Riz Khan - Global meltdown - Nov 19 - Part 1
Al Jazeera English
Transcript
hello and welcome as America's economy started collapsing it wasn't long before other countries started to show the same cracks in their financial systems each nation has tried to come up with a salvage plan but many wonder if it's going to take something bigger is a globally unified economic plan even possible the relatively new G20 Club of nations came together a few days ago in Washington DC but left pretty quickly with little more than an agreement to meet again in spring so where is the momentum going to come from to bring together The crucial pieces for solid results today we ask how do you keep the global recession from becoming a global depression remember you can join our conversation with your questions and comments log on to liv.com AJ and enter the chat room to take part we also welcome your phone calls on the show joining us from Bristol now in the United Kingdom is Anne Peter she is a senior fellow at the new economics foundation and author of The coming first world debt crisis a title which speaks for itself on her blog detonation regulation and believes that Europe lacks the structural institutions required to deal with this crisis I welcome both of you to the show good evening Dr craith if I could ask you first if you feel we're heading for a global depression uh if so is there any way of avoiding it well so far I don't think we're heading for a problem on the scale of the 1930s but we are definitely heading for a major Decline and that has all the uh Hallmarks of perhaps becoming unmanageable and so I I think there's every reason for the highest level of concern M pord do you feel U um the same way in any in any way I know you blame much of the problem on what you see as unregulated dependency on us treasury bills across the world I I'm more pessimistic perhaps than Dr G braith um and the consensus here in the UK is that this is one of the most serious crises uh our deput the governor of the Central Bank thought it was the most serious crisis economic crisis financial crisis in human history uh I think it is a very very serious crisis I think it's not so much the implosion of a property bubble or other asset Bubbles as the implosion of a massive credit bubble and I think uh that it's a long time since our public authorities our central banks have had to deal such a an you know a meltdown if you like of of an enormous a gigantic credit bubble which is global and I don't believe that um our policy makers are rarely prepared for it Mr peder if I could uh sort of bring to your attention some of the issues that have been taking place recently the American industry uh specifically Auto industry has been going obviously to the government cap in hand begging for a bailout and I want to quote an article from you in October in the new Statesman where you say the big us and EU bailouts treated the symptoms the disease is debt and bailouts helped only creditors not debtors Banks rather than hom owners the world of Finance rather than workers or industry now you I know you regard big government bailouts as uh treating the symptoms not the disease um so should America be willing to to bail out or provide any more government money in the case of General Motors for example well well my view is that the real crisis here is a crisis of debt and an excessive burden of debt and what we have to do is help companies like General Mo Motors who have you know very serious burdens of debt to manage that debt burden to ease that debt b b burden um so I I mean I think I'm I I I'm neutral on what should happen to the Auto industry and I I'm not really close enough to it to be able to comment but I do feel that what governments and what central banks are not grasping is that we have to lower borrowing costs we have to lower borrowing costs across the board not just you know in base rates but all rates all commercial rates and what's happened at as the debt crisis has become worse and more uh damaging so interest rates and the and borrowing costs have risen this has worse than the crisis it's not made it better and it's as if our monetary authorities aren't sufficiently focused on that well let me get to Dr gal Brath back in here with an email question sir to you if I may from Michigan it came in uh here in the US it says if the US Auto industry fails how will it impact the global economy well there will be KnockOn effects throughout the entire American economy they will be quite serious it's not clear that you can have the failure of one major company General Motors without uh really imperiling the other two major American uh car companies the supplier chain will go down you would have serious effects on State and local governments as the workers are out of work and all of the other state and local employees are laid off that would worsen the housing crisis so there's every argument for a for prudent in favor of a loan that would get the major automakers through into the next year we're in a moment of political transition here the current Administration can't do anything and the next Administration won't be up and running for you know three or four months so that's the argument for a loan to the auto companies right now would buy time to get into a policy environment where you might be able to make some orderly decisions to to uh put the companies on a on a more viable footing now what Dr galra what our viewer Phil Brown in Michigan was asking was the impact perhaps on the global economy do you see it having a significant impact on on other countries well a recession in the United States is going to affect our demand for imports from every place in the world so yes it will have an effect on the rest of the world but I don't think that's fundamental to the problem that the world as a whole is facing I agree what we have here is uh a problem which is at its core the Meltdown of the financial system with uh implications for the real economy and that problem would would still be there uh even if we we managed to rescue the automobile companies now miss peder I know I've read your articles where you of course put a lot of the blame in in in recent decades where the dependency on uh the US dollar and the US economy as such I guess is uh is at fault now do you feel that there is any Prospect for the world uh the global economy decoupling somewhat from the US economy well I mean my my analysis has been that um because of the way the International Financial architecture is structured um it's based if you like the the the world's Reserve asset is um is an IOU to the United States it's a debt-based asset and so for example China um holds its reserves and holds its Surplus in the form of loans to the United States at very low rates of interest uh us treasury bills and I personally believe that this is not a sustainable Financial architecture and it's one of the reasons why we've developed such enormous imbalances in the global economy we have a situation where the United States has moved from being the world's biggest creditor uh and up until n the 1970s and is today the one of the world's biggest debtors if not the world's biggest deor and China has a massive Surplus so we have imbalances in the global economy which are um really quite dangerous and in my view not addressed by those talking and and thinking about the International Financial architecture to restore stability we need to do something about what we use as the world's Reserve asset and the fact that the United States has been able to use its position as um if you like the world's most powerful com uh uh uh economy and also issuing the world's currency to live if you like Beyond its means and to build up vast um amounts of debt while at the same time China has built up a massive trade surplus and the this is this is what is at in my in my view at the heart of the volatility and instability in the global economy Dr galra if I may quote to you uh from or quote to our viewers from your book The Predator State you say protectionist is an all-purpose epithet deployed to defeat argument and stop conversation free trade has in this way gained the status of a god second only to the free market itself now to to what extent you feel the free market is perhaps dead in this climate it certainly is I I mean I make the argument in the book that the uh free trade is a is is is kind of a myth but I want to come back to this question of the Global Financial architecture because I think I do have a a substantial difference but first of all the uh debt obligations are debts of the United States not to the United States the fact that the rest of the World wishes to hold United States Treasury bills and bonds has a great deal to do with the fact that the US has a very liquid uh public debt market and a very reliable treasury we used to think and many of us here felt that the Euro was on the verge of becoming a reliable substitute for the US dollar as a reserve asset but the fact this crisis has revealed that this is not the case and I think there's a fundamental structure problem of governance inside the Euro Zone a central bank that cannot act as effectively as the lender of Last Resort and governments that cannot could not really borrow to make good the guarantees that they're making to their banking system which has caused an enormous rush into dollars as a flight to safety that's not something the US actually can do anything about and it is going to hurt our economy next year because it's going to do great damage to our exports so it is a part of the international financial problem but I don't think it's really quite fair to say that it is a matter of American policy it is much more a matter of the architecture of the world system and the fact that the United States is one large very integrated and relatively well- constructed economy in the sense that we have institutions that were built up in the New Deal and the Great Society which are still with us the European Zone was created in the 1980s in a very ad hoc way which is fundamentally problematic and I think in fact May really be testing the limits of its viability right now let's get a question from Bart in New Zealand before we take a break um I'll get back to you Miss fed peder in a sec but Bart what would you like to ask yes um um why should we trust um the government experts to solve this um global economic um problem when they got us their ideas got us into this problem in the first place but yet they didn't see the problem coming and now we're turning to these same people to solve the problem I just don't see um the logic there all right great question we're going to try and get an answer for you to that after this short break we do have to pause at this stage though and as we pause let me remind you you can join the conversation with your questions and comments by logging on to liv.com and entering the chat room the debate's taking place there you can see on the screen below me we'll be right back with more
Riz Khan - Global meltdown - Nov 19 - Part 2
Al Jazeera English
Transcript
welcome back we're looking at how the increasingly interconnected world might cope with what seems to be a pending global economic crisis joining us from Bristol in the UK is an Peter a fellow at the new economics foundation and from Austin Texas we have Economist James gal braith the Lloyd Benson chair for business and government at the University of Texas now just before the break we had a call from Barton New Zealand who was asking why should we trust the experts who got us into the mess in the first place and peder if I could put you who can we trust now well that is a good question um I think we have to trust those who've been put in charge of our uh of being of acting as guardians of our nation's finances if you like and those are our Central bankers and our policy makers in finance Ministries a lot we've lost a lot of confidence in economists um and in mainstream economists because they have got it badly wrong but if I may I'd just like to take issue with Dr gal braith because I um I want to come back to this point about the International Financial architecture the fact is that countries Hold Us dollars because they have no choice and the arrangement whereby the financial architecture was so constructed that PE that country's um held dollars and and uh treasury bills as assets as Reserve assets was also an ad hoc arrangement in 1971 um when President Nixon uh defaulted if you like on the it on the United States's obligations to repay its foreign debts in in gold and the period between 1945 and 1971 had been a period of extraordinary stability but since 1971 we've had the buildup of the United States deficit and also periods of increasing uh in uh instability and volatility so there is a direct correlation between the ad hoc way in which the International Financial architecture was constructed in 19 71 and today's Financial instability Dr GTH was interesting we've got a a question which might tie into some of the comments that an Peter is making about you know the way policies have been a lot of people are wondering and James in our chat room live station chat room which is taking place right now is asking you know how do you regard the policies the economic policies being put forward by uh president-elect Barack Obama well I think we're moving in a hopeful Direction uh and we're moving in that direction in a methodical way we are going to have to deal with the basic problems of the American economy here uh which are problems of the housing sector trying to keep people in their homes to end the Foreclosure crisis problems of the crisis of state and local government Finance problems of the uh shortage of capital for public infrastructure investment both at the state and local and at the federal level the shortfall in incomes being faced by the elderly the general shortfall of incomes being being faced in the country and the industrial crisis so there is a this this crisis has a lot of ramifications and aspects in um the on the domestic Economic Policy front and what you're seeing right now is the Assembly of a team which is going to have to come to grips with that crisis in the months ahead for the moment I'm quite U encouraged and hopeful that they're moving forward I do say I would I I would don't put any trust in central bankers and certainly not in finance officials particularly once who who as in my country uh come to us from the Wall Street institutions which uh gave us this crisis although I'm not uh uh fault them I'm not criticizing their motives on a personal level it seems to me that we do need to to uh pay attention a little bit more attention than we have paid to the small community of economists that actually did analiz the uh this CIS correctly that foresaw what was likely to happen and if if you do speak to that Community you will find them I think uh really quite strongly sympathetic to the approach that's unfolding in Washington now it's going to require a very large intervention uh of in the form of increased public spending public capital investment that's the direction that we understand we have to go in I was very actually pleased though to see that the G20 communic uh called upon all countries to take that same general approach and even though the G20 didn't accomplish very much in that respect it set a tone which seemed to me also was uh you know a more a hopeful sign for the for the larger Community now just a quick thought um do you do you believe that America needs a new a new New Deal Dr galra in the same way Franklin D Roosevelt tried to pull America out of the depression with the New Deal back then to the extent that the private financial sector is not going to finance growth for the foreseeable future it will fall to the public sector to do so it's not a question of whether we have New Deal or call it something else it's just a question of the Practical necessity that if you don't want to be faced with mass unemployment and the collapse of both both public and private institutions uh that maintain our economy the public sector is going to have to step in and do things which it has not been obliged to do for many decades and an pford you I know you Advocate a green New Deal for Europe uh that seems to be more of a longterm uh Prospect what about getting relief right now for the the way things are panning out in European countries well this is my this is the point that we make in the green New Deal which is that you know there are in more there are less expensive ways of stabilizing the economy than simply you know spending more government money into the economy and one of those is to if you like put a flaw under the under the housing market and a fall under the collapse of asset prices and the best way of doing that is man managing borrowing cost and the cheapest way of doing that is by managing monetary policy across the board not just base rates and so we would say as roselt did in 1933 that monetary policy should take precedence and that what we should be trying to do is to be putting a floor under house prices because it's the continual falling in Fall of house prices which is actually exacerbating this crisis we might have to write off debts I think we're going to have to face that and I agree with Dr gbre that we're going to have to increase incomes because one of the reasons why people have borrowed is because they had they didn't have enough money to buy for example their homes and now they don't have enough money to pay off their debts so in order to stabilize the finance sector one of the things we may have to do is raise incomes Miss Peter an email question if I may put to you which touches on some of the points you've made from Kansas Debra plumber wrote in saying can we have a world regulated economy we need one but are the wealthy countries willing to give up their status and power I mean who should be regulating Capital flows and interest rates well I think that's right pertinent question it's for you miss peder sorry sorry I I think that's a very good question and I think yes we can I mean's at the end of the second world war proposed that we should have a global independent Central Bank which acted in a sort of fair and balanced way in clearing checks if you like between nations and in settling balances between them and managing their overdrafts to put it simply um but we've moved away from that independent uh and balanced approach to one which is very heavily dependent on the financial system of one country the United States so we need to return to a more balanced Global Financial architecture in order to restore stability Dr galri I know you probably go ahead you want to chip in on this let me come in on this because the principle here should be no Global Finance without a global regulatory system that is effective we have allowed a system to grow up which is infested with tax Havens infested with regulatory Havens which has basically allowed a large part of the financial system to operate in a way which is extremely conducive to abuse and to fraud uh as well as to uh to tax evasion this system is not viable it has to be brought back under control uh and to the extent that we don't have uh a an effective regulatory system then we have to limit the amount of global interchange that there is but I think it should be possible to expand the scale of effective regulation to the scale of the system we would like to have that's the way I would like to see I would like to go I don't think that monetary policy can in fact do this job at uh canes in 19 in the early 1930s was prepared to work through the central bank but by the middle 1930s he realized that Roosevelt was in fact right you had to do this with with with public expenditure uh and uh you know in the 1930s in the United States the New Deal employed 60% of the unemployed population directly it was a huge Enterprise but it was it was necessary because the the private financial sector was essentially uh defunct at that point actually Dr gabra I mean there's less a minute and I want to put an email question to you on this uh a viewer wrote in from Florida Steve wrot in saying what nation will come out on top during this recession and I wonder if China's in the equation here uh what if China continues to push down the value of its uh its currency what Global impact will that have well what China is doing right now is is increasing public expenditure on the order of 10% of Chinese GDP per year for the next two years the country which is is most effective in mobilizing its its home resources to build its own economy is going to uh gain the most I don't think it's necessarily a competitive race here but is going to do the best in the current crisis I think the United States has that capacity I worry about whether a collection of 27 European countries can effectively coordinate along these lines whether you need a new European architecture possibly through the European Investment Bank to make Europe competitive make Europe effective in comparing the crisis in a similar way right Dr gal Brath and thank you very much for being with us we're out of time but uh on the next show we have the outspoken us Congressman Ron Paul giving us his view on the economic crisis and the priorities he feels the incoming Obama administration should be focusing on also you can catch us all next week in Mumbai India's commercial Capital looking at what's in store for a country that's rising to be an economic giant we'll be coming to you at a special time allall next week, 1400 hours GMT that's all from me in the the team we'll see you next [Music] time
Asian Markets Follow Wall Street's Lead, Tumble
Associated Press
Transcript
following the lead set by wall street asian markets tumbled thursday amid growing evidence that a bailout for the big three american automakers is not on the horizon it's all about congress it's all coming out of washington it's not wall street today it's washington and it's all about the big three auto bailout that's what's moving the market right now it doesn't look like they're going to get the money anytime soon tokyo's nikki index lost six and a half percent of its value many japanese companies also slid back including cannon and toyota isuzu also announced it will be slashing 400 jobs in the coming months elsewhere hong kong's hang seng lost five and a half percent while south korea's main stock market lost more than six and a half analysts blame the red figures on poor u.s economic news that includes the auto industry and bad housing numbers there are rising concerns that ford and general motors may go bankrupt that the us congress will not help them and this pushed the prices of their stocks sharply lower there was also a lot of negative mode coming from the banking sector as well as home builders because of poor data on housing starts a vote on the proposed 25 billion dollar bailout plan for american automakers will not take place thursday as had been expected the dow industrial average will open thursday below 8 000 for the first time since 2003 after dropping more than 420 points on wednesday brian thomas the associated press
Stocks Tumble As Hopes Fade for Quick Bailout
Associated Press
No transcript available for this clip.
Stocks Tumble for Second Day; Treasurys Surge
Associated Press
Transcript
stocks took a huge beating on Thursday with the Dow falling 5.6% in another final hour selloff stocks have been weak for much of the session but lost ground after Democratic leaders in Congress decided to Sidetrack legislation to bail out the Auto industry now demanding The Big Three develop a plan assuring the money would make them economically viable at the beginning of the day the the market really kind of fell off 200 points and then it was up 135 that was really because of the news everybody thought the auto loan was coming and then all of a sudden an Pelosi comes out and says uh well if you show us a plan we'll show you the money and the problem with that is it took all the confidence right out of the market a breach of an historic low that saw the standard in pores 500 trade below levels not seen since 2002 touched off further selling when it was all over the Dow Jones Industrials plummeted 445 points to close at 7552 the S&P 500 fell 54 points to 752 and the NASDAQ comp it tumbled 70 points to 1316 Thursday's pullback came amid heavy volume ironically that's a welcome sign for some investors who are looking for the market to experience a cathartic selloff that could lay the groundwork for a recovery Mark hamr the Associated Press
Your Money: Understanding Inflation, Deflation
Associated Press
Transcript
foreign the ongoing economic crisis has caused many casual observers to become more interested in the day-to-day events impacting our economy two terms that you'll hear quite a bit about and economic coverage are inflation and deflation first it's hard not to know what inflation means it refers to the upward movement and the average level of prices and it generally stems from an increase in the money supply and credit that's available relative to the supply of goods then there's deflation which sounds like the opposite and so you may think it's a good thing but that's actually not the case deflation is a period of recurring declines in overall prizes though it can happen in specific markets as we've seen with home prices and oil prices for instance a key trigger for deflation is falling consumer demand as companies cut prices in an attempt to encourage consumer spending deflation is uncommon actually in the U.S economy but in these unusual times you'll find that it's starting to creep in the conversation as we see how this economic crisis plays out
Dow Closes At 5-Yr. Low
CBS
Transcript
Susie garab from PBS's Nightly Business Report is at the New York Stock Exchange this morning Susie below 8 000 where is the end where is the bottom well you know I wish I had a crystal ball and I can say this is where it's going to end and this is the date Dow 8000 is that the magic number we we really don't know there are not too many good reasons right now that why people want to buy stocks every day there's more Grim news about the economy a lot of things are weighing on investors Minds how long is this recession going to last will the Auto industry uh survive and will the housing market stabilize and so that's why people are cashing out of stocks and it's going to be messy for a while so fasten your seatbelt who's feeling the brunt of it where are you seeing the effects most well it's kind of across the board I mean we saw yesterday Citigroup stock fall 23 percent in one day I mean that was incredible but you look at all the stocks uh even General Motors uh excuse me uh General Electric stocks like that are every everybody is getting hit housing stocks it's across the board all right Susie garib thank you very much this morning now let's go back over to Jeff okay Maggie thank you very much we have our personal financial advisor here this morning Ray Martin Ray always good to see you good to see you not necessarily in these times we talk about how messy it is the volatility continues almost every single day these huge swings is there a low that we can talk about you know I think for investors out there this is like watching a train wreck in slow motion for them you know you watch yesterday afternoon and the day I got to about 8 200 there's a little bit of support a little up and down motion and then just kept falling down below 8 000 yesterday you know Wall Street and Main Street right now are saying where's the bottom they don't know is it eight thousand is it seven thousand is it six thousand you know what we know is the Dow has fallen from uh this time last year by six thousand points forty five percent another 45 percent would put it at 4 500 seems ridiculous right there but you look at stock valuations Jeff and look at incredible uh by fundamental measures uh very low values right here uh are low prices relative to the earnings versus uh 1973-74 which is an incredible value and they seem like values which would say maybe you buy them if you trust the earnings and you don't know what the earnings of these companies will be right Jeff and what so what do people what do people do now when you talk to people what do you tell them well what's happening right now is you know professional investors into individual investors lack confidence to come in and buy and as a result no buyers are showing up you know if people say right now now do I sell and I was speaking at a conference in New Jersey this weekend you got to ask that question a lot I say if you haven't sold at this point what's the point in selling you've seen a 45 drop here at this time now I'm getting a lot more questions though by folks saying do I buy now and I'm saying hey hold off right here okay we're going to see a lot of this up and down volatility you could see that Dow at seven thousand or six we're all just guessing at this point but what you do is don't end invest your rent money or your grocery money into this right now and invest if you're going to invest small amounts dollar cost averaging in and you know five years later from now you'll look at some of these entry points over the next year or two is pretty good entry points huge injections into the market at any one time small little bits of savings and and your long-term money only okay Ray Martin our financial advisor we appreciate your time as always foreign
How To Borrow Money
CBS
Transcript
borrowing money from friends and family is probably one of the hardest most uncomfortable things to do but with more and more people trying to make ends meet it may be necessary our financial adviser Ray Martin is here to kind of take us through this difficult process good morning good morning Maggie first of all Ray do you think it's a good idea to borrow money from friends and family well you know you look at this versus other options you this is an option of last res you want to do this to avoid things like payday loans or Ponch UPS you know or even if it's for a short-term period of time well you don't want to go to a bank and all those fees and process if it's only for a month or two but this is loaded with what I call relationship risk this is awkward for the person asking to borrow this is awkward for the person who's being asked and you really have to think about that carefully what we want to do then is to try to make it as comfortable as possible for the person being asked and I want to put up some tips that you recommend first you say ask in private give them an out explain the need to borrow and the amount and tell them exactly what the loan is for yeah here's an example of this okay we're at a family gathering and uh you know I want to pull you aside I don't want to blurt this out over the turkey and cranberries here okay and I want to say look uh I gotta ask you something and tell you something um whatever you say we're still friends and we're still family Maggie and it's not going to change that so you need to know that and be comfortable with that uh my thing is I need to borrow money I need to borrow about $2,000 lost my job unemployment benefits are coming in another week I got to make some repairs to my car and I know I'm going to be able to repay this but that's what it's for either I'm going to ask a few trusted people like you if you can help or if not can you point me in the right direction but you've done it in telling them it's okay to say no to this and you don't want to do this put in a position where they feel they can't well you know you got to say it's okay that you can say no okay to the person you got to make that clear and you do this at the end of a family event you don't let lay this on somebody at the beginning and kind of ruin the whole family gathering kind of thing if you will put that pressure on how formal do you make it like do you say I'll pay you interest we'll come up with an exact plan for repayment this has to be a business-like transaction in my my view on this you do charge an interest rate you have something called a promisory note here this is a two-page document that you can get free downloading on the web or from services like quick and family lawyer uh and a promisory note will spell out in this document who the borrower is who the lender is how how much you borrowed the loan term how long you'll have to repay what the interest rate is the amount of the payment that you'll make and all the payments you will make and it's really important to have this because then you formally documented this for each other and it's a matter of trust in that respect but it's also good if I borrow money from when I pass away you need to know you have proof of that in a claim on my estate for example so it's just a good legal reason you need a promisory note okay so for the potential lender do we then look at the borrower just like a bank would look at the borrower well you you know you want to make here's what you need to consider you need to have that promisory note you need to consider the relationship risk what if I do loan them money how will it impact our relationship what if I say no how will that impact it what if they miss payments how will that you got to think of all that before you say yes because you may value the relationship more than this transaction and that's important don't put yourself in a financial Jeopardy situation here also make sure your sound don't borrow from your emergency fund don't borrow from your retirement account don't borrow from your home equity loan to make this personal loan but should you be prepared for never getting that money back if you lend it should you be telling yourself that I think you should and a lot of people say when they when they lend they say look it's a gift and if we ever get repaid and that's a healthy way to look at it but still make it a business-like transaction with the promisory note and keep it formal in that respect and for the asker what if the person you ask says no they say no uh you know there are other options here you can say look let's look at co-signing Al loan now for the for the person who co-signs you're still on the hook if that borrower doesn't make those payments to that bank you still got to make good on that so it doesn't impair your credit report so do that carefully I'm not saying that that's an alternative that's all that is also look to peer-to-peer lending sources such as Lending Club and prosper.com these are websites that facilitate loans between the person who needs to borrow money and between related and unrelated people where people can chip in with little amounts like $50 or $100 to bring you up up to your total 2,000 amount that you want to borrow and then you formally make payments back through the website to them and through a promisory note so consider those sources Prosper Lending Club virgin money or a couple of those peer-to-peer lending sites on the web good never heard of those thank you so much R you're welcome Maggie [Music]
Nissan CEO On U.S. Auto Bailout
CBS
Transcript
you know right now the car companies are on a Level Playing Field does that create a you know a variance in the Level Playing Field no I I don't think so you know that car companies are asking for loans which are long-term loans at reasonable interest rates and that they have obtained them by the way you know the US have already decided to deliver $25 billion it has been voted mainly to help car manufacturer transform their product into more fuel efficient products uh this is something which is not going to be create uneven unevenness I think the European are going to do the same thing and probably the Japanese going to do the same thing U now what is absolutely unknown now if if some specific companies are going to get specific treatment for something which is not linked to transformation of your product into something more F efficient but it allows you to bridge six difficult months or one one one one difficult month and and in this case uh yes it can make the things uneven but you know it's part of the reality I don't think this is going to be something specific to the United States I think this something going to see into many countries when a car maker is in difficulty he may ask for help as long as the help is limited is temporary and the viability is not questioned it is something which is tolerated so you're not screaming wait a minute that's not that's not fair that's not fair I'm not screaming at all
Notebook: State Budgets
CBS
Transcript
the economic crisis is taking its toll on every corner of the nation sometimes in unbelievable ways one suburban Detroit School District is going to start charging teachers for electricity 32 bucks to plug in a personal coffeepot 182 dollars for a mini-fridge their schools like so many others in America are low on cash and up already resorted to layoffs and hiring freezes the reason state budgets are strapped higher unemployment means lower income tax revenue and empty stores mean less cash from sales tax three-quarters of the states are facing deficits next year six billion dollars here in New York five billion in Florida 26 billion in California this serious crisis calls for creative solutions no doubt I would just hate to be that teacher paying a hundred and eighty two bucks to chill the brown bag lunch I brought to work in order to save money that's a page from my notebook I'm Katie Couric CBS News
Romney To Big 3: Fold
CBS
Transcript
should the federal government bail out the Auto industry Mitt Romney former Massachusetts governor and former Republican candidate for president says absolutely not he joins us this morning good morning Governor good morning Maggie I would like to start by reading your words back to you from your New York Times oped piece this week quote without the bailout Detroit will need to drastically restructure itself with it the automakers will stay the course the suicidal course of declining market shares insurmountable labor and retiree burdens technology atrophy product inferiority and NeverEnding job losses Detroit needs a turnaround not a check do you stand by those words even seeing wall Street's violent reaction to the turmoil in the Auto industry there's no question but that if you just write a check uh that you're going to see these companies go out of business ultimately instead we have to help these companies restructure stay in business but restructure shed the unnecessary costs make them competitive with the transplants and the foreign cars and by virtue of doing that make sure they stay in business long term this shouldn't be a check this should really be a turnaround effort the government's going to be a partner in this we don't want them going out of business but we don't want them to continue business as usual there have been a lot of editors uh excuse me letters to the editor of the New York Times in response to your piece I I'd like to just read you one from the lieutenant governor of Michigan Mr Romney's suggestion that our economy would be best served by a big three bankruptcy is a breathtaking assertion of economic Darwinism made more shocking by his roots in Michigan you're the son of an auto exec where hundreds of thousands of jobs rely on the Auto industry so despite the dire consequences to our economy and all the jobs lost you say so be it well let's be clear about this bankruptcy does not mean closing it down liquidating it or losing any jobs the course that this industry is on and has been on for the last couple of decades has been job loss after job loss losing market share unprofitability what I'm talking about is using the court or an outof Court settlement or perhaps special legislation to help these companies get rid of the exit costs that make them non-competitive that mean ongoing job losses get these companies in a competitive position so they can stay and grow and add jobs that's the course and and so I know there's a frequent uh uh thought that when you hear the word bankruptcy that means going out of business just the opposite is what I'm calling for help them get rid of the excess costs so they can stay in business let's talk about uh previous bailouts that have been successful we think of leak coka back in 1978 we took a bailout paid it back within 3 years and return that company to profitability why can't they do that again well that was uh the kind of restructuring I think that has to happen uh helping these companies go through either an outof Court settlement or going through bankruptcy court or again special legislation uh giving the government the tools to help them get on track or uh new leadership to help them get on track and get rid of the excess labor costs the excess retiree cost the excess real estate costs helping them shed these costs as what's essential I listened to a former uh CEO of GE Jack Welch last night saying the same thing these companies have to become cost competitive or they're going to go away and that's why it's so important to help them in in much the same way that Cher was helped before don't just give them a check and expect them to spend it the way they've been spending the last few years Governor Mitt Romney as always thank you for your time [Music]
US Prices, Housing Starts Plunge
VOA News
Transcript
Wall Street took a new hit on Wednesday after the government released more bad economic news the US Labor Department said consumer prices plunged a record 1% in October that's the sharpest one Monon drop in 61 years and a report from the Commerce Department showed us home building dropped to a record low housing starts fell by 4.5% in October that means the number of new homes under construction fell to its lowest level since 19 59 meanwhile the heads of the three us automakers continued their plea for $25 billion in emergency government Aid the chief executive of General Motors Richard Wagner told the house Financial Services committee on Wednesday that the recent plung in Auto Sales threatens the survival of his company what exposes us to failure now is the global financial crisis which is severely restricted credit availability and reduced industry sales to the lowest per capita level since World War II the executives say if even one of the automakers goes out of business the consequences could be catastrophic with millions of American jobs lost the Bush Administration and many republican lawmakers oppose using the $700 billion Financial rescue program to Aid automakers Republican Spencer bakis said a bailout will not solve the fundamental problems of the automobile companies a bailout of the Auto industry will just push the problem further down down the path to survive the big three are going to have to change and become more efficient and competitive Democrat Barney Frank chairman of the house committee criticized what he called a bias in using the $700 billion rescue package for banks in other words white collar workers but not blue collar workers why was it so acceptable to do that for the financial industry that is respond to the need to avoid macroeconomic harm by helping the financial industry but doing it to a blue collar manufacturing industry is somehow not right Frank and other lawmakers argue that immediate aid to the automakers is needed to avoid greater harm to the US economy president-elect Barack Obama has said Aid to the struggling automakers will be a top priority when he takes office in January Leah Hong Fincher VA news
Paulson Asked When Will Economy 'Hit Bottom?'
Associated Press
Transcript
Mr. Secretary, when do you expect our economy to finally hit bottom so that we can begin the process of recovery? Yeah, that is I I appreciate ate the straight blunt talk and and I tend to be blunt, but Treasury secretaries can't be that blunt. So, so I I I what what what I what I will say to you is is and you get at two things here, which is a bit of a challenge in communicating to to the American people because there's the financial system and and the stability of the financial system and then there's the economy. And when we went to Congress to talk about the financial system and and and the crisis we we were we were facing the um trying to communicate that and communicate to the American people that we saw what had happened what was happening in the financial system was going to have a big impact on the economy and we could see that and uh and knew that that it was inevitably going to have that impact but it would have been much worse and it would be much worse if you know if if if the financial system is not stable. Now in in terms of your specific question, I don't have an answer for you there other than other than to say that which is which is where Duke started off uh which is you know our economy you know we're a strong entrepreneurial nation. We're a rich nation. We have the resources. We have the tools uh to to deal with this. My focus is really on the financial system stability, getting credit flowing again because that's going to be the key when I as as that happens, you know, getting back to Brian's question, when the banks are lending, when credit is flowing, when the the credit markets away from the banks are working, we will we will have a stronger economy and and housing, you know, the housing prices uh uh stable. stabilize. And so I think it's going to we're going to have some challenging months in here, but we're we're going to work through this. But I can't give you a a a date. Yeah. That's it.
Big Three Blowing In The Wind
CBS
Transcript
meanwhile Congress did not come to the aid of struggling car makers at least not today Cheryl aison is covering that story and Cheryl they just didn't have the votes for a bailout so what was the problem well part of why the auto bailout is a tough sell Katie is because of the perception that Congress was too quick to approve that $700 billion economic bailout you could say the auto Executives talk their way out of an immediate bailout we do not have the votes what happened here in Washington this week has not been good for the Auto industry Congressional sources say the auto Executives shot themselves in the foot at yesterday's hearing flying in on corporate Jets costing $155,000 round trip and by being long on arrogance and embarrassingly short on specifics maybe I'm dense or something Mr Wagner I don't quite understand what the hell you just told me how much money do you need to survive General Motors from today until March 30th I car is going to depend on what happens with suppliers today the best Congress was willing to offer was a chance for automakers to submit a plan for consideration by December 2nd their last hope for help before the new year in action is simply not an option Ford has said it's now burning through a billion dollars a month GM the biggest of the automakers at issue and the closest to collapse has been losing just as much and GM told Congress it might need four to five billion in a month to keep running until April help may be needed but as one Senator told me Katie it doesn't do any good if we just give them a bigger bucket to bail and Cheryl what are the automakers uh saying about all this after hearing this today they said that they'll be pleased to present their plans not only though do they have to convince Congress but Congress made it clear they have to make their case to the public too all right Cheryl aison reporting from Washington tonight
The Market Meltdown
CBS
Transcript
Anthony Mason is our business correspondent and Anthony it seems the market saved the worst for last yeah once again Katie the nose dive came in the final hour of trading when fear swept through the markets and the losses just snowballed with the latest stock selloff all three major indexes are now down more than 43% for the year the NASDAQ has been cut in half and the S&P 500 hit an 11year low today I mean realistically a lot of these stocks are hitting lows we haven't seen I mean in my lifetime City Group which crumbled 26% today was one of the biggest losers even after a Saudi Prince upped his stake in the financial giant the stock fell below $5 the total value of City group's outstanding shares is now almost equal to the $25 billion in bailout money the treasury just pumped into the bank I think seeing City Group at the prices as that's shocking to most people Wall Street hates uncertainty and there's simply too much of it right now uncertainty about the the Auto industry uncertainty about the presidential transition this uncertainty's got to play out and people have to be more clear in terms of the market as to where the economy is going how bad the recession is going to be and the health of the credit markets have to be vastly improved again the only good news was oil which was over $140 just back in July it closed today at $49 AS Global recession fears continue to deepen Katie and Anthony I guess this is the million-dollar question but has the market hit bottom well some Traders today said they felt like this was the wash out we've been looking for but you got to hope so I mean we've lost about 900 points in two days now and there was some good news apparently today Anthony for struggling homeowners Fanny May and Freddy Mack announcing they'll suspend foreclosure foreclosures for the holiday so how will that work that's going to be kind it's kind of a breathing period for borrowers the idea is that starting next Wednesday and through January 9th Fanny and Freddy will halt foreclosures to give borrowers and Banks more time to modify loans all right Anthony Mason as always Anthony thank you
Where's My Bailout?
CBS
Transcript
[Music] did you get a table no I'm really hungry we can get one if you want I'm fine with a liquid dinner so I'm fired I got laid off today the bank laid me off oh sweetie I'm sorry but I got to tell you as an ex Leman leming I saw it coming but don't worry I've got some other stuff in the Box really you're finally going to join the world's oldest profession what's that a drug dealer farmer a hooker oh um no get this I am going to be a bank holding company oh yeah that's that's reasonable no no no check it out okay so I'm going to get the government to give me cash and then I'm going to spread it around to all of my friends communist socialist actually you know that takes time takes like a month and a half MX did it in half the time and if they could do it I can do it well you have to actually own some banks first right yeah sure the bank of Sally owned the bank of Brook how much do you want I don't feel comfortable selling anything in this economy fine I'll buy you a drink deal deal good the bank of Brook owned I'll send the paperwork on Monday no way come on you're just jealous cuz you didn't think of it first I'm not jealous I'm just protecting my assets no the bank thing is kind of tired I'm going to be an automaker we're the backbone of American manufacturing bail out money please broo you can't be an autom manufacturer you don't even own a car wow you are never going to get a hold of the bank of Brook with that kind of attitude besides we're going green I got my swin all picked out