Topic: US Economy

[tomahawk6]

The US cannot afford Obama. If anyone still doubts that Obama is a socialist this article should throw a bit of cold water on your face.

http://www.usnews.com/blogs/capital-commerce/2008/2/20/does-obama-want-a-trillion-dollar-global-tax.html

Does Obama Want a Trillion-Dollar Global Tax?
February 20, 2008 10:39 AM ET | James Pethokoukis | Permanent Link


I know we still have nine months to go before Election Day, but I may already have a winner for my "Understatement of the Election Season" Award. Right at the end of his big economic speech last week in Wisconsin, Democratic front-runner Barack Obama, last night's big primary winner in that state, said the following:

In the end, this economic agenda won't just require new money. It will require a new spirit of cooperation and innovation on behalf of the American people. We will have to learn more, and study more, and work harder. We'll be called upon to take part in shared sacrifice and shared prosperity.

Let's stick with that "new money" part for a moment. For starters, that "new" money is, of course, "your" money, your tax dollars. And it's a lot of money. Obama has proposed a couple of hundred billion buckaroos in new government spending along with new tax increases. But Obama may have just been getting started. Back in December, Obama sponsored the "Global Poverty Act," a bill that proposed the following (Efharisto to the American Thinker for spotting this one):

To require the President to develop and implement a comprehensive strategy to further the United States foreign policy objective of promoting the reduction of global poverty, the elimination of extreme global poverty, and the achievement of the [U.N.] Millennium Development Goal of reducing by one-half the proportion of people worldwide, between 1990 and 2015, who live on less than $1 per day.

What this bill would do, in short, is commit the United States to the U.N. declared goal that industrialized countries should spend 0.7 percent a year of their gross domestic product on foreign aid. Over the next decade or so, that would work out to around $850 billion. When the bill passed the Senate Foreign Relations Committee last week, Obama said that "as we strive to rebuild America's standing in the world, this important bill will demonstrate our promise and commitment to those in the developing world. Our commitment to the global economy must extend beyond trade agreements that are more about increasing corporate profits than about helping workers and small farmers everywhere."

How to pay for our penance? Economist Jeffrey Sachs, an advocate of this idea, has a suggestion:

We will need, in the end, to put real resources in support of our hopes. A global tax on carbon-emitting fossil fuels might be the way to begin. Even a very small tax, less than that which is needed to correct humanity's climate-deforming overuse of fossil fuels, would finance a greatly enhanced supply of global public goods.

So not only does Obama want to raise taxes on Americans making over $250,000 a year and eliminate the $102,000 wage cap on Social Security taxes, he perhaps wants to tack on another trillion dollars in taxes to pay for dramatically increased foreign aid. Of course, we could just borrow the money. Obama, after all, has not stressed balancing the budget during this campaign, instead promising to eventually put the budget on a "pathway" to being balanced.

And would such a commitment of money work anyway? Here is what Sachs critic William Easterly, an economic professor at New York University, wrote in the Journal of Economic Perspectives in 2003 on the topic:

Aid agencies have misspent much effort looking for the Next Big Idea that would enable aid to buy growth. Poor nations include an incredible variety of institutions, cultures and histories: millennia-old civilizations in gigantic China and India; African nations convulsed by centuries of the slave trade, colonialism, arbitrary borders, tropical diseases and local despots; Latin American nations with two centuries of independence and five centuries of extreme inequality; Islamic civilizations with a long history of technical advance relative to the West and then a falling behind; and recently created nations like tiny East Timor. The idea of aggregating all this diversity into a "developing world" that will "take off" with foreign aid is a heroic simplification.... The macroeconomic evidence does not support these claims.... The goal of having the high-income people make some kind of transfer to very poor people remains a worthy one, despite the disappointments of the past. But the appropriate goal of foreign aid is neither to move as much money as politically possible, nor to foster societywide transformation from poverty to wealth. The goal is simply to benefit some poor people some of the time.

Another option proposed by geopolitical strategist Thomas Barnett, who advocates that the United States partner with China and India to create a heavily armed global peace corps (our expertise and firepower, their manpower) to bring security to failed states in Africa and elsewhere across the globe. With a relatively safe environment established, private direct investment could then pour into those countries.

[tomahawk6]

Since the start of the Bush presidency:

DOW UP 40 POINTS IN PAST MONTH... UP 18% PAST 5 YEARS... UP 44% PAST 10 YEARS...

[GAP]

Since the start of the Bush presidency:

DOW UP 40 POINTS IN PAST MONTH... UP 18% PAST 5 YEARS... UP 44% PAST 10 YEARS...

What goes up, must come down......the faster it goes up, the faster it comes down


That applies to budgets, stockmarkets, my ego......etc 

[tomahawk6]

It is good for retirement accounts though.

[ArmyVern]

What goes up, must come down......the faster it goes up, the faster it comes down


That applies to budgets, stockmarkets, my ego......etc 

Uhmmm ... this is (both sentences) applicable to everything EXCEPT gas prices - just to be clear.  

[GAP]

Uhmmm ... this is (both sentences) applicable to everything EXCEPT gas prices - just to be clear.  

It applies to gas prices also (if you include the indigestion you get each time you go to the gas station...)

[Kirkhill]

This seems noteworthy.

Sunday, September 21, 2008
Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 Alone... Dems Ignored Warnings

via Gateway Pundit

[Flanker]

It is good for retirement accounts though.

As for good retirement, I strongly doubt it.
US are bankrupt.
The current credit crisis is only a small echo of a hidden iceberg of future debt problems.

Please sit tight while I walk you through the math of Medicare. As you may know, the program comes in three parts: Medicare Part A, which covers hospital stays; Medicare B, which covers doctor visits; and Medicare D, the drug benefit that went into effect just 29 months ago. The infinite-horizon present discounted value of the unfunded liability for Medicare A is $34.4 trillion. The unfunded liability of Medicare B is an additional $34 trillion. The shortfall for Medicare D adds another $17.2 trillion. The total? If you wanted to cover the unfunded liability of all three programs today, you would be stuck with an $85.6 trillion bill. That is more than six times as large as the bill for Social Security. It is more than six times the annual output of the entire U.S. economy.

Why is the Medicare figure so large? There is a mix of reasons, really. In part, it is due to the same birthrate and life-expectancy issues that affect Social Security. In part, it is due to ever-costlier advances in medical technology and the willingness of Medicare to pay for them. And in part, it is due to expanded benefits—the new drug benefit program’s unfunded liability is by itself one-third greater than all of Social Security’s.

Add together the unfunded liabilities from Medicare and Social Security, and it comes to $99.2 trillion over the infinite horizon.
...
No combination of tax hikes and spending cuts, though, will change the total burden borne by current and future generations. For the existing unfunded liabilities to be covered in the end, someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised. This is a cold, hard fact. The decision we must make is whether to shoulder a substantial portion of that burden today or compel future generations to bear its full weight.

Richard W. Fisher is president and CEO of the Federal Reserve Bank of Dallas
http://dallasfed.org/news/speeches/fisher/2008/fs080528.cfm

[tomahawk6]

An 18% return average over 5 years is hard to beat. No the US isnt bankrupt.

[E.R. Campbell]

...
US are bankrupt.
The current credit crisis is only a small echo of a hidden iceberg of future debt problems.

Richard W. Fisher is president and CEO of the Federal Reserve Bank of Dallas
http://dallasfed.org/news/speeches/fisher/2008/fs080528.cfm

The number, $99 Trillion, is HUGE – Fisher needs a huge number to make his argument for change (an argument with which I wholeheartedly agree, by the way) so he chose an infinite horizon. That means that there is some, finite time within which American may elect more fiscally responsible legislators.

America can change, Fisher and I would say must change; we know that because America has done so before.

Americans are good at rolling up their sleeves and solving tough problems: they don’t like it very much but they’re good at it – thankfully.

[tomahawk6]

GDP is $13.8 trillion .This means an output of $46,000 per person or 10th in the world.

[Kirkhill]

Edward,

Can you help me with this one?

How much of the world's currency and holdings are denominated in US funds?  And against that what fraction does $1 Trillion represent?

[E.R. Campbell]

Edward,

Can you help me with this one?

How much of the world's currency and holdings are denominated in US funds?  And against that what fraction does $1 Trillion represent?

Not an easy question, Kirkhill.

The best source for information is in the quarterly reports of the  Bank of International Settlements.

Most people estimate the world’s GDP at something about $65 Trillion and the BIS tracks $65 Trillion in assets and liabilities and it looks like about ⅓ of all assets and >⅓ of liabilities are held in US dollars.

But the number change, upwards, when purely domestic transactions are excluded – which is as it should be because, within their own boundaries, most countries use only their own currencies for all ‘public’ purposes.

There were some fairly authoritative estimates, two or ten years ago, that the dollar share of global transactions (to which I think your question relates) was falling, steadily from 90% (1960s) to 70% (1999/2000) and to even 50% (2007/08). But the numbers appear to include a Euro-zone trap because it appears, to me that the use of the € is often counted as international when it is, in fact, between euro-zone countries and, therefore, arguably domestic, vis à vis the €.
 
But, there are real and notional dollars (and euros, too). The $65 Trillion is ‘real’ – national banks, central banks and commercial banks, can point to $65 Trillion in ‘real’ assets and liabilities within their borders. But there are many more trillions (and quesstimates – which, in my opinion is what all of the are – vary wildly from a few dozen trillion dollars to many hundred of trillion dollars) in notional dollars. Almost all of those @#$%& derivatives are denominated in US dollars and no one knows how much is out there and how they are spread, but we do know that they were, mainly, traded in $(US). I have read estimates that derivatives, hedged bets, really, account for two to six times the ‘real’ assets under management in each brokerage house. Scary.

I think something under ⅔ of the world’s real debt is denominated in $(US) as is as much as ¾ of the notional debt. BUT if the new ‘Resolution Trust' can write down the real ‘distressed assets’ (≈$(US)1 Trillion) then will not the notional assets, no matter where in the world they are held, also be written down, automatically?

Dunno!

[tomahawk6]

I feel the need to once again stress that the treasury is getting assets in exchange for dollars. Even if all the mortgages were non-performing [only 2% are] the underlying value is the property itself.Normally foreclosed properties sell for what the bank is owed which is a discount between the property value and the outstanding loan balance. I dont like the idea of the treasury being the nations mortgage lender but thats where we are in the interim. By taking these loans off the books of the financial institutions they are strengthened as a result.

[E.R. Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail is yet more news about the US economy:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080922.wrcrisismain22/BNStory/Business/home

Democrats decry 'humbling' Wall St. Bailout
U.S. Treasury chief pitches $700-billion plan to Congress

BARRIE MCKENNA

From Monday's Globe and Mail
September 22, 2008 at 4:12 AM EDT

WASHINGTON — Calling it a "humbling time for America," U.S. Treasury Secretary Henry Paulson has begun the tough task of selling a Wall Street bailout that could exceed $1-trillion to nervous investors, scared bankers and a skeptical Congress.

Democrats, including presidential hopeful Barack Obama, complained the bailout plan doesn't do nearly enough for "Main Street" as the economy lurches toward recession.

And in a sign that the crisis isn't nearly over, the U.S. Federal Reserve moved last night to save the two last independent Wall Street brokers - Goldman Sachs and Morgan Stanley - by approving their transformation into bank holding companies and propping them up with emergency loans. Longer term, the move enables the companies, which survive on the willingness of lenders to keep them afloat, to bolster their capital and take deposits like other banks.

The central bank also granted the two firms' London-based brokerage subsidiaries, as well as Merrill Lynch & Co.'s London branch, access to the same line of credit, normally only available to commercial banks.

Fears that Goldman Sachs and Morgan Stanley might collapse was one of the key triggers for the U.S. government's decision to buy up bad loans.

Over the weekend, Mr. Paulson unveiled details of the most sweeping U.S. incursion into free markets since the Great Depression, urging Congress to pass his plan by the end of the week or risk plunging financial markets back into chaos again.

"I hate the fact that we have to do it, but it's better than the alternative," Mr. Paulson told Fox News Sunday - one of four network shows the former Wall Street banker appeared on yesterday to push the plan.

"This is a humbling, humbling time for the United States of America."

Democrats and Republicans alike appear ready to go along, however grudgingly.

The government plan is bold and sweeping. It calls on Congress to give the government virtually unlimited authority, including the power to override courts, to buy up to $700-billion (U.S.) worth of soured residential and commercial mortgage-related assets, from financial institutions operating in the country. And he called on foreign governments in Europe and elsewhere to take similar measures.

World financial markets reopen today after last week's wild and historic gyrations, triggered by the collapse of venerable investment bank Lehman Brothers, the bailout of insurer AIG and the fire sale of broker Merrill Lynch.

Taking the bad loans off their books will ease credit conditions, encourage banks to lend again, and ultimately save taxpayers money, Mr. Paulson argued.

"This is not something that we wanted to do. This was something that was very necessary," Mr. Paulson said.

And yet crucial details remain unresolved, including how to put a price on assets for which there is no market. Nor is it clear what loans or companies it will target, or when the government would begin making purchases. A leading banking industry group - the Financial Services Roundtable - warned yesterday that the government loan program, unless properly managed, could cause a further downward spiral in the value of mortgage investments.

Mr. Paulson also said foreign financial institutions will be eligible for the plan, as long as they have substantial operations and employees in the U.S. Hedge funds, on the other hand, would not.

The financial turmoil has instantly made the economy the overriding issue in the fall election, and both sides are trying to play it to their advantage.

Democrats said they are ready to go along with the bailout. But they insisted there must be a quid pro quo, including more direct aid to homeowners, stricter terms to ensure the government gets its money back and much tighter regulation of everything that happens on Wall Street, from executive salaries to lending practices.

"This plan can't just be a plan for Wall Street, it has to be a plan for Main Street," Mr. Obama said as he campaigned in Charlotte, N.C. And he called Mr. Paulson's bailout a "concept with a staggering price tag, not a plan."

Mr. Obama, like other Democrats, wants more help for homeowners struggling to stay in their homes, curbs on excessive Wall Street salaries and quicker action on overhauling bank regulation.

And yet the Democrats don't seem willing to risk blocking or delaying the bailout plan to get what they want.

Speaking in Baltimore, Mr. McCain accused Mr. Obama of playing politics amid the turmoil. "At a time of crisis, when leadership is needed, Senator Obama has not provided it," Mr. McCain said.

With the weekend announcement, the government has now committed about $1-trillion to clean up the mortgage mess.

There are two ‘stories’ here:

1.   Can the Democrats in the Congress resist the temptation to try to use the bailout plan to strengthen Obama’s position by insisting on ‘more’ (money) for Main Street? It will be pure, simple pork-barrelling if they do that; and

2.   The Fed is, clearly (to me, anyway) still not convinced that the ‘bottom’ is near, much less here. Giving Goldman Sachs and Morgan Stanley commercial bank status – and, therefore, ‘protection,’ is a move to counter the pessimism that could, too easily, turn to panic.

[tomahawk6]

Goldman Sachs and Stanley's change of status will allow them to operate as a bank and take deposits,but it will also require them to face increased regulatory requirements.

[E.R. Campbell]

... Normally foreclosed properties sell for what the bank is owed which is a discount between the property value and the outstanding loan balance ...

And therein lies a temporary (but temporary might equal 10 years!) but serious problem. The total discount is not clear, yet, but it is, clearly, greater than “normal” and it appears to be growing.

A small share of the rich US housing market is still a very big problem – especially for lower middle class employment, rather than just for “Wall Street,”"Bay Street" and "The City." The very people who are losing their home building (and home building dependent) jobs are the ones who are likely to default on their overvalued mortgages. Those ‘distressed assets’ are what US taxpayers – middle class workers in the main – are being asked required to buy. Taxes may have to rise to pay that bill; when taxes go up disposable income/consumption falls – consequentially; falling consumption = fewer jobs = more mortgages in default. Downward spiral, anyone? This is just one of the examples of the “Wall Street” <> “main Street” interaction.

We (everyone in the world) aren’t at the “bottom” yet. We need to get there (in what, 2010?) and then start, however hesitantly, to grow again before this crisis begins to resolve itself. Until then the US taxpayer is being asked required to defend the whole world, including China and Russia,  from a deep recession. As I said elsewhere: Americans are good at responding to crises- thankfully.

[tomahawk6]

I suspect the discount was already factored into the bailout price. The Treasury is hardly going to pay face value. I just dont see a downside to this deal right now. The Federal Budget alone is something like $2.9 trillion. These loans also generate monthly payments which will go into the Treasury.

[E.R. Campbell]

I suspect the discount was already factored into the bailout price. The Treasury is hardly going to pay face value. I just dont see a downside to this deal right now. The Federal Budget alone is something like $2.9 trillion. These loans also generate monthly payments which will go into the Treasury.

See my comments, above, in answer to Kirkhill. I think the discount has been guesstimated into the price in so far as it represents the real ‘distressed assets.’ Since I do not believe that anyone knows the ‘value’ of the notional (hedged) ‘distressed assets,’ or even who holds them all, I do not believe they are in any way realistically ‘factored into’ the price. BUT, I repeat, they may disappear when, rather than if, the real ‘distressed assets’ are written off.

But, basically, T6, I agree that this is a ‘good thing’ because I cannot see any other alternative. The US taxpayers survived the 1989 Resolution Trust exercise without too much problem – and it may be that this crisis is, proportionately smaller than the thrifts fiasco of 20 years ago. 

[GAP]

These investment houses unloaded Billions of $$ around the world over the last couple of years....is the bailout going to cover these ...now....international investors?

[E.R. Campbell]

These investment houses unloaded Billions of $$ around the world over the last couple of years....is the bailout going to cover these ...now....international investors?

No!

At least I hope not.

It is quite enough to ask require the US taxpayers to clean up Wall Street's mess; Bay Street and The City (and Beijing) can and must look after themselves.

BUT, the fed has extended 'protection' to the UK branches of Goldman Sachs and Morgan Stanley, so ... 

[Kirkhill]

Many thanks to both you, Edward and to T6.

Would this be a fair assessment?

If I assume that the available "real" supply of US dollars is the smaller numberguesstimate of $65,000,000,000,000 (vice the manifold larger "notional" number)
And I further assumed that 100% of the outstanding mortgages were non-performing (vice the 2% stipulated by T6)
Leaving the Federal Treasury on the hook with absolutely worthless paper and zero assets (which ignores the real value, however minimal, of the property underwriting the mortgages)

Would it be fair to suggest that the generalized impact of this $700,000,000,000 buy out, could be seen as a one time inflationary event, or alternately as a devaluation of the US dollar, with a magnitude on the order of  700/65,000 or approximately 0.1% globally?

If the actual default rate is 2% as T6 seems to suggest (if I understand correctly) then that impact would drop from 0.1% to .002%.  Likewise, if I were to assume  a 10 fold greater Notional supply of US Dollars then the impact would further drop from .002% to .0002%.

My sense of things is that the US Treasury, is not just the US's lender of last resort, it is, like the Bank of England before it, also the world's banker. 

While even the US economy will have a bit of trouble digesting a $700,000,000,000 surge in new money (if it were all to come due in one day as opposed to 10 years) in terms of the worlds economy and the soundness of the US dollar trading system it seems to me to be well within the absorption capacity of that system.

I would further suggest that when Britain Ruled the Waves and the Bank of England and the Government of Britain were joined at the hip (visible but unacknowledged) Britain managed to finance many wars, hiring and equipping other countries to do the fighting (The Seven Years - French and Indian Wars comes first to mind but it also applies to the Napoleonic Wars).  It would occasionally go into deficit, causing the Pound Sterling to fall against the Gold Standard but by and large, over the centuries from 1694 to 1944 the world's financial system was firmly grounded and survived war, famine, plague, pestilence, recession and depression.   And Britain and the Bank of England invariably profited.

My sense is that Bretton Woods was the unmaking of that old system and the making of the US Treasury and the US Government as arbiters of the new system - with all its inherent advantages.

I don't think that the US economy can be looked at in isolation.  I think it has to be seen as the primary beneficiary of a global economy which largely runs on inertia.

I do agree however, that as you - Edward - have said about Canadians and Politics, "perception is reality" that the economy is one area where intangibles like trust and panic and perception trump balance sheet facts.

While governments may fall and depositors may fail I don't believe that the system will be harmed.

Very few people liked having the world's economy in the hands of HMG and the Bank of England (least of all T6's revolting colonials  )but they accepted it because it was the safest haven where laws actually meant something.  I don't see investors seeing a better haven now than the US Treasury.  Russian Ruble? Chinese Yuan? Anything in Europe - including dear old Britain?

Faut de mieux! Least-Worst.

[E.R. Campbell]

I  don’t agree with your assumptions, Kirkhill. The US money supply (M2) equals about $7 Trillion, not $70 Trillion. See:  http://www.federalreserve.gov/releases/h6/current/ The $65 Trillion is the world’s GDP, the US GDP is, as T6 says, around $14 Billion or about 20+% of global GDP being generated by about 5% of the world’s population (a productivity factor of 4 – Canada, by contrast, produces 1.5% of the global GDP with 0.5% of the population for a productivity factor of only 3).

My sense of things is that the US Treasury, is not just the US's lender of last resort, it is, like the Bank of England before it, also the world's banker. 

Bingo! And, risks and all, the US taxpayer reaps the rewards of that – remember all those invisible exports?

The relative ‘cost’ of the bailout (for the US taxpayer) is higher than you would get with a $70 Trillion ‘base,’ but, as I said earlier, I’m guessing that, in relative terms the burden is less than in 1989 when the Savings and Loans blew up in our faces. Some might argue that the perceived relief when (mid ‘90s) the thrifts fiasco was behind us spurred the decade of prosperity that allowed Jean Chrétien and Paul Martin to balance Canada’s budget by screwing the rich provinces and relying upon an expanding economy to generate more and more revenue and allowed Bill Clinton to lead during a decade of fiscal exuberance.

[GAP]

No!

At least I hope not.

It is quite enough to ask require the US taxpayers to clean up Wall Street's mess; Bay Street and The City (and Beijing) can and must look after themselves.

BUT, the fed has extended 'protection' to the UK branches of Goldman Sachs and Morgan Stanley, so ... 

Looks like this answered my question.....

Canadian banks look for opportunities in U.S. crisis
Updated Mon. Sep. 22 2008 11:38 AM ET The Canadian Press
 Article Link

TORONTO -- Canadian financial institutions are exploring opportunities in the American financial-sector crisis, and some may be in line for a share of the U.S. government's massive rescue plan.

The U.S. Treasury Department said during the weekend that institutions from outside the United States will be eligible for assistance in the planned US$700-billion taxpayer takeover of impaired debt instruments.

"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Treasury Secretary Henry Paulson said Sunday.

The original sketch of the rescue plan would have excluded non-U.S. based banks.
Paulson has also expanded the proposal to include all toxic assets, not only those related to the collapse of the American housing market.

The Treasury Department -- which remains in negotiations with congressional leaders -- said banks with "significant operations" in the United States should be included.

"How `significant operations' would be defined is uncertain, but it seems to suggest that the Royal Bank of Canada (TSX:RY), Toronto-Dominion Bank (TSX:TD) and Bank of Montreal (TSX:BMO) would qualify," BMO Capital Markets chief economist Sherry Cooper commented Monday morning.

Those three Canadian banks have large American commercial banking subsidiaries -- the Royal concentrated in the U.S. Southeast, TD in the Northeast and BMO in the Midwest.

"We will continue to see deleveraging of the U.S. financial system; as well, banks will be raising additional capital," Cooper noted.

Observers see this as an opportunity for Canada's banks, whose capital reserves remain robust. They also would have tailwinds in takeovers from the relatively strong Canadian dollar and their high share values compared with the ravaged stock prices of American banks and insurers.
More on link

[Kirkhill]

Thanks for continuing to guide my thinking here Edward.

So if I stipulate my error on the M2 (vs M3, M4 or L?) and my further error on the approximately 40%? of Global GDP that is actually US Dollars (thus taking 70 Trillion down to 28 Trillion on GDP, 14 Trillion on US GDP and 7 Trillion on M2?) then 700 Billion represents something between 10% of M2 and 2.5% of US denominated global GDP?

Given that, wouldn't the impact still be ameliorated by the time factor (not all loans will default at the same time), the default rate (not all loans are likely to default) and the real value of the properties (not all properties will have zero value - in fact given what I understand to be neighbourhood clustering effect dilapidated properties may actually have improved value because small dilapidated lots can be amalgamated for a more generalized property redevelopment).

I guess what I am trying to come to terms with, as ever, is that no matter how much the press tries to sell soap,  the situation is seldom as bleak as reported.