January 30, 2008 - 3:23 PM | Comment
Standard economics holds that the nation is in a recession, which is a serious business slump, when it suffers negative growth for nine straight months, or three quarters if you prefer.
In the final quarter of last year, the U.S. economy grew a miniscule six tenths of a percent. But it was still growth of the gross domestic product. Not "negative growth."
Although the stock market rallied last week when the Federal Reserve cut interest rates from 3.75 to 3.00 in one fell swoop, the nation's coordinating bank cut the rate again to 2.50 percent on Wednesday.
Peter Morici, the University of Maryland economist, said this latest cut won't make much difference because, to summarize, many lenders are scared. Which illustrates that most business climates ride to a certain extent on consumer and lender confidence. Morici said Federal Reserve Chairman Bernard Bernanke did this latest cut mainly because the markets expected it.
But are the screaming commentaries by TV reporters on stock market and commodities floors driving this pessimism, and doing their own job of undermining lender confidence?
Typical of his hyperactivity is a survey put out by Financial Times/Harris poll that "large majorities" in Europe and the U.S. believe that business will be worse this year than last. The "large majorities" cited by FT/Harris include 54 percent in the U.S. and 56 percent in France.
At the same time, FT/Harris says that pluralities in the U.S. and the European nations feel their individual situations will be about the same this year as compared to 2007. Go figure.
What's your expectation for the region, the nation, and personally in 2008?
--Douglas Turner
January 28, 2008 - 10:15 AM | Comment
SWEETWATER, Fla. … When Mitt Romney appeared before about 250 Cuban-Americans at a youth
center here Sunday, he was wearing an odd-looking shirt that most likely wouldn't mesh with his normal sense of style.
But it was the traditional "guayabera" worn by Cuban men and a local organization of survivors of the Bay of Pigs fiasco in 1961, and Romney knew wearing this outfit in front of this audience … and praising the veterans … was the right thing to do.
Indeed, more than three million Hispanics live in South Florida and the Orlando and Tampa metropolitan areas, and their presence is everywhere. That's why every candidate who has been stumping through Florida over the past few weeks has taken time to pay special attention to
this key voting bloc.
"A lot of us down here have come and lived the American dream," said Jose "Pepe" Diaz, a Miami-Dade County commissioner who introduced the former Massachusetts governor on Sunday. "We're part of America, and I think it's important to reach out to every community … especially in an election."
While Sen. John McCain and former Mayor Rudy Giuliani also have made strong appeals, Diaz said he thinks Romney has just as much chance as any to capture the Latino vote … and as a result … maybe the Florida primary too.
It will all be decided Tuesday night when the results come in, culminating weeks of furious
campaigning in the Sunshine State … a big and diverse state with significant populations of
minorities like Hispanics.
… Robert J. McCarthy
January 26, 2008 - 5:00 AM | Comment
COLUMBIA, S.C. … I spent the past two days talking to voters from across this state, which will hold its Democratic primary Saturday, and I couldn't help but be struck by the vast chasm between what was being said and what the candidates were talking about.
Sen. Hillary Rodham Clinton and Sen. Barack Obama spent a goodly part of a debate Monday, not to mention some radio air time this week, attacking each other. And yet the voters I met had hardly a bad word to say about either one of them.
Those who liked Clinton tended to say Obama wasn't quite experienced enough, and those who liked Obama tended to think that one Clinton was great, but two would be one too many.
And when I asked the voters about the debate or the attack ads, they would roll their eyes or change the subject or dismiss the question as fast as they could.
In fact, they all seemed a bit like Leecia and Martin Eve, sister and brother from Buffalo, who raveled here to campaign … Leecia for Hillary, Martin for Barack … and who don't seem overly traumatized about being on different sides.
It all surprised me a bit, because if there's one thing I've learned in 19 years of political reporting, it's that voters tend to like their guy (or girl) and loathe the opposition.
But based on what I heard this week … and from dozens of voters in Iowa,
New Hampshire and Nevada … there seems to be something different going on in
this Democratic race for president.
--Jerry Zremski
January 24, 2008 - 7:30 PM | Comment
MIAMI -- Rudy Giuliani tried to make the case for winning the influential Cuban-American vote during two stops here Friday.
But in a sign of the luck his campaign is encountering these days, his reward was an endorsement for Sen. John McCain by the state's top Hispanic politician -- Sen. Mel Martinez.
The Buffalo News traveled with Giuliani all day Friday, and for all his difficulties, the ex-mayor of New York remains upbeat. He concentrated on his new emphasis on reviving the economy, which he says can be summarized in old-fashioned conservative principles like cutting taxes and reducing regulations.
And he comes off a strong performance in the debate held Thursday night at Florida Atlantic University (though most observers gave former Gov. Mitt Romney the highest reviews). His supporters are holding out strong hope for a good showing in Tuesday's Republican presidential primary -- even if some of that talk is now about coming in second.
"Then we'll be in it for Super Tuesday and beyond," said former Lake Worth Mayor Ralph Schenck, a longtime Giuliani supporter, referring to the slate of 24 contests around the nation on Feb. 5.
There is also optimism surrounding the former mayor's strong Florida organization, which may have been working Florida longer than any other.
But the polls show Romney and Sen. John McCain at the top of the heap in Florida, a far cry from the situation just two months ago -- when Giuliani seemed invincible in the Sunshine State.
-- Robert J. McCarthy
January 23, 2008 - 3:50 PM | Comment
On Monday night, President Bush gives his final State of the Union Message. Might it not be a good time for him to make amends for starting the war against Iraq?
The nonpartisan Center for Public Integrity says it has tracked 935 "false statements" made by members of the Bush administration to justify the pre-emptive American invasion of Iraq.
In its report "Orchestrated Deception on the Path to War," the Center cites false statements made by then Secretary of State Colin Powell, then Defense Secretary Donald Rumsfeld and several others, including the president himself. The report says Bush himself had the most falsehoods, 260, including statements about weapons of mass destruction, plans to wage nuclear war, and purported links to al-Qaida.
Bush was closely followed by Powell, who, the center said, made 254 inaccurate utterances, most famously his lecture to the United Nations Security Council in February, 2003, in which he displayed aerial photos of a facility there he said was making weapons of mass destruction.
The center said Bush and seven senior officials, in addition to their falsehoods leading up to the March, 2003, invasion "also made hundreds of other statements in the two years after 9/11 in which they implied that Iraq had weapons of mass destruction or links to al-Qaida. Other administration higher-ups, joined by Pentagon officials and Republican leaders in Congress, also routinely sounded false war alarms in the Washington echo chamber."
"The cumulative effect of these false statements — amplified by thousands of news stories and broadcasts — was massive, with the media coverage creating an almost impenetrable din for several critical months in the run-up to war. Some journalists — indeed, even some entire news organizations — have since acknowledged that their coverage during those prewar months was far too deferential and uncritical. These mea culpas notwithstanding, much of the wall-to-wall media coverage provided additional, 'independent' validation of the Bush administration's false statements about Iraq."
The president has since acknowledged that there were no nuclear or other mass destruction weapons found, and that in some cases the intelligence he had turned out to be wrong. But he has never admitted he made a mistake or exercised poor judgment.
American military dead from the Iraq War approach 4,000. The country is broken. For Iraqi civilians, almost 15 percent of its prewar population has been displaced. The war is likely to cost more than $1 trillion by the time Bush leaves office in a year, all of paid for by borrowed money, leading to a national debt of $9 trillion at a time of threatened recession.
The center's report is available on the web at http://www.publicintegrity.org/WarCard/
Despite the controversy, many Americans seem well-disposed to the war, with Sen. John McCain, R-Ariz., perhaps the leading proponent of it among presidential candidates.
Seizing on the center's report, the Democratic National Committee has released a survey of McCain's statements in support of the conflict, beginning with McCain's praise of Bush's leadership on the war in 2003, and his plea last year that the "surge" be given more time to work, and his claim that "great local political progress" is being made in Iraq.
--- Douglas Turner
January 22, 2008 - 9:45 AM | Comment
Just six weeks ago, Rudy Giuliani's standing in the national presidential polls had his legions of local supporters riding high.
But after new polls on Monday showed the former mayor of New York badly trailing Sen. John McCain … even on home turf … just about everyone realizes he must win Florida or pack up and come home.
His local supporters, however, remain optimistic.
"These polls are just a snapshot in time," said Erie County Republican Chairman James P. Domagalski, a top Giuliani supporter in Western New York. "These polls have changed literally 100 times.
"But regardless of the poll," he added, "I believe New Yorkers will vote for their favorite son … Rudy Giuliani. When they get into the voting booth, they'll remember what he did on Sept. 11."
That started out as the central Giuliani strategy … cast the former mayor as the leader who took decisive action in the tragedy's aftermath and as someone who could deal with terrorists and rogue states around the world.
But amid a plummeting stock market and mounting fears of a national recession, some observers say that theme no longer ranks as the top concern of Florida … or even New York … voters. As a result, the former mayor is retooling and shooting at McCain for opposing President Bush's tax cut program several years ago.
Now the Giuliani hope is that the large crowds he has been drawing in Florida will translate into a victory there on Jan. 29, and that the original strategy of building on that momentum for "Super Duper Tuesday" (which includes New York), will still hold true.
--- Robert J. McCarthy
January 22, 2008 - 9:41 AM | Comment
Congressional leaders have quickly joined President Bush in pushing a so-called "stimulus" package to stave off a feared recession. On the campaign trail, presidential candidates are vying to post the largest total amount of money the government will spend in either tax cuts, cash rebates, or pump-priming public works.
The moves look to some as a way for Republicans and Democrats to inoculate themselves against blame for allowing an economic slide to occur.
Each recession has its own special traits. The one that began during the Ford and Carter administrations combined stagnation with interest-driven inflation. The phenomenon was called "stagflation."
But the worst kind of financial calamity, the kind of bank panic that occurred in 1893,when American paper and precious metals turned worthless, has not happened since the Great Depression when the government created the Federal Deposit Insurance Corporation, guaranteeing the value of most depositors' money.
So far foreign markets have reacted negatively to calls for action in Washington, with stock values in Hong Kong and Germany falling as much as 8 percent in one day. The Dow Jones Industrial average and other American markets have also plunged, prompting many to wonder where the bottom is.
Good question. Consumer debt of all kinds has risen 25 percent in five years to a record $2.5 trillion, with write offs of bad credit card debts approaching record levels. Once impregnable banking houses in Manhattan have written off huge losses because of overinvestment of what the market pleasantly calls "subprime"--meaning worthless--mortgage loans.
These banks have run for support to financial houses in Singapore, India and Communist China. More menacing is the condition of little-noticed companies that insure bond issues by local, state and federal governments, and industry. One bond assurance firm, Ambac, just had its credit rating downgraded. Another bond assurance company had to borrow $1 billion at a 14 percent interest rate to save, temporarily, its AAA rating.
Bloomberg said cut credit ratings could force asset sales, at sacrifice prices, and create more turmoil in the credit markets. Downgraded credit could also make borrowing by state and local governments much more expensive, prompting some agencies to postpone construction or other investments.
As unsettling as this is, the Wall Street Journal reported that losses from the credit crunch, which amount to seven tenths of one percent of gross national product, have not approached the losses resulting from the implosion of the U.S. savings and loan industry in the 1980s. That cost $189 billion, or 3.2 percent of gross national product.
The S&L crisis in part had the same cause as this one. President Reagan and the congressional oversight committees, prompted by inappropriate influence by segments of the banking business, dropped their guard against protecting consumers against unscrupulous profiteering. In those days, they called it deregulation. The "subprime"--worthless--mortgage crisis was also caused by the lowering of state and federal protections against unwise investments.
Until this ugliness raised its head, there had been calls from Wall Street to Congress to relax the strict accounting standards promugated after the Enron scandal. Wonder what will happen now to those blandishments?
--Douglas Turner
January 11, 2008 - 3:31 PM | Comment
Before leaving on what the White House billed as a week-long peace trip to the Middle East, President Bush threatened Iran with military action if Tehran authorizes any further swift boat "provocation" on American naval ships patrolling the Persian Gulf.
Bush didn't use the term military, but warned Iran of serious consequences if these small Iranian naval craft interfere with our Navy. He based his remarks on early reports that Iranian forces made a radio threat against the U.S. ships. But two days later, the Pentagon said the threat may not have come from the Iranian Revolutionary Guard boats and may not even have been directed at our ships.
Further, the Pentagon maintained the report that the Iranians threatened the U.S. Navy did not come from our Defense Department.
Bush's visit to Israel and Palestinian territory left many confused because on one hand he spoke of some of the land settled by Israelis after the 1967 war as "occupied" territory, then hinted that the administration favors some form of land-for-peace deal with the Palestinians.
"There should be an end to the occupation that began in 1967," Bush told reporters. But then he said Palestinians should not expect Israel to give up all the territory it won 41 years ago. Further mixing the tone of the journey, the Bush administration is expected to announce it plans to sell $20 billion worth of high-precision missiles and other military equipment to the Saudi Arabian kingdom.
The Associated Press said Friday the announcement is timed to coincide with Bush's arrival in the kingdom on Monday. Nothing was said about his trying to talk the Saudis into increasing crude oil shipments to bring down the price of gasoline.
Some observers wonder why Bush chose this time to make such a trip, wondering why he would not instead devote himself to preparing his last State of the Union message, his final budget message, and meeting with Treasury officials and the financial community to try to ease some of the anxiety over possible recession, and roiling anxieties over credit on Wall Street.
The confusion over the "attack" of the Iranian swiftboats--reminiscent of President Johnson's exploitation of a 1964 false report of a North Vietnamese attack on a U.S. fighting ship leading to the escalation of the Vietnam War, is compounded by the recent National Intelligence Estimate of the likelihood that Iran is creating a nuclear bomb.
The intelligence community said Iran halted its N-weapons program in 2003, underscoring differences the U.S. and the United Kingdom have over policies on Iran. Other stops on this tour include Kuwait, Bahrain, the United Arab Emirates, and Dubai. He returns to Washington late Monday.
Was this trip necessary?
--Douglas Turner
January 11, 2008 - 11:35 AM | Comment
As worries increase over a possible recession this year, fair trade groups in Washington are making new calls for greater watchfulness on unfair trading practices by China and other competitors.
Among these groups is the U.S. Business and Industry Council, which represents small and medium-sized manufacturers. A recent USBIC study shows that American manufacturers are not only losing ground to imports in such labor-intensive areas as toy manufacturing and apparel, but in "advanced" or high-tech industries as well.
Alan Tonelson, senior analyst for USBIC said the "report shows that, even in so-called high-tech industries, where we're supposed to have a natural advantage, U.S.-based manufacturers can't compete effectively on their home turf. And if they can't prevail at home, how can they compete effectively abroad?"
"This report shows that dozens and dozens of our key industries are facing the same kinds of import floods that have pushed the U.S.-owned auto industry close to bankruptcy," Tonelson said.
The fault, he says, lies with the failure of the Bush administration to deal with currency manipulation by Communist China, theft of intellectual property, and the willingness of American companies to move even their most capital intensive production overseas.
Another group, the Alliance for American Manufacturing, says China's central and provincial governments "have been boosting China's steel production with massive, hidden energy subsidies that include supports for" coal, electricity and natural gas. These subsidies are illegal under China's commitments to the World Trade Organization.
With the help of these subsidies, China shipped 5.4 million tons of steel to the U.S. in 2006 --more than double the amount in 2005.
Overall, China accounted for nearly $26 billion of the U.S. trade deficit last October--a five-fold growth in six years. Peter Morici, the University of Maryland economist, says China still devalues its currency by 50 percent.
Despite this, the Bush administration refuses to cite China as a currency manipulator, an action that would bring about sanctions against U.S. imports of Chinese goods.
Morici says "apologists for Chinese currency and trade practices point out that U.S. consumers benefit from less expensive products at Wal-Mart and other purveyors of subsidized imports.But these bargains come at high cost--we are saddling our children with debt to foreigners and slashing economic growth."
So far, the presidential candidates of both parties have said little about China's behavior, about trade deficits, or possible American responses. The exceptions are Rep. Duncan Hunter, R-Calif., and Rep. Ron Paul, R-Texas.
Both these men have finished far behind the leaders in the Iowa caucuses and the New Hampshire primary, indicating the American people are not much interested in economics. Are you?
--Douglas Turner
January 10, 2008 - 5:11 PM | Comment
So what exactly went wrong with all the polls that smugly predicted Barack Obama would cruise to victory in Tuesday's New Hampshire primary?
According to Lee Miringoff and Barbara Carvalho, two of the nation's top pollsters who run the Marist College poll, few considered the human factor of Hillary Clinton's mini-meltdown in a Portsmouth cafe.
They wrote Wednesday that no surveys were taken on Election Eve, and that nobody measured the effect of Clinton's teary discussion of why she runs -- especially on the women who would eventually carry the day for the New York senator.
"New Hampshire has a tradition of voting for women. Democratic primary voters also like the Clintons," Miringoff and Carvalho wrote. "If the pollsters and media pundits erred, it was not in their weekend numbers but in not polling Monday and missing the impact of the unrelenting media coverage that characterized the Clintons as finished."
In addition, they said nobody released poll results from Monday only -- the kind of numbers that might have measured Clinton's "cafe effect."
"How New Hampshire voters were evaluating the race and the factors they were weighing in the last hours of the campaign were never measured," they said. "Even the exit polls, designed in advance, would not capture the final mood of the voters about the campaign. As a result, explanations about what happened here are fueled more by conjecture than by the numbers."
All of which says pollsters are people too, and mistakes are made. And it ranks as just one more element in a most unpredictable election year.
Robert J. McCarthy
