Gloomy tales spun by newspapers and online journals

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Every day the same old story : General Motors fighting to stave off bankruptcy, Lakshmi Mittal becomes poorer, Fed decreases interest rates, Another big bank is bailed out.....oh!! The internet and the newspapers have become increasingly monotonous, for they forget that they must churn interesting and original news, or something new for a change. But they are caught in their small web, and they are somehow compelled to cry out the word "Recession" in every article/news item every day.
How many of you agree that newspapers' tone influences our opinion? That when they paint a gloomy picture, we think likewise?

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Critical views on the US Auto Industry Bailout

WSJ asks and answers some important questions :

Will fewer companies look to insource into America if the federal government is willing to bail out their domestic competitors?

The answer :

The answer is an obvious yes. Ironically, proponents of a bailout say saving Detroit is necessary to protect the U.S. manufacturing base. But too many such bailouts could erode the number of manufacturers willing to invest here....

Will a U.S.-government bailout go ignored by policy makers abroad?

The answer :

No. A bailout will likely entrench and expand protectionist practices across the globe, and thus erode the foreign sales and competitiveness of U.S. multinationals. And that would reduce these companies' U.S. employment, R&D and related activities. That would be bad for America.....

Will a federal bailout that politicizes American markets bolster foreign-investor demand for U.S. assets?

The answer :

Not likely. Instead, America runs the risk of creating the kind of "political-risk premium" that investors have long placed on other countries -- and that would reduce demand for U.S. assets and thereby the value of the U.S. dollar.

Reduced foreign demand for U.S. assets would be troubling at any time. Its prospect is especially troubling now, when the federal government's fiscal 2009 deficit is widely forecast to reach something near or exceeding $1 trillion -- up from $456 billion last year. With net saving still near zero for U.S. households and falling profits for U.S. companies, financing that deficit will require attracting foreign capital.

Tough times lie ahead for Obama!!!

Kal's cartoon in The Economist :



With once-in-a-century subprime crisis and global economic meltdown, we need a once-in-a-century president with different ideas, change! Yes, if Americans through full support behind him, the world is his, and no obstacle is too small. What is most important today is bringing back the faith...

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My Endorsement : John McCain

With all newspapers giving out their endorsements for Barack Obama, my view is that only taking an economic view, John McCain is a safe bet against the new-rising Senator (but soon to become President) Obama. It may now be inevitable that Barack Obama is going to be voted President, and that too by a large margin, but a small defence for for McCain :

Even though USA faces a budget deficit of $1 trillion, Obama has vowed to dole out another $1.32 trillion over the next decade to different tax credits, 'middle-class' tax cut benefits, and special exemption for seniors. His proposed income-based health-insurance subsidies and Medicaid elegibility will drill a hole to the tune of $1.63 trillion too!

Obama is going to fund/spend taxpayer dollars on 176 other programs, averaging out to $1.4 trillion over the next 10 years...

A Simple math reveals that these numbers mean approximately $4.3 trillion of increased spending, without adding to it the $1 trillion deficit already there.

But the million-dollar question : Who pays for such expenditure 10 years down the line?? Senator Obama has not pre-empted his voters or us about how he plans to fund these trillion dollar payments. How much ever he digs, the American taxpayer's pockets are not going to yield $4.3 trillion.  Its going to be less, and there's no doubt about it.

Coming back to his oratory skills and connecting with voters, he is the best at that! Who wouldn't want to be a speaker like Barack Obama?
Vernon Smith opines that speaking well does not necessarily represent someone's experience of handling economic situations like this....

He excels as a rhetorician -- common to both the great and the least of past presidents -- but performance cannot run on that fuel. Inevitably, I think his luster will fade even with his most ardent supporters as that reality sets in. We also have seen luster fade time after time with Republican presidents. The rhetoric of a smaller and less invasive government always leads to king-size performance disappointments.

Comments, votes, suggestions and your lovely opinions are always welcome!! Post them now..

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