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Is the Economy Starting to Recover? Or Just Less Bad?

Could it be that things are beginning to get better for the U.S. economy?

Nope, no real chance of that. But a spate of somewhat better-than-expected economic numbers this week and last has forecasters declaring that the pace of decline seems to have slowed. Such a slowing has to happen before things start to improve. Which could mean that we’re seeing the beginning of the beginning of the end of this nasty recession.

Then again, we might not be — and premature optimists have been punished several times already during this downturn. So the people who make a living calling the twists and turns of the economy have become almost comically cautious about declaring an inflection point. Some examples:

Wednesday’s stronger-than-expected data on durable-goods orders was a “slim silver lining on the horizon,” UniCredit Research economist Harm Bandholz wrote in a note to clients. But, he was quick to point out, “investment and exports continue to plummet.”

“The unexpected increase in orders in February marks a moderation relative to the incredibly weak data in January,” wrote Michelle Meyer of Barclays Capital in response to the same durable-goods data. “However, we do not interpret today’s report as a signal of the end of the downturn in manufacturing.”

“We are prepared to hazard the view that the post-Lehman meltdown is now over and the market is stabilizing” is how Ian Shepherdson of High-Frequency Economics greeted Wednesday’s reported rise in new home sales. “That’s not the same as a recovery, but it is better than continued declines in sales.”

“While these developments provide some support for our expectation that housing will stabilize in coming months,” declared Kent Michaels of Goldman Sachs on Tuesday after running through other positive real estate data, “they fall well short of what would normally signal recovery in the sector.”

There are several reasons for all this caution among economists. One is that the numbers aren’t all that positive, and a few good days could easily give way to a disappointing run. Also, there’s a lot of noise in the data, and seeming turning points are sometimes just the product of flawed measurement and random chance.

Another issue is that while there are signs that housing and consumer spending in the U.S. are no longer in the free fall of a few months ago, other parts of the economy are still in sharp decline. To quote Shepherdson again: “The epicenter of the recession has shifted from the consumer to the corporate sector.” And it’s possible that corporate cutbacks could lead to a relapse among consumers. “The main downside risk probably lies in sharper-than-expected multiplier effects via the dramatic deterioration in the labor market,” warned Goldman Sachs economist Jan Hatzius on Monday after predicting that consumer spending would rise for the rest of the year. “Both the weekly and monthly labor market indicators still show an accelerating employment contraction.”

In other words, nobody really knows if we’ve hit a turning point yet. But it is at least ever so slightly encouraging that they’re starting to talk about one. Cast your votes for the TIME 100. See the best business deals of 2008.

Police seek ‘Plasma Pat’ in TV discount scam

He’s a TV salesman offering an unbelievable deal — and police say you don’t want to do business with him.

Dubbing himself “Plasma Pat, the TV Discount Guy,” he allegedly took cash from Wal-Mart shoppers, promising to use his employee discount to get them a good deal on a TV set, police said. Then, he called the police to taunt them. Police in Largo, Florida, a city near Tampa on the state’s gulf coast, circulated security pictures of “Plasma Pat,” and now can put a name to the alliterative nickname. Investigators say their suspect is 60-year-old Joseph Wesley Torma, and they’ve just released a mug shot from a recent arrest in Polk County, Florida. “He made at least two or three phone calls, and he even talked about surrendering, but he never showed up, obviously,” said Lt. Michael Loux of the Largo Police department. Police believe “Plasma Pat” has conned victims in about a dozen different places in Florida. He allegedly befriended people outside Wal-Mart stores, telling his victims that he worked at the store, and that he could use his employee discount to get them a good deal on a major purchase. Then, police said, he took their cash, walked into the store through one door — and out another, leaving his victims in the parking lot. One victim found himself out $300 while waiting outside for a television. Largo Police say that Torma also called them several times. asking to speak with Det. Brendan Arlington. Each time he called, police say, Torma identified himself as “Plasma Pat,” and bragged that he had cheated about 30,000 people who will never file a police report. “Because the victims feel embarrassed, he feels that nobody is going to report the crime,” said Lt. Michael Loux. “And I think he’s probably right.” Police say they believe that Torma has left the area, and may be headed to Texas, but they have not explained why.

Four receive organs from slain California officer

Organs donated by a slain Oakland, California, police officer saved four lives, and his donated tissue will enhance the lives of up to 50 others, the California Transplant Donor Network said Wednesday.

Officer John Hege, 41, was pronounced brain dead on Sunday but was kept on life support pending a decision on organ donation. He was the fourth Oakland officer to die after a gunman fired on police in two weekend incidents. “Officer Hege was registered on the Donate Life California Organ and Tissue Registry, which his family also supports,” the donor network said in a news release. “He chose in death as he did in life to help those in need. His organ donations saved the lives of four adult males from California.” Hege’s liver, kidneys and heart were donated, the network said, and the transplants were successfully completed Tuesday and early Wednesday. In a written statement, Hege’s family said, “Our son John never met a stranger.” “John’s courage and strength was enhanced by his ability to perceive the realities of life,” the family said in the statement. “In June 2008, he registered on the Donate Life California Organ and Tissue Donor Registry. We completely and proudly support his decision, and it gives us a great deal of comfort to know that four individuals have received the gift of life because of our selfless and beloved John. “Even in death he gave to the lives of those in our community whom he had always loved and supported.” Hege had been with the Oakland police force about 10 years. The man accused of shooting the officers — Lovelle Mixon, 26, of Oakland — was fatally shot in a gun battle with SWAT officers in an apartment complex where he was hiding, police said. Authorities said Saturday night that Mixon had an extensive criminal history and was in violation of parole for assault with a deadly weapon.

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The incidents began about 1 p.m. Saturday in east Oakland, when two motorcycle officers tried to pull over a car for a “fairly routine traffic stop,” said Dave Kozicki, deputy police chief. Emergency dispatchers received reports that two officers had been shot and needed help, he said. Those officers were Hege and Sgt. Mark Dunakin, 40, an 18-year veteran of the force. Dunakin died Saturday. Police launched an intense manhunt to track down the gunman. An anonymous caller directed authorities to a building on an adjacent street where the man was believed to be barricaded, acting Police Chief Howard Jordan said. The gunman fired on SWAT officers who entered the apartment, hitting two of them before police shot and killed the man, Jordan said. Those two officers — Sgt. Ervin Romans, 43, and Sgt. Daniel Sakai, 35 — died. Police said Romans had been with the department since 1996 and Sakai since 2000. A fifth officer who was grazed by a bullet was treated at a hospital and released, police spokesman Jeff Thomason said Saturday.

Pentagon report: China’s military expanding its capabilities

China’s military is developing longer-range ballistic and anti-ship missiles that are "shifting the balance of power in the region" and could help Beijing secure resources or settle territorial disputes, a report released by the Pentagon said Wednesday.

China also continues to build up short-range missiles and increase its “coercive capabilities” against Taiwan. The report suggests such moves constitute an effort to pressure Taiwan into settling the cross-strait dispute in favor of China, though tensions between the two countries have receded over the past year. The report, called the “Military Power of the People’s Republic of China,” is the Pentagon’s annual briefing to Congress on the status of the communist country’s military might. While China continues to proclaim that its military buildup is for defense purposes to protect its interests, the report says the country’s lack of transparency is worrisome and could lead to an unintended conflict. “The limited transparency in China’s military and security affairs poses risks to stability by creating uncertainty and increasing the potential for misunderstanding and miscalculation,” according to the report. “Much uncertainty surrounds China’s future course, particularly regarding how its expanding military power might be used.” The lack of transparency causes Washington “to speculate to some degree on what their intentions are,” Pentagon spokesman Geoff Morrell told reporters at a Wednesday briefing. According to Adm. Timothy Keating, the head of the U.S. Pacific Command, some of that uncertainty is due to the cessation of talks between the Chinese and U.S. militaries. In March of 2008, the United States and China installed a hot line between the two countries’ militaries. But there have been no military-to-military talks since November 2008, when Washington announced it was selling weapons to Taiwan. “We are looking for the resumption of that dialogue so we can engage in discussion with our colleagues in the People’s Republic of China and their Army, Navy and Air Force so we can have a sense of their way ahead,” Keating told the House Armed Services committee on Tuesday. “We don’t have a clear idea of their broad strategic way ahead.”

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The Pentagon report comes after a recent incident in which Chinese ships, including a Chinese navy vessel, confronted an unarmed U.S. Navy surveillance ship in the South China Sea in international waters. The confrontation prompted the United States to move a destroyer ship to the area to protect the surveillance vessel. While the report does not discuss the incident, it notes the importance China puts on controlling its waterways and the surrounding territories because “China’s economic and political power is contingent upon access to and use of the sea, and that a strong navy is required to safeguard such access.” The analysis also said that while much of China’s capability is more for regional disputes, it did send two destroyers and one supply ship off the coast of Africa to protect Chinese vessels from pirate attacks. That move was a sign of Chinese intent to expand its militaries to protect expanding economic and political interests around the world, according to a China analyst. “The Chinese military is being told to develop capabilities to deal with Chinese national interests beyond the pure defense of Chinese territory,” said David Finklestein, the Director of China Studies for CNA, a nonprofit research group that does analysis for the U.S. military and other clients. “China, with a global economy, now obviously has global political interests and clearly has expanding global security interests.” Though the Pentagon report concludes that “China’s ability to sustain military power at a distance remains limited,” it does have a growing space program, nuclear weapon system and cyber warfare capabilities, “the only aspects of China’s armed forces that, today, have the potential to be truly global,” the report explained. In citing China’s cyber warfare, the report notes that U.S. government computers were the target of “intrusions that appear to have originated” from China, although they were not confirmed to be from the military.

U.S. shares blame for Mexico drug violence, Clinton says

The United States shares the blame for Mexican drug trafficking and the attendant violence that has killed thousands in the past year alone, Secretary of State Hillary Clinton said Wednesday.

“Our insatiable demand for illegal drugs fuels the drug trade,” she said en route to Mexico City, according to pool reports. “Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians. So, yes, I feel very strongly we have a co-responsibility.” Clinton arrived in the Mexican capital a day after the United States unveiled its plan to improve security along its long southern border. Clinton will meet with President Felipe Calderon and other Mexican leaders to discuss the bilateral strategies for the drug war. But her aides said she will also make an effort to show that the U.S.-Mexican relationship is not restricted to matters dealing with drug violence.

‘The War Next Door’

Anderson Cooper is live from the U.S.-Mexico border as the drug war fuels violence.
Tonight, 10 ET on CNN

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“We are going to demonstrate that we are spending it in an accountable and effective manner that will assist the Mexicans” in law enforcement and justice, she said. The United States needs to stop the flow of guns, body armor and night-vision goggles to the cartels, Clinton said. “These criminals are outgunning the law enforcement officials,” she said. “When you go into a gunfight or are trying to round up these bad guys and they have military-style equipment that is much better than yours, you start out at a disadvantage. Since we know the vast majority of that comes from our country, we are going to help stop it from getting there in the first place.” The Mexican army arrested a man Mexico calls a top drug cartel chief and four of his bodyguards, the government announced Wednesday. Hector Huerta Rios, also known as “La Burra” or “El Junior,” was arrested Tuesday in the city of San Pedro Garza Garcia, outside Monterrey in Nuevo Leon state, a little more than 100 miles from Mexico’s border with the United States.

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The Obama administration announced a crackdown on border violence and on the smuggling of cash and weapons into Mexico on Tuesday, a step that could mark an end to a nasty blame game over where responsibility for the violence lies. Clinton will visit a Mexican police base to show U.S. support for the nation’s embattled police force. And she will travel to Monterrey, a thriving industrial town, to meet with students, hold a town-hall meeting with business leaders and visit a clean energy plant. The Defense Department and the director of national intelligence have both warned of the national security threat an unstable Mexico poses to the United States. Congress has seized on the issue, holding eight hearings since coming back into session two months ago. Homeland Security Secretary Janet Napolitano testified at a Senate Homeland Security Committee hearing on violence along the U.S.-Mexican border Wednesday. Mexico is the United States’ second-largest export market, after Canada, and its third-largest total trade partner. Hundreds of U.S. companies have factories in Mexico, and Mexico is a leading supplier of crude oil to the United States. Clinton noted that many Americans have close ties and families in Mexico, adding that she herself honeymooned there. Napolitano and Attorney General Eric Holder are due to visit Mexico soon, to be followed next month by President Obama, before he attends the Summit of the Americas in Trinidad and Tobago.

Questions pour in for Obama’s online town hall meeting

Americans can submit questions on WhiteHouse.gov for President Obama to answer live online Thursday.
During the Great Depression, President Franklin Roosevelt reassured anxious Americans through his famous fireside chats over the radio.

Now, in the 21st century, President Obama has found his own fireside equivalent, launching an online town hall meeting Thursday where he will answer citizens’ questions about the troubled economy and his efforts to fix it. “We’re going to try something a little different. We are going to take advantage of the Internet to bring all of you to the White House to talk about the economy,” he says in an introductory video on the site. As of late Wednesday afternoon, more than 30,000 people had submitted more than 32,000 questions on the official administration Web site, WhiteHouse.gov. Americans may submit questions, and vote on others’ queries, until 9:30 a.m. ET Thursday. Obama has promised to answer the most popular questions through a live video stream on WhiteHouse.gov. beginning Thursday at 11:30 a.m. ET. The site had recorded more than 1 million votes as of late Wednesday afternoon. The White House’s Web site asks people to agree to post “only questions related to the economy (including topics essential to long-term economic growth, such as education, fiscal responsibility, green jobs and energy, health care reform, and home ownership).”

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A quick review of questions revealed deep concerns among Americans trying to make ends meet. “What is the government doing to make higher education more affordable for lower and middle class families” asked James of Bloomington, Indiana, who described himself as a full-time student who also works full time, “only to break even at the end of the month.” “Why do I have to be to the point of foreclosure to get any help with my mortgage Why aren’t you helping the people who want to prevent foreclosure” asked another questioner from Providence, Rhode Island. Observers say Obama, who revolutionized the use of technology as a political tool during his campaign, will be the first president to address questions from the public live on the Internet. By allowing people to submit any question they want and answering them live on the Web for the entire world to see, the administration hopes to create a more transparent style of governing that will help win public support. “This is just the tip of the iceberg,” said Don Tapscott, author of “Growing Up Digital,” a book exploring the generation that has grown up on the Web. “It turns out that the Internet is a new medium of human communication that not only helps you get elected, it changes the way you govern.” Along the presidential campaign trail, Obama was praised for his innovative use of social networking sites such as Twitter and Facebook to announce events, rally volunteers and raise money. Nine years ago, when George W. Bush ran for president, Internet media tools such as Facebook, Twitter and YouTube didn’t exist. Bush and former President Bill Clinton engaged in online chats with citizens, but neither relied on the Internet as a platform for reaching the American public as Obama does, said Andrew Rasiej, co-founder of the Personal Democracy Forum and the techPresident blog. “It’s changing the relationship between the president and the country,” Rasiej says. “It’s building on a 21st-century information age platform. We want to make sure our president isn’t stuck in a bubble.” Some observers wondered whether Obama’s creative social media initiatives, dubbed Obama 2.0, would continue once he entered office. But Thursday’s online meeting — the first of many, according to the government — reaffirms his commitment to engaging with Americans through technology, Rasiej said. While Obama’s staffers have stopped posting updates on social networking sites since the election, they are sill reaching constituents through WhiteHouse.gov, which is more interactive than previous administrations’ Web sites. Launching an online town hall meeting will allow more effective communication with citizens, said Ellen Miller, executive director at the Sunlight Foundation, a group that advocates government transparency. Americans can submit their own questions and receive direct responses without questions or answers being filtered by the media, she said. “There might be a question asked that wouldn’t have been asked at a press conference,” she said. “It’s a significant step forward for new-media communications.” Adam Ostrow, editor of Mashable.com, a guide to social media, said the online town hall-style meeting will encourage Americans to get involved beyond the election. “It gives people a sense of participation and what is going on and to be able to shape some of the decision that will be made,” he said.

Obama’s ‘Trade War’: No Truck with Mexico

Obamas Trade War: No Truck with Mexico

The U.S. press has given the flare-up an ascending series of alarming descriptions: “a dispute that could lead to a trade war”; a “mini trade war”; and the full, flaming “Obama’s first trade war.” This month’s ban on Mexican truckers operating in U.S. territory quickly led to Mexico imposing retaliatory tariffs on a wide range of American products. The speed with which the two governments have been willing to sacrifice free trade for a political spat has politicians and business lobbies south of the border increasingly worried about how well the fragile Mexican economy can survive the fracas — and how much stomach the country has for a confrontation with the still formidable economic power to its north.

“With the world economy being so unstable and the Mexican peso falling, it is crazy to get into this protectionist trade dispute now,” says Rep. Edmundo Ramirez, of the former ruling Institutional Revolutionary Party. “Our governments should be sitting down and negotiating solutions. Not slapping on retaliatory measures.”

The spat, which will at least give Secretary of State Hillary Clinton something other than drug gangs to discuss in her visit to Mexico on Wednesday and Thursday, was kicked off when President Barack Obama signed a spending bill on Mar. 11. Embedded in the bill was a clause that prohibits funds being used to “implement, continue, promote, or in any way permit” a two year-old pilot program that allowed some Mexican trucks to operate in the United States. Pressure for the clause had come directly from the Teamsters, who have long opposed the Mexican 18 wheelers competing on their turf, complaining that the foreign truckers don’t meet U.S. safety standards.

Down in Mexico, the administration of President Felipe Calderon accused the U.S. of being hypocritical and protectionist. They have a strong case. Under the North American Free Trade Agreement , Mexican trucks were meant to be roaming some U.S. roads in 1995 and the width and breadth of the whole union by 2000. However, successive U.S. administrations could not say no to Teamster complaints that Mexican trucks were not fit for the interstates. Finally, both sides agreed on the pilot program to break the deadlock.

“We consider that the United States is mistaken, protectionist and clearly violating the treaty,” Mexico’s Economy Secretary Gerardo Ruiz Mateos told a news conference on Mar. 16. “To decide to protect their own transport sector they have decided to affect the competitiveness of our countries and of the region, impacting many other productive sectors.”

Ruiz Mateos made the angry statements as he announced that Mexico would slap tariffs across 90 U.S. products that had been worth $2.4 billion in trade in 2007. He pulled no punches about his goal: the tariffs were designed to hit as many different U.S. states as possible. Coming into effect on Mar. 19, the tariffs of 10% to 45% affected goods ranging from onions and shaving cream to fruit juice and red wine. There was even a tariff on Christmas trees, which may not have worried the growers too much because they don’t sell many in March.

However, while Mexicans are normally pleased to celebrate any chance to hit back against the imperialist gringos, there was little popular applause for the latest measures. As the world economy is suffering, the Mexican peso has lost about 40% of its value against the dollar in the last four months. That means higher prices for just about any product imaginable in the supermarkets and stores of Mexico, which imported $151 billion worth of goods from its northern neighbor last year. The new tariffs mean the prices will go up even further. “This will hit poor people, whatever the government says,” Ramirez says. “Poor families use many of these products mentioned.”

Even the Mexican trucking companies were reluctant to praise the measures. Indeed, right now their trucks are busy blocking city streets to protest high diesel prices set by government oil monopoly Pemex. They have nothing nice to say about their own government. Adolfo Torres, a regional leader of the National Chamber of Cargo Transporters said the U.S. ban on Mexican trucks shows that the White House is better at supporting its own industries. “The U.S. government is defending its people, closing the border to Mexican transport while here we have to turn to drastic measures like a strike to get the ear of our government,” Torres told Mexican reporters.

However, an end to the dispute may be in sight. Obama’s Transportation Secretary Ray LaHood met with U.S. lawmakers Tuesday, saying he planned to restart the pilot program with sufficient safety requirements imposed on Mexican truckers. Though key American congressmen have yet to sign on to LaHood’s initiative, Ruiz said the same day that Mexico would remove the tariffs to reciprocate if the program was reinstituted. “For us, the solution is to go on with the program that we had,” he said. “In the moment the United States returns to its commitments, we will eliminate all the tariffs we imposed.” Clinton may be able to come home from her Mexico trip with some good news.
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Air Force jet crashes in California

An F-22A fighter jet similar to this one crashed Wednesday during a test mission in California.
An Air Force F-22A fighter jet crashed Wednesday near Edwards Air Force Base in California, Air Force officials said.

The single-seater crashed about 10:30 a.m. for unknown reasons, the officials said. The status of the pilot was unknown. At $150 million apiece, the F-22A is the most expensive Air Force fighter. The fighter was on a test mission when it crashed about 35 miles northeast of Edwards AFB, where it was stationed, the Air Force said in a news release. In 2004, an F-22 Raptor crashed on a training mission in the Nevada desert. The pilot ejected and was not hurt, though the jet was destroyed. The plane was designed in the 1980s to provide a stealthy method to enter Soviet air space and strike Soviet bombers if the USSR attempted a nuclear strike. Once the Cold War ended, the Air Force found a new mission for the F-22 as a long-range fighter with a sophisticated stealth design and state-of-the-art equipment that no other plane could rival. However, the rising cost of the plane and numerous design and software problems threatened the program, which was almost killed by Congress. In the end, the aircraft survived, and most of the problems were fixed, except for the price tag, which forced the Air Force to buy fewer aircraft.

Turkish party leader missing after helicopter crash

Paul Begala says Americans are looking to President Obama to solve problems left by the Bush administration.
The leader of an ultra-nationalist Turkish political party was involved Wednesday in a helicopter crash in a mountainous region of Eastern Turkey, the state news agency reported.

(CNN) — I love Alex Castellanos. Heck, somebody has to. Truth is, we’ve been known to break bread after our CNN gigs. He is engaging and amusing and whip-smart. But when he said Tuesday night on CNN that President Obama is already looking like a one-term president, he’s full of more beans than a burrito at Matt’s El Rancho back home in Austin, Texas. Obama inherited an ungodly mess: a $1.2 trillion deficit, an economy that was careening from recession into depression, a collapse in effective demand, the disintegration of the real estate market and a financial meltdown that spanned the globe and brought multibillion-dollar institutions to their knees. That’s not to mention Iraq, Afghanistan, Iran, North Korea and the Mexican drug war. If this were “Sesame Street,” the announcer would be saying, “This program brought to you by the letters G, O and P.” None of the crises the president is addressing were of his creation. All of them were created or worsened by the Republicans who ran the House of Representatives, Senate and White House for years. And so the American people turned to Obama to bring change — and change he has brought. He’s moving on all fronts: addressing the housing foreclosure crisis, the banking crisis, the unemployment crisis. Did I mention that all of these crises were courtesy of the Republicans who ran this country for years Good.

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Now the Republicans have what we Texans call the chutzpah to criticize Obama for doing too much. Maybe, just maybe, he wouldn’t have to be fixing so many problems if the Republicans hadn’t created so many problems. The Republicans are like an arsonist who complains that the fire department is wasting water. Obama is trying to handle an immediate crisis while also laying the foundation for long-term growth. The Republicans are doing neither. They have no plan to stop the loss of jobs or to get capital markets functioning properly — and they certainly have no plans for health care, education or energy, which are the keys to both long-term economic growth and long-term deficit reduction. All the energy — indeed all debate — is on the progressive side of the aisle. The Obama administration’s only intellectual challengers are on the left, where economist and New York Times columnist Paul Krugman and others are offering a vigorous critique and proposing alternative solutions. But where are the Republicans Doing nothing but complaining. Unless and until they do offer an alternative, they really have no right to whine about the president. For now at least, GOP stands for “Got 0 Plans.” The opinions expressed in this commentary are solely those of Paul Begala.

Commentary: GOP means ‘Got 0 Plans’

Paul Begala says Americans are looking to President Obama to solve problems left by the Bush administration.
I love Alex Castellanos. Heck, somebody has to. Truth is, we’ve been known to break bread after our CNN gigs. He is engaging and amusing and whip-smart.

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