Financial Crisis

A travelling salesman is driving down a country road when he runs over a cat. Seeing a farmhouse nearby, he approaches to confess this unfortunate situation to the pet’s owner. When a woman answers the door, he says, “I’m sorry, but I think I just ran over your cat.” She asks him, “Well, what did it look like?” “Oh, m’am,” he replies, “I completely ran over it, so it was very awful, just a smear on the road…” “Oh, no,” she interrupts, “I mean, what did it look like before you ran over it.”  read more »

After the release of the 2009 fourth-quarter GDP estimate, some forecasters are now predicting a rapid recovery in 2010. Certainly, the fourth-quarter growth rate was impressive, particularly following the modest pickup reflected in the third-quarter results and the terrible results of the previous several quarters. Implicitly, these optimistic forecasts are based on the assumption that the United States economy has been fundamentally unchanged by the recession.  read more »

At the height of the foreclosure crisis the problems experienced by some so-called “sprawl” markets, like Phoenix and San-Bernardino-Riverside, led some observers to see the largest price declines as largely confined to outer ring suburbs. Some analysts who had long been predicting (even hoping for) the demise of the suburbs skipped right over analysis to concoct theories not supported by the data. The mythology was further enhanced by the notion – never proved – that high gas prices were forcing home buyers closer to the urban core.  read more »

This is the second in a two part series exploring a pessimistic and an optimistic future for the United States. Part One appeared yesterday.

A positive assessment of US prospects rests on at least seven propositions. First, the current crisis is not inherently more threatening than many others, most notably the Civil War, the Great Depression, and two World Wars. Quality leadership, building on the resilient political and economic institutions of the country, will prove sufficient to bring about needed sacrifices and transformations. We have seen this many times in the past from the Progressive Era to the New Deal, the Second World War and the winning of the Cold War, which was a uniquely bipartisan triumph.  read more »

This is the first in a two part series exploring a pessimistic and an optimistic future for the United States. Part Two will appear tomorrow.

I’m an old (76) 1950s type liberal, and have lived to see the election on the nation’s first mixed-race president, as well as some remarkable social change in the general status of women and ethnic minorities. The United States has a remarkable heritage of entrepreneurship and resilience in its democratic institutions. Yet there are cogent reasons to be fearful and pessimistic about our capacity to maintain our preeminence, at least in the medium run (10-15 years).  read more »

America is at a crossroads. Its current path is unsustainable. The deficit for fiscal year ending Sept. 30, 2009 was $1.42 trillion. The National Debt is $12.5 trillion with the debt ceiling just raised to $14.9 trillion. The National Debt has increased $4 billion per day since September 28, 2007. The Obama Administration projects trillion dollar deficits for years to come. It has bailed out GM and Chysler, the banks “too big to fail” , and state governments that cannot manage their budgets.  read more »

For more than one-third of a century Jerry Brown has proved one of the most interesting and original figures in American politics--and the 71-year-old former wunderkind might be back in office in 2010. If he indeed wins California's gubernatorial election, the results could range from somewhat positive to positively disastrous.  read more »

The Golden State is not so golden anymore. California is broke. With a $20 billion dollar deficit and tax revenues down 27% from last year, Governor Schwarzenegger looks to Washington D.C. for a bail-out to rescue the state from financial ruin. Like the executive passing a beggar on a street corner, Washington looks the other way. Unemployment is statistically 12.3%, but functionally, it runs closer to 20% of the work force. Nowhere is unemployment more tragic than in the Central Valley, the fruit and vegetable producer of the world.  read more »

The Obama administration celebrated the anniversary of the passage of the American Recovery and Reinvestment Act, or economic stimulus, by pointing out the gradual recovery of the United States economy has resulted in “saving or creating two million jobs.” But young Americans continue to bear the brunt of what is still America’s worst recession since the Great Depression.  read more »

Although I cannot imagine that it will have much appeal in the ratings beyond C-Span 2, a terrific new reality program, Euro Bomb, could be produced around the survival of the Greek economy.

The founder of both the ancient and modern Olympic games is in the midst of a debt crisis that threatens not just to send a few bondholders off the island, but has the potential to blow up the European Union’s currency zone.  read more »