Treasury Secretary: The Worst May Be Over

Paulson Admitted That Gas Prices Will Counteract The Stimulus Plan, But Stopped Short Of Calling For Another

(AP)  The worst of the U.S.'s credit crisis may have passed, Treasury Secretary Henry Paulson said, though he acknowledged rising gas prices will blunt the effect of 130 million economic stimulus checks.

He ruled out a second stimulus package for now.

In an interview with The Associated Press on Wednesday, Paulson said the turmoil that has gripped Wall Street and that took a turn for the worse again in March has eased somewhat. "There's progress," he said. "I think we're closer to the end of this" than to the beginning.

A prolonged housing slump, a severe credit crisis and soaring energy costs have pushed the economy to the edge of a recession. To help cushion the blow, the Bush administration and Congress speedily enacted a $168 billion stimulus package of tax rebates for people and tax breaks for businesses.

With oil costs surging to record levels and gasoline prices hovering around all-time highs above $3.60 a gallon, Paulson acknowledged that pain at the pump would diminish the impact of the stimulus payments that are designed to give the economy a jump-start.

"Obviously, the high price of gasoline is unwelcome and is a challenge and is a headwind," he said.

The first batch of rebate payments started hitting bank accounts last week through direct deposits. Paulson, Vice President Dick Cheney and other Bush administration officials will head to government check printing centers around the country on Thursday for events highlighting the fact that millions of rebate checks are in the mail.

"We will get some help from the stimulus," Paulson said in the interview. "Later this year, I expect growth will pick up." Still, he acknowledged that the country was facing "tough times" as people struggle with soaring gasoline prices, higher medical costs and a weak jobs market.

Paulson said the steep slump in housing, which has depressed home sales and prices, remained "the biggest risk to the economy." Although he said he did not know when the worst of housing's problems will pass, he suggested there will still be strains in the months ahead.

"Even the optimists here believe that you're going to continue to see in the next several months" newspaper headlines that will say prices have declined even further and foreclosures have increased, he said. "That's what happens during a correction."

However, Paulson said he believes the turmoil that began last August in credit markets has calmed since mid-March when the crisis claimed its largest victim with the forced sale of Bear Stearns, the U.S.'s fifth largest investment firm, to JP Morgan Chase & Co. "Again, I think we're on the right path," he said.

Even though the markets are "somewhat calmer now," Paulson said large portions of the credit markets - ranging from mortgages to student loans to loans that banks make to each other - still are not functioning in a normal way. "I wouldn't be surprised at all to see more bumps in the road," he said.

Paulson rejected for now the notion of a second stimulus bill, including such things as extending unemployment benefits, an idea pushed by Democrats in Congress. He said it would be unprecedented to extend unemployment benefits from the current 26 weeks with unemployment at the relatively low level of 5 percent.

He said the administration's focus at the moment is on getting the current 130 million stimulus payments into the people's hands. The administration believes the rebates will energize overall economic growth and will create an additional 500,000 jobs later this year.

"Some families will use them to help fill up their gas tank, for a family vacation, or to help (buy) back-to-school clothes and a lot of other things that people are going to like to get done," Paulson predicted.

Among Paulson's duties is making sure that the U.S. financial system is not used to bankroll terrorist activities. "A significant portion of our time spent in this area has to deal with Iran," Paulson said.

The department has warned U.S. banks that Iran is using an array of deceptive practices to hide involvement in nuclear proliferation and terrorist activities. Iran's central bank, also known as Bank Markazi, is involved in these deceptive acts, according to the government's warning. Paulson, however, wouldn't say whether or not the department is considering imposing financial sanctions against Bank Markazi.

"We are continuing to watch what the central bank of Iran does carefully," he said.

The Treasury chief spoke on a day when President George W. Bush threatened to veto a broad housing rescue package being considered by Congress. Paulson said the measure being pushed by House of Representatives Financial Services Committee Chairman Barney Frank, a Democrat, was too broad in its effort to insure up to $300 billion (euro193.2 billion) in new mortgages for homeowners facing the threat of default.

Paulson said the administration would continue negotiating with Congress to come up with an acceptable bill, but he did not offer any details of what type of mortgage relief the administration would support.

"Housing is an important area and there are certain things that we need to get done there from Congress," he said. "I view my job as to work to get something that is acceptable and that the president can sign."

The administration favors a narrower legislative housing fix - including strengthening oversight of mortgage giants Fannie Mae and Freddie Mac, which play a major role in financing mortgages, and modernizing the Federal Housing Administration, which insures mortgages.

In addition, the administration has been promoting a voluntary effort by the mortgage industry to modify current loans to keep distressed borrowers in their homes. Treasury officials met for six hours with industry executives on Tuesday, and Paulson said he was encouraged by the progress, although he did not give details.

On other subjects, Paulson said it made sense to re-examine the government's mandate to boost production of ethanol in light of high food costs. However, he argued that the demand for ethanol was being pushed up because oil prices have risen sharply, not because of the government's order to increase ethanol production.

"I think it always makes sense to rethink everything as conditions change," Paulson said. "But I would just say to you that we looked at this and let's recognize that the ethanol mandate is not what is driving this right now."

[kevzgrl]

I work for State of Ohio - our agency director stood up in front of us 2 weeks ago and told us how she was "feeling our pain" at the pump too, when she drives from Dayton to Columbus every day (on a $100,000+ salary, with hubby a well-pd lawyer) and then last Friday, announced how many of our co-workers are going to be laid off in July. Feeling our pain, my azz! 400 in MR/DD, 700 in prisons, 500 in Human Svc, and there is more to come from all the other state agencies. Not to mention, the plant closings and mass layoffs being announced every single day in the papers. How is that getting better?
We have a contractually mandated raise coming up, but our insurance premium is going up 7% this year, along with co-pays and deductibles and out of pockets, and that will wipe out the raise by more than double - feeling our pain, my azz!
These bureacracy types sit up at the top of the food chain and tell us, who are trying to make it with the rising prices of everything, the gas costs thru the roof and no relief in sight, that they are feeling our pain - well, I say BULL-SH-IT. When a politician can tell me HOW he''s going to fix things, and then actually FOLLOWS THRU on it and DOES it, that''s when I will believe things are getting better, not until then.
I work in Unemployment - I know what they say the numbers are, and I have a VERY good idea what the numbers ACTUALLY are, and it AIN''T getting any better!

[ranger1948]

nokoolaid
If obama gets elected i am afraid the worst is yet to come.

[tazmjam]

Pt2
REF: http://infowars.net/articles/may2008/050508oil.htm

The report pointed out that the Commodity Futures Trading Commission, a financial futures regulator, had been mandated by Congress to ensure that prices on the futures market reflect the laws of supply and demand rather than manipulative practices or excessive speculation. The US Commodity Exchange Act states, %u201CExcessive speculation in any commodity under contracts of sale of such commodity for future delivery causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity.
The impact on market oversight has been substantial. NYMEX traders, for example, are required to keep records of all trades and report large trades to the CFTC.
In contrast to trades conducted on the NYMEX, traders on unregulated OTC electronic exchanges are not required to keep records or file Large Trader Reports with the CFTC, and these trades are exempt from routine CFTC oversight.
In contrast to trades conducted on regulated futures exchanges, there is no limit on the number of contracts a speculator may hold on an unregulated OTC electronic exchange, no monitoring of trading by the exchange itself, and no reporting of the amount of outstanding contracts at the end of each day.

Contact your Senator and Reps and tell them you want this loophole closed.

[tazmjam]

Pt 1
Many believe record high gas prices can be blamed for much of our economic woes. Our government tells us there is nothing they can do. Some people have suggested Hedge Funds and Futures speculation may be to blame. It appears they may not be that far off the mark. There are some Futures markets that are not regulated by CFTC. The OTC electronic markets was exempted from CFTC oversights and reporting requirements. No way to know who is buying or selling oil futures on OTC. Open to all kinds of greed or worse.. if someone wanted to sink the US economy this would be the way. Why is Washington and MSM ignoring this? PLEASE READ:

http://infowars.net/articles/may2008/050508oil.htm

Ref: article written by F. William Engdah
A June 2006 US Senate Permanent Subcommittee on Investigations report on %u201CThe Role of Market Speculation in rising oil and gas prices,%u201D noted, %u201C . . . there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.%u201D
What the Senate committee staff documented in the report was a gaping loophole in US government regulation of oil derivatives trading so huge a herd of elephants could walk through it. That seems precisely what they have been doing in ramping oil prices through the roof in recent months.
The Senate report was ignored in the media and in the Congress.

The administration favors a narrower legislative housing fix - including strengthening oversight of mortgage giants Fannie Mae and Freddie Mac, which play a major role in financing mortgages, and modernizing the Federal Housing Administration, which insures mortgages. =============

"Strengthening oversight" and "modernizing" would more often be called rearranging the deck chairs on the Titanic. Those things do need to be done, to avoid future predators such easy access to their sucker list. But, of more utility to Americans employed outside the beltway, would be the current proposal before Congress. This proposal consists of three essential points: (1) Making lower valued mortgages with fixed rate loans available throughFannie/Freddie, with prices more in line with corrected values;(2) losses to be assumed by the financiers of the previous mortgages, with the greedy vultures deprived of their easy kill, and (3)gains from future resale or refinancing of those properties to be split with Fannie/Freddie, negating "investment properties" capitalizing on the government''s assistance to homeowners. These new loans would be limited to those persons who are current in their payments, thereby not rewarding people who simply walk away from their debts.

[a-ji]

"Treasury Secretary: The Worst May Be Over"

Over? Are you kidding me? It hasn''t begun!

[forthepeopl1]

PAULSON MADE A DEAL FOR HIS FREINDS AT GOLDMAN SACKS IN 2006 WITH CHINA, HE HIMSELF PUT IN 2500000 MILLION,SACK PUT IN 3 BILLION. SO HOW MUCH MONEY DID HE MAKE ON THAT DEAL WITH CHINA..

MAKEING DEALS WITH COUNTRYS WHILE SAYING IT GOOD FOR AMERICA..

I HOPE THE MONKEY THAT JUST WENT UP HIS A/S/S EXPLOADS IN IT..WHAT A FACE ONLY A BUSH COULD LOVE

[forthepeopl1]

going "under water" as their loans exceed the please this is a simple thing to fix, why are you bending over for all of the wallstreet scum.
you have the right to do what this paulson/ben did for wallstreet,saying they had to to save america. so you can say the same thing, but this time you would be saveing america, and not wallstreet.
you must come out and stop the forcloseing of all these millions of homes, now,
ALL YOU HAVE TO DO IS MANDATE THAT ALL MORTGAGES THAT HAVE BEEN TAKEN OUT FROM 2000 TO 2007 BY ALL AMERICANS TO BE RE-FI A.S.A.P. NO EXCEPTIONS,


NO MATTER WHAT THE CREDIT IS, THEY WILL RE-FI EVERYONE AT JUST OVER PRIME, AND AT A RATE OF 40% OF WHAT IS OWED ON THE PROPERTY( PERSONAL HOMES ONLY)!!
WHY, BECAUSE MOST HOST ARE SELLING AT FORCLOSER FOR 20 TO 30 CENTS ON THE DOLLAR, SO AS TO WHAT PAULSON SAID TO BEARSTEARN 2 DOLLARS IS BETTER THAN NO DOLLARS SO TAKE THE DEAL..NOW REMEMBER ALL OF YOU, IF THIS COMPANY IN 6 MONTHS LOST 98% OF THEIR VALUE FROM 700 BILLION TO WHAT IS IT NOW. AND FOR SOMEONE TO COME IN AND BUY IT FOR NOTHING, WHAT IS THE REAL VALUE OF ALL THESE HOMES???NOBODY KNOWS, SO WHY NOT JUST START OVER??? AND STOP THE BLEEDING FOR ALL AMERICANS.

[e-mail]
DAVID A BELANGER
FOR COMMON SENSE THIS IS SO EASY TO FIX DONT MAKE IT HARDER THAN IT IS PEOPLE.


WHAT MORE BAILOUTS FOR WALLSTREET COMING.

[rushman71]

"I think we''re closer to the end of this"
Yeah, that''s what she said!!! LOL

[Gary Kempf]

In an interview with The Associated Press on Wednesday, Paulson said the turmoil that has gripped Wall Street and that took a turn for the worse again in March has eased somewhat. "There''s progress," he said. "I think we''re closer to the end of this" than to the beginning.

English translation: I am walking away from here in January a Millionaire, I made mine America!

[ranger1948]

bush''s regime really thinks we will buy this story and everything is just fine.

[fiteit1]

Among Paulson''s duties is making sure that the U.S. financial system is not used to bankroll terrorist activities. "A significant portion of our time spent in this area has to deal with Iran," Paulson said.

The department has warned U.S. banks that Iran is using an array of deceptive practices to hide involvement in nuclear proliferation and terrorist activities. Iran''s central bank, also known as Bank Markazi, is involved in these deceptive acts, according to the government''s warning. Paulson, however, wouldn''t say whether or not the department is considering imposing financial sanctions against Bank Markazi.

I think they slipped this in from another article because it has nothing to do with domestic economic issues. Almost like they are sending a subliminal message (Iran is the next Iraq).

[sparks224]

truthyness,
You voted for W, didn''t you.

[sparks224]

"LOL!! Hey, He''''s trying the Obama strategy!! Keep telling the same lie over and over again until they start to believe it."
Posted by truthyness

Yeah! he''s not a straight talker like W!

[truthyness]

LOL!! Hey, He''s trying the Obama strategy!! Keep telling the same lie over and over again until they start to believe it.

[michellem99-2009]

HA HA HA..I mean HA HA HA.