WASHINGTON -- 8:30 p.m. EDT --
Still a bit jet-lagged, but wanted to share a headline from an Obamacampaign economic policy conference call. The call occurred after Obama met with a high-voltage group of economic advisers from government, labor and the private sector.
On the call, The Bourbon Room got in the last question. I asked why Obama had declared in his opening remarks before the meeting began that the U.S. economy was in a state of "emergency" and what the group thought the number one priority was in addressing this economic emergency.
You can read the roster of economic figures who met with Obama at the end of this post.
More importantly, I wanted to share with you what Laura Tyson, former President Clinton's head of the Council of Economic Advisers, said the group talked about in the context of a U.S. economy in the midst of an emergency.
I found her remarks incredibly sobering and prescient. Less than an hour after the conference call ended, Merrill Lynch & Co. Inc. reported a $5.7 billion 3rd quarter write-down and said it would seek to raise $8.5 billion by selling new stock.
The investment banker and brokerage firm posted a $4.9 billion 2nd quarter loss and a $9 billion write-down, much of the pain linked to instability in the housing market and the foreclosure crisis. In announcing its stock sale, Merrill Lynch said the state-owned Singapore firm, Temasek Holdings, would purchase $3.4 billion of Merrill's stock. Management announced it would also buy $750,000 of the Merrill stock.
Here is Tyson's verbatim take, from the conference call, on what those in Obama's economic forum were most worried about. I've italicized the most compelling parts.
"We discussed in the meeting two different -- they are related, obviously -- but two different conditions that are of grave concern.
One is the state of the financial markets. We had a lot of discussion about what has transpired so far, about uncertainty going forward. There are a number of people from the financial markets at the meeting. No one feels that we know for sure that there aren't other bank failures out there, that no one feels for sure that we have, uh, seen a solution yet to the potential down-ward cycle of falling home prices, falling asset values in financial institutions, unwillingness of financial institutions to lend, credit contraction, further falling housing prices bringing in prime real estate, bringing in credit card debt, etc.
The other area was -- we talked about how that was affecting demand. The primary driver of demand has been consumption. Americans are really very hard-pressed. They are hard-pressed by higher energy prices. They are hard-pressed by falling wealth in their houses. They’re hard-pressed by rising unemployment rates. They are hard-pressed because the expansion we've just gone through didn't generate real income growth for the median worker and the median family.
Those two issues, and they’re not separate, they’re related, were the focus of much of what we talked about. The stimulus package of course -- is designed -- we’ve got to do something to try to put a floor on the falling housing prices, which this new housing bill can do, to some extent.
And we have to do something to help the consumer continue to spend, albeit at a reduced rate. We talked about a variety of different ways that one could add stimulus. There was a discussion about what size of the stimulus should be. Sen. Obama has suggested about $50 billion dollars. There was quite a strong consensus that infrastructure should be a part of it. Those were the kinds of issues that we talked about. That’s where the sense of emergency came from in looking at those two related sets of issues."
That was what was on the minds of the following economic heavyweights who attended today's Obama economic conference:
? Jared Bernstein (Senior Economist, Economic Policy Institute)
? Bill Bradley (Former Senator, D-N.J., U.S. Senate 1979-1997)
? Warren Buffet (Chairman and CEO, Berkshire Hathaway) – joined the meeting by phone
? Anna Burger (Chair, Change to Win; International Secretary-Treasurer, Service Employees International Union)
? Jon Corzine (Governor, State of New Jersey)
? William Daley (Chairman of the Midwest, JP Morgan Chase; Former Secretary, U.S. Dept of Commerce, 1997-2000)
? James Dimon(Chairman and CEO, JPMorgan Chase)
? William Donaldson (27th Chairman of the SEC 2003-2005)
? Indra Nooyi (Chairman and CEO, PepsiCo Inc.)
? Paul O’Neill(Special Advisor, Blackstone Group, Former Secretary, U.S. Dept of Treasury, 2001-2002; Former CEO, Alcoa)
? Federico Peña(Managing Director, Vestar Capital Partners; Former Secretary, U.S. Dept. of Energy, 1997-1998; Former Secretary, U.S. Dept. of Transportation, 1993-1997; Former Mayor, City of Denver 1983-1991)
? Penny Pritzker (CEO, Classic Residence by Hyatt)
? Robert Reich (University of California, Berkeley; Former Secretary, U.S. Dept of Labor, 1993-1997)
? Robert Rubin(Chairman andDirector of the Executive Committee, Citigroup; Former Secretary, U.S. Dept of Treasury, 1995-1999)
? Eric Schmidt(Chairman and CEO, Google)
? William Spriggs (Professor and Chair of the Department of Economics, Howard University)
? Lawrence Summers (Harvard University; Managing Director, D.E. Shaw; Former Secretary, U.S. Dept of Treasury, 1999-2001)
? John Sweeney (President, AFL-CIO)
? Laura Tyson(Haas School of Business, University of California, Berkeley; Former Chairman, National Economic Council, 1995-1996; Former Chairman, President’s Council of Economic Advisors, 1993-1995)
? Paul Volcker
(Former Chairman, U.S. Federal Reserve 1979-1987)