June 17. 2009

Obama frets on debt, sees U.S. unemployment rising

Tuesday, June 16, 2009 5:50 PM - WASHINGTON (Reuters) - President Barack Obama said on Tuesday that worrying about the U.S. government's finances "keeps me awake at night" and the country needed to start planning now to tackle soaring deficits.

In a pair of interviews on CNBC and Bloomberg television, Obama defended increasing government spending to prevent the recession from worsening, and warned the unemployment rate may hit 10 percent this year, a level not seen since 1983.

"There's no doubt that we've got a serious problem in terms of our long-term deficits and debt," he told CNBC. "I make no apologies for having acted short term to deal with our recession."

But he said once the recession ends, "we're going to have to close that gap between the amount of money coming in and the amount of money going out."

The Congressional Budget Office estimated on Tuesday that the federal deficit would hit $1.43 trillion in fiscal 2010 under Obama's budget plan, slightly higher than it had previously forecast...

http://www.washingtonpost.com

Obama pushes reform to restore investor confidence

Wed Jun 17, 2009 11:02am EDT - WASHINGTON (Reuters) - President Barack Obama will lay out on Wednesday his vision for reshaping U.S. financial regulation, aiming to tighten oversight of the largest firms whose excessive risk-taking triggered a global recession.

The proposals will include closing one bank regulator and creating new overseers for big-picture economic risk and consumer financial product safety, according to a document detailing the administration's proposal.

In a package of reforms that takes on many tough jobs while avoiding at least one, the administration proposes putting the Federal Reserve in charge of monitoring the largest financial firms in the hope that holding one agency accountable will prevent a repeat of the severe banking and capital markets crisis that has shaken economies around the world.

"We must act now to restore confidence in the integrity of our financial system," the administration said in the 85-page document.

"The lasting economic damage to ordinary families and businesses is a constant reminder of the urgent need to act to reform our financial regulatory system and put our economy on a track to a sustainable recovery."...

http://www.reuters.com

Fed's Warsh warns of false optimism on U.S. economy

Tue Jun 16, 2009 5:41pm EDT - NEW YORK (Reuters) - A top Federal Reserve official warned on Tuesday not to take recent gains across a range of asset prices as proof the U.S. economy is on the verge of a strong recovery.

"The panic's hasty retreat should not be confused with robust recovery," Federal Reserve Governor Kevin Warsh said in prepared remarks to the Institute of International Bankers annual meeting in New York.

"The rather indiscriminate bounce off the bottom -- across virtually all assets and geographies -- may be more indicative of a one-time reset, which may or may not be complete."

Warsh said private demand, the true arbiter of economic performance, "remains weak" even while government spending has surged, and the the jobless rate is likely to peak at a higher rate, and linger longer at those high rates, than in recent recessions.

"The 'jobless recovery' may prove to be a familiar and vexing refrain," he said.

"I would expect business capital expenditures and consumer spending to continue to disappoint for the next several quarters," Warsh added.

Rising exports will also not provide an easy way for the U.S. economy to return to growth, he said. "The global economy runs the risk of being mired in a period of slower growth for several years to come."...

http://www.reuters.com