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General News    H2'ed 3/1/09

Calling Sully to the Rescue: How Bad Will It Get?

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"In 1930, right before the depression hit, John Maynard Keynes wrote, "The world has been slow to realize that we are living this year in the shadow of one of the greatest economic catastrophes of modern history."  ~Economist James Galbraith, Congressional Testimony (Monthly Review)


No One Seems To Know Or Be Willing To Say How Bad Things Are

By Danny Schechter
Author of Plunder

Pilot Chesley 'Sully' Sullenberger has been given his own Facebook page which may be the equivalent these days to being inducted in some heroes hall of fame. He became the rescuer who knew where he was, saw where he was going, and touched his huge plane down into what he calculated correctly would be a safe landing on the Hudson River.

Will President Obama be able to rescue us from the ongoing economic collapse that has put the country and his plans at risk?  Is he flying blind or does he know how to achieve a safe landing even in the absence of flight controllers and people who know what is going on. Is he going far enough?

Does anyone even know how bad the economy is, or how much worse it will get?  Can anyone see the "bottom" the way Sully saw the water rushing up at him in the cockpit of his distressed aircraft?  He handled his crash; can we handle ours?

On Friday, after a crisis that's been going in full panic mode since August 2007, the people who are supposedly in the know don't "seem" to bee. This AP report from late last week made that clear:

"WASHINGTON – The economy's downhill slide at the end of last year was likely much steeper than the government initially thought and it is probably doing just as poorly now - if not worse - as a relentless slew of negative forces feed on each other, pushing the country deeper into recession."

Reread the sentence and you can see, as a famous Hollywood Screen writer wrote years ago "nobody knows nothing."  The operative phrases are "likely much steeper than the government initially thought" and "it is probably doing just as poorly now." What? Duh?

The self-styled experts had  what they call a "revision" of the numbers. At first  they thought the economy only dropped or "contracted" by 3% but when they looked again, it had more than doubled to 6.2%. Oops! These new fourth-quarter figures showed the economy shrinking at the fastest rate in a quarter century, were far worse than expected.

There is a reason economics is called "the dismal science" although the science part of all this is very shaky and may have to be separated from the "dismal" part. There were economists like Nouel Roubini forecasting these trends but he was marginalized by agencies that thought they were so much smarter than the man they called "Dr. Doom."

Someone needs to take a deep breath and figure out what all of economic stimulus efforts are stimulating, General Motors and many banks have received and lost billions. Insurance companies are lining up for more moolah. Fannie Mae needs another $15 biliion.

It seems endless, and we are not even touching the surface of the real economic time bombs on the horizon from credit default swaps, derivatives and credit cards. Nomi Prins who worked for as an analyst for Bear Stearns and a managing partner for Goldman Sachs says the official math is totally fuzzy:

"The media, like Washington hasn't a clue as to the way in which the system leveraged itself.  It talks about the home loans.  It talks about the homeowners.  It talks about asset securities and packaging and slicing and dicing as if it really understands what happened with these securities. And it really doesn't talk about the 10, 20, 30 percent or what ever amount of leverage or borrowing that was done on the back of them. 

"And the fact that even the treasury, the Oval Office, no one in Congress has actually been able to present an accurate description or evaluation of the loss of the value these securities used to be, the borrowing that was done on top of them and the way this nothing set of loans – remember there was only 1 ½ trillion dollars worth of sub loans – subprime loans created – became $14 trillion worth of asset backs and 140 minimum trillion dollars worth of just stuff. 

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News Dissector Danny Schechter is blogger in chief at Mediachannel.Org He is the author of PLUNDER: Investigating Our Economic Calamity (Cosimo Books) available at Amazon.com. See Newsdisssector.org/store.htm.
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