Bailout bill doesn't thrill experts

"This was a joke," said Co-Director of the Center of Economic Policy Research Dean Baker of the proposed bailout bill that failed to pass in Congress yesterday. Baker and other economic experts analyzed the economy at a discussion held by the Institution for Policy Studies (IPS). Baker said that the Bush administration was "trying to hold a gun to our head," and that the general public was smart enough to oppose the bill. After the bill failed to pass in Congress, Baker said "I was out there celebrating yesterday."

Baker said the central reason for the economic problems we've had is the drop in the housing market. He said that housing prices have gone down 20-30 percent since 2006, and said that eliminates up to $70,000 of every homeowner's net worth.

Director of the Economic Policy Institute Living Standards Program Jared Bernstein asked why Treasury Secretary's initial plan required $700 billion. Bernstein said the reason for the amount asked for in the bill was never made clear. He also asked why the government "would not intervene directly in the housing market." He said that this proposed bailout will, for the taxpayers, be "a uniquely unrewarding recovery."

IPS scholar and New York Times bestselling author Barbara Ehrenreich said that a big portion of the problem was the "polarization" of the economy in the United States. She cited the fact that the U.S. is the most economically polarized country of all industrialized nations. Ehrenreich also said that 25-30 percent of employed Americans are "failing to makes ends meet." She said that the U.S. has used "easy credit as a substitute" for those that do not make enough money on their own. She said that this system must change, and that the wealthy "could never have imagined the problems" of the poor in the United States.

Today at Talk Radio News Service

Pentagon Correspondent Dawn Casey will cover the Pentagon gaggle and press briefing.
News Director Lovisa Frost will be reporting the White House press briefing.
The Washington Bureau will be covering a discussion with former Speaker of the House Newt Gingrich on his solutions for the financial crisis. They will also cover a forum at the Institute for Public Policy on “The Election and the Economics of Inequality”.

In U.S., green means gold

According to New York Times columnist and author Thomas L. Friedman, the world is not going through a green revolution.

"Have you ever been to a revolution where no one got hurt? That's the green revolution. In the green revolution everybody is a winner. Exxon's green, BP's green, GM is now green," said Friedman during a discussion of his new book "Hot, Flat and Crowded: Why We Need a Green Revolution--and How it Can Renew America."

"That's not a revolution my friends, that's a party...it has no connection whatsoever to a revolution. You'll know it's a revolution when somebody gets hurt."

Friedman explained that recent threats to the environment has made a revolution of this magnitude necessary, and that it can be carried out through innovation in energy technologies (ET).

"Whichever country, company, or community can come up with a source of abundant, cheap, clean, reliable electrons...will actually have the answer for energy resource supply and demand, will be able to undermine petro-dictatorships, will be able to mitigate climate change, will be able eliminate energy poverty, and will certainly be able to slow down bio-diversity loss."

Friedman said that with the opportunity to provide so many benefits, energy technologies will be the next great global industry, and the country that dominates the field will have the greatest economic, national, and energy security.

"That country has to be the United States of America. If we don't own ET the way we owned [information technology], the chance that our kids having the same standard of living we did will be zero...it's still up for grabs."

The economy, the war, the big election issues

"I think Obama would like to do a Kennedy," said John Mueller, Woody Hayes Chair of National Security Studies and Professor of Political Science at Ohio State University said during a panelist debate at the Brooking Institute. The panel analyzed the essential aspects that will determine who will be the president of the United States, focusing on the fundamentals--the economy and the war--and which one will play the biggest role in the 2008 election.

According to Mueller, the Iraq war is no longer the number one issue on the agenda. "What Americans want to talk about and think about is domestic," Mueller said that's why the economic crisis is going to play a big role in the election outcome. Mueller also said that Americans are still very supportive of the war in Afghanistan, saying as long as there is no bloodshed, no lives taken, no one would care if America stayed in Iraq several years more to come.

Ron Elving, Senior Washington Editor, National Public Radio went for a different angle, introducing a narrative perspective to of the election outcome. According to Elving, people don't want to know the truth nor the reality about the issues debated in the election, claming that the American people want a story. Elving highlighted that the traditional American voter will be affected by the stories surrounding the presidential candidates. "Which are the more compelling narratives for this election, is it McCain-Palin or is it Obama-Biden?" he said.

New direction for Fannie and Freddie

In early September the two government sponsored mortgage finance companies Fanninie Mae and Freddie Mac were put under the conservatorship, or legal control, of the U.S. government. The CEOs were dismissed and the Federal Housing Finance Agency Director James Lockhart III was installed as a temporary replacement for the board of directors.

"We did not take this action lightly. We counseled with Chairman Bernake...we also consulted with Secretary Paulson. They both concurred with me that conservatorship needed to be undertaken," said Lockhart during a House Financial Services Committee hearing.

"First signs, despite all the market turmoil are that the conservatorships are positive. I am pleased to say that the enterprises are funding costs and the spreads on the {Mortgage Backed Security} have declined."

Lockhart went on to say that since the conservatorship home rates for thirty year mortgages fell below six percent for the first time in 2008.

In order to pursue stability, Freddie Mac and Fannie Mae both had to go through major changes. The CEOs were replaced by former U.S. Bancorp Vice Chairman David Moffit and former Merrill Lynch president Herb Allison. Both companies have severely limited approval of low document and no document loans, and common stock and preferred dividends were eliminated, saving the companies $2 billion. In addition, Lockhart says both CEOs have been urged to be more creative in preventing home forclosures.