Timothy Geithner, U.S. Treasury Secretary on Charlie Rose

I watched this recently, a very interesting segment....Check out the video here
Timothy Geithner on Charlie Rose


Charlie Rose Talks to Timothy Geithner
The U.S. Treasury Secretary discusses the global recovery, the ongoing American mortgage mess, and tensions with China over its currency

By Charlie Rose as in Bloomberg Businessweek

October 18, 2010

Tell me where the global economy is right now and what you expect to happen next.
The world's now healing. And it's growing. The IMF expects the world as a whole to expand at a rate of a little over 4 percent next year, which is not amazing but much better than we would have thought possible. But that overall number hides huge difference across regions. China, India, Brazil, emerging markets in Asia, Latin America, Eastern Europe, they've got a long period of very rapid growth ahead of them. In Europe and Japan, growth is much weaker. In the U.S., the picture is mixed. Most economists think we're growing at a rate of about 2 percent. But the private forecasters say they expect the economy to strengthen gradually into 2011 and grow at about 3 percent. That's not fast enough for us. We want it to be faster.

We are, in my judgment, a substantial way through the process of healing, of fixing the things that were broken. The financial sector is much less leveraged, we've had a traumatic, huge adjustment in house prices across the country, and private savings rates have already increased quite significantly. Those things are really important for future growth, and they're encouraging. But they do mean that we're not growing as fast as we'd like, and I think Washington's got more work to do to try to provide some support for the economy.

Should there be a national moratorium on foreclosures?
What you're seeing in housing is a national tragedy, still very, very difficult. A lot of people were taken advantage of, and a lot of people were too optimistic about what they could afford. Now you've seen some banks suspend the foreclosure process so they can make sure that they're not causing any injustice to borrowers, and that's very important. But a national moratorium would be very damaging to exactly the kind of people we're trying to protect. We want to make sure we're holding [lenders] accountable. But we also want to make sure that we're not going to make the problem worse.

"It's The Economy, Stupid" Courtesy of SmallCapInvestor.com

"It's The Economy, Stupid" Ian Wyatt | SmallCapInvestor Daily | September 30, 2010 1:33pm EDT

When James Carville hung a sign with the phrase, "It's The Economy, Stupid" on Bill Clinton's Little Rock campaign headquarters in 1992 the message to campaign insiders was pretty clear - Clinton was a better choice than Bush because Clinton understood what the economy needed.

Now, I'm not going to get all 'political' on you today - but I am going to talk about the economy. Whether or not Clinton really delivered what the economy needed in the early 1990s is debatable. But what's not debatable is that the market and the economy are intertwined - so investors need to be aware of what's going on in the economy right now and consider how it will affect stocks moving forward.

***Earlier this week the Conference Board released the results of the latest Consumer Confidence Index. The results were dismal as the September consumer confidence level dropped to 48.5, down from 53.2 in August. The index measures consumers' feelings on the job market and general business conditions over the next six months.

"Overall, consumers' confidence in the state of the economy remains quite grim. And, with so few expecting conditions to improve in the near term, the pace of economic growth is not likely to pick up in the coming months" said Lynn Franco, director at the Conference Board Consumer Research Center.

Experts think consumer spending will increase only at a modest pace throughout the rest of the year. This will hold back GDP and limit growth in all sectors of the economy.

"The economy is stuck in an unvirtuous cycle. Consumers are waiting for more jobs to be created, and businesses are waiting for consumers" believes Wells Fargo economist Mark Vitner.

What's needed is a positive feedback loop in which greater consumer confidence leads to consumer spending. In other words, the consumer needs to be a part of the recovery - and that comes down to job creation. Keep an eye on job creation and consumer confidence numbers and look for stabilization in the trends to signal a good time to buy stocks. When they improve, the market will likely have already moved higher.

***Right now President Obama's staff could hang a sign on the oval office that says, "It's Housing, Stupid". Any politician that doesn't see the direct correlation between a stable housing market and economic recovery should get a place in the unemployment line.

According to the S&P/Case-Shiller Index, housing prices increased 3.2 percent from July 2009 to July 2010. New home sales, existing home sales, and new housing starts all beat estimates last month as well.

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