Last week, Nobel Prize winner and New York Times economics columnist Paul Krugman advocated Depression Economics. This, even though he admitted we aren't in a Depression and probably won't even come close.

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President-elect Barack Obama has urged the lame-duck Congress to push an economic stimulus package when they meet next week. Specifically, he has asked for many of the same measures as are in his Economic Stimulus Proposal. Read more...

Treasury Secretary Henry Paulson has shifted the focus of the TARP program from purchasing toxic mortgage-backed securities, which will take too long, to faster ways of infusing capital into the financial system. The Capital Repurchase Program put $115 billion into the eight largest banks, which hold nearly half of the nation's financial assets. This has loosened credit markets, and lowered the LIBOR rate.

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In September, consumers somewhat resumed their reliance on credit card debt, which increased a mere 1.2%. Although up from August's rise of only .4%, it still represesnts a significant decline from the 7% increase in 2007. Consumers owe $971 billion, which is $3,184 of credit card debt per person, or $8,299 per household. (Source: Federal Reserve, G.19 Release, November 7, 2008)

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The Federal Reserve's $85 billion bail-out of insurance giant AIG has been revised. The Treasury Department will purchase $40 billion in preferred shares as part of its Capital Repurchase Plan. The Federal Reserve will purchase $52.5 billion in mortgage-backed securities. The funds will allow AIG to retire many credit default swaps, freeing it up to lend more.

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In October, the economy lost 240,000 jobs, according to the Employment Report released by the Bureau of Labor Statistics (BLS). Generally, about 150,000 new jobs are needed each month to keep the economy stable.

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President-elect Barack Obama has outlined an aggressive economic stimulus package to address the mortgage crisis and lessen impact of a recession. As President-elect, Obama can work with the lame-duck Congress when it meets in mid-November to pass many of his measures before he takes office. Obama will also be attending an economic summit of the world's leaders on November 15. Although he has no official standing, his popularity around the world and his detailed economic plan could give him the leadership ability to move many of this agenda items forward.

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The election of Barack Obama as President has removed uncertainty, which will have a positive effect on the stock market, since investors are looking for a new direction and leadership. An improvement in the stock market gives the economy a boost, by helping to recapitalize banks.

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The BEA advance report for the U.S. GDP growth rate for Q3 2008 was a negative .3%, down substantially from the 2.8% growth in the second quarter. The decrease was due to a 3.1% decline in consumer spending, the first decline since 1991 and the biggest drop since 1980. This was driven by a 6.4% decline in purchases of clothing and food, the biggest since 1950. (Source: GDP News Release, Bloomberg, GDP Shrinks at Fastest Pace Since 2001, October 30, 2009)

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The FOMC dramatically lowered the Fed Funds rate a half point to 1%, the lowest rate since the 2003 recession. This was just three weeks after the Federal Reserve joined other Central Banks around the world in a coordinated rate cut of 1/2 point. At the same time, the FOMC lowered the discount rate to 1.25%. Read more...