Paulson sees more bad news ahead but economy strong enough to withstand volatility

[babylonsister]

Paulson sees more bad news ahead
But the Treasury Secretary tells Fortune's Nina Easton that the economy is strong enough to withstand the volatility.
FORTUNE Magazine
By Nina Easton, Fortune Washington bureau chief
August 16 2007: 2:04 PM EDT

WASHINGTON (Fortune) -- Treasury Secretary Hank Paulson predicts that the "current strained situation" in the markets "will take time to play out, and more difficult news will come to light. Some investors will take losses, some organizations will fail," he says in remarks that will appear in the forthcoming issue of Fortune.

But, he stresses, global economic fundamentals remain healthy, providing a solid base for financial markets to continue to adjust. "The overall economy and the market are healthy enough to absorb all this," he notes.

This is the kind of carefully calibrated observation that has become the hallmark of Paulson's public remarks during a volatile summer. How to acknowledge bad news without feeding it is at the crux of a communications dilemma for the Bush administration.
Paulson: Market turmoil to slow U.S. growth

It's not an easy balance. Attempting to cheerlead a squirrely market is a dangerous enterprise, akin to "catching a falling knife" says former White House economics adviser Lawrence B. Lindsey, because "you risk looking impotent" if the market continues to fall. But saying nothing can carry its own risks, too, if the markets interpret that invisibility as a sign of no-confidence.

And what administration officials say publicly can have almost as much impact on markets as what the Federal Reserve Board decides behind closed doors. That's a lesson that Treasury Secretaries sometimes learn the hard way.

more...

http://money.cnn.com/2007/08/16/magazines/fortune/easton_paulson.fortune/index.htm?postversion=2007081611

[enid602]

1. global

"But, he stresses, global economic fundamentals remain healthy,... " You'll notice he spoke of GLOBAL economic health, not US.

[babylonsister]

2. He's hedging his bets? Ugh. nt

[ozymandius]

3. Nevermind him.

He'll do anything for a laugh.

[babylonsister]

4. Oh, ozymandius! I don't know enough about any of this.

Are you being sarcastic? Should we be worried? I did notice your update(s?) today, and that can't be a good sign.

And thank you for being so reliable! DU loves you!

[fed-up]

7. hell yes, be worried, remember a year ago or more when some posters kept saying get out of DEBT

that the market was going to crash any time

Well, the time is now

there is no more monopoly money to play with

there is no more home equity for people to tap to pretend that they can afford to keep the economy rolling along

the shit is hitting the fan and like many posters have shown, this is just the beginning

if people don't have all that spare monopoly money they will not take vacations so those in the tourist industry will be hit hard

there will not be extra home improvements getting done, so that will hit contractors and home buidling supply stores

money for their kids college just got wiped out so those kids will have to find a job

there will not be extra fun money for nights on the town so those in the entertainment industry will be hit hard

no money for new flashy SUVs (Good) so the auto industry will take another hit

many small mom and pop stores will feel the pinch and may go under

all sorts of other areas will get hit also

somebody had to do the bookkeeping, accounting and banking so those jobs will go

no more money for work clothes as the jobs don't exist, so that industry will take a hit

the list is endless and not pretty



I thank god for those on DU that warned us at least one year ago. I have no credit cards and no mortgage...

[ozymandius]

8. It was sarcasm - to a degree.

Compare the rhetoric Paulson and Bernanke have used during the past two months. (Discount Bush's comments; he does not know what the hell he's talking about save covering his ass with rah-rah wind.) These two are academics and very experienced. They are also frequently wrong about the severity of our current fiscal storm. Sure - they want to paint as rosy a picture for the sake of appearances. But they've redirected their messages lately. The situation we find ourselves in regarding long-term capital management has changed dramatically since it was reported that Bear Sterns and Goldman Sachs have lost vast amounts of cash in hedge fund ventures. The latest shoe to drop is the number of mortgage companies that have either gone under or are about to go under. There are a few each week it seems that fail.

The biggest potential monster out there is hedge fund solvency. Hedge funds are not regulated by the government. Because of this - they are not required to report the condition of their spreadsheets. So when a hedge fund fails we learn about it through one of the leaked disclosure letters that's sent out to their investors. When we talk of hedge funds we're talking about trillions of dollars around the world under secret management.

There's the rub: how many hedge funds are on the brink of failure because of this mortgage/credit crisis? We don't know. And we will not know until more go bankrupt.

[madrchsod]

5. bad news for who?

the family out on the street? the family living with a friend or family? the family that has to give up their dog or cat because there`s no room for them? ya it`s bad news for them but they are used to bad news,they live with it every dam day...it`s the fuckers who gamed the markets,the guys raking in millions on the trading of bad paper created for the purpose of taking every last cent from the family on the street.

ya it`s bad news ...bad news for the guys who gamed the system because they have so much further to fall....

[nadinbrzezinski]

6. My god why did I just have a flashback to oh of Herbert

Hoover who really didn't think there was any trouble

[screembloodymurder]

9. Old news.

Now we're considering jumping out the window.