[Marxism] Hank Poulson's Chatham House Speech

[Steve Palmer]

Chatham House is Britain's leading imperialist think tank, home of the "Royal
Institute for International Affairs".

This is not the sound of a strong confident imperialism - these guys are
running scared.

http://www.treas.gov/press/releases/hp1064.htm
http://www.chathamhouse.org.uk/files/11790_020708paulson.pdf

July 2, 2008
HP-1064

Remarks by U.S. Treasury Secretary Henry M. Paulson, Jr.
on the U.S., the World Economy and Markets before the Chatham House

London - Thank you, Robin. I am pleased to be in London again. Today I will
provide my perspective on current U.S. and global economic conditions and then
look forward to your questions.

When President Bush visited the United Kingdom last month, Prime Minister Brown
remarked on the similarities between our countries -- that both are "founded
upon liberty, our histories forged through democracy, our shared values
expressed by a commitment to opportunity for all." And indeed our countries are
loyal and true allies, our people are friends and we stand and work together on
the world economic stage.

U.S. Economy

Today, the U.S. economy is going through a rough period. And while we have seen
better growth in Europe over the last few quarters, there are signs of a
slowdown in Europe in general and the UK specifically. However, emerging
economies are expected to continue a period of strong growth, which will
support global growth overall.

Early this year, President Bush and the U.S. Congress enacted an economic
stimulus package that is injecting $150 billion into the U.S. economy now when
it's most needed. To date, almost 95 million payments totaling over $78 billion
have been sent. Consumer spending data in May show these payments are helping
families weather this period of slow growth and higher food and gas prices.

Still, the U.S. economy is facing a trio of headwinds: high energy prices,
capital markets turmoil and a continuing housing correction.

U.S. Housing Market

While we have implemented several public and private initiatives to prevent
avoidable foreclosures, the housing correction continues to pose a significant
downside risk to the U.S. economy. As the market works through past excesses,
U.S. foreclosures will remain elevated and we should not be surprised at
continued reports of falling home prices. Our policy continues to be to work to
avoid preventable foreclosures while not impeding the necessary correction
because the sooner housing prices stabilize and more buyers return to the
market the sooner housing will begin to contribute to economic growth.

U.S. and Global Capital Markets

Today I will focus on our capital markets – where the United States and
the United Kingdom face similar challenges and are pursuing similar approaches.
I see our work in three tranches; first and foremost, our number one priority
continues to be promoting market stability and limiting the impact on the
broader economy as we work through today's institutional and markets stresses.
Second, implementing the appropriate policy responses to recent events to
address the deficiencies in our markets which the current problems have
exposed. Third, improving our overall financial regulatory structure to better
prevent and address future turmoil.

Working through the current turmoil will take additional time, as markets and
financial institutions continue to reassess risk, and re-price securities
across a number of asset classes and sectors. I have encouraged financial
institutions to de-lever, recognize and disclose losses and raise capital, so
they can continue to play their vital role in supporting economic growth. Even
in this difficult environment, financial institutions worldwide have raised
over $338 billion. Institutions in the U.S. and the U.K. have raised capital
equal to 95 and 96 percent of their recognized losses, respectively. In
continental Europe, the gap is wider; there, institutions have raised only 56
percent of their recognized losses so far. I encourage financial institutions
to continue to strengthen balance sheets by raising capital, de-leveraging or
reviewing dividend policies.

Today's markets are difficult and this is a tough earnings environment for our
financial institutions as they work through the present market turmoil and
adjust to the underlying challenges in our economy. For example, high oil
prices will in all likelihood prolong our economic slowdown and housing
continues to pose a significant downside risk.

U.S. Response to Policy Issues Arising from Market Turmoil

As the United States and international capital markets work through the
immediate turmoil, policymakers around the world have been focused on
addressing the policy implications.

In the United States, the Treasury Department, the Federal Reserve, the
Securities and Exchange Commission and the Commodities Futures Trading
Commission worked together through the President's Working Group on Financial
Markets, the PWG, to recommend and implement specific near-term policy actions.
U.S. regulators, investors, financial institutions and credit ratings agencies
have begun to implement these and other recommendations, which include stronger
mortgage origination oversight, national licensing standards for mortgage
brokers, and actions to improve market infrastructure, regulatory oversight,
risk management practices, steps to address valuation issues, and policies and
practices related to the credit ratings agencies and the mortgage
securitization chain.

International Policy Response to Market Turmoil