UNPRECEDENTED MOVES FOR UNPRECEDENTED TIMES
President-elect Obama has been pulling out all of the stops in an attempt to avert an economic freefall. Normally between Election day and Inauguration day very little is heard from the newly elected President. Well, Barack Obama has been holding press conferences and appointing members of his cabinet and advisory team in order to instill confidence in the banking and financial systems.
What has happened in the last few days?
President-elect Obama has announced the following appointments:
Tim Geithner as Treasury Secretary
- Vice chairman of the Federal Open Market Committee (FOMC)
- President of the N.Y. Federal Reserve Bank
- Worked since 1988 in various capacities for presidential administrations
Larry Summers as Director of the National Economic Council
- Former Secretary of the Treasury
- Economics professor at Harvard and president of Harvard from 2001-2006
Christina Romer as Chair of the Council of Economic Advisers
- Economics professor at University of California – Berkeley
- Member of the National Bureau of Economic Research’s Business Cycle Dating Committee
- Published three papers this month alone analyzing tax policy and its fallout on the economy
- PhD from MIT
Peter Orszag as Director of the Office of Management and Budget (OMB)
- Former director of the Congressional Budget Office
- PhD from London School of Economics
- Former economic adviser to President Clinton
Melody Barnes as Director of the Domestic Policy Council
- Former Chief Counsel to the Senate Judiciary Committee
- Executive Vice President for Policy at the Center for American Progress
- Paul Volcker, former Federal Reserve Chairman was appointed to a new White House advisory board charged with helping lift the nation out of recession.
- Officials have confirmed that Robert Gates will be retained as the Secretary of Defense.
- Retired Marine General James Jones will likely be the new National Security Adviser.
- It is rumored that Hillary Clinton will be appointed as Secretary of State.
- Citigroup was “bailed out” this past weekend. The government is injecting another $20 billion on top of the $25 billion put in previously. The government is also guaranteeing $306 billion in risky assets.
- The Big 3 Automakers were told to come back to Congress with a “plan”, before the government will use any of the TARP funds to bail out the ailing companies.
It is now rumored that the fiscal stimulus package that will be passed by Congress in January will be in the $400-$500 billion range, possibly higher, and will include:
- Aid to ailing states
- Extended unemployment benefits
- Tax rebates
- Infrastructure spending which is expected to add about 2.5 million jobs
- Direct aid to homeowners
- New stimulus package for $800 billion unveiled on Tuesday, November 25th – The Fed plans to purchase $600 billion of debt issued by Fannie, Freddie and Ginnie Mae. In addition the Fed will provide up to $200 billion in direct financing to investors buying securities tied to student loans, credit card loans, and car loans. This immediately pushed mortgage rates lower.
Finally, during these turbulent times, we all too often spend too much time listening to the media as they sensationalize the “Crisis du Jour”. However, let’s spend some time counting our blessings. Look for the good in each day.
Edward J. Kohlhepp, CFP®, ChFC
Edward J. Kohlhepp, Jr., CFP®, MBA
“Tomorrow is a mystery. Today is a gift. That is why it is called the present.” --Eleanor Roosevelt