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Should the Gov't Anchor Its Economic Rescue to the Middle-Class Homeowner?
Name:Brian Morrissey
Question: I remember a person, whom I believe was an economics professor at Columbia University, who during the financial crisis proposed that the government anchor their financial rescue strategy to the middle class homeowner, rather than government investment in 'too big to fail' commercial banks. Have you heard of any such proposal? Whatever became of it? -- Posted November 20, 2009 | Comments (0) | Permalink
Who Regulates the Student Loan Industry?
Name:Andra Makler
Question: Who regulates the student loan industry to stop the practice of gouging young people with excessive interest charges added to their principal when they "defer" payment ...the govt doesn't pay the interest and the loans mushroom. -- Posted November 19, 2009 | Comments (0) | Permalink
Did Tax Cuts Create U.S. Jobs?
Name:Ken Lum
Question: The Bush tax cuts put billions in the hands of corporations and other businesses with the hope that they would create U.S. jobs, especially manufacturing jobs in the United States. Did this actually happen or did much of that money get used to create jobs overseas for cheaper labor rather than pay for expensive American jobs? And approximately what proportion of the tax cuts were used to create overseas jobs? -- Posted November 18, 2009 | Comments (0) | Permalink
What's the 'Next New Thing' to Solve the Jobs Crisis?
Name:Hunter Millington
Question: Hi Paul. If it's going to take a "new thing," a la the Internet, to pull us out of the unemployment funk, what do you think it is ? Paul Solman: When I receive a query like this, Hunter, I think to myself: Why don't I become an entrepreneur, push some alluring version of the "new thing," and cash in on my sem-quasi-celebrity? Then I remember that: 1) It would be wrong; 2) It probably wouldn't work; and, in answer to your question, 3) I have no idea what the Next New Thing will be and wouldn't be good at either developing or bringing it to market if I did. Happily, there are uncountable numbers of people out there trying to invent the NNT even as I write. Many are in the alternative energy business, like a Frenchman I met a few weeks back at the B&B we frequented in Lisbon. Wood pellets (made of sawdust) for home heating is his game. Says it works wonders at his stove in Paris, and from what I saw of his family, they certainly seemed to have been well heated. You can even control the temperature by remote control, he alleges. For all I know, there may have been an alternative energy entrepreneur checking into every hostelry in Europe that day. Or a biotech pioneer. Perhaps even a space travel visionary like Howard Bloom, author of the intriguing new book, Genius of the Beast. (Okay, there can't be that many astro-preneurs out there, but you get the point.) In short, who knows the nature of the NNT? But you can be sure there are plenty of folks working on it. Will it usher in a new wave of prosperity? They forbid the following sentence on TV news, because it was already a cliche decades ago, but that's because it was always so apt: Time will tell. -- Posted November 17, 2009 | Comments (2) | Permalink
Why Didn't the Gov't Bail Out People Instead of Banks?
Name:Tommie Kelly
Question: I have never understood why it would not have been more effective to have "bailed out" people directly, and banks indirectly, by giving money to people instead of banks. The money would have necessarily have had to move through the banks, thus increasing cash flow, but would not have become bank property as it did, with which the banks could do anything they liked, as indeed they did, which did not actually "help the economy" in any way that I can see. Meanwhile, they've done as little as possible to help people facing foreclosure. What have I missed here? How did simply improving the banks' balance sheets help any of the rest of United States, the Joe Blows? Paul Solman: Remember, Tommie, how desperate the situation seemed a year or so ago. As I often wrote at the time, credence in the financial system was dissolving. The credibility of banks to pay back depositors (especially those with accounts beyond the insurance limits -- by far most of the money deposited by companies and the like) was on the line. And what about the credibility of credit itself? If those same banks couldn't come up with enough money to honor their debts, our credit cards might suddenly cease to work. Credence; credibility; credit: The entire system was perceived to be on the brink. At that moment, how exactly would the government have bailed out the system by giving money to you, me, and the rest of us? How quickly? In what form? A lump sum to each family? How much for each? Suppose many of us DIDN'T put the money in the banks and just held onto it. Frankly, in the environment of the time -- and with banks teetering left and right -- that's what I might have done. Not you? The solution to bail out the banks was one of desperation. That their creditors were thus rescued, and their executives and now even shareholders, to the extent their stock prices have come back, may be grossly unfair and perhaps unwarranted. But the phrases "too big to fail" and "too interconnected to fail" aren't used lightly. They reflect a consensus. -- Posted November 16, 2009 | Comments (0) | Permalink
Seven Questions for Sheila Bair Editor's note: Ask and ye shall receive. We received some excellent and provocative questions for FDIC Chair Sheila Bair in response to our request here on the Business Desk. Thanks to everyone who contributed. Paul sat down with Bair this morning at FDIC headquarters in Washington, and his interview appears on Friday's NewsHour. Bair also answered seven questions from NewsHour viewers -- on topics ranging from the power of the banking lobby and what to look for to judge a bank's health to lessons learned from other countries' banking rules and the changing role of the FDIC. We were particularly interested to hear Bair's response to a reader question on what she'd do differently in hindsight. Her response: She wished she'd dissuaded Treasury from using federal bailout dollars to prop up big financial institutions with capital infusions last fall, not least because of the thorny issues raised by government ownership of these banks and the public outcry that ensued. Watch Bair's exclusive interview answering NewsHour viewers' questions below. -- Posted November 13, 2009 | Comments (5) | Permalink
Ask the FDIC's Sheila Bair Your Questions
Paul Solman: We're interviewing Sheila Bair, head of the Federal Deposit Insurance Corporation, this Friday. And she's agreed to answer your questions as well as mine. Her answers will be posted here on the Business Desk in a special video. So here's a rare opportunity: to ask the person who guarantees your bank deposits anything you wish. I'd make suggestions, but they would probably be questions I'll wind up actually asking myself. I therefore encourage you to come up with your own: on banking reforms, bailouts, you name it. It's your money (as deposits) that she's insuring, money that comes from insurance premiums the banks themselves pay. But since the government's guarantee is iron-clad, if the FDIC runs out of money, it will be replenished. And that too will be your money, as a U.S. taxpayer. Be bold. Be creative. And remember, there are no stupid questions. Leave your questions in the COMMENTS section below, and be sure to include your name, city, and state. -- Posted November 11, 2009 | Comments (52) | Permalink
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