Charlie Rose

IRISH  07/13/2009 05:23 PM Report

Remember America how and who got the country to this state of affairs culminating in the crisis of 2008. Eight years of Bush II rule in ignoring the deficit.

doodahdaze  07/12/2009 07:34 AM Report

This interview is the first time I heard this feller speak, I like how he talks, easy to follow his logic, thus easier to understand, and consequently easier to trust. Not like that, Nigel Ferguson stooge, that tartufe refers to in the opening comment; that guy's a joke.

Again, Mr. Rose, great guest and interview.

jpatol  07/10/2009 11:38 PM Report

Altman is the clearest and most logical thinker on long term financial consequences.

He gives a rational overview of what we can do now to buoy our chances of shaping a better financial future for everyone.

We have to face the deficit--it's too late to argue about how we got here. Starting now we need to earn more money or spend less. Period.

charlizecourriers  07/10/2009 04:53 PM Report

More "something for nothing." Roger exemplifies that very tried and true principle of those who serve in American government-Get the Geld!

Stefan_vK  07/09/2009 11:32 PM Report

While the interview was pretty good overall I think that one statement of his was absurd in that form:

"Now, no society is going to continue to increase its standard of living with no savings. It’s axiomatic. You can’t, because savings equal investment, investment equals productivity, productivity equals standards of living. So no savings, no investment, and so forth."

Saying that something is axiomatic in ones model of the real world doesn't mean that it is true; it means that one defined it to be true for ones model and either it is true or the model is inaccurate. Deducing the truth of a statement from a model that is based upon the assumption that the statement must be true is circular reasoning.

Further I would argue that in reality the equality relationships that he mentions are indeed nothing more than correlations. If for example inequality goes up with productivity it is not hard to imagine the average standard of living to go down. But at least that part is not a logic fallacy but just a matter if interpretation.

sh200kr  07/09/2009 11:32 PM Report

don't raise taxes. just print money and spend them!

sh200kr  07/09/2009 11:32 PM Report

don't raise taxes. just print money and spend them!

Ricardo_Amaral  07/09/2009 11:31 PM Report

Regarding the subject of restructuring the international monetary system to be relevant to the realities of the world of the 21st Century - you can read about it on my latest article as follows:

My latest article was published today on the RGE Monitor website, and you can read it at:

“Brazil, China and the New Asian Currency”

Written by Ricardo C. Amaral

http://www.rgemonitor.com/emergingmarkets-monitor/257250/brazil_china_and_the_new_asian_currency

It was also published on Brazzil magazine at:

Brazzil Magazine – July 9, 2009

“With US Capitalism’s Demise It’s High Time For Brazil to Adopt the New Asian Currency”

Written by Ricardo C. Amaral

http://www.brazzil.com/component/content/article/205-june-2009/10207-with-us-capitalisms-demise-its-h igh-time-brazil-adopt-new-asian-currency.html

.

tartufe  07/09/2009 03:27 PM Report

Agree with a flat tax for openers IF ALL loopholes could be plugged. Our system is run by oligarchs (Military, Financial, Big Pharma, et al) with an immutable lobbying structure, rendering loopholes well entrenched and totally assured. Bribery is (too) powerful. We're a democracy on paper only. For example if Obama were fatuous enough to try to pull out of Af-Pak he would discover where the real power of government lies - much like his deferred Irag departure.

So taxes? Progressive with loopholes. Make them work for it.

tartufe  07/09/2009 03:05 PM Report

Yeah RE, probably some of your own soliloquy and aired here in part from time-to-time.

REMant  07/09/2009 03:00 PM Report

This all seems very dire and paradoxical until you realize that what is contributing to dragging the economy down IS the stimulus spending or the promise of it. Dump that and you will get both recovery and a balanced budget. That tho leaves the Fed as a problem. We must raise interest rates or rather stop trying to set them, since it hasn't really made much difference anyway, and keep Bernanke from printing money. But we must realize that the govt deficit, while important, is only really important - as Altman said to begin with, and then proceeded to forget - to the extent that it contributes to a private sector deficit, ie, the economy's indebtedness as a whole.

A sales tax is regressive, but it also encourages savings, however, the best Federal tax to adopt is a flat income tax, which would be less progressive, but close all the loopholes, thus allowing the mkts to correct the manifold distortions caused by them in the economy, and make welfare delivery easier and more efficient. States and localities already levy a large amount of regressive taxes, and it is best to keep these in balance.

It seems as if the employment growth during the Bush admin was entirely due to excessive govt spending and too low nominal interest rates, in other words, a pile of "stimulus."

The problem in Japan was that it attracted much too much foreign investment, saved too much and relied too much on foreign sales, just as China has been recently. This encouraged a huge amount of corruption and bubbles, similar to what we've seen here. The emergence of China and other developing countries, undercut its exports, and the shift of investment to the tech sector in the US, causing the tech bubble here, brought about its denouement. In the belief that they would recover their economic status they failed to cut their losses, or allow deflation, plus they added considerably to their debt, and I would say that we are doing much the same thing.

One can think of globalization or market expansion as presenting a deflationary pressure with respect to old wealth, but which is necessary to achieve maximum economic efficiency, just as full employment is desirable in any one country, thus the potential for economic crisis is always present even when a regime of sound money and balanced budgets is followed, and there are no wars. Old money and new labor square off and we hear talk of the "stickiness" of prices, but govts usually move to to hold them up in the misguided view that price equates to wealth and for fear of civil unrest. The better policy is to allow the deflation, and for developed countries to invest in developing ones and, of course, in the poor in their own countries, and never allow accumulated wealth to create a service economy, tho I suspect this would be a pretty difficult balancing act, and it is always possible that overinvestment will overwhelm virtue. Krugman's view, on the other hand, is mercantilist, a bit fascist or socialist. Altman seems to be in the monetarist camp. I wonder, BTW, whether he, or many others, will ever start arguing with "standard" monetary economic theory. or what it would take for that to happen.

ShalomFreedman  07/09/2009 02:59 PM Report

Altman is an unusually refreshing expert on economic affairs. He is clear and forceful. He also really knows his stuff. His warning against the super- deficits, and his recommendations for how to cut spending, and increase revenues sound to my non-expert ear sensible.

He in effect comes out against a second stimulus now because of the enormous deficits. He points to a very slow recovery now.

He however offers some long- term consolation by saying that this crisis will result in a larger long-term savings - rate . He points out that the savings rate in the private sector his already has jumped to seven percent. He believes a period of greater savings may lead to a stronger growth American economy in the future.

It is alarming however to hear from him that after such a sharp economic fall the recovery is going to be very slow to come. He points to double- digit unemployment in the coming year.

tartufe  07/09/2009 02:58 PM Report

He touted taxes. I agree. But above $300k, with surcharges over $775k of say 50% with a two year sunset, and a value added tax of 3% for one year, 1-1//2% following year, then 0.75% for last year. An equivalent tariff on imports to defuse any advantage.

Wont happen as corporate lobbyists, the true legislators, will preclude rational decisions.

Spending cuts imperative. Altman's lame offer in this regard was a spineless across-the-board freeze. The real solution is leaving Iraq and Af-Pak and cutting the military budget accordingly and then some.

Altman turned into just another one-of-the-boys at the end. Endorsing Paulson, Geithner et al. Disappointing. Citigroup et al need to fail, with appropriate (Madoff-style) incarcerations.

REMant  07/09/2009 02:50 PM Report

seems to me I've heard all that somewhere before Tartufe...

tartufe  07/09/2009 02:01 PM Report

This July 5, 2009 editorial by George Gurley is germane as Altman points out our deficit is of more concern than health care. A bit lengthy but worthy.

“Money is the root of all evil. But, according to Niall Ferguson in “The Ascent of Money,” it’s also the “root of most progress.” Woolgatherers from Rousseau to Marx have dreamed of a society that operated without money. Yet, money and its offspring — credit and debt — have been “as important as any technological innovation in the rise of civilization,” writes Ferguson.

Money in some form has been around since the beginning of time. Shells, beads, stone discs, cattle, gold and silver have performed its roles. But money got really interesting when someone figured out that paper backed by gold could serve as a medium of exchange. A unit of gold held in reserve could be multiplied by issuing units of paper money. It was a kind of magic, which dramatically stimulated economic activity and increased wealth. As long as people had faith that they could redeem their paper for gold, the magic worked.

At some point, however, the magicians created too much money. Excess liquidity drove prices up. Fear overcame euphoria. One day the gong of doom sounded and everyone wanted to exchange paper money for gold. But there wasn’t enough gold in the vaults to cover all the paper money afloat. A moment of epiphany arrived: The paper was worthless. The bubble burst. The financial system collapsed.

We’re living in a modern version of this eternally recurring tale. There are many competing explanations for the current economic meltdown. The web of mistakes and culprits was complex. But the ultimate cause was expansive monetary policy. Low interest rates and excess money supply inflated the bubble, driving up the price of real estate and oil, tempting investors to take outrageous risks and stoking the deadly sin, Greed. This should have been no surprise. Loose monetary policy makes booms and busts inevitable. Now, the government’s colossal bailout and stimulus schemes promise to inflate another bubble — while we’re still recovering from the last.

“Money is a matter of belief, even faith,” writes Ferguson. The word “credit” comes from the Latin “credo,” belief. But faith in money is being tested today. One problem is that money is no longer backed by gold or any other commodity. The dollar is a “fiat currency,” backed by nothing other than the nation’s credit. Too much borrowing and spending has made that credit look shaky. There’s even been talk of the United States losing its AAA credit rating.

For a long time, the dollar has been the world’s “reserve currency,” an immense advantage in the global market place. Like the British before us, we’ve abused that advantage. The day of reckoning may be at hand. Those who’ve funded our deficit spending and profligate consumption are getting nervous.

The Chinese fear that we may “monetize” our debt — that is, devalue the dollar so that we can repay them with cheaper money. China has recently expressed interest in some alternative international reserve currency. Loss of the dollar’s unique status “would have serious costs for America,” writes economist Nouriel Roubini. “Our ability to finance our budget and trade deficits cheaply would disappear.” The decline of the dollar might take more than a decade, “but it could happen even sooner if we do not get our financial house in order.”

What would it take to get our financial house in order? The United States must “rein in spending and borrowing, and pursue growth that is not based on asset and credit bubbles,” writes Roubini. By the same token, individual Americans must spend less and save more. Everyone would have to swallow bitter medicine and suffer some deprivation.

Entitlements would have to be cut. Restoring faith in the dollar would require more disciplined monetary policy. Failure to get our financial house in order means higher taxes and higher interest rates, more costly imports, less economic growth, a lower standard of living, fewer resources to fund our social and environmental agendas and a decline in the value of our savings.

Does anyone believe that our gerrymandered, earmark-addicted politicians have the moral courage and sense of responsibility to get our financial house in order? Even the president of the Dallas Federal Reserve is skeptical.

“Throughout history … the political class has … turned to the central bank to print their way out of an unfunded liability,” said Richard Fisher. He estimates the government’s unfunded obligations for retirement and health care at more than $99 trillion.

Other experts are gruffer yet.

“Quite frankly, we do not trust the government,” said fund manager Bob Rodriguez. “We will not lend long-term money to a borrower that capriciously erodes its balance sheet.” Monetary expert and Stanford professor John Taylor calls our government, “the most serious source of financial risk today.” Lenin is supposed to have predicted the death of capitalism on the basis of policies unfolding today: “There is no subtler, surer means of overturning the existing basis of society that to debauch the currency. By a continuing process of inflation, government can confiscate an important part of the wealth of its citizens.”

Roubini calls our current debacle “the biggest asset and credit bubble in human history. But our predicament is nothing new. In A.D. 64, the emperor Nero decreased the silver content in Roman coins and made them smaller. Two centuries later, there was virtually no silver in the coins and wheat was two hundred times more expensive.

In the early 20th century, German printing of paper money resulted in an annual inflation rate of 182 billion percent. Since 1957, the purchasing power of the dollar (relative to the consumer price index) has declined by 87 percent.

What to do? An area banker recently answered that question: “I pray.”