http://www.globalstrategywatch.com The best of the economics blogosphere daily 1 2008-01-08T12:20:11Z http://feeds.wsjonline.com/~r/wsj/economics/feed/~3/AGSrYl3wKyI/ The Federal Reserve, a year ago ago this week, began unveiling economic projections four times a year (expanded from twice annually) and stretching over three years (instead of two). The change was promoted as a major step forward for Fed transparency. That transparency today gave us a particularly ugly outlook inside officials minds. The majority of the Federal Open Market Committee appears to see unemployment remaining high into 2011, with growth remaining weak into 2010. Looking at the unemployment rate alone, the 17 current policy makers proved to be particularly bullish in late October just days before a jobs report showed unemployment at 6.5% for the month, up from 6.1%. The Fed s projections: unemployment in the fourth quarter of this year averaging somewhere between 6.3% and 6.6%. Removing the three highest and lowest projections the central tendency shows the rate between 6.3% and 6.5%. With two months left in the year, unemployment is sure to top the high end of those projections. But where the most bearish Fed officials may have fallen short in late 2008, they made up for it in the next two years. The unemployment rate is seen as averaging as high as 8% in the fourth quarters of 2009 and 2010. The low end of the projections from 17 policymakers puts it at 6.6% next year and 5.5% in 2010. Excluding the extremes, the central tendency forecast shows unemployment between 7.1% and 7.6% in 2009 and between 6.5% and 7.3% in 2010. Only in 2011 do any officials bring unemployment down around the 5% level they seek. The range of projections for that year runs between 4.9% and 7.3%. Under that scenario, the jobless recovery after the 2001 recession wouldn t look so bad. Fed officials substantially downgraded their GDP projections, expecting at best weak growth into 2010. At their October meeting, the 17 current Fed policymakers forecast economic output in 2009 ranging from a 1% decline to a 1.8% increase between the fourth quarter of this year and the final three months of next year. Excluding the three highest and lowest figures, the forecasts fall between -0.2% and 1.1% next year and between 2.3% and 3.2% in 2010. The 2011 projections appear to be all over the map: ranging from 2% to 5% GDP growth including all policymakers, or 2.8% to 3.6% under the central tendency forecasts. Many participants highlighted the recent decline in consumer confidence and the extent to which households were swiftly curbing their outlays in response to large losses in stock-market and housing wealth and deterioration in labor market conditions, the Fed said Wednesday in a summary of the projections released with the October minutes. Severe dislocations in credit markets were also seen as weighing heavily on consumer spending and business investment. Fed officials projected inflation, measured by the price index for personal consumption expenditures, ranging between 1% and 2.2% in 2009 (1.3% to 2% excluding the extremes), remaining low in 2010 and slowing to a 0.8% to 1.8% range in 2011 (or 1.4% to 1.7% excluding the extremes). Fed officials generally consider an inflation rate of 1.5% to 2% to be consistent with price stability. Some Fed officials saw a risk that over time inflation could fall below levels consistent with the central bank s objectives, the minutes said, likely referring to those officials who put their forecasts below 1.5%. Some feared the development would pose important policy challenges in light of the already low level of the Fed s rate target. Some officials argued for further rate cuts from the current 1% and said that questions about the effectiveness of such a move were actually reasons for a more aggressive policy adjustment, the minutes said. An easing of policy should contribute to a beneficial reduction in some borrowing costs, even if a given rate reduction currently would elicit a smaller effect than in more typical circumstances, and more aggressive easing should reduce the odds of a deflationary outcome. FOMC members believed downside risks to growth would remain even with the half-percentage-point cut at the late-October meeting. Members anticipated that economic data over the upcoming intermeeting period would show significant weakness in economic activity, and some suggested that additional policy easing could well be appropriate at future meetings, the minutes said. In any event, the committee agreed that it would take whatever steps were necessary to support the recovery of the economy. Sudeep Reddy Image: http://feedads.googleadservices.com/~a/ck0NNp_MrGR-bekD5lbgDOouaeg/i Image: http://feedproxy.google.com/~f/wsj/economics/feed?d=41 Image: http://feedproxy.google.com/~f/wsj/economics/feed?i=sGZsfIBF Image: http://feedproxy.google.com/~f/wsj/economics/feed?i=wwWbDo0T Image: http://feedproxy.google.com/~f/wsj/economics/feed?d=52 Image: http://feedproxy.google.com/~r/wsj/economics/feed/~4/AGSrYl3wKyI No publisher bcarliner 2008-11-19T23:37:32Z Feed Item http://feeds.wsjonline.com/~r/wsj/economics/feed/~3/JQefhdjF6cM/ The federal law encouraging banks to lend to low- and moderate-income neighborhoods is not responsible for the current housing and economic woes, a top U.S. bank regulator said Wednesday. Comptroller of the Currency John Dugan offered a spirited defense of the Community Reinvestment Act, taking aim at conservative critics who have blamed the legislation for the lending excesses at the root of the current housing crisis. CRA is not the culprit behind the subprime mortgage lending abuses, or the broader credit quality issues in the marketplace, Dugan said in prepared remarks for a speech in Baltimore on Wednesday. The 1977 legislation has come under fire in recent months as policy makers debate where to lay the blame for a housing crisis that continues to weigh on the broader economy. The CRA does not require banks to make risky loans, rather it requires federal banking regulators to work with financial institutions to serve neighborhoods where access to credit may be scarce. Dugan, in his remarks, noted that loans made by banks through CRA-related programs in some cases perform at or above the levels of standard conventional mortgages. More broadly, he said CRA programs help encourage greater private investment in areas where such development would otherwise not occur. CRA projects also act as catalysts for other investments, job creation and housing development, Dugan said. He added that in today s difficult economic environment, the need for the positive results that CRA has generated are even greater. Looking at the banking industry as a whole, Dugan said financial institutions continue to face unprecedented challenges to the flow of credit. This comes despite the Treasury Department s efforts to inject $250 billion of capital into the financial system to help unfreeze credit markets. Dugan also said he expects an ongoing debate between Treasury and Congress over whether to use some portion of the $700 billion financial rescue package to directly deal with foreclosures will not be settled until President-elect Barack Obama takes office in January. Michael R. Crittenden Image: http://feedads.googleadservices.com/~a/ENb2GrwTgjP6SvxOPpqlTd_iMik/i Image: http://feedproxy.google.com/~f/wsj/economics/feed?d=41 Image: http://feedproxy.google.com/~f/wsj/economics/feed?i=8Pkh7Fcy Image: http://feedproxy.google.com/~f/wsj/economics/feed?i=cAUsgj5p Image: http://feedproxy.google.com/~f/wsj/economics/feed?d=52 Image: http://feedproxy.google.com/~r/wsj/economics/feed/~4/JQefhdjF6cM No publisher bcarliner 2008-11-19T22:48:59Z Feed Item http://epicureandealmaker.blogspot.com/2008/11/this-cant-be-good.html Randolph Duke: "Exactly why do you think the price of pork bellies is going to keep going down, William?" Billy Ray Valentine: "Okay, pork belly prices have been dropping all morning, which means that everybody is waiting for it to hit rock bottom, so they can buy low. Which means that the people who own the pork belly contracts are saying, 'Hey, we're losing all our damn money, and Christmas is around the corner, and I ain't gonna have no money to buy my son the G.I. Joe with the kung-fu grip! And my wife ain't gonna fu ... my wife ain't gonna make love to me if I got no money!' So they're panicking right now, they're screaming 'SELL! SELL!' to get out before the price keeps dropping. They're panicking out there right now, I can feel it." Randolph Duke: "He's right, Mortimer! My God, look at it!" — Trading Places Citibank below $7. Goldman below $56. Morgan Stanley below $11. Blackstone below $6. Fortress below $2.50. I'm beginning to smell a black, black Christmas on Wall Street. Furthermore, I don't think we're going to see any babies born on the Upper East Side, in Greenwich, Connecticut, or in Mayfair next August, September, or October, either. Get your G.I. Joes with the kung-fu grip while they're hot. © 2008 The Epicurean Dealmaker. All rights reserved. No publisher bcarliner 2008-11-19T23:37:33Z Feed Item http://feedproxy.google.com/~r/economist/blogs/freeexchange/~3/kXNY4Ab8Hxk/pushing_a_bailout.cfm What will a $25 billion rescue accomplish? JAMES SUROWIECKI has been pushing for a bail-out of the automakers quite persistently. I admire the man and his work, but I still feel he's not really engaging with the arguments serious opponents of a bail-out are making. In his latest post, he writes:What’s most mystifying about the opposition to bailing out the automakers are the assertions that having G.M. or Ford go bankrupt would not be that big a deal for the economy or the markets as a whole.I don't think anyone seriously thinking about the issue is making this argument. Obviously it would be a big deal for the firms to go bankrupt. If it's manageable, however, then the economy as a whole will be much better off No publisher bcarliner 2008-11-19T23:37:31Z Feed Item http://www.portfolio.com/views/blogs/market-movers/2008/11/19/will-berkshire-lose-its-triple-a?tid=true On the face of it, recent activity in Berkshire Hathaway makes little sense. Credit default swaps on the triple-A company were trading at 388bp yesterday, and are somewhere over 450bp today , possibly having risen as far as 560bp this morning. As Bloomberg says, For the swaps to pay off, Berkshire would have to exhaust its $33.4 billion cash hoard, and Buffett's decades-long record as the world's most successful investor would have to come to a cataclysmic end. That isn't entirely true, of course: so long as the swaps widen out at all, traders can make money off them even absent an event of default. But given that the CDS is pricing in such a high probability of serious distress, it's entirely reasonable for Berkshire's stock to have fallen -- it's now below $90,000 a share, a level not seen since mid-2006. Even so, Berkshire's market capitalization, at $139 billion, is still significantly higher than its book value, which was $118 billion as of June 30 and is surely significantly lower now, given the degree to which Buffett's investments in the likes of Goldman Sachs have eroded. In other words, the stock market is still pricing in growth and profits, even as the bond market is much more pessimistic. All insurance companies have a certain amount of event risk. But for Berkshire Hathaway the event the company is most worried about isn't a hurricane or an earthquake -- it's a credit downgrade. Roger Ehrenberg asks the question on everybody's mind: "If the market continues to push against Berkshire's credit will a downgrade become a self-fulfilling prophecy?" A downgrade could be very, very bad for Berkshire, depending on how its collateral agreements are worded. At some point, Berkshire's counterparties are going to be able to ask it to put up a lot of collateral against the derivatives contracts it has written -- not only the CDS contracts, mind, but quite possibly also the long-dated put options it's written on broad stock-market indices. Such collateral calls could be extremely harmful to Berkshire's business model -- and that's before taking into account the loss of business at its new monoline subsidiary. On the other hand, I'm not comfortable with any company -- not even Berkshire Hathaway -- having a business model which requires a triple-A rating. Triple-A ratings should be the consequence of a company's profitability, not a cause of it. If Berkshire lost its triple-A and started playing on a level playing field with everybody else, that might be more sustainable, in the long term, than an attempt to shore up the triple-A at all costs. Certainly there's something very weird going on when CDSs are at 450bp and the credit is still triple-A: one or the other has to be wrong. Related Links The $58 Trillion Elephant in the Room Extra Credit, Wednesday Edition Ratings Revamp No publisher bcarliner 2008-11-19T22:49:02Z Feed Item http://rodrik.typepad.com/dani_rodriks_weblog/2008/11/international-finance-and-economic-growth.html The Commission on Growth and Development has put out a nice survey by Maury Obstfeld of the impact of international finance on growth in developing countries. Here is the first part of the abstract: Despite an abundance of cross‐section, panel,... No publisher bcarliner 2008-11-19T22:49:03Z Feed Item http://v2.ftalphaville.ft.com/blog/2008/11/19/18444/the-death-throes-of-the-bond-insurers/?source=rss Ambac's share price hit an all-time low on Wednesday, falling below $1 a share for the first time in the company's history as a public company. Why? A rather savage downgrade from S&P;, which cut the bond insurer's  financial strength rating to A from AA, The outlook on the ratings is negative,... No publisher bcarliner 2008-11-19T23:37:31Z Feed Item http://www.salon.com/tech/htww/2008/11/19/solarworld_and_general_motors/index.html?source=rss&aim=/tech/htww The early reaction to the surprise $1.3 billion dollar bid by Germany's SolarWorld to buy the German carmaker Opel from General Motors has not been kind. It's "a great gag" said one German auto-industry analyst, strongly implying that the bid was just an exercise in public relations sensationalism. Another analyst professed "big amazement," noting that Opel's workforce was 16 times the size of SolarWorld's. And for what it's worth, a spokesperson for GM maintained that Opel, which has been part of General Motors since 1929, "is not for sale." SolarWorld's ostensible goal is to redirect Opel towards producing "green" cars boasting energy efficient and low-emission engines. Whether that's a realistic business plan or a P.R. stunt, I don't know. But I do think there is some interesting symbolism in the gesture. SolarWorld, an integrated producer of silicon wafers, solar cells and solar panels, is one of Germany's fastest growing companies and one of the the largest solar companies in the world. It recently opened a huge facility in Hillsboro, Oregon. It is a prime example of the kind of energetic, ambitious, job-creating green company to emerge from Germany's vigorous government support for and subsidization of renewable energy. Democratic politicians are tearing their hair out trying to figure out how to keep U.S. automakers from shedding thousands of jobs in economically ailing Midwestern states. But the real challenge is to create new jobs in new industries. Germany has succeeded to a great extent in achieving such aims in the solar sector, to the point that companies such as SolarWorld are now spouting brash rhetoric about plans to pick some flesh off GM's rotting carcass. But Where are the new American companies looking hungrily at the industrial infrastructure of the Rust Belt? Perhaps a contender will soon emerge from California, where, even in the teeth of a brutal recession, Governor Arnold Schwarzenegger is pushing aggressively forward with plans to spur the growth of renewable energy. On Monday, GreenWombat's Todd Woody reports, Schwarzenegger issued an executive order requiring that California power utilities get fully a third of their energy from renewables sources by 2020. California currently requires the state's Big Three investor-owned utilities -- PG&E, Southern California Edison and San Diego Gas & Electric ( -- to secure 20 percent of their electricity from green energy sources like wind, solar and geothermal by 2010. Monday's move turns what had been a 33 percent renewables goal into a mandate and extends responsibility for meeting it to every electricity retailer in California.... California's aggressive renewable energy policies already have had one desired consequence: spurring the creation of green collar jobs. OptiSolar, which earlier this year signed a long-term contract to supply PG&E with 550 megawatts of electricity from a massive photovoltaic solar farm, employs 500 people at its Bay Area headquarters and factory. CEO Randy Goldstein said his company will hire another 1,000 for its new Sacramento factory. No publisher bcarliner 2008-11-19T22:48:54Z Feed Item http://blogs.ft.com/wolfforum/2008/11/a-new-architecture-for-global-financial-regulation/ By Walter Mattli and Ngaire Woods At the G20 summit in Washington this month, it was agreed that global growth will require sound new global regulation of financial markets. But what would it take to achieve such regulation? No publisher bcarliner 2008-11-19T22:48:59Z Feed Item http://feedproxy.google.com/~r/economist/blogs/freeexchange/~3/wlsFVUP0lpk/letting_the_air_out.cfm The Fed will get (more) serious about deflation ALL the recent talk of the threat of deflation has now, more or less, become deflation. Asset prices, food and energy have all tumbled in recent months, and in October, the core index of American consumer prices actually fell. Treasury inflation-protected bonds see fairly significant deflation over the next couple of years, "Despite the fact that the Fed will never let it happen", editorialises Felix Salmon in a link to the story.One would think. A deflationary spiral could quickly turn a bad situation into a disastrous situation. Households would hoard dollars, investment would fall, and indebted Americans, of which there are many, would find themselves struggling harder to pay back their debts. And in fact, the Federal Reserve is promising No publisher bcarliner 2008-11-19T22:48:58Z Feed Item http://www.portfolio.com/views/blogs/market-movers/2008/11/19/yet-more-paulson-revisionism?tid=true The second part of David Cho's interview with Hank Paulson features even more revisionism. Get a load of this: Paulson used his influence within the administration to win even broader powers from Congress, allowing him to nationalize major financial institutions, either in part or entirely. The bills were sweeping in scope and gave him the latitude to spend hundreds of billions of dollars as he saw fit... Under the plan, Paulson was granted sweeping discretion to decide how to use the $700 billion and which financial firms would get the money. He could hire firms to manage the program without having to obey the standard government rules for contractors. He could even decide how to place conditions on companies receiving government help, including limits on executive compensation. In the end, Congress granted Paulson every authority he asked for. It's not easy to keep Paulson's stories straight, but when it comes to Lehman Brothers, the First Version was that it was a good thing that it was allowed to fail. The Second Version was that Treasury never had the power to rescue Lehman. And the Third Version is that he was trying desperately to save Lehman, as he says today: When the investment bank Lehman Brothers released disastrous second-quarter earnings this summer, shortly before it went bankrupt, Paulson asked its chief executive, Richard S. Fuld Jr., what the next quarter would look like. Fuld said it might be worse. Paulson demanded that he find a buyer for the company. Fuld balked, looking for other ways to save the firm. So Paulson moved ahead himself and tried, ultimately unsuccessfully, to engineer a deal. "I was the only guy who drove that," Paulson said. "I called two banks when none of them were interested. I tried to get them interested. I urged them to do it. . . . That's what a Treasury Secretary needs to do when you are in a war." If you're being charitable to Paulson, you might think that at least the second two versions are consistent -- that Paulson tried to save Lehman despite not yet having the power to nationalize it, and that shortly afterwards, in the TARP bill, he was sure to give himself that power. But it turns out that story doesn't wash, for two reasons. Firstly, Paulson is happy admitting to Cho that he has done lots of things as Treasury secretary which he was unsure he had the power to do. But more importantly, when he introduced the TARP bill initially, it didn't include a lot of the powers that Congress eventually gave him. Nouriel Roubini told the story of what really happened over a month ago: Congress realized that Paulson needed extra powers, and went to great lengths to give him those powers even though he never asked for them. As Nouriel says: Paulson should be lucky that his early opposition to such public capital injection in the financial system did not prevent Congress - via the back door - to do what was right. This is not Paulson "winning" powers from Congress which he "asked for" -- it's Paulson being given powers by Congress which he didn't ask for. If there's any hero in this story, it's not Paulson, it's Barney Frank. And it's depressing to see Paulson try to grab whatever little credit there is to go round. Related Links Hank Paulson, Revisionist Worst of Times Hank Paulson, Serial Revisionist No publisher bcarliner 2008-11-19T22:49:01Z Feed Item http://v2.ftalphaville.ft.com/blog/2008/11/19/18438/the-great-currency-of-china/?source=rss Steen Jakobsen, CIO of Denmark's Saxobank poses some interesting Asia-related thoughts in his latest blog post as he travels through Asia. Among them is the idea that the Chinese RMB can become a truly "hard" international currency in its own right. Apparently this is now a serious thought doing the rounds in Asia and all the more interesting given Thursday's admission by the Fed that the US is indeed in the midst of quantitative easing.... No publisher bcarliner 2008-11-19T23:37:30Z Feed Item http://feedproxy.google.com/~r/clusterstock/~3/yXeFoDZ68oY/the-worst-mortgage-predator-ever You don't have to listen very long before you'll hear that our nationwide mortgage crisis was caused by "predatory lending practices." But while houses-for-all maniacs advocates like Angelo Mozilo of Countrywide Financial certainly deserve their share of the blame, we shouldn't forget the root causes of these practices. One recent article about the foreclosure crisis is a good example of "predatory lending" talk: Nationwide, the foreclosure crisis has resulted to literally millions of homeowners in mortgage default. After much investigation, it was found out that many of the homeowners became victims of mortgage servicers and lenders who engaged in predatory lending practices. These aggressive lending practices were quite rampant during the last housing boom. There were lenders who falsified information on the borrower's application, allowing them to get approved for loans they could not afford. On the other hand, there were those that offered hybrid mortgage products along with incentives that include interest only payment, no down payment and adjustable rates. Mozilo, who we'll let stand in for the mortgage industry here, was a weird type of predator, however. Rather than lurking around and secretly capturing unsuspecting homebuyers with unwieldy loans, he was perfectly upfront about what he was doing. In June of 2004 (which was dubbed "Home Ownership Month"), Mozilo explained his theory that "closing the homeownership gap is not just the right thing to do; it's the foundation of future business growth." And he knew exactly how to close that gap: the loans we now call predatory. "Eliminating the down-payment barrier is critical to helping the underserved buy homes. And our industry is making strides to break down this barrier and level the playing field. Recent loan program innovations include zero-down-payment loans and loans requiring cash contributions of the lesser of $500 or 1 percent of a home's sales price. For qualified borrowers--especially those among the African-American, Asian and Hispanic emerging-markets population segments--these programs are having a positive impact and enabling people to realize their dreams. But we can do more to create products to fit specific needs." Once you get over your shock and horror over this obviously racist attempt to trap minority buyers in unaffordable homes, you might want to check out the origins of Mozilo's nefarious plans. To help you out, we'll print in full a government document that explains the origins of this kind of predation: As part of President Bush's ongoing effort to help American families achieve the dream of homeownership, Federal Housing Commissioner John C. Weicher today announced that HUD is proposing to offer a "zero down payment" mortgage, the most significant initiative by the Federal Housing Administration in over a decade. This action would help remove the greatest barrier facing first-time homebuyers - the lack of funds for a down payment on a mortgage. Speaking at the National Association of Home Builders' annual convention, Commissioner Weicher indicated that the proposal, part of HUD's Fiscal Year 2005 budget request, would eliminate the statutory requirement of a minimum three percent down payment for FHA-insured single-family mortgages for first-time homebuyers. "Offering FHA mortgages with no down payment will unlock the door to homeownership for hundreds of thousands of American families, particularly minorities," said HUD's Acting Secretary Alphonso Jackson. "President Bush has pledged to create 5.5 million new minority homeowners this decade, and this historic initiative will help meet this goal." Preliminary projections indicate that the new FHA mortgage product would generate about 150,000 homebuyers in the first year alone. "This initiative would not only address a major hurdle to homeownership and allow many renters to afford their own home, it would help these families build wealth and become true stakeholders in their communities," said Commissioner Weicher. "In addition, it would help spur the production of new housing in this country." For those that choose to participate in the Zero Down Payment program, HUD would charge a modestly higher insurance premium, which would be phased down over several years, and would also require families to undergo pre-purchase housing counseling. HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov . No publisher bcarliner 2008-11-19T19:44:52Z Feed Item http://www.salon.com/tech/htww/2008/11/19/shelby_and_the_bailout/index.html?source=rss&aim=/tech/htww When Michigan Senator Carl Levin makes statements supporting a bailout for U.S. automakers, he is generally dismissed as a spokesperson for his constituents -- Michigan, of course, is ground zero for the Big Three. No state in the union employs more auto workers. So how come Richard Shelby, R-Ala., doesn't get the same treatment? In Congress, Shelby is the most outspoken opponent of a bailout, routinely declaring that the Big Three are "dinosaurs." But if there was truth in advertising, every time he opens his mouth there should be a disclaimer: Senator Shelby represents the interests of his constituents -- non-union employees of foreign-owned automobile manufacturers. Alabama ranks sixth on the list of states with the most auto workers -- by last count 130,000 jobs directly or indirectly depended on the auto industry. Hyundai, Honda and Mercedes-Benz all have state-of-the-art plants in Alabama, producing, among other things, the kind of low gas-mileage luxury sport utility vehicles that most U.S. consumers are currently reluctant to buy. Toyota manufactures engines for its Tundra trucks and Sequoia SUVs in Alabama. Scores of other parts suppliers thrive, employing non-union labor in a right-to-work state. Alabama also ranks sixth, nationally, in production of cars and light trucks in the United States. All Honda Odyssey minivans sold in the U.S. are made in Alabama. The Hyundai Santa Fe SUV is made in Alabama. So who do you think would benefit most from a collapse of Ford, GM and Chrysler? How about states such as Alabama and the rest of the South, which have long been busy turning the industrial Midwest into the rust belt, well before outsourcing and offshoring and globalization became working class swear words. Emptywheel, blogging at FireDogLake, was one of the first observers to pounce upon this, in a post last Thursday, "The Ideological Battle Over the Auto Overhaul Heats Up" : In other words, Shelby isn't opposed to car companies that are stupidly committing and recommitting to SUVs. Rather, he's just opposed to car companies that make SUVs with union labor. Alabama's emergence as an automobile industry powerhouse has been rapid. Mercedes-Benz opened its first factory in the state in 1993. Today, according to the Alabama Automobile Manufacturers Association, "Motor vehicles were Alabama's top export in 2006 at over $4.9 billion -- equivalent to 35 percent of the state's total exports," and the automotive industry accounted for 13 percent of the state's manufacturing gross domestic product. Alabama's story is part of the larger narrative of the New South's emergence as a industrial playground for foreign manufacturers, eager to exploit non-union labor -- but still paying better wages than most local industries, thus partially insulating them from the threat of union organizers. It's a narrative that is going to come into clear focus during the next four years, if President-Elect Barack Obama attempts to carry through on his promises to organized labor. Standing against him will be a phalanx of Southern Republican Senators, led by Richard Shelby, opposing him not just on ideological grounds, but motivated also by clear financial incentives. No publisher bcarliner 2008-11-19T19:44:51Z Feed Item http://dealbook.blogs.nytimes.com/2008/11/19/tarps-powers-give-pause-to-private-equity/ Last week, Treasury Secretary Henry Paulson Jr. floated the idea of encouraging private capital to invest in financial institutions alongside the government's Troubled Assets Relief Program - possibly through something he called "matching investments." But if the government wants to attract the private equity crowd, it may need to change certain provisions in the TARP first. [...] No publisher bcarliner 2008-11-19T18:28:42Z Feed Item