"I Am Not Dr. Doom"
Monday, April 27, 2009

Q. You are the economist known for predicting the economic downturn in 2008. What do you believe is happening to the economy today? 

A. The consensus among economists is that they see the economy that was contracting for the last two quarters at 6 percent going into positive economic growth by the second half of this year. . . . I believe that the rate of economic contraction is going to slow from negative 6 percent in the last two quarters to negative 2 percent by the fourth quarter. 

Next year, I believe that the growth rate is going to be low -- 0.5 percent for the U.S., compared to the consensus view of [plus] 2 percent. I believe the unemployment rate this year is going to go well above 10 percent and will be well above 11 percent next year, so even if we are technically out of a recession, we are going to feel like we are in a recession. 

 

I do agree that there is an improvement in the sense that the rate of contraction is not going to be as much as it has been in the last couple of quarters, but I still believe that the bottom of the economy [will be seen] toward the beginning or middle of next year. So my views are more bearish than the consensus. 

I believe things are going to be very mediocre throughout the world; in particular, in Europe and in Japan. They will only get out of their recession toward the end of next year. 

So you are still Dr. Doom? 

No, I am not Dr. Doom. I am Dr. Realist. I don't believe we are going to end up in a near-depression. Six months ago I was more worried about an L-shaped near-depression. Today, after the very aggressive policy actions taken by the U.S. and other countries . . . we are, instead, in the middle of a U. 


You think the Obama administration is on the right track with the stimulus packages and Chairman of the Federal Reserve Ben Bernacke pumping money into the system? 

Yes, I have to give credit to the administration. Within 30 days of coming to power, they did an $800 billion stimulus package, a new program to deal with mortgages and foreclosures, and also a bank plan that, when Treasury Secretary Tim Geithner came with details, made the markets rally sharply . . . Again, the glass is only half full because in order to do things with speed, they did not do them perfectly. Each one of these three programs has some flaws. The fiscal stimulus could have been more front-loaded. For the mortgages, eventually you are going to need the reduction of the face-value principal of the mortgages. And on the banks, I believe the PPIP [Public-Private Investment Program] plan can work for banks that are solvent. But . . . after the stress tests, it is going to be obvious that even some of the largest banks are so fundamentally in trouble that you cannot buy their toxic assets. You need to take over these banks on a temporary basis, clean them up and then sell them back to the private sector.

You have to nationalize these banks? 

Yes, if you do not like the dirty N-word, you can call it a temporary takeover. Nobody is in favor of permanent government ownership of the financial system. But we might need to do it on a temporary basis. 

 

How do you feel about the deficit that the Obama administration is building up? 

In the short term I am supportive of it, because if we didn't have these fiscal deficits, the recession would become a depression. I think we need to stimulate demand in a situation in which every component of aggregate demand is sharply falling -- consumption, residential, inventory, exports. On the other side, I do agree that this is not a free lunch. 

What is going to fuel the next growth cycle? 

That is a difficult question because the periods of high growth in the United States in the last 25 years have been characterized by an asset and credit bubble. The real estate bubble of the '80s ended up with pain in the [savings-and-loan] crisis. Then came the tech bubble, which ended up in another crash and led to a recession. And now we have this more generalized housing and credit bubble, which ended up in a big disaster. . . . We have to switch our capital into things that are more productive and more stable in terms of social growth. That is going to be a challenge. And the potential growth rate might fall to a much lower rate. 

Do you believe this is a bear-market rally or do you think it is the market anticipating an economic recovery? 

I do believe it is a bear-market rally. . . . We have seen this cycle of bear-market rallies. It is true that as time goes by, it is possible that the latest low is going to be the true low. . . . As we reach newer lows we may be closer to a level of the market that is fundamentally right. A year ago we were not as close to a true bottom. Today we are closer to it. 

Do you worry about China getting tired of holding our bonds? 

In the short run, China has no option but to accumulate dollar reserves. Why? Because if they stop doing that, their currency would appreciate sharply while their exports are plunging. China cannot afford to let its currency appreciate any further, and to prevent the appreciation given their current and capital accounts they have to buy another $300 [billion] or $400 billion of reserves this year alone. 

But I have seen a huge number of new initiatives in the last month after China expressed its worries that suggest they are pushing for the yuan to become an international currency and a reserve currency. . . . 

They want to create a yuan zone in Asia. They are pushing for inter-Asian trade to be conducted in yuan. They are taking several steps that will lead their own currency to become an international currency. 

Over time, they are moving away from the dollar? 

Yes, slowly they will. In order to move away from the dollar, first they have to establish their own currency as an international currency. That will take years, but already in a month they have done more than in the last 10 years.

By Laura MacInnis and Sue Pleming

GENEVA/WASHINGTON (Reuters) - The United States will boycott a United Nations conference on racism next week, the U.S. State Department said on Saturday, citing objectionable language in the meeting's draft declaration.

The United Nations organized the forum in Geneva to help heal the wounds from the last such meeting, in Durban, South Africa. The United States and Israel walked out of that 2001 conference when Arab states tried to define Zionism as racist.

The Obama administration, which kept its distance from preparations for the "Durban II" meeting, has come under strong pressure from Israel not to attend.

"With regret, the United States will not join the review conference," said State Department spokesman Robert Wood, ending weeks of deliberations inside the Obama administration over whether to attend.

Wood said significant improvements were made to the conference document, but the text still reaffirmed "in toto" a declaration that emerged from the Durban conference which the United States had opposed.

"The United States also has serious concerns with relatively new additions to the text regarding "incitement," that run counter to the U.S. commitment to unfettered free speech," he added.

The announced boycott came about three months after President Barack Obama became the first African-American to lead the United States.

Canada also has said it will not go next week because of fears of a repeat of the "Israel-bashing" that occurred at the last conference. The European Union is still deliberating.

The Czech Republic, which holds the rotating EU presidency, has called a meeting for Sunday evening to evaluate the bloc's stance on attending.

"There are still several member states of the EU that are not decided yet," Czech foreign ministry spokeswoman Zuzana Opletalova said. "We are in touch with them and there will be a decision on a common position before the conference starts."

Britain, however, confirmed that it would send a delegation to the conference, albeit without a high-level official.

RIGHTS GROUPS CONCERNED

Juliette de Rivero of Human Rights Watch said the meeting in Geneva would lack needed diplomatic gravitas without Washington's presence.

"For us it's extremely disappointing and it's a missed opportunity, really, for the United States," she said.

A draft declaration prepared for the conference removed all references to Israel, the Middle East conflict and a call to bar "defamation of religion" -- an Arab-backed response to a 2006 controversy over Danish cartoons of the Prophet Muhammad that Western states see as a way to quash free expression.

Wood conceded there had been improvements to the document, but he said it was not enough.

"The United States will work with all people and nations to build greater resolve and enduring political will to halt racism and discrimination wherever it occurs," he said.

Diplomats said the high-profile presence of Iranian President Mahmoud Ahmadinejad at the forum made it probable that touchy subjects would still dominate the proceedings.

Ahmadinejad, who has previously said Israel should be "wiped off the map" and questioned whether the Nazi Holocaust happened, will address the plenary and hold a news conference on Monday -- coinciding with Holocaust Remembrance Day.

Iran's sentencing of U.S.-Iranian journalist Roxana Saberi to eight years in prison on Saturday may also have dampened White House enthusiasm about the chance of direct diplomatic contact with Tehran at the conference.

Ahmadinejad is one of only a handful of heads of state who have confirmed they will attend the conference at the U.N.'s Palais des Nations.

Iranian dissidents on Saturday expressed dismay about his taking center stage, saying his participation "would only serve to discredit the conference."

Western officials have said they are preparing for a response if Ahmadinejad were to make "unacceptable" comments in his Monday remarks. Some said they would respond with rebuttals on the spot, and others signaled they could leave the forum.

One diplomat said: "We don't normally walk out of conferences run by the United Nations and we'd rather avoid doing it. But that doesn't mean that there aren't red lines that if breached would prompt us to take action."

(Writing by Sue Pleming and Laura MacInnis; editing by Paul Simao)

(Additional reporting by Kate Kelland in London, Holger Hansen in Berlin, Jan Strupczewski in Brussels; editing by Robert Woodward)

Conference Discusses Obama’s Birth Certificate

Group Begins Movement To Boycott Hawaii
By JOHN P. CONNOLLY, The Bulletin
Publish:Monday, April 06, 2009
Washington — A group seeking to force the State of Hawaii to release President Barack Obama’s birth certificate met this past weekend to discuss the prospects of getting the state to make it public as well as the involved legal issues.

So-far, efforts to get Hawaii to release the birth certificate have been hampered by the doctrine of legal standing, which requires a plaintiff to show how he or she has been directly harmed by another person’s actions. In this case, courts have repeatedly ruled ordinary citizens cannot sue Mr. Obama to obtain his birth certificate because they lack standing.

The lack of standing mainly stems from the fact the plaintiffs did not raise legal objections to the president’s birth certificate and his place on the ballot before the 2008 primaries. Consequently, the right to legally object was considered to have been legally waived by the courts that have already ruled on the standing issue.

Andy Martin, the lawyer and author who is trying to get Hawaii to release Mr. Obama’s birth certificate, led the two-day conference. A long-time critic of Mr. Obama, Mr. Martin is credited with being the first person to raise questions about his religious upbringing and question if he was a Muslim.

“There’s never been a meeting where people got together and talked about this controversy, kicked it around,” said Mr. Martin. “We might even stimulate some people to go to Hawaii and take up their own cases.”

Mr. Martin, who has written a book about Mr. Obama, argues the president’s birth certificate and school records should be released for historical purposes.

Hawaii has laws that prevent unauthorized persons from accessing the birth certificate, with an exception for those who have a tangible interest in its contents, an interest Mr. Martin claims he has as a writer, writing about the man who is arguably one of the most public figures in the world.

Mr. Martin said his case has a much better chance to succeed because the definition of standing that has kept other cases from proceeding is much more liberal in a state court than a federal court.

Interest in the contents of Mr. Obama’s birth certificate intensified in 2008, when his campaign released a print off of his birth data, calling it his birth certificate.

While the document is legal, it was not his birth certificate. Mr. Obama’s lengthy legal efforts to prevent the document from being released have generated questions and speculations over what he might have to hide. Speculation has varied from the possibility he could be ineligible to be president to the idea Barack Obama Sr. was not his father.

Mr. Martin is critical of the many theories that have flown about in recent months, saying they are understandable, but they should be rooted in the evidence. He is working to get the birth certificate released because he says the American people want the truth.

“Why doesn’t he just sit down and tell his story to the American people?” asked Mr. Martin. “He’s an extraordinary person. He would have more legitimacy as a leader, credibility as a leader, and respect as a leader if he did.”

Mr. Martin has met with resistance from Hawaii authorities in his pursuit of records and other evidence to corroborate a story published by WorldNetDaily reporter Jerome Corsi, saying that Gov. Linda Lingle had sealed off Mr. Obama’s birth certificate.

Mr. Martin requested interdepartmental documents from the governor and attorney general’s offices, only to receive back materials that did not fit the description of what he requested. Instead of getting inter-departmental communications, Mr. Martin received 500 e-mails from citizens concerned about the secrecy surrounding Mr. Obama’s birth certificate.

“Friday, I exposed how the Hawaii governor, Linda Lingle, had mailed me a package of empty materials, without the particularized documentation I had requested,” said Mr. Martin. “She violated Hawaii law. I don't understand why Ms. Lingle thinks she is helping herself by subordinating her office to the Hawaii Attorney General. Ms. Lingle is an independent constitutional officer.”

In response to the resistance of government and school officials to releasing records about Mr. Obama’s past, Mr. Martin and the conference announced a boycott of Hawaii tourism, products and businesses. Any citizen can join in the boycott by going to the Web site, BoycottHawaii.com.

“The BoycottHawaii.com movement will afford every person anywhere in the world a powerful new weapon to punish the State of Hawaii for concealing historical records concerning Mr. Obama,” said Mr. Martin. “I will be writing to the Punahou School, asking them to obtain permission to release his Punahou records.”

Mr. Martin’s case is currently being appealed after being denied in its initial hearing.

John P. Connolly can be reached at jconnolly@thebulletin.us

Comment:

I dunno whether this hold ground or what, but I'm aware that during the 2008 campaign, there is a strong Israeli intelligence element behind some of the most absurd and exaggerated attacks to smear and discredit Barack Hussein Obama II, as a muslim opostate. Although  some of the facts presented is correct but the ways they put it clearly to shape the public opinion away from this particular US presidential contender.

Anyways, let keep a weather eye on this or what say you?