Tape 203 - REITs and banks; Jimmy Carter as President; the slow-down in GNP; the Humphrey-Hawkins Bill
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- | Hello, this is David Frances, | 0:02 |
financial editor of the Christian Science Monitor. | 0:04 | |
I'd like to welcome you once more | 0:07 | |
on behalf of Instructional Dynamics Incorporated | 0:09 | |
to a visit with MIT's Nobel Prize | 0:13 | |
winning economist, Paul Samuelson. | 0:15 | |
We are recording this conversation | 0:18 | |
in the second half of July. | 0:20 | |
We have a question from a reader, | 0:23 | |
an investment broker in Chicago. | 0:25 | |
This writer, I should say, asks, | 0:27 | |
"What ultimately will the banks | 0:32 | |
"have to do with their REIT holdings, | 0:34 | |
"their real estate investment trust holdings, | 0:37 | |
write them down, write them off?" | 0:40 | |
That's the first question. | 0:42 | |
The second is, "How much of the lack | 0:43 | |
"of liquidity in banks is due to their REIT holdings?" | 0:46 | |
- | Well, David, first let me welcome you | 0:51 |
back from your trip to Germany. | 0:53 | |
We'll all be looking forward to the special | 0:56 | |
supplement in the Christian Science Monitor | 0:58 | |
on the German economy because Germany is the Phoenix | 0:59 | |
and is certainly one the most interesting | 1:04 | |
as well as dynamic economies in the world today. | 1:07 | |
On the REIT problem, that reached its | 1:10 | |
peak or perhaps I should say depths | 1:20 | |
about two years ago and the blissful | 1:22 | |
effect of time itself is beginning to | 1:26 | |
save those banks which had the greatest | 1:29 | |
exposure from their own earlier folly. | 1:32 | |
It looked for a while, to many people, | 1:35 | |
as if they discovered a new way to make | 1:37 | |
12% per year by investing in | 1:39 | |
real estate investment trust, but as always | 1:42 | |
or so often happens, you had over entry | 1:45 | |
and those that came into the game late | 1:49 | |
found themselves with a lot of very poor paper. | 1:53 | |
I think that those particular banks | 1:59 | |
who were identified with themselves floating | 2:02 | |
investment, real estate investment trust, so called reits, | 2:05 | |
were on the danger list more than 18 months ago. | 2:10 | |
And I think that they have reduced their exposure. | 2:14 | |
They've done it yes by write offs, | 2:21 | |
by very painful write offs. | 2:24 | |
They've done it many cases by auction, selling at a loss. | 2:26 | |
There are still, in Florida, condominiums, | 2:31 | |
and I think those investments were the very worst, | 2:35 | |
which were ill designed, were ill priced, | 2:39 | |
were started too late, and nobody will | 2:43 | |
ever get his money out of those, | 2:48 | |
but that doesn't mean that they're worthless. | 2:51 | |
Generally speaking, they have been written down. | 2:53 | |
So I would say we've weathered that storm. | 2:57 | |
Whether we've learned a lesson on the next | 3:02 | |
quick way of getting rich, let's reserve judgment on that. | 3:05 | |
As far as the second question is concerned, | 3:12 | |
whether the reits are the only thing to worry about | 3:15 | |
or the principal thing to worry about, | 3:19 | |
I would say there is one other bothersome picture | 3:21 | |
on the balance sheet of some of our very large banks. | 3:28 | |
I have reference there to the loans to governments. | 3:31 | |
I don't mean the federal government of the United States. | 3:37 | |
I don't mean the high class assets, say of the | 3:40 | |
province of Ontario, but I'm thinking of | 3:44 | |
Zaire and Peru and the LDCs, the less developed countries. | 3:49 | |
There's quite a lot of paper, what I would have to call | 3:56 | |
soft loans, in the hands of private enterprise. | 4:00 | |
It's the business of government | 4:05 | |
to lose money in good causes. | 4:06 | |
It's not the business of banks | 4:08 | |
to lose our money in good causes. | 4:10 | |
So there is a day or reckoning coming there. | 4:15 | |
Various estimates have been made as to | 4:21 | |
how large these obligations are and I don't think | 4:22 | |
that they're large enough to sink any big | 4:26 | |
metropolitan bank, any big New York, Chicago, | 4:31 | |
San Francisco, Los Angeles bank, but there may still be | 4:34 | |
some chickens that are going to come home to roost. | 4:40 | |
As you know, David, there's a very concerted effort | 4:43 | |
on the part of the third world, so called, | 4:46 | |
to engineer a forgiveness of all debts | 4:49 | |
from the poorer countries to the wealthier countries. | 4:54 | |
I don't know how far that will go, but I think de facto | 5:02 | |
you're going to get a lot of defaults. | 5:08 | |
You've already had delays in payment by Peru and | 5:13 | |
by Zaire and there are some others in the offing. | 5:15 | |
The principle losers, I believe, will not be | 5:20 | |
the depositors of large, private United States banks | 5:23 | |
or, for that matter, the banks abroad. | 5:29 | |
The principle losers will be the international agencies, | 5:33 | |
the World Bank, the IMF, the various branches | 5:38 | |
of the United Nations and the various | 5:44 | |
aid programs of the United States. | 5:46 | |
Since many of us thought that those were very soft loans | 5:50 | |
all along, that they should have been, | 5:52 | |
that the fine line between aid and loans | 5:55 | |
is something which only the future can define, | 6:03 | |
I don't think it's a tragedy for us or for the world | 6:06 | |
that a lot of those so called loans | 6:11 | |
are going to turn out to be de facto gifts, | 6:13 | |
but there still does exist in the | 6:17 | |
balance sheets of our financial institutions | 6:23 | |
a certain amount of water of this sort. | 6:27 | |
Fortunately, the greatest amount of those poor obligations | 6:31 | |
were taken on just prior to the recession itself. | 6:39 | |
It's amazing what 18 months will do for | 6:45 | |
the condition of a bank in an age of | 6:50 | |
recovery and in an age of inflation. | 6:54 | |
Inflation bails out an awful lot of people | 6:57 | |
because the liabilities which banks owe | 6:59 | |
are stated in fixed money terms | 7:03 | |
and as money gets to be more plentiful, | 7:06 | |
as the price level soars, as the real value | 7:10 | |
of money goes down, then many a rash debtor is saved | 7:12 | |
from his own folly by the tide around him. | 7:18 | |
I think that that has pretty much happened. | 7:23 | |
Very good thing, I believe, for the financial stability | 7:27 | |
of the country that it has happened. | 7:30 | |
Let me say this, suppose it hadn't. | 7:32 | |
Then, I don't think we live any longer | 7:35 | |
in the days of laissez faire where it's sink or swim, | 7:37 | |
let each institution take care of itself, | 7:42 | |
that's tough doughnuts if tens of thousands | 7:45 | |
of depositors happen to put their money in the wrong place. | 7:48 | |
They took their chances and they have to live | 7:53 | |
with the promises they've kept. | 7:57 | |
That's not the way we run the system these days. | 8:02 | |
It is a legitimate function of the government | 8:05 | |
in a cool, in a judicious way to keep microeconomic | 8:08 | |
events from becoming macroeconomic disasters. | 8:17 | |
I think that even under republican presidents, | 8:20 | |
under President Nixon, under President Ford | 8:26 | |
that the new rules of the game would apply | 8:30 | |
and that depositors with funds in insured banks | 8:34 | |
would not be permitted to live through, once again, | 8:39 | |
what some of use are old enough to remember, | 8:43 | |
what happened in the Great Depression | 8:46 | |
when thousand and thousands and thousands | 8:48 | |
of banks failed, often paying their depositors | 8:52 | |
a couple of dollars on a hundred dollars. | 8:56 | |
- | Dr. Samuelson, it's not long after Jimmy Carter | 9:00 |
emerged triumphant from the Democratic Party Convention | 9:03 | |
in New York City, it begins to look more and more | 9:06 | |
like the former Georgia governor will be | 9:11 | |
the next president of the United States. | 9:13 | |
What sort of president do you think he'll make? | 9:15 | |
Will it make a difference economically speaking | 9:17 | |
if he or a republican is president? | 9:20 | |
- | I think it will make a difference. | 9:24 |
The parties are not diametrically opposed to each other. | 9:29 | |
They don't espouse completely different platforms | 9:34 | |
in practice when they're in office, | 9:39 | |
whatever the differences in the rhetoric of their platforms. | 9:43 | |
Nevertheless, we don't live, I think, | 9:49 | |
in a deterministic world where it's all going to | 9:52 | |
come out in the wash and all going to amount | 9:54 | |
to pretty much the same thing no matter what happens. | 9:56 | |
It does make a difference. | 9:58 | |
In a moment, I want to talk about what we now know | 10:01 | |
was the softening in the economy in the second quarter | 10:06 | |
of 1976, the quarter that's just behind us. | 10:10 | |
In appraising just what that means | 10:15 | |
and what it might be leading to, | 10:17 | |
I think it makes a very great difference | 10:20 | |
whether the polls show Jimmy Carter, the democrat, | 10:22 | |
the head of a unified democratic party likely to win | 10:28 | |
and likely to bring in with him into Congress | 10:32 | |
a lot of old democrats and a lot of new democrats | 10:35 | |
and likely to make it difficult for | 10:39 | |
very many old republicans to be reelected | 10:42 | |
and many new republicans to be reelected. | 10:45 | |
I think that that situation which you correctly | 10:48 | |
described as what an informed person | 10:51 | |
must think now to be the case. | 10:55 | |
How different it would be if we were back in a period like | 10:57 | |
1972 in terms of political outlook and the smart money | 11:01 | |
had every reason to think there was going to be | 11:08 | |
a republican landslide, that a McGovern like candidate | 11:10 | |
for the democratic party could not unify the party, | 11:15 | |
could not keep the marginal vote from straying away | 11:18 | |
from the traditional democratic party to the republicans. | 11:22 | |
Then, I think that this would very much | 11:25 | |
affect my interpretation of what the meaning is | 11:29 | |
of the second quarter slow down | 11:32 | |
that's been recorded just behind us. | 11:35 | |
So let's take stock now that we're in the lull | 11:38 | |
between the two conventions, let's take stock | 11:42 | |
of the Carter phenomenon, because it is a phenomenon. | 11:46 | |
Surprisingly, I commented on this is a recent | 11:53 | |
Newsweek article, much of that issue of Newsweek, | 11:56 | |
purely by coincidence, was given over | 12:02 | |
to the fact that there are a heck of a lot | 12:04 | |
of businessmen for Jimmy Carter. | 12:08 | |
We expect businessmen, generally, to be keen | 12:12 | |
for republican candidates, and many of the | 12:16 | |
businessmen I'm going to talk about have said | 12:18 | |
that if they had their druthers, they still | 12:21 | |
would prefer Mr. Ford, but they see | 12:23 | |
an awful lot of merit in Jimmy Carter. | 12:27 | |
I'm talking about people like Henry Ford in Detroit, | 12:29 | |
like the head of Coca Cole, Austin, in Atlanta, | 12:35 | |
Edgar Bronfman, the head of Seagrams. | 12:39 | |
They just had a party for Jimmy Carter who came to New York. | 12:43 | |
And just as he has charmed | 12:49 | |
blacks, women, democrats generally, he seems | 12:54 | |
to be able to play his little flute | 13:01 | |
to businessmen and they purr. | 13:04 | |
There are quite a lot of businessmen who are enthusiastic. | 13:09 | |
If you have to have a democrat, | 13:11 | |
then Jimmy Carter is the one to have. | 13:13 | |
He even said at this meeting, he's quoted in | 13:20 | |
the recent press as having said at this meeting | 13:24 | |
that he's going to go very easy on tax reform, | 13:28 | |
that is very slow on tax reform, | 13:32 | |
that he's going to spend a year looking | 13:34 | |
the situation over, no rocking the boat, | 13:36 | |
no rash precipitative action. | 13:39 | |
That's not exactly the same rhetoric that I thought | 13:45 | |
I heard in the acceptance speech at the convention. | 13:48 | |
I don't know if you were out of the country. | 13:51 | |
- | I was out of the country, yes. | 13:53 |
- | During that time, but if you had been here | 13:53 |
to listen to the convention speech, | 13:56 | |
Jimmy Carter looked the American people in the eye, | 13:59 | |
the television camera eye, looked the delegates assembled | 14:04 | |
in Madison Square Garden in the collective eye, | 14:08 | |
and he said, "It's as simple as this, | 14:10 | |
"we don't have tax reform, it's long overdue. | 14:13 | |
"I tell you we're going to have it." | 14:18 | |
It turns out the tax reform we're going to have | 14:20 | |
is going to be with all deliberate | 14:24 | |
slowness apparently so that the stock market | 14:30 | |
has taken the Gallop Poll very much in its stride. | 14:37 | |
Choosing Mondale as the vice presidential candidate, | 14:45 | |
the most liberal of the six people widely discussed, | 14:49 | |
the most liberal by almost anybody's count, | 14:56 | |
didn't set too well with the stock market. | 14:59 | |
It went down below the thousand level for the Dow Jones | 15:02 | |
which is had been flirting with. | 15:07 | |
Nevertheless, you do find almost every index | 15:10 | |
of sentiment and not just on the part of the consumer, | 15:15 | |
but on the part of the more affluent of the consumers | 15:20 | |
and on the part of business in pretty high gear | 15:23 | |
despite the prospect, perhaps exaggerated | 15:29 | |
by the polls at the moments, that it's a sure thing | 15:33 | |
that the democrats are going to win | 15:37 | |
and Jimmy Carter will be the next president. | 15:39 | |
Well there are no sure things in politics. | 15:41 | |
And there's a lot of time between now and November. | 15:43 | |
Nevertheless, the betting odds favor that and yet the | 15:46 | |
general state of expectations looks to be pretty good. | 15:51 | |
- | But you take him to be serious about tax reform? | 15:56 |
- | Well, I have to say this that as a Carter watcher, | 16:00 |
along with other people, one must objectively | 16:06 | |
admit to a very important element of ambiguity | 16:10 | |
in the words of Governor Carter and in the probabilities. | 16:15 | |
He could turn out to be one of the new breed | 16:25 | |
of politicians, the Governor Dukakis type of democrat, | 16:29 | |
the Governor Brown type of democrat, | 16:35 | |
the younger person who doesn't answer to the old, | 16:40 | |
let's say Hubert Humphrey drum beat. | 16:48 | |
He could be a man of great determination | 16:52 | |
who will try to dismantle whole agencies | 16:54 | |
by the dozens, that, after all, was his | 17:00 | |
original gimmick in seeking office. | 17:03 | |
My own inclination is to bet that the force | 17:07 | |
of circumstances of his democratic constituency | 17:12 | |
will make him, in fact, if we were to meet | 17:16 | |
a year from now and look back on the, | 17:21 | |
what's almost the first year of the Carter administration | 17:25 | |
that he is, in fact, in the mainstream of the | 17:29 | |
democratic party which means more liberal on the | 17:33 | |
fiscal side in the spending, somewhat egalitarian | 17:38 | |
with respect to his tax program. | 17:43 | |
Although the resistances to a really egalitarian | 17:45 | |
tax reform program in American political life | 17:50 | |
in both parties are very very substantial. | 17:52 | |
- | Yes, I should think it. | 17:56 |
- | Don't hold your breath. | 17:57 |
- | I should think it'd be amusing when he has | 17:58 |
a confrontation with Senator Long, if he does. | 18:00 | |
- | Yes, but remember that the southern democrats | 18:04 |
who are chairmen of the important committees | 18:10 | |
and who by seniority acquire a disproportionate weight, | 18:13 | |
that's almost becoming a threatened species, | 18:19 | |
Threatening to go extinct. | 18:24 | |
Where are the Wilbur Millses of recent years? | 18:27 | |
They finally meet the time when their unilateral power | 18:30 | |
to delay, to contrive is limited. | 18:37 | |
So Senator Long himself will have to follow | 18:42 | |
the election returns, and if it is the case | 18:46 | |
that Carter brings in on his coattails | 18:50 | |
or just by coincidence a lot of freshmen | 18:56 | |
congressmen and senators, a good deal younger | 18:59 | |
than Senator Long he will find that the | 19:02 | |
majorities on his committees will have to be reckoned with. | 19:07 | |
So I don't want to minimize the resistances to various | 19:11 | |
tax reforms which will hurt the well being | 19:17 | |
of the affluent, but by the same token, | 19:22 | |
one should not minimize the very strong political | 19:27 | |
forces which have been held in check, low these many years | 19:30 | |
and which one of these days are going | 19:34 | |
to overflow the banks of the dam. | 19:36 | |
It's just I would guess a question of how | 19:39 | |
thorough going the tax reforms are. | 19:44 | |
Let's be concrete as to why it makes a difference as to | 19:51 | |
whether a Jimmy Carter, a democrat is elected | 19:59 | |
with a strong party following in the congress. | 20:03 | |
To do that, let's note that the | 20:08 | |
first quarter GNP numbers were revised upward. | 20:13 | |
It now appears that we grew at an annual rate of 9 1/3%. | 20:17 | |
In real terms, in the first quarter, | 20:23 | |
I think the first number came out at | 20:26 | |
7.2%, then 7.5%, then 8.3%, and now they're up to 9.3%, | 20:28 | |
but the second quarter real growth | 20:37 | |
was less than half that much, 4.4%. | 20:41 | |
Fortunately, we were prepared for the let down. | 20:46 | |
Wisely, the economists in Washington in the | 20:51 | |
present administration, tipped off | 20:56 | |
the public and the press to the fact that | 21:00 | |
we would be down at 5% or below. | 21:03 | |
Most of that is due to the let down | 21:07 | |
in the rate of inventory accumulation. | 21:12 | |
Most of the first quarter strength is because | 21:15 | |
of an undue strength in inventory stock piling. | 21:17 | |
The contrast with second quarter is because | 21:21 | |
you don't have a continuation of that undue | 21:23 | |
strength with the further increase. | 21:26 | |
If you take final GNP demand which is | 21:30 | |
the total GNP but with all the inventory numbers | 21:36 | |
purified out of the figure, the second quarter | 21:39 | |
is stronger than the first quarter. | 21:42 | |
I think that that's something very important to notice. | 21:46 | |
That's why leaving politics out of the picture | 21:51 | |
for the moment, I do not think that the | 21:55 | |
bulk of the evidence will suggest that the | 21:57 | |
second quarter easing off is an omen | 22:01 | |
of our going into a growth recession | 22:05 | |
or into an ordinary full fledged recession | 22:08 | |
in the last part of this year. | 22:12 | |
It's true, there are some signs of softness, | 22:16 | |
the unemployment number went up, the layoffs have increased, | 22:19 | |
retail sales in certain areas have been soft | 22:25 | |
and consumer sentiment, particularly of the | 22:29 | |
lower income half of the consumer group has deteriorated. | 22:33 | |
Nevertheless, I would say the best bet is | 22:40 | |
that the economic historians will look back on | 22:45 | |
the second quarter and say this | 22:47 | |
was just a temporary interruption | 22:48 | |
of what is still a fairly healthy recovery. | 22:50 | |
But suppose it's not. | 22:56 | |
There are no sure things in economics. | 23:00 | |
Then, I think with an Allen Greenspan advising | 23:02 | |
a Henry Ford, not Henry Ford, a Gerald Ford | 23:08 | |
solidly in office, reelected by acclimation, | 23:12 | |
you would see a countenancing of the softness, | 23:17 | |
particularly if the softness in the economy | 23:23 | |
is accompanied by some little reacceleration of inflation | 23:26 | |
which actually is in the second quarter date. | 23:30 | |
It's mostly food. | 23:32 | |
If you take out food and energy prices, | 23:33 | |
but, of course, that's the great game, | 23:36 | |
sifting through the data to eliminate | 23:38 | |
some things and include other things. | 23:41 | |
The rate of inflation in the second quarter | 23:43 | |
is not really worse than the first quarter. | 23:46 | |
But if you leave those in, and after all, | 23:48 | |
we have to pay for food and energy, | 23:49 | |
the inflation is deteriorating. | 23:52 | |
Then, I think, you would find that the republican | 23:54 | |
administration vetoing bills of Congress | 23:57 | |
and initiating legislation of its own | 24:02 | |
such that we could move into 1977 into | 24:05 | |
a economy that's growing only at 3 or 4%. | 24:10 | |
I am pretty sure that a Jimmy Carter | 24:14 | |
with the kind of mandate that he's likely to get, | 24:19 | |
would under those circumstances take action, | 24:22 | |
certainly those economists who are now associated with him | 24:24 | |
could be expected to advise him to do so. | 24:28 | |
- | Would he take the, do you think the | 24:32 |
Humphrey Hawkins Bill would get through? | 24:34 | |
- | No. | 24:35 |
I think that the Humphrey Hawkins Bill is mostly rhetoric. | 24:37 | |
There's evidence that Carter did not | 24:40 | |
care for the Humphrey Hawkins Bill, | 24:42 | |
but he couldn't come out against it, | 24:45 | |
so he came out for it with the highest rate | 24:46 | |
of unemployment that was possibly defensible, 4.6% | 24:49 | |
and also said there were going to be plenty | 24:55 | |
of amendments and plenty man power programs | 24:57 | |
to get the unemployment down in that way. | 24:59 | |
Let me say since we've talked about the GNP accounts | 25:03 | |
that a majority of the forecasters had correctly | 25:07 | |
foreseen a slow down, not quite | 25:12 | |
as slow as turned out to be the case. | 25:15 | |
So it's worth asking what it is that they're | 25:19 | |
seeing in their crystal balls for the next four quarters. | 25:22 | |
I've tallied the average rate of real growth | 25:27 | |
that the various forecasters have been | 25:30 | |
looking forward to from the middle of 1976 | 25:35 | |
to the middle of 1977 and data resources, | 25:38 | |
that's Dr. Otto Eckstein, 5.9%, Chase Econometrics 5.6%, | 25:43 | |
Manufacturers Hanover Trust 5.6%, | 25:51 | |
The Wharton School Model of Lawrence Klein | 25:54 | |
Carter's advisor, it's only 5%, | 25:57 | |
the UCLA computer model 5.8%. | 26:01 | |
Those are all tightly bunched. | 26:04 | |
They agreed more among themselves and they will, | 26:07 | |
the facts will agree with them subsequently, | 26:10 | |
but if they're at all near the mark, | 26:13 | |
then we are still growing faster than the | 26:15 | |
trend potential gross of the US economy. | 26:22 | |
We are still in that first nice part of every recovery | 26:26 | |
when productivity will be improving, | 26:32 | |
when profitability is likely to be improving, | 26:35 | |
when the pressure of price inflation of reacceleration | 26:38 | |
of price inflation is not yet strongly manifest. | 26:44 | |
So that would not be bad performance. | 26:52 | |
Now, for those of us who are impatient | 26:55 | |
to get job opportunity for the part of the | 26:57 | |
population that has felt the brunt of the recession | 27:02 | |
numbers which average out to something | 27:07 | |
like 5 1/2, 5 2/3% real growth are | 27:09 | |
a little bit on the disappointing side. | 27:14 | |
They're significantly less than the 7% | 27:17 | |
which we averaged in the first half of this year | 27:23 | |
if you count in that very good first quarter | 27:25 | |
and the not so good second quarter, | 27:28 | |
but they're not good enough for lots of democrats. | 27:31 | |
Nevertheless, for lots of people in the | 27:35 | |
money market, they like this moderation. | 27:37 | |
I notice this amusing, it shows how people's ideas change. | 27:42 | |
Otto Eckstein was the economist for Lyndon Johnson | 27:47 | |
on the Council of Economic Advisors. | 27:50 | |
He's now a forecaster and a consultant. | 27:53 | |
Perhaps that's made him more conservative, | 27:57 | |
but his pessimistic scenario involves greater strength | 27:59 | |
than his actual forecast because more is less. | 28:03 | |
If we grow 7, 8%, according to his computer, | 28:10 | |
we will by the last part of '77 | 28:17 | |
go in to a pretty bad recession. | 28:19 | |
And if we grow more modestly, then we continue | 28:22 | |
in expansion through the last part of the 1970's. | 28:26 | |
I may also say that all of these forecasts, | 28:32 | |
if they're near the mark, and my advice to you | 28:35 | |
is to take that 5 2/3% real growth | 28:38 | |
and add plus or minus 2% to it and that's the range | 28:42 | |
in which the numbers are, in fact, likely to fall. | 28:45 | |
They show pretty good profits. | 28:50 | |
I look to see what happens to profits in the | 28:51 | |
second quarter of '77, just a year from now, | 28:54 | |
and they'll be, according to these estimates, | 28:57 | |
after taxes, above 100 billion dollars, | 29:01 | |
between 100, 110 billion dollars. | 29:05 | |
They're now about 80, I'm sorry last time | 29:07 | |
we had solid numbers, first quarter, | 29:10 | |
they were about 85, 86 billion. | 29:12 | |
So that's a considerable increase in profits | 29:15 | |
which Wall Street would probably not find displeasing. | 29:18 | |
The reason, though, I think that one can be | 29:24 | |
less worried about the slow down is | 29:27 | |
that the Federal Reserve, although it's independent | 29:31 | |
of the executive and although Carter's backed down | 29:34 | |
a little bit now, and only asks that the chairman | 29:37 | |
serve with the new president, that after Arthur Burn's | 29:42 | |
one year is up, that from then on the president have that, | 29:47 | |
the Federal Reserve itself will realize | 29:53 | |
where the political pressures are if | 29:56 | |
there's a democratic election. | 29:57 | |
A member of the Federal Reserve board said | 30:00 | |
at a private dinner meeting, he didn't realize | 30:05 | |
what he was saying and then he corrected himself, | 30:08 | |
but he first said it, was that as a board member, | 30:10 | |
he doesn't want there to be a landslide for the democrats. | 30:14 | |
That will make life tougher for him. | 30:17 | |
Well by the same token, there were a lot of people | 30:19 | |
who were hoping for that landslide. | 30:21 | |
- | Thank you very much. | 30:23 |
If you subscribers would like to ask | 30:25 | |
questions of Professor Paul Samuelson | 30:27 | |
or suggest some subjects for him to discuss, | 30:30 | |
please write to Instructional Dynamics Incorporated | 30:33 | |
450 East Ohio Street Chicago, Illinois 60611. | 30:37 |
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