Bharat Rakshak

• The End of the Financial World as We Know It
• How to Repair a Broken Financial World

vina wrote:

markos wrote:I am talking about TARP money, $700 billion allocated to bail out financial institutions of which $350 billion was dispensed and out of that $45 billion went to Citi.

Money is money. Doesn't matter if it is TARP or C*AP or any such Wampum. Fact is AIG took in more money than Citi. Last I checked, AIG too was just as private as Citi was ,before the bailout

AIG was practically nationalized where the govt took a majority stake(80%?) and was bailed out before TARP went into effect. I think there is a difference between cash infusions (bailouts) to banks and the bailout of AIG/Fannie/Freddie.

Hello.. All the big banks in Wall St , including Citi are "practically" nationalized . So how is it very different from AIG? . Freddie and Fannie were a travesty. At least the banks being private had the excuse of the "conflict" in incentives alignment , profits and motives, short term vs long term etc between the "owners" and 'management' . Fannie and Freddie, dont even have that fig leaf!.

vina wrote: But that is about where the similarities end. In the US too, there are massive disparities in education access and quality. Yup and that is the "zip code" segregation of the US. The schools in the poor , distressed and minority dominated areas of the US suck ,

markos wrote: As someone else mentioned below, all US schools are not equal. Inner city schools are in the worst shape. Most of the immigrant children go to schools in good neighborhoods and thus oblvious to the ailing schools in US that lack good teachers and equipment in classrooms

At least in US, public schools are still viable. Can we say the same about Indian where public school system, which has become the last resort for the poorest children ?

The "problem" is multi dimensional and multi faceted, and complex. It is ridiculous to reduce it to a unidimensional "private vs public" or worse, extend it to "Indian Parents are Racist" because they dont send their kids to school with significant /majority Hispanic and /or Black populations .

markos wrote: The argument made by "karthiksan" was simple (no need to look at multiple dimensions here) - he claimed govt schools in India are much better standard than their counterparts in US (and any more funding of education using tax-payer money in US was waste according to him).

When asked for proof, he started bringing up anecdotal evidence of people who went to public schools 30+ years ago. Then I quoted two sources which contradicts that and clearly showed that vast majority of govt schools in India are in a very bad shape and any parent with sufficient means won't take that risk. So average indian govt school which is still probably the only means for lower classes in India is in a much worse shape than the schools in US.

Where did I say "Indian Parents are racist" ? I said it is racism to claim superiority of some ethnic minorities in US or students in India (in general without giving any specific details) based on superficial data.

I can also parse out a few statements from a post and start a meaningless debate. But it is merely going to waste the bandwidth

Will Obama's stimulus plan really work?


We should resist the temptation to see the forthcoming "economic stimulus" package as a panacea. It won't be. At best, it would represent traditional "pump priming." This familiar metaphor is worth pondering. To get the pump started, you add water; then the pump operates independently. Similarly, the stimulus will succeed only if the economy resumes spontaneous expansion and job creation.

The incoming Obama administration has understandably focused on the immediate task of designing the stimulus program. It has said less about how it would encourage self-sustaining economic growth. But that, in the end, is the crucial issue. Ever-expanding government budget deficits — reflecting spending increases and tax cuts — would ultimately be ineffective and self-defeating.

The stimulus qualifies as a necessary evil, a parachute against an economic free fall. Conventionally, the economy is sliced into four sectors: consumer spending; business and housing investment; net exports; and government spending. The first three sectors are weakening. Consumer confidence is at a record low, according to a Conference Board survey conducted since 1967. Only 6 percent of Americans think jobs are plentiful; 41 percent think there will be fewer jobs in six months. Housing construction has collapsed; businesses are fearful of making new investments. Exports suffer from faltering foreign economies.
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If government doesn't prod the economy, what will? The danger is that pessimism and shrinking spending would feed on each other, pushing output down and unemployment up. By propping up production, employment and confidence, a stimulus package aims to buy time. Even so, joblessness would rise. IHS Global Insight predicts that it will peak at 9.2 percent in early 2010. But a free fall would be averted, and as overborrowed Americans repaid their debts, they would resume higher spending. Bloated housing inventories would decline; home construction would revive. Business investment would follow.

That's the theory.

By all reports, the stimulus will be massive. Stanley Collender, a respected budget expert, thinks the 2009 deficit could exceed $1.3 trillion, about 9 percent of the economy (gross domestic product). In dollars, that would triple the 2008 deficit of $455 billion. As a share of GDP, it would dwarf Ronald Reagan's post-World War II record of 6 percent in 1983. Gasp.

(For numbers junkies, here's Collender's math. He starts with the Congressional Budget Office's latest 2009 estimate, $438 billion. He then adds $500 billion in stimulus, assuming that some of the stimulus will be spent in 2010. He also adds $100 billion unbudgeted so far for Iraq and Afghanistan, $80 billion for relief from the alternative minimum tax, and $250 billion for the Troubled Asset Relief Program. Note: The TARP figure involves highly technical accounting rules.)

Under some circumstances, the stimulus could backfire. One possible pitfall is that foreign and domestic investors in U.S. Treasury bonds might balk at buying so many more securities. To convince them, interest rates might have to rise, which might perversely worsen the crisis. There might even be a panicky flight from the dollar. So far, the opposite has happened. Scared investors have crowded into "safe" Treasuries and driven their interest rates to astonishing lows. Still, psychology has governed this unpredictable crisis; a sudden shift in sentiment isn't inconceivable.

Even if this unpleasant surprise and others don't materialize, the stimulus remains a stopgap. The present crisis represents a fundamental break in the recent pattern of American economic growth. For the past quarter-century, the economy has advanced on an ever-rising tide of personal borrowing that supported expanding purchases of consumer goods — contributing to U.S. trade deficits — and a housing boom. But lending became reckless, and many households overborrowed. In its simplest terms, the "stimulus" substitutes the federal government's superior credit for damaged private credit.
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But this cannot continue indefinitely. Rapid increases in the federal debt — much faster than in recent years — would threaten a further loss of confidence that might prolong today's financial crisis or, someday, trigger a new one. A growing federal debt burden would also compound the problem of paying the staggering retirement costs of aging baby boomers. So: Neither rising household nor government debt provides a plausible foundation for future economic growth.

What the United States needs is export-led growth. The rub is that many other countries want that, too. Just as large U.S. trade deficits signified American overspending, large trade surpluses in China, Japan and other Asian countries signified their oversaving. In China, consumption spending is 35 percent of GDP, notes economist Nicholas Lardy of the Peterson Institute. That's half the American level.

The future of the U.S. economy depends on finding new sources of productive demand. That is partly a domestic exercise, but it also requires that other societies reduce their oversaving and reliance on exports. This is a tall order. Our fate is not entirely in our hands — or Barack Obama's.

ramana wrote:Now we should focus on how to restore liquidity and bank confidence to re-oil the global economy.

ramana wrote:If we can do what I suggested then India can rule the world.

ramana wrote:If we can do what I suggested then India can rule the world.

Prem wrote:

Chineese bubble is gonna burst in few months and by end of this year India will be very attractive for investment. Export driven economies are doomed for the time being as they will shrink drastically . Lets wait for chinese export figures in this quarter .

Saxo bank predicts that in 2009 crude trading at $25. S&P 500 falls 50% to 500. China’s GDP growth falls to zero. EURUSD falls to 0.95. Italy could leave the ERM. If Saxo Bank’s 10 outrageous claims for the year ahead transpire, economic conditions will worsen dramatically in 2009. "The good thing is, overall, we predict 2009 will be a turning point because it can’t get much worse" says Chief Economist David Karsbøl.

The Copenhagen‐based online trading and investment specialist's predictions are an annual attempt to predict rare but high impact ‘black swan’ events that are beyond the realm of normal market expectations. Compiled as part of the bank’s 2009 Outlook, the thought exercise this year present a dismal view of the global financial landscape.

Saxo Bank’s Outrageous Claims for 2009:

1. There will be severe social unrest in Iran as lower oil prices mean that the government will not be able to uphold the supply of basic necessities.
2. Crude will trade at $25 as demand slows due to the worst global economic contraction since the great Depression.
3. S&P will hit 500 in 2009 because of falling earnings, vaporizing housing equity and increased cost of funds in the corporate sector.
4. The EU is likely to crack down on excessive government budget deficits in several member states, and Italy could live up to previous threats and leave the ERM completely.
5. The AUDJPY will drop to 40. The decline in the commodities markets will affect the Australian economy.
6. EURUSD will fall to 0.95 and then go to 1.30 as European bank balances are under tremendous pressure because of exposure to the faltering Eastern European markets and intra‐European economic tensions.
7. Chinese GDP growth drops to zero. The export driven sectors in the Chinese economy will be hurt significantly by the free‐fall economic activity in the Global Trade and especially of the US.
8. Pre‐In's First Out. Several of the Eastern European currencies currently pegged or semi‐pegged to the EUR will be under increasing pressure due to capital outflows in 2009.
9. Reuters/ Jefferies CRB Index to drop to 30% to 150. The Commodity bubble is bursting, with speculative excesses so large they have skewed the demand and supply statistics.
10. 2009 will see the first Asian currencies to be pegged to CNY. Asian economies will increasingly look towards China to find new trade partners and scale down their hitherto US‐centric agenda.

David Karsbøl, Chief Economist at Saxo Bank, comments:

"It is not even outrageous to call this the worst economic crisis ever. We have, regrettably, been rather precise in almost all predictions from last year. What used to be outrageous now seems to be the norm", says Karsbøl.

"In a year when markets and economies have fluctuated more widely than ever before nothing seems out of the ordinary or impossible. We believe that 2009 will be equally unpredictable and therefore have made ten outrageous predictions largely focusing and what might happen to global indices and currencies. The good thing is, overall, we predict 2009 will be a turning point because it can’t get much worse" says Karsbøl.

"In 2008 the S&P 500 has fallen well over 25% below its 1182 high of 2007, world oil prices got close to the predicted high of $175, and UK growth has turned negative. Who knows which of our 2009 forecasts will prove to be right but judging by previous years some of them most certainly will," he adds.

Ameet wrote:NYT Op-Ed: The Next World Order

http://www.nytimes.com/2009/01/02/opini ... dia&st=cse

CHINA and India are in a struggle for a top rung on the ladder of world power, but their approaches to the state and to power could not be more different.

Two days after last month’s terrorist attack on Mumbai, I met with a Chinese friend who was visiting India on business. He was shocked as much by the transparent and competitive minute-by-minute reporting of the attack by India’s dozens of news channels as by the ineffectual response of the government. He had seen a middle-class housewife on national television tell a reporter that the Indian commandos delayed in engaging the terrorists because they were too busy guarding political big shots. He asked how the woman could get away with such a statement.

I explained sarcasm resonates in a nation that is angry and disappointed with its politicians. My friend switched the subject to the poor condition of India’s roads, its dilapidated cities and the constant blackouts. Suddenly, he stopped and asked: “With all this, how did you become the second-fastest growing economy in the world? China’s leaders fear the day when India’s government will get its act together.”

The answer to his question may lie in a common saying among Indians that “our economy grows at night when the government is asleep.” As if to illustrate this, the Mumbai stock market rose in the period after the terrorist attacks. Two weeks later, in several state elections, incumbents were ousted over economic issues, not security.

All this baffled my Chinese friend, and undoubtedly many of his countrymen, whose own success story has been scripted by an efficient state. They are uneasy because their chief ally, Pakistan, is consistently linked to terrorism while across the border India’s economy keeps rising disdainfully. It puzzles them that the anger in India over the Mumbai attacks is directed against Indian politicians rather than Muslims or Pakistan.

The global financial crisis has definitely affected India’s growth, and it will be down to perhaps 7 percent this year from 8.7 percent in 2007. According to my friend, China is hurting even more. What really perplexes the Chinese, he said, is that scores of nations have engaged in the same sorts of economic reforms as India, so why is it that it’s the Indian economy that has become the developing world’s second best? The speed with which India is creating world-class companies is also a shock to the Chinese, whose corporate structure is based on state-owned and foreign companies.

I have no satisfactory explanation for all this, but I think it may have something to do with India’s much-reviled caste system. Vaishyas, members of the merchant caste, who have learned over generations how to accumulate capital, give the nation a competitive advantage. Classical liberals may be right in thinking that commerce is a natural trait, but it helps if there is a devoted group of risk-taking entrepreneurs around to take advantage of the opportunity. Not surprisingly, Vaishyas still dominate the Forbes list of Indian billionaires.

In a much-discussed magazine article last year, Lee Kwan Yew, the former prime minister of Singapore, raised an important question: Why does the rest of the world view China’s rise as a threat but India’s as a wonderful success story? The answer is that India is a vast, unwieldy, open democracy ruled by a coalition of 20 parties. It is evolving through a daily flow of ideas among the conservative forces of caste and religion, the liberals who dominate intellectual life, and the new forces of global capitalism.

The idea of becoming a military power in the 21st century embarrasses many Indians. This ambivalence goes beyond Mahatma Gandhi’s nonviolent struggle for India’s freedom, or even the Buddha’s message of peace. The skeptical Indian temper goes back to the 3,500-year-old “Nasadiya” verse of the Rig Veda, which meditates on the creation of the universe: “Who knows and who can say, whence it was born and whence came this creation? The gods are later than this world’s creation. Who knows then whence it first came into being?” When you have millions of gods, you cannot afford to be theologically narcissistic. It also makes you suspect power.

Both the Chinese and the Indians are convinced that their prosperity will only increase in the 21st century. In China it will be induced by the state; in India’s case, it may well happen despite the state. Indians expect to continue their relentless march toward a modern, democratic, market-based future. In this, terrorist attacks are a noisy, tragic, but ultimately futile sideshow.

However, Indians are painfully aware that they must reform their government bureaucracy, police and judiciary — institutions, paradoxically, they were so proud of a generation ago. When that happens, India may become formidable, a thought that undoubtedly worries China’s leaders.

Gurcharan Das is the author of “India Unbound.”

certain coastal arab communities like yemenis, oman; yahudis; gujaratis; fujianese; tamils have been trading on a continent wide scale for hundreds of years...reaching even into central asian trade routes. finding super sharp trading and financial skills has not been a problem for india.

SwamyG wrote:

certain coastal arab communities like yemenis, oman; yahudis; gujaratis; fujianese; tamils have been trading on a continent wide scale for hundreds of years...reaching even into central asian trade routes. finding super sharp trading and financial skills has not been a problem for india.

As usual you hit the nail on its head. The subcontinent peninsula because of its geographical advantage was one of the crucial pieces of real-estate that was involved in trading. The region increased its wealth by not looting, but by carrying trade across the globe. Right from Middle East, to China along with Rome and the Far South East.

ramana wrote:Prem For you!!!!

Ameet wrote:NYT Op-Ed: The Next World Order

http://www.nytimes.com/2009/01/02/opini ... dia&st=cse

CHINA and India are in a struggle for a top rung on the ladder of world power, but their approaches to the state and to power could not be more different.

Two The ]

My take is India's USP was its business class which understood game theory before it was formalized. The INC in its moroness suppressed the business instincts of Indians and kept them bound.

KarthikSan wrote: U.S. debt is losing its appeal in China

The title says it all! And The Messiah said "Let there be money!" and he heard "The Chinese aren't buying T-Bills anymore" Maybe they will invest in the Indian rupee

DETROIT -- A Detroit elementary school is asking for donations of toilet paper and light bulbs to keep their school functioning.

The principal of the Academy of Americas sent a letter to staff, parents and partners asking for donations of items "that are of the utmost importance for proper school functioning and most importantly for student health and safety."

In the letter, Principal Naomi Khalil cited budget constraints within the district as the reason why the school could no longer stock the items.

The district is grappling with a more than $400 million budget deficit and is on the verge of being assigned an emergency financial manager by the state.

The letter asks for toilet paper, paper towel rolls, trash bags and 60, 100 or 150-watt light bulbs.

"We realize that the economic situation is stressful for our entire community, but we are asking for your collaboration," wrote Khalil. "We thank you for your cooperation and we hope that as a school community we can pull together to guarantee the best possible educational environment for our children."

Parents said a letter went out asking for supplies at the start of the school year.

"They sent out a letter for pencils, pens, they put Kleenex on there," said parent Danny Huddleston.

A spokeswoman for the district said the school is not running out of supplies but instead is asking for them to ensure they have sufficient supplies to what they already have.

But at least one parent said he doesn't mind helping out the school no matter the circumstance.

"I'm all about helping the school. If that's what they need then that's what we need to see what we can do to help the out," said Juan Oroczo.

Donations are being accepted at the school's font office, beginning Jan. 12.

The school is located at 5680 Konkel St. in Detroit.

a shipment of made-in-pakistan Lotas can resolve this outrage.

vsudhir wrote:Protectionism will be back with bang-bang in 2009, IMO.

Asymmetric Access to markets - esp large, profitable, savings-positive, demand-healthy ones (hint hint nudge nudge - the G-8 don't quite satisfy these bare regularity conditions) will acquire strategic and geopolitical ramifications.

IMO, India should liberalize internally with a vengeance.

The first dibs at the Indian mkt should rest with desi firms or otherwise firms that demonstrate a longterm commitment in capital spending and investments to India, phirst and phormost.

Now that our desi banks like hdfc and our insurance co.s like LIC, GIC have shown they can withstand competition without seeking sarkari bailouts, more sectors can be liberelized - esp in services like edu, healthcare and so on.

CBS wrote: In Midst Of Crisis, President-Elect Urges Quick Action; Focuses On Job Creation, Clean Energy



(CBS/AP) President-elect Barack Obama warned of dire and lasting consequences if Congress doesn't pump unprecedented dollars into the national economy, making an urgent pitch Thursday for his mammoth spending proposal in his first speech since his election.

"In short, a bad situation could become dramatically worse" if Washington doesn't go far enough to address the spreading crisis, Mr. Obama said as fresh economic reports showed an outlook growing increasingly grim.

Since his November election, he has deferred to President George W. Bush on foreign policy matters such as the Middle East. But, with the urgency of the economic crisis, Mr. Obama has waded deeply into domestic issues as he works to generate support for his plan to create jobs, jolt the economy and make long-term investments in other areas.

In the speech at George Mason University outside of Washington, Mr. Obama cast blame on "an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington."

But he added, "The very fact that this crisis is largely of our own making means that it is not beyond our ability to solve. Our problems are rooted in past mistakes, not our capacity for future greatness."

Mr. Obama laid out goals of doubling the production of alternative energy over three years, updating most federal buildings to improve energy efficiency, making medical records electronic, expanding broadband networks and updating schools and universities.

Still, his remarks shed little new light on the details of his plan that could cost as much as $775 billion over two years in tax cuts and spending intended to jolt the economy and create new jobs.

The speech marked Mr. Obama's highest-profile effort yet on an issue certain to define and dominate his early presidency.

"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible," he said.

Governors of six states and mayors of 14 cities - a bipartisan audience that came from as far away as Minnesota and Utah to be among the few hundred in attendance - listened to the speech that lasted less than a half hour. Included were Mayor Michael Bloomberg of New York City.

Mr. Obama asked Congress to work day, night and on weekends if necessary to pass a revival plan within the next few weeks so that it can be ready for his signature shortly after he takes office on Jan. 20.

The speech came amid a grim economic backdrop. The Labor Department reported Thursday that total unemployment claims jumped to around 4.6 million last week, even though the number of new claims dropped unexpectedly.

For all of 2008, employers probably slashed payrolls by at least 2.4 million. And some economists predict a jump in the jobless rate from 6.7 to 7 percent in December, which would be the highest in more than 15 years, reports CBS News correspondent Priya David. The Labor Department will release the latest unemployment figures Friday.

Of the 3.2 million jobs that the Obama administration says will be saved or created, a million of those jobs will come from a $25 billion investment in infrastructure - building and renovating roads, bridges and schools while making a long-term investment in renewable energy and "green" initiatives, reports CBS News correspondent Kelly Wallace.

On Wednesday, news of an unparalleled federal budget of $1.2 trillion for the 2009 budget year was revealed, according to a Capitol Hill aide briefed on new Congressional Budget Office figures.

Mr. Obama acknowledged the new stimulus spending will "certainly add to the budget deficit." He also acknowledged some sympathy with those who "might be skeptical of this plan" because so much federal money has already been spent or committed in an attempt - largely unsuccessful so far - to get credit, the lifeblood of the American economy, flowing freely once again.

Such statements are coded to appeal to budget hawks in both parties, whom Mr. Obama wants to win over so that approval of a package draws wide, bipartisan support in the Democratic-led Congress.

Mr. Obama also pledged to keep his stimulus plan free from pork barrel spending, telling Congress that "this must be a time when leaders in both parties put the urgent needs of our nation above our own narrow interests."

CBS wrote: Mr. Obama began his speech with the following sobering line:

"Throughout America’s history, there have been some years that simply rolled into the next without much notice or fanfare. Then there are the years that come along once in a generation – the kind that mark a clean break from a troubled past, and set a new course for our nation. This is one of those years. We start 2009 in the midst of a crisis unlike any we have seen in our lifetime..."

The president-elect says his plan would create three million jobs and invest in "priorities like health care, energy, and education." The transition released the following key bullet points of the plan:

• Doubling the production of alternative energy in the next three years.
• Modernizing more than 75% of federal buildings and improve the energy efficiency of two million American homes, saving consumers and taxpayers billions on our energy bills.
• Making the immediate investments necessary to ensure that within five years, all of America’s medical records are computerized.
• Equipping tens of thousands of schools, community colleges, and public universities with 21st century classrooms, labs, and libraries.
• Expanding broadband across America, so that a small business in a rural town can connect and compete with their counterparts anywhere in the world.
• Investing in the science, research, and technology that will lead to new medical breakthroughs, new discoveries, and entire new industries.

Below are Mr. Obama's full remarks as prepared for delivery and released by the transition team.



Throughout America’s history, there have been some years that simply rolled into the next without much notice or fanfare. Then there are the years that come along once in a generation – the kind that mark a clean break from a troubled past, and set a new course for our nation.

This is one of those years.

We start 2009 in the midst of a crisis unlike any we have seen in our lifetime – a crisis that has only deepened over the last few weeks. Nearly two million jobs have now been lost, and on Friday we are likely to learn that we lost more jobs last year than at any time since World War II. Just in the past year, another 2.8 million Americans who want and need full-time work have had to settle for part-time jobs. Manufacturing has hit a twenty-eight year low. Many businesses cannot borrow or make payroll. Many families cannot pay their bills or their mortgage. Many workers are watching their life savings disappear. And many, many Americans are both anxious and uncertain of what the future will hold.

I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future. And our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world.

In short, a bad situation could become dramatically worse.

This crisis did not happen solely by some accident of history or normal turn of the business cycle, and we won’t get out of it by simply waiting for a better day to come, or relying on the worn-out dogmas of the past. We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC. For years, too many Wall Street executives made imprudent and dangerous decisions, seeking profits with too little regard for risk, too little regulatory scrutiny, and too little accountability. Banks made loans without concern for whether borrowers could repay them, and some borrowers took advantage of cheap credit to take on debt they couldn’t afford. Politicians spent taxpayer money without wisdom or discipline, and too often focused on scoring political points instead of the problems they were sent here to solve. The result has been a devastating loss of trust and confidence in our economy, our financial markets, and our government.

Now, the very fact that this crisis is largely of our own making means that it is not beyond our ability to solve. Our problems are rooted in past mistakes, not our capacity for future greatness. It will take time, perhaps many years, but we can rebuild that lost trust and confidence. We can restore opportunity and prosperity. We should never forget that our workers are still more productive than any on Earth. Our universities are still the envy of the world. We are still home to the most brilliant minds, the most creative entrepreneurs, and the most advanced technology and innovation that history has ever known. And we are still the nation that has overcome great fears and improbable odds. If we act with the urgency and seriousness that this moment requires, I know that we can do it again.

That is why I have moved quickly to work with my economic team and leaders of both parties on an American Recovery and Reinvestment Plan that will immediately jumpstart job creation and long-term growth.

It’s a plan that represents not just new policy, but a whole new approach to meeting our most urgent challenges. For if we hope to end this crisis, we must end the culture of anything goes that helped create it – and this change must begin in Washington. It is time to trade old habits for a new spirit of responsibility. It is time to finally change the ways of Washington so that we can set a new and better course for America.

There is no doubt that the cost of this plan will be considerable. It will certainly add to the budget deficit in the short-term. But equally certain are the consequences of doing too little or nothing at all, for that will lead to an even greater deficit of jobs, incomes, and confidence in our economy. It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy – where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit.

That is why we need to act boldly and act now to reverse these cycles. That’s why we need to put money in the pockets of the American people, create new jobs, and invest in our future. That’s why we need to re-start the flow of credit and restore the rules of the road that will ensure a crisis like this never happens again.

That work begins with this plan – a plan I am confident will save or create at least three million jobs over the next few years. It is not just another public works program. It’s a plan that recognizes both the paradox and the promise of this moment – the fact that there are millions of Americans trying to find work, even as, all around the country, there is so much work to be done. That’s why we’ll invest in priorities like energy and education; health care and a new infrastructure that are necessary to keep us strong and competitive in the 21st century. That’s why the overwhelming majority of the jobs created will be in the private sector, while our plan will save the public sector jobs of teachers, cops, firefighters and others who provide vital services.

To finally spark the creation of a clean energy economy, we will double the production of alternative energy in the next three years. We will modernize more than 75% of federal buildings and improve the energy efficiency of two million American homes, saving consumers and taxpayers billions on our energy bills. In the process, we will put Americans to work in new jobs that pay well and can’t be outsourced – jobs building solar panels and wind turbines; constructing fuel-efficient cars and buildings; and developing the new energy technologies that will lead to even more jobs, more savings, and a cleaner, safer planet in the bargain.

To improve the quality of our health care while lowering its cost, we will make the immediate investments necessary to ensure that within five years, all of America’s medical records are computerized. This will cut waste, eliminate red tape, and reduce the need to repeat expensive medical tests. But it just won’t save billions of dollars and thousands of jobs – it will save lives by reducing the deadly but preventable medical errors that pervade our health care system.

To give our children the chance to live out their dreams in a world that’s never been more competitive, we will equip tens of thousands of schools, community colleges, and public universities with 21st century classrooms, labs, and libraries. We’ll provide new computers, new technology, and new training for teachers so that students in Chicago and Boston can compete with kids in Beijing for the high-tech, high-wage jobs of the future.

To build an economy that can lead this future, we will begin to rebuild America. Yes, we’ll put people to work repairing crumbling roads, bridges, and schools by eliminating the backlog of well-planned, worthy and needed infrastructure projects. But we’ll also do more to retrofit America for a global economy. That means updating the way we get our electricity by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy to every corner of our nation. It means expanding broadband lines across America, so that a small business in a rural town can connect and compete with their counterparts anywhere in the world. And it means investing in the science, research, and technology that will lead to new medical breakthroughs, new discoveries, and entire new industries.

Finally, this recovery and reinvestment plan will provide immediate relief to states, workers, and families who are bearing the brunt of this recession. To get people spending again, 95% of working families will receive a $1,000 tax cut – the first stage of a middle-class tax cut that I promised during the campaign and will include in our next budget. To help Americans who have lost their jobs and can’t find new ones, we’ll continue the bipartisan extensions of unemployment insurance and health care coverage to help them through this crisis. Government at every level will have to tighten its belt, but we’ll help struggling states avoid harmful budget cuts, as long as they take responsibility and use the money to maintain essential services like police, fire, education, and health care.

I understand that some might be skeptical of this plan. Our government has already spent a good deal of money, but we haven’t yet seen that translate into more jobs or higher incomes or renewed confidence in our economy. That’s why the American Recovery and Reinvestment Plan won’t just throw money at our problems – we’ll invest in what works. The true test of the policies we’ll pursue won’t be whether they’re Democratic or Republican ideas, but whether they create jobs, grow our economy, and put the American Dream within reach of the American people.

Instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made transparently, and informed by independent experts wherever possible. Every American will be able to hold Washington accountable for these decisions by going online to see how and where their tax dollars are being spent. And as I announced yesterday, we will launch an unprecedented effort to eliminate unwise and unnecessary spending that has never been more unaffordable for our nation and our children’s future than it is right now.

We have to make tough choices and smart investments today so that as the economy recovers, the deficit starts to come down. We cannot have a solid recovery if our people and our businesses don’t have confidence that we’re getting our fiscal house in order. That’s why our goal is not to create a slew of new government programs, but a foundation for long-term economic growth.

That also means an economic recovery plan that is free from earmarks and pet projects. I understand that every member of Congress has ideas on how to spend money. Many of these projects are worthy, and benefit local communities. But this emergency legislation must not be the vehicle for those aspirations. This must be a time when leaders in both parties put the urgent needs of our nation above our own narrow interests.

Now, this recovery plan alone will not solve all the problems that led us into this crisis. We must also work with the same sense of urgency to stabilize and repair the financial system we all depend on. That means using our full arsenal of tools to get credit flowing again to families and business, while restoring confidence in our markets. It means launching a sweeping effort to address the foreclosure crisis so that we can keep responsible families in their homes. It means preventing the catastrophic failure of financial institutions whose collapse could endanger the entire economy, but only with maximum protections for taxpayers and a clear understanding that government support for any company is an extraordinary action that must come with significant restrictions on the firms that receive support. And it means reforming a weak and outdated regulatory system so that we can better withstand financial shocks and better protect consumers, investors, and businesses from the reckless greed and risk-taking that must never endanger our prosperity again.

No longer can we allow Wall Street wrongdoers to slip through regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales. No longer can we allow the unscrupulous lending and borrowing that leads only to destructive cycles of bubble and bust.

It is time to set a new course for this economy, and that change must begin now. We should have an open and honest discussion about this recovery plan in the days ahead, but I urge Congress to move as quickly as possible on behalf of the American people. For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

That is not the country I know, and it is not a future I will accept as President of the United States. A world that depends on the strength of our economy is now watching and waiting for America to lead once more. And that is what we will do.

It will not come easy or happen overnight, and it is altogether likely that things may get worse before they get better. But that is all the more reason for Congress to act without delay. I know the scale of this plan is unprecedented, but so is the severity of our situation. We have already tried the wait-and-see approach to our problems, and it is the same approach that helped lead us to this day of reckoning.

That is why the time has come to build a 21st century economy in which hard work and responsibility are once again rewarded. That’s why I’m asking Congress to work with me and my team day and night, on weekends if necessary, to get the plan passed in the next few weeks. That’s why I’m calling on all Americans – Democrats and Republicans – to put good ideas ahead of the old ideological battles; a sense of common purpose above the same narrow partisanship; and insist that the first question each of us asks isn’t “What’s good for me?” but “What’s good for the country my children will inherit?”

More than any program or policy, it is this spirit that will enable us to confront this challenge with the same spirit that has led previous generations to face down war, depression, and fear itself. And if we do – if we are able to summon that spirit again; if are able to look out for one another, and listen to one another, and do our part for our nation and for posterity, then I have no doubt that years from now, we will look back on 2009 as one of those years that marked another new and hopeful beginning for the United States of America. Thank you