Bank of America and Citigroup, is bound to require far larger investments of taxpayer money, atop the more than $300 billion of taxpayer money already poured into those two financial institutions and hundreds of others.
But if hundreds of billions of dollars of new investment is needed to shore up those banks, and perhaps their competitors, what do taxpayers get in return? And how do the risks escalate as government’s role expands from a few bailouts to control over a vast portion of the financial sector of the world’s largest economy?
The Obama administration is making only glancing references to those questions. In an interview Sunday on “This Week” on ABC, the House speaker, Nancy Pelosi, alluded to internal debate when she was asked whether nationalization, or partial nationalization, of the largest banks was a good idea.
“Well, whatever you want to call it,” said Ms. Pelosi, Democrat of California. “If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization.
“I’m not talking about total ownership,” she quickly cautioned — stopping herself by posing a question: “Would we have ever thought we would see the day when we’d be using that terminology? ‘Nationalization of the banks?’ ”
So far, President Obama’s top aides have steered clear of the word entirely, and they are still actively discussing other alternatives, including creating a “bad bank” that would nationalize the worst nonperforming loans by taking them off the hands of financial institutions without actually taking ownership of the banks. Others talk of de facto nationalization, in which the government owns a sizeable chunk of the banks but not a majority, with all that connotes.
That has already happened; taxpayers are now the biggest shareholders in Bank of America, with about 6 percent of the stock, and in Citigroup, with 7.8 percent. But the government’s influence is far larger than those numbers suggest, because it has guaranteed to absorb the losses of some of the two banks’ most toxic assets, a figure that could run into the hundreds of billions of dollars.
Many believe this form of hybrid ownership — part government, part private, with the responsibilities of ownership unclear — will not prove workable.
“The case for full nationalization is far stronger now than it was a few months ago,” said Adam S. Posen, the deputy director of the Peterson Institute for International Economics. “If you don’t own the majority, you don’t get to fire the management, to wipe out the shareholders, to declare that you are just going to take the losses and start over. It’s the mistake the Japanese made in the ’90s.”
“I would guess that sometime in the next few weeks, President Obama and Tim Geithner,” he said, referring to the nominee for Treasury secretary, “will have to come out and say, ‘It’s much worse than we thought,’ and just bite the bullet.”
So far the Obama administration has signaled that it is trying to avoid that day, and members of its economic team — among them Mr. Geithner and the president’s top economic adviser, Lawrence H. Summers — made the case during the Asian financial crisis in the 1990s that governments make lousy bank managers.
Indeed, the risks of nationalization they warned about then apply equally to the United States now. The first is that nationalization can prove contagious. If the Obama administration took over Bank of America and Citigroup, two of the largest banks in the United States, private investors could decide to flee from the likes of JPMorgan Chase and Wells Fargo, or other major banks, fearing they could be next.
Moreover, Mr. Obama’s advisers say they are acutely aware that if the government is perceived as running the banks, the administration would come under enormous political pressure to halt foreclosures or lend money to ailing projects in cities or states with powerful constituencies, which could imperil the effort to steer the banks away from the cliff.
“The nightmare scenarios are endless,” one of the administration’s senior officials said.
The argument in favor of nationalization, even a brief nationalization of a few months or years, is straightforward: It might be the only way to pull America’s largest financial institutions out of the downward spiral that makes it enormously difficult to raise the capital they need to keep operating.
Right now, many banks are reluctant to write off their bad debts, and absorb huge losses, unless they can first raise enough capital to cushion the blow. But they cannot attract that capital without first purging their balance sheets of the toxic assets. Japan’s experience proved the dangers of that downward swirl; the economy stagnated, new lending ground to a halt and the country’s diplomatic clout shrank with its balance sheets.
Nationalization could pull the banks out of that dive, at least temporarily, as the government injected capital, hired new managers and ordered a restart to lending. But some Republicans who bit their tongues when President George W. Bush ordered huge interventions in the market would charge that Mr. Obama was steering America toward socialism.
Nationalization, said Charles Geisst, a financial historian at Manhattan College “is just not a term in the American vocabulary.”
“We think of it,” he continued, “as something foreigners do to us, not something we do.”
It is also something foreigners do to themselves: the British have recently taken a majority stake in the Royal Bank of Scotland.
Some of Mr. Obama’s advisers have asked who the government would get to run the banks. Many of the most experienced executives are tainted by the decisions they made during the age of excess. And how would the government attract the best talent if it demanded that they take minimal pay — a political reality in the current environment?
Another option is for the government to buy the banks’ most toxic assets either through a giant fund, or, more likely, a federally supported bad bank designed to buy up troubled investments. But in that case, taxpayers might well be the losers: They would have all of the banks’ worst assets and none of their performing loans. And unless a deal is worked out to take a larger share of the banks whose bad loans are shuffled off to the government, the taxpayers would not have the chance to benefit by selling the shares back to private investors.
Moreover, cleaning up the banks’ bad assets, without extracting a heavy price for the bank managers, shareholders and their lenders, is exactly what Mr. Summers and Mr. Geithner warned against during the Asian financial crisis.
“We told the Asians that they had to be willing to let banks and companies fail,” said Jeffrey Garten, a professor at the Yale School of Management and a top official in the Clinton administration. “We warned that there was great moral hazard if governments just bailed them out.”
“And now,” he said, “we are doing the polar opposite of our advice.”
Eric Dash contributed reporting from New York.
The biggest layoffs were at Peoria, Illinois-based Caterpillar. The world’s largest maker of construction equipment said it’s cutting 20,000 jobs after fourth-quarter profit fell by almost a third.
Pfizer Inc., the leading drugmaker, said it’s acquiring competitor Wyeth for $68 billion and will close five factories and eliminate 19,000 jobs, or 15 percent, of the combined company’s workforce.
The firings came as American jobless claims reached 589,000 in the week ended Jan. 17, matching the highest level in 26 years, as shrinking demand for products and services forced companies to lower costs. U.S. President Barack Obama today said job cuts demonstrate the urgent need for the economic stimulus program being debated in Congress.
Employers “are each cutting thousands of jobs. These are not just numbers on a page,” Obama said today at the White House. “We cannot afford distractions, we cannot afford delays” in getting legislation to boost the economy through Congress.
Sprint Nextel Corp., the U.S. wireless carrier, will cut 8,000 jobs, or 14 percent of its workforce, in order to reduce expenses by $1.2 billion a year.
Home Depot Inc., the world’s largest home-improvement retailer, said it will cut 7,000 jobs, or 2 percent of its workforce, and exit its Expo home-décor business.
“Certainly since 2001, with the dot-com collapse, we haven’t seen these kinds of large cuts,” James Pedderson, a spokesman for Challenger Gray & Christmas Inc., a Chicago-based provider of executive-outplacement services, said in an interview. “In terms of the number of companies and the number of cuts, this morning is certainly unusual.”
ING Groep NV, the biggest Dutch financial-services company, said it will reduce its workforce by 5.4 percent, eliminating 7,000 jobs. ING reported its second consecutive quarterly loss as it took 1.8 billion euros ($2.36 billion) worth of writedowns on the value of mortgage assets.
To contact the reporter on this story: Don Jeffrey in New York at email@example.com.
Last Updated: January 26, 2009 11:22 EST
Crisis claims Icelandic cabinet
Iceland's coalition government has collapsed as a result of an escalating economic crisis.
Prime Minister Geir Haarde announced the immediate resignation of his cabinet, after talks with coalition partners broke down.
Iceland's financial system collapsed in October under the weight of debt built up during years of rapid growth.
The currency has since plummeted, with unemployment soaring. The economy is forecast to shrink by 9.6% this year.
In a series of protests, demonstrators have accused the government of leading the country to ruin.
Mr Haarde told reporters on Monday: "I really regret that we could not continue with this coalition. I believe that that would have been the best result."
The coalition between Mr Haarde's Independence Party and Foreign Minister Ingibjorg Gisladottir's Social Democratic Alliance had been under strain for the past three months.
The prime minister said he would speak to Iceland's president to formally dissolve the government.
Last week Mr Haarde called an early general election for 9 May, adding that he would not stand for health reasons. The Social Democratic Alliance is now expected to look for new coalition partners to form a government until the election.
Story from BBC NEWS:
Published: 2009/01/26 13:52:23 GMT
© BBC MMIX
By Hal Weizman in Chicago
Published: January 26 2009 13:45 | Last updated: January 26 2009 13:45
Caterpillar, the world’s biggest maker of construction equipment and heavy-duty engines, is cutting 20,000 jobs as it struggles to cope with the global economic downturn.
The action comes a month after the Illinois-based bellwether group slashed executive salaries by up to half and cut 814 jobs from its site in Mossville, Illinois, citing a decline in orders and weaker demand for engines in Caterpillar machines.
The company was one of several in the US to announce job cuts on Monday morning. Sprint Nextel said it would cut 8,000 jobs while Home Depot said it would shed 7,000.
Caterpillar announced the latest round of cuts as it reported that fourth-quarter profits fell by more than 32 per cent and warned that earnings would come under pressure again in 2009.
Caterpillar said profit in the quarter was $661m or $1.08 a share, down from $975m or $1.50 in the same period a year earlier and well below analysts’ expectations of about $1.28.
“Fourth-quarter profit was disappointing,” said Jim Owens, chief executive. “It is now clear that we need to sharply lower our production and costs.”
“These are very uncertain times, and it’s imperative that we focus Team Caterpillar on dramatically reducing production schedules and costs in light of poor economic conditions throughout the world,” Mr Owens said.
“While it’s painful for our employees and suppliers, it’s absolutely necessary given economic circumstances. We expect to have most of the actions needed to lower employment and cost levels in place by the end of the first quarter.
“Financial markets remain under stress, and our expectations for 2009 have deteriorated,” said the company. “Uncertainty around the depth and duration of this recession makes it very difficult to forecast sales and revenues.”
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By Dawn McCarty and Tiffany Kary
Jan. 26 (Bloomberg) -- Smurfit-Stone Container Corp., a maker of cardboard packaging and one of the world’s largest paper recyclers, filed for bankruptcy in the face of falling demand and heavy debt payments.
The petition for Chapter 11 bankruptcy, filed today in a U.S. Bankruptcy Court in Wilmington, Delaware, listed $5.6 billion in consolidated debt and $7.5 billion in consolidated assets as of Sept. 30. Twenty-four affiliates also sought protection.
The company joins other pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corp. Durango SAB, Mexico’s largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer, and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada.
“The acceleration of the unprecedented global economic recession has weakened demand for packaging, and the frozen credit markets have prevented an out-of-court refinancing of our capital structure,” Patrick J. Moore, chairman and chief executive officer of Chicago-based Smurfit-Stone, said in a statement. “While this is not the outcome we anticipated, we are taking this action to become a more financially healthy company.”
Smurfit-Stone, is North America’s second-largest maker of corrugated packaging, and has 22,000 employees in the U.S., Canada, Mexico and Asia, according to its Web site. Operations outside of the U.S. and Canada are excluded from the bankruptcy process, the company said.
Smurfit-Stone’s 30 largest consolidated creditors without collateral backing their claims are owed about $4.2 billion, court papers show. The Bank of New York, as agent for bondholders, has an unsecured claim of $2.2 billion, CIT Group Inc. is owed $36.8 million and British Petroleum is owed $22.1 million, according to court papers.
Rivals AbitibiBowater Inc., Temple-Inland Inc. and International Paper Co. also have significant debt, according to Mark Wilde, an analyst at Deutsche Bank Securities in New York.
In December, Smurfit-Stone said fourth-quarter earnings would be “significantly” lower than the previous period, citing slowing demand for containers for industrial and consumer goods. It said it would reduce production of containerboard and some types of paper.
Credit-rating companies Moody’s and Standard & Poor’s downgraded their ratings on Smurfit-Stone’s debt shortly thereafter. Both said the company could be required to get waivers on its debt covenants.
Smurfit-Stone has an $800 million revolving credit facility due Nov. 2009. Moody’s also rates an estimated $3.5 billion in debt, and noted in December that the company could need to get waivers on some of its covenants to maintain access to the revolver.
Containerboard and corrugated containers are Smurfit-Stone’s main products, and it collects recycled paper as a raw ingredient through 27 recycling plants. Its net sales were $7.4 billion in 2007, and a three-year program designed to make mills more productive is slated to finish in the first half of this year, according to the company’s Web site.
The case is Smurfit-Stone Container Corp., 09-10235, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporters on this story: Dawn McCarty in Wilmington, Delaware at firstname.lastname@example.org; Tiffany Kary in New York Bankruptcy Court at email@example.com.
Last Updated: January 26, 2009 06:02 EST
Sunday, January 25, 2009
I was thinking the other day that Joe McNally had it right when he said that the best shoots are the free ones! They are the assignments you give to yourself. They are the ones that "you do for yourself, for whatever reason, and hopefully come out of it on the other side a better photographer."
These are the assignments that force you to use whatever is in your bag, and whatever is laying around to create the best image possible with what you have...and this in turn forces you to push yourself and learn from the experience...and that is always a good thing!
Above is Danielle, shot in the old grain mill here in McKinney...
Saturday, January 24, 2009
Britain is heading for economic depression for the first time since the 1930s, economists have warned.
By Edmund Conway, Economics Editor
Last Updated: 9:49PM GMT 23 Jan 2009
Families must brace themselves for a slump of far greater severity and longevity than the recessions of the 1980s and 1990s, they warned. They said the current crisis will be of a scale to rival the biggest peace-time crisis in modern history — the Great Depression.
The warning was delivered by economists and politicians after the Office for National Statistics revealed that the economy shrank by 1.5 per cent in the final three months of 2008 alone.
The contraction follows a 0.6 per cent fall in gross domestic product (GDP) — the most comprehensive measure of Britain’s wealth generation — during the previous three months. This means Britain fulfils the criteria for a technical recession — two successive quarters of negative output.
The news sent the pound sliding to its lowest level since 1985. Sterling dropped more than three quarters of a cent to $1.3688 as investors speculated that the Bank of England may be forced to cut interest rates towards zero in response to the recession.
John McFall, the Labour chairman of the Treasury select committee, sounded a more optimistic note. He said: "We know that 2009 is going to be really tough for many people. There is a determination in Britain and across Europe to keep people in work, to avoid unemployment, so people’s contribution will not be lost."
Confirmation that the economy has entered recession capped a week in which Gordon Brown was forced to announce a new £350 billion bank rescue plan. Unemployment has almost reached two million. President Barack Obama discussed the financial crisis with the Prime Minister on the telephone yesterday, his first call to a European leader.
The fall in GDP is the sharpest since 1980, when Britain was mired in its most severe post-war recession. The news is an embarrassment for Mr Brown, who pledged as Chancellor not to return Britain to "boom and bust".
Britain is likely to suffer more than other economies due to its heavy reliance on the financial services sector, which has all but imploded in the wake of the economic crisis, experts said.
Others raised the spectre of an outright economic depression, often defined by experts as a peak-to-trough economic contraction of 10 per cent. Aside from the demobilisation periods following the First and Second World Wars, this kind of contraction has never taken place — not even in the 1930s’ Great Depression.
Roger Bootle, the managing director of Capital Economics, said: "I think there’s a very good chance this recession will be the worst since the 1930s. I suspect the economy could shrink by 6 per cent from last year to the end of next year — and that might not be the end.
The plight facing Britain is uncannily similar to the 1930s, since prices of many assets —from shares to house prices — are falling at record rates, but the value of the debt against which they are held remains unchanged.
This “debt deflation” is among the most painful of all economic phenomena, since it means the amount families owe increases each year even if they borrow no more.
Albert Edwards, a strategist at Société Générale, likened the British economy to a Ponzi scheme — a fraudulent debt mountain like that allegedly used by the New York hedge fund manager Bernard Madoff.
“What I find amazing is that people aren’t really nailing Gordon Brown and [Bank of England Governor] Mervyn King for this,” he said. “At least in the US they had the excuse of the arrival of sub-prime — a new sector of the market. We didn’t really have anything similar but we ended up with a bigger national Ponzi scheme than the US.”
Friday, January 23, 2009
France’s AAA rating may be at risk as the deepening economic slump erodes tax revenue and forces the country to raise borrowing, according to ING Groep NV.
“I’m not saying France is going to be downgraded, but the level of debt puts them in a spot of danger,” Padhraic Garvey, head of investment-grade debt strategy in London at ING, said in an interview. “Their AAA rating is under stress.”
The French government increased its 2009 budget deficit forecast for the third time in 2 1/2 months on Jan. 20 to the highest in 14 years. Public debt will rise to as high as 70 percent of gross domestic product this year, from 67 percent in 2008, Budget Minister Eric Woerth said.
The extra yield investors demand to hold 10-year French bonds instead of the benchmark German bunds widened to 57 basis points on Jan. 21, the most since the euro’s debut a decade ago. The average yield spread in the past 10 years was 8 basis points.
The 16-nation economy will shrink 1.9 percent this year, the first contraction since the euro’s introduction, the European Commission forecast on Jan. 19, cutting its outlook amid the worst financial crisis since World War II. The commission expects France’s deficit to swell to 5.4 percent of GDP in 2009 as the economy contracts by 1.8 percent, the severest recession in six decades.
Standard & Poor’s cut Spain’s AAA sovereign rating by one step to AA+ on Jan. 19. Greece’s classification was lowered to A- from A five days earlier while Portugal’s rating was reduced to A+ from AA- on Jan. 21.
Wednesday, January 21, 2009
Wed Jan 21, 2009 4:02pm EST
LOS ANGELES, Jan 21 (Reuters) - Walt Disney Co (DIS.N) said on Wednesday it sent voluntary buyout offers to 600 executives at its domestic theme parks to cut costs amid an economic meltdown that has depressed attendance and prompted the company to deeply discount Walt Disney World stays.
Disney said if the buyout offer, which expires Feb. 6, does not produce enough reductions, the company will consider layoffs.
A company spokeswoman declined to say what amount of savings or head count reductions Disney was trying to achieve, or what the cost of the terminations would be.
The buyout offers come about six weeks after Disney said its hotel bookings had started to rebound as a result of the discounts. The move appears to be part of "significant" costs savings the company promised investors late last year.
Disney Chief Financial Officer Tom Staggs said at that time that hotel bookings were down about 6 percent in the company's first and second quarters, an improvement over the 10 percent drop the company previously forecast for that period.
In a letter dated Jan. 22, Disney told employees it needed to streamline its executive work force "at all levels" to reduce its cost structure.
The buyouts would become effective between mid-February and the end of March, the letter from Jayne Parker, senior vice president of human resources, said.
Disney shares closed up about 4.9 percent to $21.23 on Wednesday on the New York Stock Exchange. (Reporting by Gina Keating; editing by Carol Bishopric)
Wednesday, January 21, 2009
Trade Grinds to a Halt
Over the last 6-9 months, we have seen many indicators of weakening demand and the impact on trade. For example, the collapse of the Baltic Dry Index - down more than 90%. This reflected lease rates for freighters and indirectly demand for bulk cargo capacity. The initial drops in shipping volume were modest but had a severe impact on commodity prices and shipping rates as the global economy swung from a sellers market to a buyers market. Now we are starting to see the full impact of credit withdrawal. Our thesis has long been that excessive and EZ credit (TM) were the root cause of massive false demand that radically distorted the consumer economies, those who manufactured and exported to them and the raw material suppliers to the manufacturers. The chain of causation has proven out and now we will see just how large that distortion was.
Our back of the envelope calculation is that first-order effects in the US will be 10% of GDP, with further ripple effects from there. Our assumptions are fairly simple. Net additions to household debt ranged between $800 billion to $1.2 trillion from 2002 to 2007. That number fell to $77 billion in Q2 and negative $117 billion in Q3. All data come from the Fed Z.1 Flow of Funds release. We merely assume that net consumer credit will go to zero, whereas it could go severely negative as defaults and debt repayment have already caused outstanding credit to fall. We further assume that household savings will rebound from approximately zero to halfway back to the historic 10% range. The cumulative impact would be to reduce personal consumption by $1.3-1.6 trillion or between 9% and 12% of GDP.
Granted not all of this will hit US production. Much of the damage will occur in the export economies as we stop buying from them. We have repeatedly argued as much. Outsourcing which destroyed jobs in the US and made the target nations prosperous is now going in reverse and this should provide a partial circuit-breaker to the US economy which MAY prevent a consumption-employment-income-consumption death spiral like the 1930s. On the other hand, business spending is also falling and that swing is far more difficult to estimate. For modeling purposes, the hit to US output from lower capital spending should be roughly equal in size to the reduced demand for imports so US GDP probably declines 9-12% - straddling the 10% line of the textbook definition of depression.
Unless people dig themselves even deeper into a debt hole, households will not take on further debt - either out of prudence or inability. It would have been extraordinarily difficult to stop this a year and virtually impossible now. Once the (misplaced) confidence evaporated, the conclusion became inevitable.
I'd like to thank Karl Denninger of Ticker Forum for his inimitable description of the current crisis. The PG version of which runs:
We're screwed, but they're screwed worse.We are indeed seeing just how bad the rest of the world has it right now. The NY Timesdid an excellent piece over the weekend that described the rapid decline of world trade. Here's the money quote:
Over all, the total reported exports from those 43 countries peaked in July, at $1.03 trillion. By November, the figure was down 26 percent, to $766 billion. Since the figures are seasonally adjusted, the monthly figures should be comparable.This is not just a problem for Asia but a global one. German exports fell 21%. Over a quarter of all world trade went away in only FOUR MONTHS. I think this is a pretty good example of just how much credit distorted the US and world economy. At some point, credit goes from a useful organ to a cancer. We have often spoken of the Universal Debt bubble and the breathtaking size and scope of it. It was "fun" while it lasted but the bill for the UDB is about to come due. The check is on its way to the table and we're going to spend a lot of time arguing over who gets to pay for it. George Washington spoke of government but it applies to credit as well and the distinction between the government and the banks grows ever smaller:
Tuesday, January 20, 2009
Tuesday, January 20, 2009
My fellow citizens:
I stand here today humbled by the task before us, grateful for the trust you have bestowed, mindful of the sacrifices borne by our ancestors. I thank President Bush for his service to our nation, as well as the generosity and cooperation he has shown throughout this transition.
Forty-four Americans have now taken the presidential oath. The words have been spoken during rising tides of prosperity and the still waters of peace. Yet, every so often the oath is taken amidst gathering clouds and raging storms. At these moments, America has carried on not simply because of the skill or vision of those in high office, but because We the People have remained faithful to the ideals of our forbearers, and true to our founding documents.
So it has been. So it must be with this generation of Americans.
That we are in the midst of crisis is now well understood. Our nation is at war, against a far-reaching network of violence and hatred. Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. Homes have been lost; jobs shed; businesses shuttered. Our health care is too costly; our schools fail too many; and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.
These are the indicators of crisis, subject to data and statistics. Less measurable but no less profound is a sapping of confidence across our land - a nagging fear that America's decline is inevitable, and that the next generation must lower its sights.
Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America - they will be met.
On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord.
On this day, we come to proclaim an end to the petty grievances and false promises, the recriminations and worn out dogmas, that for far too long have strangled our politics.
We remain a young nation, but in the words of Scripture, the time has come to set aside childish things. The time has come to reaffirm our enduring spirit; to choose our better history; to carry forward that precious gift, that noble idea, passed on from generation to generation: the God-given promise that all are equal, all are free, and all deserve a chance to pursue their full measure of happiness.
In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted - for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things - some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.
For us, they packed up their few worldly possessions and traveled across oceans in search of a new life.
For us, they toiled in sweatshops and settled the West; endured the lash of the whip and plowed the hard earth.
For us, they fought and died, in places like Concord and Gettysburg; Normandy and Khe Sahn.
Time and again these men and women struggled and sacrificed and worked till their hands were raw so that we might live a better life. They saw America as bigger than the sum of our individual ambitions; greater than all the differences of birth or wealth or faction.
This is the journey we continue today. We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions - that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.
For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act - not only to create new jobs, but to lay a new foundation for growth. We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age. All this we can do. And all this we will do.
Now, there are some who question the scale of our ambitions - who suggest that our system cannot tolerate too many big plans. Their memories are short. For they have forgotten what this country has already done; what free men and women can achieve when imagination is joined to common purpose, and necessity to courage.
What the cynics fail to understand is that the ground has shifted beneath them - that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works - whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. And those of us who manage the public's dollars will be held to account - to spend wisely, reform bad habits, and do our business in the light of day - because only then can we restore the vital trust between a people and their government.
Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control - and that a nation cannot prosper long when it favors only the prosperous. The success of our economy has always depended not just on the size of our Gross Domestic Product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart - not out of charity, but because it is the surest route to our common good.
As for our common defense, we reject as false the choice between our safety and our ideals. Our Founding Fathers, faced with perils we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience's sake. And so to all other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: know that America is a friend of each nation and every man, woman, and child who seeks a future of peace and dignity, and that we are ready to lead once more.
Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.
We are the keepers of this legacy. Guided by these principles once more, we can meet those new threats that demand even greater effort - even greater cooperation and understanding between nations. We will begin to responsibly leave Iraq to its people, and forge a hard-earned peace in Afghanistan. With old friends and former foes, we will work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet. We will not apologize for our way of life, nor will we waver in its defense, and for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that our spirit is stronger and cannot be broken; you cannot outlast us, and we will defeat you.
For we know that our patchwork heritage is a strength, not a weakness. We are a nation of Christians and Muslims, Jews and Hindus - and non-believers. We are shaped by every language and culture, drawn from every end of this Earth; and because we have tasted the bitter swill of civil war and segregation, and emerged from that dark chapter stronger and more united, we cannot help but believe that the old hatreds shall someday pass; that the lines of tribe shall soon dissolve; that as the world grows smaller, our common humanity shall reveal itself; and that America must play its role in ushering in a new era of peace.
To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West - know that your people will judge you on what you can build, not what you destroy. To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history; but that we will extend a hand if you are willing to unclench your fist.
To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds. And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to suffering outside our borders; nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it.
As we consider the road that unfolds before us, we remember with humble gratitude those brave Americans who, at this very hour, patrol far-off deserts and distant mountains. They have something to tell us today, just as the fallen heroes who lie in Arlington whisper through the ages. We honor them not only because they are guardians of our liberty, but because they embody the spirit of service; a willingness to find meaning in something greater than themselves. And yet, at this moment - a moment that will define a generation - it is precisely this spirit that must inhabit us all.
For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies. It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours. It is the firefighter's courage to storm a stairway filled with smoke, but also a parent's willingness to nurture a child, that finally decides our fate.
Our challenges may be new. The instruments with which we meet them may be new. But those values upon which our success depends - hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism - these things are old. These things are true. They have been the quiet force of progress throughout our history. What is demanded then is a return to these truths. What is required of us now is a new era of responsibility - a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.
This is the price and the promise of citizenship.
This is the source of our confidence - the knowledge that God calls on us to shape an uncertain destiny.
This is the meaning of our liberty and our creed - why men and women and children of every race and every faith can join in celebration across this magnificent mall, and why a man whose father less than sixty years ago might not have been served at a local restaurant can now stand before you to take a most sacred oath.
So let us mark this day with remembrance, of who we are and how far we have traveled. In the year of America's birth, in the coldest of months, a small band of patriots huddled by dying campfires on the shores of an icy river. The capital was abandoned. The enemy was advancing. The snow was stained with blood. At a moment when the outcome of our revolution was most in doubt, the father of our nation ordered these words be read to the people:
"Let it be told to the future world...that in the depth of winter, when nothing but hope and virtue could survive...that the city and the country, alarmed at one common danger, came forth to meet [it]."
America. In the face of our common dangers, in this winter of our hardship, let us remember these timeless words. With hope and virtue, let us brave once more the icy currents, and endure what storms may come. Let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.
Sunday, January 18, 2009
Saturday, January 17, 2009
Fed May Purchase Treasuries in Days to Ease Credit, UBS Says
By Whitney Kisling
Jan. 16 (Bloomberg) -- The Federal Reserve may purchase Treasuries within the next few days or weeks as it broadens its policy beyond interest rate cuts to ease credit conditions amid the worst recession in 25 years, according to UBS AG.
“Fed officials use every chance they get to highlight Treasury purchases as an important arrow in their quiver,” William O’Donnell, U.S. government bond strategist at UBS Securities LLC in Stamford, Connecticut, wrote in a research report today. “It now appears as if the Fed may use Treasury purchases as a blunt tool to bring loan rates down further. This makes it more likely that Treasury purchases come sooner.”
Fed Chairman Ben S. Bernanke reiterated Jan. 13 that he’s considering buying long-term Treasuries as a way to bring down borrowing rates and unfreeze private credit markets as U.S. economic data and government reports continue to show the recession is deepening.
The economy weakened in all regions during the past month, the Fed said the following day, as access to credit remains locked, forcing consumers to cut back on spending.
Lower rates could “spill over into private borrowing rates much more broadly,” Federal Reserve Bank of San Francisco President Janet Yellen said yesterday in a speech. UBS said Yellen’s comments refer to more than mortgage rates, which the Fed already started trying to lower this month by buying $500 billion of mortgage-backed securities.
“By buying back Treasury debt, all loan markets should benefit via ‘denominator effects’ by further lowering base rates,” said O’Donnell of UBS, one of the 17 primary dealers that trade directly with the Fed.
Treasury purchases may help to keep yields low as President-elect Barack Obama aims to roll out an $825 billion stimulus plan that will be funded with government debt.
Yields on 10-year notes rose 7 basis points to 2.27 percent at 12:19 p.m. in New York. The yield dropped last month to the lowest level on record when investors sought government debt as a haven amid the collapse of global credit markets.
To contact the reporter on this story: Whitney Kisling in New York at firstname.lastname@example.org
One has to really question whether or not this is in actuality Monetizing the debt?
"The Federal Reserve becomes the Buyer and Seller of US Gov't debt, there is no 'Market" in which to sell the debt as it's too risky. The Fed makes all it can buy and The Fed buys all it makes, and it's a real whirlpool once this track has been decided upon. This only serves to make Finance Market problems for the US Dollar exponentially WORSE, it is only a time-staving move for an inevitable US Dollar collapse. The "repugnance" of US Debt feeds on itself, NOBODY wants to hold onto US debt since it's likely to lose value at any rate, at any time. There is no more consistency to assess risk on. US debt will not be sellable to anyone BUT The Federal Reserve. It becomes in essence, worthless."
Friday, January 16, 2009
Thursday, January 15, 2009
Edinburgh, had this to say about the fall of the Athenian Republic some
2,000 years prior:
"A democracy is always temporary in nature; it simply cannot exist as a
permanent form of government. A democracy will continue to exist up until
the time that voters discover that they can vote themselves generous gifts
from the public treasury. From that moment on, the majority always votes for
the candidates who promise the most benefits from the public treasury, with
the result that every democracy will finally collapse due to loose fiscal
policy, which is always followed by a dictatorship."
"The average age of the worlds greatest civilizations from the beginning of
history, has been about 200 years.
During those 200 years, these nations always progressed through the
1. From bondage to spiritual faith;
2. From spiritual faith to great courage;
3. From courage to liberty;
4. From liberty to abundance;
5. From abundance to complacency;
6. From complacency to apathy;
7. From apathy to dependence;
8. From dependence back into bondage "
Wednesday, January 14, 2009
Coffee shortage brewing after poor Brazil crop
Published: January 13 2009 12:11 | Last updated: January 13 2009 19:26
A substantial fall in Brazilian coffee production this year looks likely to drag the global coffee market into a supply deficit in 2009-10, according to the International Coffee Organisation which released its latest monthly report on Monday.
The ICO said Brazil’scoffee production, which follows a biennial cycle (high output one year followed by low the next), could fall from 46m 60kg bags in 2008-09 to between 36.9m and 38.8m bags this year, a drop of 16 to 20 per cent.
The ICO said the preliminary crop forecast for Brazil implied a shortfall of at least 5m bags for world supply in 2009-10 but cautioned that a more accurate picture would emerge once production estimates from other countries were published in the near future.
In New York, ICE March arabica coffee futures firmed 0.2 per cent at $1.1470 per pound following a drop of 17.7 per cent last year.
Global coffee consumption in calendar year 2008 is estimated at 128m bags, a rise of 2.4 per cent on the previous year and matching annual consumption growth since 2000, with little evidence of the global financial crisis affecting demand. Consumption could rise to more than 132m bags in 2009 and 134m bags in 2010 if future demand growth matches the historic average.
In London, Liffe March robusta coffee futures dipped 1.3 per cent to $1,643 a tonne following a fall of 7.8 per cent in 2008.
Oil prices staged a rebound on hopes of further government action to address the credit crisis after Ben Bernanke, chairman of the US Federal Reserve, said more capital injections and guarantees for financial institutions could be needed.
Nymex February West Texas Intermediate recovered from early weakness to rise $0.19 to $37.78, trading between a low of $36.10 and a high of $39.50. The March WTI contract traded $1.25 higher at $44.90.
The large spread which has developed between the February and March contracts has been attributed partly to expectations that oil companies will deliver more of the supplies that have been stored in offshore tankers to the US mainland now that the tax year end has passed. Crude oil in storage at Cushing, Oklahoma, the delivery point for WTI, has reached record levels and traders expect further deliveries from offshore tankers to be evident in the US weekly inventories data, due out today.
ICE February Brent rose $1.92 to $44.83 a barrel after touching a high of $45.59.
The rise for crude prices came in spite of the US government warning that a steeper fall for global oil consumption was likely this year. The Energy Information Administration revised its 2009 global demand forecast to a fall of 810,000 barrels a day, compared with its earlier projection for a decline of 610,000 b/d.
The EIA said that total US consumption fell 5.7 per cent in 2008 and that a further decline of 2 per cent was expected this year, with only a modest rebound of 0.8 per cent likely in 2010.
Tuesday, January 13, 2009
Freight rates for containers shipped from Asia to Europe have fallen to zero for the first time since records began, underscoring the dramatic collapse in trade since the world economy buckled in October.
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 5:42PM GMT 13 Jan 2009
The cost of shipping goods from Asia to Europe has tumbled
"They have already hit zero," said Charles de Trenck, a broker at Transport Trackers in Hong Kong. "We have seen trade activity fall off a cliff. Asia-Europe is an unmitigated disaster."
Shipping journal Lloyd's List said brokers in Singapore are now waiving fees for containers travelling from South China, charging only for the minimal "bunker" costs. Container fees from North Asia have dropped $200, taking them below operating cost.
Industry sources said they have never seen rates fall so low. "This is a whole new ball game," said one trader.
The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy.
Trade data from Asia's export tigers has been disastrous over recent weeks, reflecting the collapse in US, UK and European markets.
Korea's exports fell 30pc in January compared to a year earlier. Exports have slumped 42pc in Taiwan and 27pc in Japan, according to the most recent monthly data. Even China has now started to see an outright contraction in shipments, led by steel, electronics and textiles.
A report by ING yesterday said shipping activity at US ports has suddenly dived. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18pc year-on-year, a far more serious decline than anything seen in recent recessions.
"This is no regular cycle slowdown, but a complete collapse in foreign demand," said Lindsay Coburn, ING's trade consultant.
Idle ships are now stretched in rows outside Singapore's harbour, creating an eerie silhouette like a vast naval fleet at anchor. Shipping experts note the number of vessels moving around seem unusually high in the water, indicating low cargoes.
It became difficult for the shippers to obtain routine letters of credit at the height of financial crisis over the autumn, causing goods to pile up at ports even though there was a willing buyer at the other end. Analysts say this problem has been resolved, but the shipping industry has since been swamped by the global trade contraction.
The World Bank caused shockwaves with a warning last month that global trade may decline this year for the first time since the Second World War. This appears increasingly certain with each new batch of data.
Mr de Trenck predicts Asian trade to the US will fall 7pc this year. To Europe he estimates a drop of 9pc – possibly 12pc. Trade flows grow 8pc in an average year.
He said it was "illogical" for shippers to offer zero rates, but they do whatever they can to survive in a highly cyclical market.
Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Shipping lines say credit woes compounded demand slowdown
2008-12-29 11:04 AM
Seaborne transportation of goods such as washing machines and other household appliances fell the most in at least 5 1/2 years in November, according to data published last week on the Web site of Neptune Orient Lines. Shipments dropped 12 percent to 169,700 boxes in the four weeks to Nov. 14, compared with a year earlier, it said.
"We have in some trades received feedback from customers and the market that they are having issues with letters of credit," Michel Deleuran, head of network and product at Copenhagen-based Maersk Line, said by phone today. The issue is exacerbating "a lack of demand in individual countries" as the global recession takes hold, he said.
World trade in commodities, from oil and coal to timber and grains, has already been hurt by a reduction in the sums banks are willing to advance to customers to ensure payments. Maersk spokesman Michael Storgaard said Oct. 15 that container shipments of consumer goods weren't affected at the time.
Reduced supply of trade finance has "been a factor" in Neptune Orient Lines reporting its largest year-on-year decline in shipments since May 2003, David Goodwin, vice president of NOL Group Corporate Affairs, said in an e-mailed statement Dec. 12. "The key driver behind lower demand for container shipping is the sharp reduction in consumer confidence and consumer spending globally," he said. The cost of shipping containers has declined "very dramatically" and at "unprecedented" speed, Deleuran said today. He declined to be more specific because shipping lines can breach competition rules by discussing what they earn.
Tuesday, January 06, 2009
By Matt Andrejczak
Last update: 4:21 p.m. EST Jan. 6, 2009
SAN FRANCISCO (MarketWatch) -- Alcoa Inc. (AA): late Tuesday said it plans to cut 13% of its global workforce, sell four business units, cut output, freeze salaries and hiring efforts. The Pittsburgh-based aluminum giant said it is taking the steps to conserve cash in the current economic downturn. The meausures will result in a fourth-quarter charge of $900 million to $950 million after tax, or $1.13 to $1.19 a share. Alcoa, a Dow Jones Industrials Average component, reports earnings Jan. 12.
By Nouriel Roubini
Page 1 of 1
“Because the United States is such a huge part of the global economy, there’s real reason to worry that an American financial virus could mark the beginning of a global economic contagion.” – Nouriel Roubini, March 2008
Last year’s worst-case scenarios came true. The global financial pandemic that I and others had warned about is now upon us. But we are still only in the early stages of this crisis. My predictions for the coming year, unfortunately, are even more dire: The bubbles, and there were many, have only begun to burst.
The prevailing conventional wisdom holds that prices of many risky financial assets have fallen so much that we are at the bottom. Although it’s true that these assets have fallen sharply from their peaks of late 2007, they will likely fall further still. In the next few months, the macroeconomic news in the United States and around the world will be much worse than most expect. Corporate earnings reports will shock any equity analysts who are still deluding themselves that the economic contraction will be mild and short.
Severe vulnerabilities remain in financial markets: a credit crunch that will get worse before it gets any better; deleveraging that continues as hedge funds and other leveraged players are forced to sell assets into illiquid and distressed markets, thus leading to cascading falls in asset prices, margin calls, and further deleveraging; other financial institutions going bust; a few emerging-market economies entering a full-blown financial crisis, and some at risk of defaulting on their sovereign debt.
Certainly, the United States will experience its worst recession in decades. The formerly mainstream notion that the U.S. contraction would be short and shallow—a V-shaped recession with a quick recovery like the ones in 1990–91 and 2001—is out the window. Instead, the U.S. contraction will be U-shaped: long, deep, and lasting about 24 months. It could end up being even longer, an L-shaped, multiyear stagnation, like the one Japan suffered in the 1990s.
As the U.S. economy shrinks, the entire global economy will go into recession. In Europe, Canada, Japan, and the other advanced economies, it will be severe. Nor will emerging-market economies—linked to the developed world by trade in goods, finance, and currency—escape real pain.
What constitutes a “recession” will depend on the country in question. For China, a hard landing would mean annual growth falls from 12 to 6 percent. China must grow by 10 percent or more each year to bring 12 to 15 million poor rural farmers into the modern world. For other emerging markets, such as Brazil or South Korea, growth below 3 percent would represent a hard landing. The most vulnerable countries, such as Ecuador, Hungary, Latvia, Pakistan, or Ukraine may experience an outright financial crisis and will require massive external financing to avoid a meltdown.
For the wealthiest countries, a debilitating combination of economic stagnation and deflation might happen as markets for goods go slack because aggregate demand falls. Given how sharply production capacity has risen due to overinvestment in China and other emerging markets, this drop in demand would likely lead to lower inflation. Meanwhile, job losses would mount and unemployment rates would rise, putting downward pressure on wages. Weakening commodity markets—where prices have already fallen sharply since their summer peak and will fall further in a global recession—would lead to still lower inflation. Indeed, by early 2009, inflation in the advanced economies could fall toward the 1 percent level, too close to deflation for comfort.
This scenario is dangerous for many reasons. A number of central banks will be close enough to setting interest rates of zero that their economies fall into a triple whammy: a liquidity trap, a deflation trap, and debt deflation. In a liquidity trap, the banks lose their ability to stimulate the economy because they cannot set nominal interest rates below zero. In a deflation trap, falling prices mean that real interest rates are relatively high, choking off consumption and investment. This leads to a vicious circle wherein incomes and jobs are falling, with demand dropping still further. Finally, in debt deflation, the real value of nominal debts rises as prices fall—bad news for countries such as the United States and Japan that have high ratios of debt to GDP.
As orthodox monetary tools become ineffective, policymakers will turn to unorthodox approaches. We’ll see traditional fiscal policy, in the form of tax cuts and spending increases, but also worldwide bailouts of lenders, investors, and financial institutions, as well as borrowers. Central banks will inject massive amounts of cash into financial systems to unclog the liquidity crunch. More radical actions, such as outright purchases of corporate and government bonds or subsidization of mortgage rates, might also be necessary to get credit markets functioning properly again.
This crisis is not merely the result of the U.S. housing bubble’s bursting or the collapse of the United States’ subprime mortgage sector. The credit excesses that created this disaster were global. There were many bubbles, and they extended beyond housing in many countries to commercial real estate mortgages and loans, to credit cards, auto loans, and student loans. There were bubbles for the securitized products that converted these loans and mortgages into complex, toxic, and destructive financial instruments. And there were still more bubbles for local government borrowing, leveraged buyouts, hedge funds, commercial and industrial loans, corporate bonds, commodities, and credit-default swaps—a dangerous unregulated market wherein up to $60 trillion of nominal protection was sold against an outstanding stock of corporate bonds of just $6 trillion.
Taken together, these amounted to the biggest asset and credit bubble in human history; as it goes bust, the overall credit losses could reach as high as $2 trillion. Unless governments move with more alacrity to recapitalize banks and other financial institutions, the credit crunch will become even more severe. Losses will mount faster than companies can replenish their balance sheets.
Thanks to the radical actions of the G-7 and others, the risk of a total systemic financial meltdown has been reduced. But unfortunately, the worst is not behind us. This will be a painful year. Only very aggressive, coordinated, and effective action by policymakers will ensure that 2010 will not be even worse than 2009 is likely to be.
Nouriel Roubini is professor of economics at New York University’s Stern School of Business