New Website Launched

I’ll keep writing on a specific issue these four months, keeping an eye on regular worker’s lives during the economic turmoil. The website, ran by Kate Zhao and Mark Morales, is named “Worker United”.

Hope you enjoy reading it.

Live Blogging: The Economic Challenges Facing President Obama

Four professional business reporters and economists are discussing the economic challenges facing the new President Obama tonight at McGraw-Hill’s 50th floor with the editor-in-chief of BusineeWeek.

Code Red: The economic challenges facing Obama, does that theme mean the U.S. turns to be more socialism or more revolutionary about its system? During the panel, they addressed four questions: the confidence index of President Obama, challenges facing the new President, what is expected for next Monday’s separate stimulus plan from the new political team and the rescue and bailout plans until now for the financial institutions and the real industry. They also debated on the China-U.S.’s economic relations and both countries’ stimulus plan for the global financial crisis.

I interviewed author of why GM matters Bill Holstein who supported moving back manufacturing jobs from China to the U.S. in the panel. I asked whether there is any room and future cooperative opportunities in the two big countries:

And Sosse saw the chance relied on opening the global trading system:

Here are the moderator and panelists:
Steve Adler, Editor-in-chief, Business Week (Moderater)
Steve Liesman, Senior economics reporter, CNBC
Neal Sosse: Chief Economist of Credit Suisse
Floyd Norris, Business columnist, The New York Times
Bill Holstein, author of why GM matters, also columnist for NY times and Businessweek.com

From left to right on the stage: Holstein, Liesman, Norris, Sosse and Adler

Confidence index of the new president

6:33 p.m.

Adler first summarizes the challenges President Obama is facing now: how to rescue the financial system, how to fix the social security and medicare problems in the U.S. and how to save the declining global trade demand to the U.S., and how to seek for energy independence. Then he turned to an interesting question about how confident every panelist feel about the new President’s plan with the scale of 1 to 10.

Holstein is giving 4, because he questions whether the President can step up and address the deep structural challenges of the entire American manufacturing and the real economy?

” Saving, rescuing, otherwise ending the systemic risk caused by the banking sector,” said Liesman and he gave the score of 5-6 regarding the stimulus plans released until now.

Norris said  he would rather resign if he were the president, facing the challenges like that and he doesn’t want to give a score.

“We have to deliver more socialism in the last 90 days than Carl Marx can ever do in his lifetime and it’s not over yet,” Sosse said and he gave the score of 5.

How much do you feel confident about President Obama’s economic rescue plan?

Liesman said he wished that George Bush would be with the Obama’s team. Forris is also worrying about the team and when he and Liesman were in Davos last week, they didn’t see anyone from the Obama’s team attending the conference. There has been some fights and cnflicts inside the team and we have to wait to see “who had the real power under Obama’s administration”.

Audience bursts into a laugh when Adler asks around how many of them were thinking that Obama’s plan is going to do better with Bush as one of the officer. “Are you kidding me?” some said.

Criticism about the stimulus plan

6:50 p.m.

Sosse:  Let me speak to the design elements first and then the execution. On the design front, replacing the cash flows to the households, tax cuts, unemployment insurance benefits and food stamps makes lots of sense. (But do we have made the balance between the tax cuts and infrastructure investment? Are tax cuts and rebates leading to spending wise enough to rescue the economy on the long term?)

Norris: Cutting taxes is a welcome news, but part of tax cuts doesn’t have much stimulus effects, at least no multi-platform effects at all. (I agree!!!)

Holstein: We need a systematic change rather than a booth of money to reboot. Just stimulating the economy, just getting consumption going again, and having people to go back to Walmart and and generating money to China is not the ideal way. We need to make investment in our manufacturing, in our R&D to create real wealth. (Right! Americans spend money, Chinese make goods. When I chatted with a manager from Pfizer before the panel, she was surprised by my descriptions on Chinese migrant workers’ lives and their satisfaction when they could earn more money, sending back to their hometown and being proud of knowing more than the friends still living in the inland rural area. But that’s the real lives in China for regular workers, earning $100 per month, working 10 hours per day, taking turns to sleep…… They are not the most benefactor of the globalization.)

When asked if one stimulus plan can solve everything, Norris remembered that Bush suffered from trying to pursue too many things and once ended up with nothing. Sosse thinks because of the trade deficit, the U.S. stimulus plan will increase imports and benefit China. He raised the question of “buying America”.

Buying America and Credit Protectionism

7:01 p.m.

“We are heading to ‘credit protectionism’,” said Norris. But there is an argument that U.S. government can borrow money with lower rates in the world, since the dollar is so strong.

Holstein thinks that there is not real movement in Washington to rescue Detriot. He is also the only one in the panel defending the auto industry and suspicious about the government’s role in rescuing the nation’s biggest industry.

He also thinks that we should buy American goods to suppor the country if they are reasonable price and high quality. “The whole ‘buy America’ is naive, because the world is here,” Holstein also said, adding the point that it’s not forcement to not buying goods from other countries.

Deflation or inflation?

7:11 p.m.

Norris asked Sosse whether we should fear about the deflation or inflation now? He supposed the government is going to borrow money from the world and devalue the dollar.

“The output gap is open and opening to the global economy now and will be sufficiently large to carry you through a pretty good economic recovery in 2010 or 2011 before you start worrying about pricing,” Sosse answered. Liesman thinks that the health growth rate for the U.S. is 3 percent and for China, it needs to keep 7 to 8 percent growth rate. He also pointed out China’s unployment rate leadind to social unstablity is the real reason the government issued a sizable stimulus plan.

Sosse took an example of job changes from farm boys to factory workers, and then to the workers in service and office buildings, so he didn’t think manufacturing was the only industry which can solve the unemployment problem.

Banking system and financial bailout

Panelists are joking about the Wall Street salary caps and maybe we need different people working at the financial industry.

“I think the government should come in with a massive program,” Liesman siad. “I think they need to be ruthless.” He also thought we were in a credit spiral now- the banking system was bad, making the economy bad, making the banking system bad and making the economy system bad……

“You may have to choose if you want justice or growth,” said Norris. He says that America’s treating the bankers too harshly, and Holstein challenges whether the government has the capability to run AIG. Norris also think AIG should not be bailout or should be sold to others, although some of its credit default swaps may be hard to sell.

The audience grumbled for the comments on Wall Street and were murmuring to raise questions.

Q&A Time

Audience suggested that making the TARP as the bonus to Wall Street traders and asked question about the government’s role on the regulation of the financial system. “The bonus package is awfully large,” Holstein said, and talked about changing the financial corporate culture.

Others asked about media’s responsibility on the reporting and covering of the crisis and panelists all agreed with the idea that facts and truths should be reported, no matter the harsh words will cause worries on the market.

At the last moment, Sosse touched the topic of China’s stimulus plan and he thought it was more proficient because of the dictatorial government and political system. I’ve heard lots of American friends amazed by the Beijing Olympics believed the authoritative government made the miracle happened in China.

O