Boston bank chief wins national, local adherents

Boston bank chief wins national, local adherents


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By Robert Gavin
/December 17, 2008
Flash back to a year ago. The US economy was slowing, but employers were still adding jobs. The Dow Jones industrial average remained above 13,000. Oil prices were taking off. And policy makers at the Federal Reserve agreed that only a modest cut in interest rates was needed to keep the economy on track.

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I am pleased to see that someone besides myself realized a year ago that we were heading into a recession. The government leaders in Washington seemed to be in denial. Judging from your article, there appears to be at least one person in the Federal Reserve who has been steering things in the right direction instead of running the economy aground. I recall a year, not that long in the past, when the Fed kept raising interest rates and oversteered the economy into a crash. Those of us who know something about physics understand momentum. Compare the economy to a lumbering supertanker. It takes some effort to change the course, but once the bow starts swinging to a new direction it will be carried around by momentum. It is necessary to midships the wheel before you come to the new course. Anyone who has ever been at the helm understands this.
by FredinVicksburg December 17, 3:35 AM
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Here we go again. Yet another government technician who is going to tackle poverty in Springfield. But from a safe distance--of course.

At least when Gisele was photographed serving food at a soup kitchen. She was actually at the soup kitchen.

But I understand because the Sheriff of Hampden wants to tackle poverty in Springfield, as well. But only from the safety of his Longmeadow residence.

In brief, the only way to make structural changes in Springfield is to put the city into bankruptcy. Because while cities are not designed to fail, some do fail.
by welfarehotel December 17, 5:27 AM
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Good luck to this gentleman. We surely need a steady hand at the helm of this shipwreck.
by colorman December 17, 5:34 AM
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There was a good article the other day (yesterday?) in the Wall Street Journal on Japan's "lost" decade, and the ineffectiveness of numerous government stimulus spending efforts to improve that economy. The article argued for tax cuts as a stimulus. I would like to know Mr. Rosengren's take on what policy lessons we should learn from Japan's experience.
by Kevin831 December 17, 6:22 AM
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If we're going to go the route of tax cuts, then I want targeted tax cuts. If your company works with green technologies, then I'd be all for tax cuts. If the Big Three sign on to rework their product offerings so that they are more green and more efficient, then I'm all for tax cuts.

But don't send me another check for $300. I don't see where that does much good.
by gerryfisher December 17, 7:40 AM
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last one to leave could you bring the light bulb after turning it off....
thank you
by 9thlife December 17, 9:00 AM
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To Gerry Fisher - Don't you see the genius of that $300 "tax rebate?" In all likelihood, you pay down your bills with it, so Mr. Visa or Mr. MasterCard make out like bandits. Or you save it in the bank, so the banks make out quite nicely. Maybe, just maybe, you'll buy a TV or Wii with it and benefit your local Best Buy.

That's why they push for those kind of tax cuts rather than something targeted toward energy efficiency or green technologies. Those require businesses to spend money, which reduce their bonus payments. It's just easier to throw the public a $300 bone, which really benefits the big companies.
by NatickPilgrim December 17, 9:57 AM
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Eliminate health insurance companies!
by foolish1 December 17, 3:13 PM
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For starters, how about letting the losers fail and the winners win. I'm pretty sure that's an important principle.

I haven't seen the kind of action we're seeing in Washington since they cleaned up the combat zone. Whores everywhere.
by hippydippy December 17, 4:30 PM
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Well, if you give me a stimulus check I will spend it like the last one and take a young friend shopping. She does not earn much and, with two children, never has much too spare. I would prefer to see something positive to unfreeze credit. Automakers are trying to sell vehicles, and I know people trying to buy vehicles, but they can't get together because they can't get financing. The same is true of housing. As to Detroit, Ford Motor Company has a small fleet of hydrogen fueled celled vehicles (cars and shuttle buses) that they are testing (go to the company's Web page and click on "innovation." You can't get much greener than that. The byproduct of hydrogen fuel is water vapor. That could be implemented in short order for municipal transit systems, but someone has to come up with the money for implementation.
by FredinVicksburg December 17, 7:15 PM
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Whatever is to be done must be done large and fast. I would, by fiat, declare all mortgages to be 5% for 30 years. Consumer's only option is to opt out of the change. This way, everyone benefits and those who can't afford 5% shouldnt have a mortgage anyway.
Next I would raise the Federal gas tax 20 cents per gallon, while reducing corporate taxes significantly. I would either relieve or eliminate college loans and taxes on unemployment. I would change SocSec so that only people who put in get money and none for illegal immigrants. I would require people to save 2.5% of their gross pay, being allowed to take it out and spend it only every 3 or 5 years. I would require the auto makers to set up solar building operations and re-sell turnkey solar to consumers for very cheap prices. This would put Americans to work also and reduce the need for oil. Gasoline would have to be regulated as being too powerful to create or destroy money. That's enough for now.
by testnameone December 17, 8:43 PM
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Great. It was the Boston Fed Res that was the driving force behind the transition from collateral and 'ability to pay' based loans to credit score loans. Thanks for the Fannie Mae/Freddie Mac debacle, Boston FedRes. You're clueless & apparently shameless. My husband, a loan officer, got out of mortgages when (in the name of ending red lining) the ability to pay back a loan became irrelevant.
by notrealy December 17, 10:04 PM
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Putting a bandaid on this problem - "We have to do SOMETHING" - won't solve any problems in the long run. What caused this massive problem in the first place? "notreaty" above has a very good point. It was a Boston Fed study years ago that sent us on the road to giving mortgages to people unlikely to be able to pay them off - this in the name of good liberal motives. Those motives would be the same ones that pave the way to Hell.

Of course, there's more to it. The deregulation of investment firms, derivatives, etc, are beyond my understanding, but I have no doubt there's plenty of blame to go around. Behind closed doors, men will always try to gin the system to their advantage - so the more you believe in the benifits of capitalism, the more you should favor policing of the game. This is something that Adam Smith understood over 200 years ago - read The Wealth of Nations. In any case, unless we start changing what went wrong, we'll be back sooner rather than later.
by markbul December 18, 12:57 AM
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