“Make more loans? We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.” — John C. Hope III, the chairman of Whitney National Bank in New Orleans

Back in early December, I highlighted a warning from UCLA Anderson Forecast Senior Economist David Shulman that the US economy, indeed perhaps much of the world economy, faced what is known as a “balance sheet recession.”

To refresh your memories, a balance sheet recessions are highly uncommon and happen following the bursting of a nation-wide asset price bubble. Nomura Securities Chief Economist Richard Koo first described the phenomenon, where the vast majority of companies in an economy devote most of their resources to paying off their debts even when interest rates are near zero.

Balance sheet recessions are as rare as a nation-wide asset price bubble which happens perhaps once every two generations. This type of recession is unlike other recessions in that the inventory cycle is not the key driver. The key driver in this recession is the corporate effort to repair their balance sheets by postponing investments and instead, paying down debt. When a large number of companies move away from the usual goal of profit maximization to debt minimization all at the same time in their effort to regain their financial health, the balance sheet recession starts.

A snowballing debt burden may freeze the market, since companies and consumers care only about paying off debt, choking consumption and investment sentiment. This leads to another round of asset deflation further deepening the economic slump. This vicious cycle is dubbed a balance sheet recession. In effect, companies are looking to wipe under-performing assets off their balance sheets. Japan’s experience from 1991 through 2005 is the main and best known example of a balance sheet recession.

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We are here to mark the beginning of our journey to Washington. This is fitting because it was here, in this city, that our American journey began. It was here that a group of farmers and lawyers, merchants and soldiers, gathered to declare their independence and lay claim to a destiny that they were being denied.

It was a risky thing, meeting as they did in that summer of 1776. There was no guarantee that their fragile experiment would find success. More than once in those early years did the odds seem insurmountable. More than once did the fishermen, laborers, and craftsmen who called themselves an army face the prospect of defeat.

And yet, they were willing to put all they were and all they had on the line – their lives, their fortunes, and their sacred honor – for a set of ideals that continue to light the world. That we are equal. That our rights to life, liberty, and the pursuit of happiness come not from our laws, but from our maker. And that a government of, by, and for the people can endure. It was these ideals that led us to declare independence, and craft our constitution, producing documents that were imperfect but had within them, like our nation itself, the capacity to be made more perfect.

We are here today not simply to pay tribute to our first patriots but to take up the work that they began. The trials we face are very different now, but severe in their own right. Only a handful of times in our history has a generation been confronted with challenges so vast. An economy that is faltering. Two wars, one that needs to be ended responsibly, one that needs to be waged wisely. A planet that is warming from our unsustainable dependence on oil.

And yet while our problems may be new, what is required to overcome them is not. What is required is the same perseverance and idealism that our founders displayed. What is required is a new declaration of independence, not just in our nation, but in our own lives – from ideology and small thinking, prejudice and bigotry – an appeal not to our easy instincts but to our better angels.

That is the reason I launched my campaign for the presidency nearly two years ago. I did so in the belief that the most fundamental American ideal, that a better life is in store for all those willing to work for it, was slipping out of reach. That Washington was serving the interests of the few, not the many. And that our politics had grown too small for the scale of the challenges we faced.

But I also believed something else. I believed that our future is our choice, and that if we could just recognize ourselves in one another and bring everyone together – Democrats, Republicans, and Independents, north, south, east and west, black, white, Latino, Asian, and Native American, gay and straight, disabled and not – then not only would we restore hope and opportunity in places that yearned for both, but maybe, just maybe, we might perfect our union in the process.

This is what I believed, but you made this belief real. You proved once more that people who love this country can change it. And as I prepare to leave for Washington on a trip that you made possible, know that I will not be traveling alone. I will be taking with me some of the men and women I met along the way, Americans from every corner of this country, whose hopes and heartaches were the core of our cause; whose dreams and struggles have become my own.

Theirs are the voices I will carry with me every day in the White House. Theirs are the stories I will be thinking of when we deliver the changes you elected me to make. When Americans are returning to work and sleeping easier at night knowing their jobs are secure, I will be thinking of people like Mark Dowell, who’s worried his job at Ford will be the next one cut, a devastating prospect with the teenage daughters he has back home.

When affordable health care is no longer something we hope for, but something we can count on, I will be thinking of working moms like Shandra Jackson, who was diagnosed with an illness, and is now burdened with higher medical bills on top of child care for her eleven year-old son.

When we are welcoming back our loved ones from a war in Iraq that we’ve brought to an end, I will be thinking of our brave servicemen and women sacrificing around the world, of veterans like Tony Fischer, who served two tours in Iraq, and all those returning home, unable to find a job.

These are the stories that will drive me in the days ahead. They are different stories, told by men and women whose journeys may seem separate. And yet, what you showed me time and again is that no matter who we are or what we look like, no matter where we come from or what faith we practice, we are a people of common hopes and common dreams, who ask only for what was promised us as Americans – that we might make of our lives what we will and see our children climb higher than we did.

We recognize that such enormous challenges will not be solved quickly. There will be false starts and setbacks, frustrations and disappointments. And we will be called to show patience even as we act with fierce urgency.

But we should never forget that we are the heirs of that first band of patriots, ordinary men and women who refused to give up when it all seemed so improbable; and who somehow believed that they had the power to make the world anew. That is the spirit that we must reclaim today.

For the American Revolution did not end when British guns fell silent. It was never something to be won only on a battlefield or fulfilled only in our founding documents. It was not simply a struggle to break free from empire and declare independence. The American Revolution was – and remains – an ongoing struggle “in the minds and hearts of the people” to live up to our founding creed.

Starting now, let’s take up in our own lives the work of perfecting our union.

Let’s build a government that is responsible to the people, and accept our own responsibilities as citizens to hold our government accountable.

Let’s all of us do our part to rebuild this country.

Let’s make sure this election is not the end of what we do to change America, but the beginning.

Join me in this effort. Join one another in this effort. And together, mindful of our proud history, hopeful for the future, let’s seek a better world in our time. Thank you.

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Good old Neil Young tells it as it is in this clip that he posted on YouTube earlier this.

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This was the Bush Presidency. Never ever ever forget this. If LBJ was the zenith of fairness in America, then GWB was its nadir. Fitting that it came in a white tie dinner.

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Palestinian doctor Ezzeldeen Abu al-Aish was giving Israel’s Channel 10 his daily account from inside the war zone in Gaza when three of his daughters were killed in an Israeli attack.

In his report, he called for help as his house was attacked. Al Jazeera’s Roza Ibragimova reports. In other news from Gaza, Israel has declared an unilateral cease fire though Hamas is vowing to fight on. More on this from the New York Times:

Prime Minister Ehud Olmert of Israel announced late Saturday night that the Israeli military would begin a unilateral cease-fire in Gaza within hours while negotiations continued on how to stop the resupply of Hamas through smuggling from Egypt.
Mr. Olmert, who said all Israeli objectives for the war had been reached, said Israel was responding positively to a call by President Hosni Mubarak of Egypt earlier in the day for an immediate cease-fire, in a clearly orchestrated move by two countries that both see the Hamas movement in Gaza as a threat. Meanwhile, Hamas leaders outside Gaza have insisted that the group will fight on, regardless of any Israeli declaration.

The announcement came on a day in which Israel was again criticized by the United Nations over civilian deaths in Gaza — this time after a tank fired at a United Nations school, killing two young brothers taking shelter there.

United Nations aid officials raised questions about whether the attack, and others like it, should be investigated as war crimes. The Israeli Army said that it was investigating the reports at the highest level but that initial inquiries indicated that troops were returning fire from near or within the school.

The Israeli cease-fire, which becomes effective at 2 a.m. Sunday, could mean an effective end to a three-week-old war that has killed at least 1,200 Palestinians, with more buried under rubble, and 13 Israelis. But even then, the shape of any lasting peace was far from clear.

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Earlier this week, President George W. Bush made a formal request to Congress on behalf of President-elect Barack Obama for the release of the second $350 billion tranche from the $700 billion Troubled Asset Relief Program (TARP) fund. Though Congress passed the TARP rescue program on October 3, 2008 to deal with the most serious financial crisis to hit the country since the 1930s, smaller community banks have had to wait to seek financial support until the government was able to draw up the rules under which they could apply, a delay that had caused unhappiness in the banking community.

This past Wednesday, the Treasury Department finally released the rules that small banks will need to follow to seek support from the government’s $700 billion financial rescue program. The Treasury Department gave the small banks until February 13, 2009 to submit their requests for money. The new rules cover roughly 2,500 banks that are organized as S corporations which do not pay any income taxes. Instead, an S corporation’s income or losses are divided among and passed through to its shareholders. Most of them are set up as partnerships, with no more than 100 shareholders. Thus these small community banks aren’t able to issue preferred shares to the government in exchange for capital injections from the TARP, as other banks can.

The nation’s largest financial institutions, with publicly traded stock, began receiving billions of dollars in support in mid-October. But smaller institutions that do not have publicly traded stock had to wait until Treasury could come up with rules that would govern their applications.

The government earlier had established a December 8 deadline for about 3,800 banks that are classified as C corporations to apply for money. Both types of corporations are named for the part of the IRS tax code that applies to them.

The rules that will govern the applications from small S corporations will provide for government support in the form of loans rather than the purchase of preferred shares of stock. The debt will carry an interest rate of 7.7 percent until the fifth year of the government’s investment when the rate will increase to 13.8 percent, according to the Treasury rules.

So far, Treasury has provided $192.3 billion to 257 large and small financial institutions in 42 states and Puerto Rico. Treasury officials say the goal is to provide banks with $250 billion of the first $350 billion in bailout money.

In the video above, the American News Project looks at one small bailed-out bank. Eagle Bank, a community bank headquartered in Maryland, has received many millions of dollars of TARP money, but is having trouble making loans. Its CEO, Ron Paul, says that the government has not taken fleeing depositors into account and, as a result, small banks and their surrounding communities will suffer.

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The death toll in Zimbabwe’s worst ever cholera outbreak has now topped 2,000, with more than 100 deaths – and nearly 1,500 new cases – added just this week, the United Nations World Health Organization (WHO) reported. In all, there have been close to 40,000 cholera cases reported in Zimbabwe since the outbreak began late last year according to the WHO.

Virtually no part of the country has been spared in the epidemic, made worse by a near collapse of the health system and deteriorating humanitarian conditions. The disease, which is caused by contaminated food or water, has affected all ten of Zimbabwe’s provinces, and nearly 90 per cent of the country’s 62 local districts. Half the cases are in Harare, the nation’s capital, and only a handful of professionals are staffing clinics where several dozen are needed.

WHO and other United Nations agencies, such the UN Children’s Fund (UNICEF), have been scaling up their efforts to respond to the outbreak, including through the delivery of vital medical supplies.

The cholera epidemic is just the latest crisis to hit Zimbabwe, which has been faced with a worsening humanitarian situation owing to years of failed harvests, bad governance and hyperinflation, as well as months of political tensions after disputed presidential elections in March involving the incumbent Robert Mugabe and the opposition figure Morgan Tsvangirai.

Although a power-sharing deal on the formation of a new government was reached in September with the help of regional leaders, outstanding issues remain, jeopardizing the deal’s implementation.

Bob Herbert of the New York Times has an op-ed out today on Zimbabwe worth a read.

Life expectancy in Zimbabwe is now the lowest in the world: 37 years for men and 34 for women. A cholera epidemic is raging. People have become ill with anthrax after eating the decaying flesh of animals that had died from the disease. Power was lost to the morgue in the capital city of Harare, leaving the corpses to rot.

Most of the world is ignoring the agony of Zimbabwe, a once prosperous and medically advanced nation in southern Africa that is suffering from political and economic turmoil — and the brutality of Mugabe’s long and tyrannical reign.

The decline in health services over the past year has been staggering. An international team of doctors that conducted an “emergency assessment” of the state of medical care last month seemed stunned by the catastrophe they witnessed. The team was sponsored by Physicians for Human Rights. In their report, released this week, the doctors said:

“The collapse of Zimbabwe’s health system in 2008 is unprecedented in scale and scope. Public-sector hospitals have been shuttered since November 2008. The basic infrastructure for the maintenance of public health, particularly water and sanitation services, have abruptly deteriorated in the worsening political and economic climate.”

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