In the current economic climate, it is common to hear people speak about the need for banks to relax their lending standards and start approving loans again.
But is this really a good idea? Writing for CNN Money, Paul R. LaMonica argues that if financial institutions lend for the sake of it, the country will have a more difficult time pulling itself out of the crisis.
Instead, banks should use the funds from the Troubled Asset Relief Program to shore up their balance sheets and protect themselves against the fresh wave of credit defaults that are around the corner, he says.
Considering that irresponsible lending was a cause of the current recession, it would be a mistake to re-start a system of lending to people who cannot afford to pay the money back, according to LaMonica.
Daniel Alpert of investment bank Westwood Capital, called for a rethinking of "so-called stimulus."
"I don’t think massive consumer spending is the way out. The country needs a pickup in savings and investments in the future," he told the news provider.
From homebuilders’ perspective, 2009 is likely to be a washout year, a panel of housing experts has predicted.
The National Association of Home Builders said at a news conference that this year is expected to be worse than 2008 and a period where the market really hits "the bottom," the Associated Press reports.
A number of factors contribute to this outlook, including rising foreclosures and late payments on mortgages, as well falling house prices and housing starts.
Meanwhile, employment figures may have the most significant impact on whether or not the housing market will recover any time soon.
Frank Nothaft of Freddie Mac forecast that unemployment could reach 8.7 percent in the fourth quarter of the year, up from its current level of 7.2 percent.
"The single most important trigger event leading to [mortgage] delinquency is unemployment," he told the news provider.
One factor that may be holding potential homebuyers back from the market is that many mortgage lenders are employing strict criteria to determine who can obtain a loan.
And some existing homeowners have been stung by falling prices, meaning they currently owe more money on their mortgage than their property is worth.
As the damaging effects of the financial crisis continue to spread, there has been a tendency for people to turn to the government for solutions.
However, many analysts argue that government intervention in the free market may not be successful, Reuters reports.
According to the World Economic Forum’s 2009 Global Risks report, one of the problems at the heart of addressing these concerns is that the financial crisis is global, with the actions of a single government able to affect – and be affected by – countries around the world.
"That intervention will be both reactive and uncoordinated by a series of local, regional and national political actors," commented Ian Bremmer of Eurasia Group in his 2009 outlook.
The world is moving toward a situation in which politics and the free market are necessarily intertwined, he said.
According to the WEF report, this could end up disrupting the natural system of incentives that encourage growth.
"Intervention in support of the financial and manufacturing sectors carries the risk of rewarding failure or propping up inefficient corporations and industries," it states, according to Reuters.
Companies who do not receive government funds may also find themselves at a disadvantage, it explains.
Although the Patriot Act is intended to combat terrorists, it is also reportedly being used to fight back at unruly passengers.
A report in the Los Angeles Times describes how mother Tamera Jo Freeman was convicted of a federal felony defined as an act of terrorism, after she apparently engaged in some disruptive behavior on a plane.
In fact, her particular behavior consisted of spanking her two children, swearing at a flight attendant and throwing a can of tomato juice on the floor, according to the article.
At least 200 people on flights have been convicted of terrorism under the Patriot Act. The Times says most of these cases do not contain any evidence of hijacking or physical attacks, but have instead consisted of arguments, bad language and unruly behavior.
"We have gone completely berserk on this issue," security consultant Charles Slepian told the news provider. "These are not threats to national security or threats to aircraft, but we use that as an excuse."
The Patriot Act was passed by Congress 45 days after the terrorist attacks on September 11, 2001.
The price of gold rose by more than 3 percent on Tuesday, as more investors turned toward the precious metal as a safe haven for their wealth.
According to Reuters data, gold reached an 11-day high of $860.40 an ounce, fuelled by demand from people seeking secure assets.
Standard Chartered analyst Daniel Smith told the news provider that investors are flocking to exchange-traded funds, which issue securities backed by stocks of gold.
"People are slowly building long positions in gold and commodities more generally," he said.
There appears to be a trend of investor mistrust of paper assets in an uncertain economic climate. In addition to exchange-traded funds, other vehicles for gold investment include mutual funds, as well as gold coins or bullion.
"With the exception of the 30-year Treasury bond, gold has held up better than other asset classes and has been in a general upward trend since 2001," Leo Larkin of Standard & Poor’s told Newsday.
Although a stronger dollar often prompts gold to fall, that did not seem to be the case on Tuesday. The dollar rose against the euro as officials released negative predictions about this year’s European economic forecast.
Mobile phone companies are moving one step closer to developing a comprehensive way to track users’ location – and use that information to deliver targeted marketing.
Today’s phones have the ability use GPS chips and network-based cell-tower information to communicate in an individualized way with users, Reuters reports
For example, if a person is walking past a particular clothing store, their phone may offer them a discount related to that shop.
However, the technology may be moving more slowly than operators would like, due to privacy concerns about how people might react to the knowledge that their location is being shared with a service provider.
The article states that as of the end of 2008, both Verizon Wireless and Sprint have taken steps toward implementing location-based services, while AT&T has said it will begin development on its own version early this year.
"I think you’ll see the business pressures on other carriers will lead them to adopt a more open solution as well," Joel Grossman of data aggregator WaveMarket told the news provider.
This is not the first time GPS technology has been at the heart of a privacy debate. In recent months, some police forces have been pushing for further license to use GPS to track suspects.
Newly identified chemicals in the water supply could potentially be causing fertility problems in men, according to British scientists.
A group of chemicals known as anti-androgens have been discovered by researchers at Brunel University, the Universities of Exeter and Reading and the Centre for Ecology & Hydrology.
These pollutants – which enter the water supply from discarded medicines, pharmaceutical treatments and agricultural pesticides – may be capable of having a feminizing effect on male fish, the scientists say.
In previous studies, the same teams had demonstrated how estrogens and estrogen-mimicking chemicals cause reproductive problems in male fish.
Now, they suggest the anti-androgens may also be contributing to the hormone disruption in fish. Additionally, they say the chemicals could potentially be linked to a male fertility problem called testicular dysgenesis syndrome.
Senior author Charles Tyler of the University of Exeter said the study draws attention to "the cocktail of chemicals" in the water supply which may harm reproduction.
"There are likely to be many reasons behind the rise in male fertility problems in humans, but these findings could reveal one previously unknown factor," he added.
A new Fox News survey has found that half of Americans believe the recent stimulus packages and government support of private companies feels like a move toward socialism.
Some 50 percent of total respondents held this opinion, including 70 percent of Republicans, 53 percent of independents and 37 percent of Democrats.
At the same time, slightly more than half of all respondents said they think the best way to ease the country’s economic troubles is to encourage spending by individuals and businesses. Only 19 percent said government spending was the answer.
However, when it came to voicing opinions on President-elect Barack Obama’s specific stimulus plan, responses were more mixed.
Some 79 percent of Democrats said they supported it, along with 60 percent of independents. Just over half of Republicans opposed it.
"It will be interesting to see whether this level of support holds up once the details of the recovery plan come to light, especially given the public’s general preference for private rather than public solutions," commented Ernest Paicopolos of Opinion Dynamics, which conducted the poll for Fox News.
Obama has indicated that he believes strong government intervention is crucial to bring the economy out of recession.
An appeals court for the secretive Foreign Intelligence Surveillance Court has affirmed the use of warrantless wiretaps, a much-criticized measure that was introduced by the Bush administration.
The unclassified version of an August 2008 ruling was released on Thursday and responded to a challenge by an unnamed telecoms company to the Protect America Act of 2007.
This act gave the government the right to monitor phone calls and emails of suspected terrorists without first obtaining a court warrant.
Objections to the act suggested that it violated the Fourth Amendment of the Constitution, which prohibits "unreasonable search and seizure."
In its decision, the court said the requirement to obtain a warrant could slow down the government’s ability to collect time-sensitive information and potentially put Americans’ security at risk.
Although the Protect America Act expired in February, Congress has since passed a new law that permits surveillance and protects communications companies who participated in warrantless wiretapping from lawsuits.
The Foreign Intelligence Surveillance Court was established in 1978 to review applications for warrants related to national security investigations.
More than six in 10 Americans do not want any more of their tax dollars to be devoted to bailing out financial institutions, according to a new poll.
A CNN/Opinion Research survey found that the majority of people feel the first bailout was not successful and do not want to spend more in this way.
"One reason for the opposition to more money being spent may be that more than eight in 10 said that the first $350 billion of taxpayer money for the bailout didn’t work," said CNN’s polling director Keating Holland.
In fact, a similar poll taken by CNN back in October, before the bailout had been approved found that 56 percent of the public opposed the measure.
However, the newest findings do reveal that some people are in support of the government’s proposed actions, with 38 percent agreeing more money should be given to struggling financial institutions.
On Thursday, the Senate voted to release the remaining $350 billion of the $700 billion Troubled Asset Relief Program to the incoming administration.
A Maple Heights, Ohio law that requires landlords to collect personal information and photos of their tenants has attracted complaints about its privacy implications.
ACLU attorney Melvyn Durchslag said the measure was likely enacted to keep students from outside the school district from attending the suburb’s schools, the Cleveland Plain-Dealer reports.
The law at stake obligates landlords to provide the city with data on tenants, including names of adults, number of adults and children living in a residence, names and ages of children, which schools the children attend, residents’ signatures and photographs.
"In their zeal to search out a few people who may be improperly registered for school, city officials have jeopardized residents’ personal information and contributed to our ever-expanding surveillance society," Durchslag said, according to the news provider.
City officials told the Plain-Dealer they would seek to address the issue and that no one had ever complained about it before.
Durchslag said that the ACLU had battled Maple Heights previously over the use of personal data. In 2002, the organization won a lawsuit against the school district centering on the proof required for enrolling new students.
The U.S. does not have an adequate import control policy on genetically modified animals, a USDA internal audit report suggests.
Additionally, the document advises that the country’s existing policy on GMO crops is in danger of becoming obsolete in the future, Reuters reports.
This is because more countries are following the lead of the U.S. and devoting funds to biotechnology and the development of GMO crops and animals.
Previously, the country’s policy was sufficient to cover food that was developed within the U.S. or used similar technology, so "it was unlikely that anything unfamiliar would be imported," the audit stated.
Recommendations from the Office of Inspector General include the development of a control policy for GMO imports and a plan to keep tabs on the development of new GMO crops and livestock in other countries.
Findings from a CBS News/New York Times poll reveal that 87 percent of Americans believe GMO food should be labeled as such – however, the U.S. does not currently have mandatory labeling for these products.
Meanwhile, 53 percent of respondents said they do not want to consume GMO ingredients at all.
A consumer group has brought a lawsuit against Coca-Cola for the marketing of its VitaminWater products.
The Center for Science in the Public Interest says that the company is engaging in "deceptive" practices by selling the beverages as a healthier alternative to soda.
In fact, each bottle of VitaminWater contains 33 grams of sugar, the CSPI says, which "do more to promote obesity, diabetes and other health problems" than the advertised vitamins do good.
Among the "unsubstantiated" claims made by Coca-Cola mentioned in the suit are the products’ potential to reduce the risk of chronic disease, promote healthy joints and support optimal immune function.
"While it is true that vitamins do play various roles in the human body, the statements on VitaminWater labels go far beyond even the loose, so-called ‘structure/function claims’ allowed by the FDA and cross the line into outright fraud," the CSPI says.
The news comes after the FDA scolded Coca-Cola in December over the labeling of its fortified drink Diet Coke Plus, saying it did not contain enough health benefits to use the term "plus."
If President-elect Barack Obama’s stimulus package goes ahead, the country will eventually be left with a "flat economy" and increased debt, according to the Libertarian Party.
The party’s national chairman, William Redpath, said that spending trillions of dollars will do little or nothing to pull the economy out of a recession and will, in fact, cause further problems down the road.
He pointed out that Presidents Hoover, Roosevelt and Ford had all attempted to stimulate the economy by spending on projects in the past, but these efforts were not successful, instead leaving the country with a burden of debt.
"This debt is later repaid with magic money borrowed from foreign countries, printed out of thin air or from tax increases," Redpath explained.
Fraud and pork spending also plague typical big government plans for funding projects around the country, he said.
"So, much of the money taken out of the economy, in order to jump-start the economy, is lost, leaving American taxpayers with a flat economy and even more debt to pay," he added.
The Libertarian Party, along with a number of economists, think tax cuts would be a better path to economic recovery.
Amid talk about the multi-billion dollar stimulus package proposed by President-elect Barack Obama, new Treasury figures reveal that the federal budget deficit has already reached a record $485.2 billion for the first three months of fiscal 2009.
This number sets a new high for a first-quarter deficit and is also greater than the figure for all of fiscal year 2008, which stood at $455 billion.
There are a number of factors at play that have contributed to the rise. Spending on bailouts, economy recovery programs and capital investments began during this period, while income tax revenues have gone down due to job cuts.
According to the Associated Press, Peter Orszag, who has been nominated to lead the White House Office of Management and Budget, predicted large deficits to continue for years.
He told the Senate Budget Committee that the U.S. was likely to face deficits equaling approximately 5 percent of the economy for up to a decade.
In December alone, the country’s deficit grew by $83.6 billion, the Treasury said. Since bailout spending began, it has been issuing bonds extremely quickly to pay for the spending, CNN Money reports.
As the economy has faltered, sales of herbal remedies and vitamins have been increasing, as people look for less expensive ways to treat health conditions.
That is according to an Associated Press investigation, which found many Americans looking to avoid filling costly prescriptions or making doctors’ visits.
According to an AP analysis of data, nationwide retail sales of vitamins and supplements rose by nearly 10 percent during the three months ending December 28th, compared with the same period in 2007.
That data includes New Jersey mom Kristen Kemp, who told the news provider she has been treating her kids’ illnesses with home remedies such as tea and honey, as well as with Chinese herbs.
"Just going to the doctor will cost me $20 per kid – and I have three kids," she explained. "Just in case something bad happens to our jobs, I want more money in the bank."
A government survey released late last year showed that more Americans have been turning to natural supplements to treat their health problems. Among that group, approximately one-quarter cited cost as a factor for avoiding conventional medicine.
Just days after scientists within the FDA accused managers in the administration of corrupt practices, a new report raises concerns about disclosure of financial conflicts.
According to the Health and Human Service Department’s inspector general, 42 percent of marketing applications approved by the FDA did not contain required information about any financial connections between companies and researchers.
Without this documentation, it would be impossible to determine if there was a financial conflict of interest in a clinical trial.
The FDA has required financial documentation of this type for nearly a decade, but the report reveals that compliance with this requirement has been lax.
In 31 percent of applications reviewed, the agency did not document that it had reviewed any financial data at all.
Meanwhile, in 20 percent of applications that contained disclosures that may have raised questions, the FDA did not act, according to the report.
The inspector general made a number of recommendations for improvement to the process. The FDA accepted all but one, which suggested it should investigate conflicts of interest before a trial even began.
The agency said this would add to its workload without producing meaningful results for the public.
Privacy advocacy groups have said they will file a complaint with the Federal Trade Commission urging it to adopt rules and safeguards related to the mobile advertising industry.
In particular, the Center for Digital Democracy and the U.S. Public Interest Research Group have pointed to Google’s new Android platform as a "sleeping giant" that could threaten people’s privacy by surreptitiously collecting user data.
Android has the ability to collect cookies, which are identifiers of particular users and their browsing history. If installed on a phone with geolocation technology, the groups argue that Google could potentially track users’ locations, as well as internet habits.
Jeffrey Chester of the Center for Digital Democracy told Forbes he does not have a specific complaint about Google’s behavior, but he feels the company has not fully addressed privacy concerns before rolling out their new product.
"People don’t really understand what’s about to emerge: A new kind of data collection and advertising, with huge implications for privacy," he told the news provider.
It remains to be seen how the Obama administration will respond to privacy concerns in an age of rapidly developing technology.
Sodas and fancy coffee drinks may be adding hundreds of additional calories to people’s daily intake, new research suggests.
Findings published in the American Journal of Clinical Nutrition reveal that Americans consume around 300 calories a day from sweetened beverages, HealthDay News reports.
And the caloric intake has risen over the past two decades. According to the data, people are drinking approximately 50 extra calories per day, compared to the 1980s.
Study author Sara Bleich suggested that cutting down on mochas, sodas, smoothies, energy drinks and similar sweetened beverages could provide "an easy way" to shed unwanted pounds – at a rate of around 2.5 pounds a month for the average person.
She said that availability and sizing have contributed to the increase in calorie intake.
"Sugar-sweetened beverages are everywhere. And … the container size has increased, so that on any given consumption occasion, people are drinking more," Bleich explained.
Meanwhile, the latest data from the Bureau of Health Statistics indicates that 34 percent of Americans now qualify as obese.
By adopting universal healthcare, America risks turning into a "nanny state" that controls how its citizens behave and what they consume, a doctor cautions.
Paul Hsieh, cofounder of Freedom and Individual Rights in Medicine, writes in the Christian Science Monitor about the dangers of government involvement in paying for people’s healthcare.
He offers up an example of the so-called "waistline police" in Japan, who are charged with monitoring obesity levels among those over 40. Because government funds pay for healthcare, the country reserves the right to fine and punish people who do not meet certain standards.
Hsieh also describes a British ban on certain egg commercials due to health concerns, as well as New Zealand immigration practices which may keep obese people from entering the country, on the grounds that they cost the system too much money.
"Of course healthy diet and exercise are good. But these are issues of personal – not government – responsibility," he writes.
According to Hsieh, the U.S. is also headed toward a nanny state society. Many cities have already enacted bans on trans fat use, limited the opening of fast food restaurants and imposed taxes on unhealthy foods.
With the introduction of universal healthcare, it could only be a matter of time before the government steps in further, he argues.
President-elect Barack Obama has made it clear that he believes government intervention is the best way to help the country overcome its current economic challenges.
In a speech given on Thursday in support of his economic stimulus package, Obama said that "only government can provide the short-term boost necessary to lift us from a recession this deep and severe."
He is attempting to tie the measures in the stimulus to expanding other government-led programs, including those relating to infrastructure and green energy.
According to some experts, Obama’s vision represents a 180-degree reversal from that espoused by Ronald Reagan during the financial crisis of the early 80s.
Allan Lichtman, a professor at American University in Washington, told the Los Angeles Times that in the president-elect’s view, "it’s not just a matter of fixing the economy – it’s a matter of fundamentally moving the economy in a new direction."
"And government, not private enterprise, has to take the lead," he added.
Obama’s economic stimulus package could cost as much as $1 trillion, according to estimates. Some have questioned how this spending will be achieved without raising taxes significantly.
Americans are being placed at risk by the misconduct of managers within the Food and Drug Administration, according to a letter penned by a group of scientists that was sent to the Obama transition team.
The letter, written on a letterhead bearing the name of the Center for Devices and Radiological Health, claims that the scientific review process for medical devices has been "corrupted and distorted," the Associated Press reports.
"Managers have ordered, intimidated and coerced FDA experts to modify scientific evaluations, conclusions and recommendations in violation of the laws … and to accept clinical and technical data that is not scientifically valid," the letter reads.
They used the example of computer-aided mammography as an example. FDA scientists recommended against approving the devices five times, because research revealed they produced false alarms that led to unnecessary biopsies.
However, the FDA managers ignored the objections and ordered the technology to be approved, the letter states. This behavior signifies "the most outrageous conduct," the scientists say.
In recent years, the FDA drug and device approval process has come under attack from a number of corners.
The current financial crisis was completely unforeseen by the Bush administration, according to vice president Dick Cheney.
In an interview with the Associated Press, Cheney claimed that people could not place blame for the economy’s collapse on President Bush because "nobody anywhere was smart enough to figure it out."
When asked whether Bush should apologize for not doing more to prevent the recession, the vice president said, "I don’t think he needs to apologize. I think what he needed to do is take bold, aggressive action and he has."
During the interview, Cheney also defended the methods of interrogation used on suspected terrorists, as well as counterterrorism surveillance programs.
He said that there was no reason for Bush to consider pardoning those who engaged in such measures, as they were legally authorized to do so.
"My view would be that the people who carried out that program … in fact were authorized to do what they did and we had the legal options that in effect said what was appropriate and what wasn’t," Cheney commented.