The display of increased expenditure for solar, wind, and other "not dry" projects under Obama creates a fresh efficiency center—and a reason to party

By John Carey

Watch full size video:

Sure, celebrities such as Samuel Jackson, Bono, and Alice Walker were set to wear the appearance at the Green Inaugural Ball, held without ceasing the eve of President Barack Obama’sitting Jan. 20 installation. But the real draw for this celebration of all things bright-green and renewable was Al Gore.

There was Gore, striding in with his wife, Tipper, upon the body the green carpet at the Smithsonian’s Center of American Art & Portraiture, getting a blustering hug from green-hatted musician Michael Franti, who declared he’d walked a few blocks to the event in bare feet. There he was on the VIP floor of the adjacent and recently renovated National Portrait Gallery, holding court while burdened with the busts of Abraham Lincoln and Roman emperors, beads of sweat glistening on his beaming face as fans swarmed around, drawn like photons to a solar panel, staying to have their pictures taken with him and Tipper.

"It’s cool," said Matthew Mears of SunWorks, a Florida-based solar equipment company, as he waited his turn. "He’s the most famous person I’ve ever met."

Across the room, Chris Traub, CEO of the Strategic Executive Search Group, watched the quietly determined jostling to get close to the Oscar- and Nobel Prize-winning former Vice-President. "Al Gore has rock luminary power," said Traub, who had traveled all the way from Taipei, Taiwan, for the chance to blend with the green concourse.

And so it went at the Green Ball, where the food was organic, the video screen showed stirring pictures of workers installing solar panels and touring wind farms, and the throng responded to the pulsating beat of Maroon 5 by talking policy and thumbing their BlackBerrys instead of really dancing. "It’s a substantive swinging lower classes," joked one environmentalist as she watched the huge green-lit ballroom from any overlooking second-floor window.

It was a fitting tribute to the mount of a modern talent center in Washington—and a clean contrast with eight years ago, when the Bush Administration rode to power at the back the backing of oil companies and other traditive energy outfits.

The real action at the Green Ball wasn’t cutting unattached, but getting down to business. "We’re momentarily giddy unless fundamentally serious," said Carl Pope, executive director of the Sierra Club, who bucked the green trend through a bright-red bow tie and cummerbund. "I’ve already done a lot of networking," reported Mike Clemons, CEO of Oklahoma City’s Green Energy Holdings, what one. invests in verdant companies, since he worked the VIP room.

Just about everyone was on notice: Start the green revolution! Fight climate make some change in.! Create jobs in solar, twine, biofuels, and energy efficiency! Halfway through the evening, Nancy Pelosi strode to the stage-coach in a shimmering fit by the agency of a hint of fuchsia. "Nothing could be more important than the issue that brings us to this place," she said. "I made this issue—reversing climate change and ending energy dependence—the flagship issue of the Democratic Congress."

The company executives in being there extolled the bottom-line benefits.

"Green is good for duty," said John Replogle, CEO of Burt’s Bees, the maker of lip balm and other personal care products. Replogle drove up for the event from Morrisville, N.C., in his hybrid car. "We’ve cut waste 85% in the last five years, and cut the energy per unit of production by 40%. We’ve saved hundreds of thousands of dollars."

And the violence over Obama’s green jobs charm was palpable.

"The whole green economy will be a wonderful way to jump-start the emissions reductions we need to slow climate change," said Rosina Bierbaum, dean of the University of Michigan’s School of Natural Resources & Environment and former affiliate director of the Clinton White House’s Office of Science & Technology Policy.

For Rhone Resch, president of the Solar Energy Industries Assn., "it’s almost like the coming of maturity of our industries. We as an industry are declaring hostility on the recession. We are deploying thousands of troops, with thousands of projects ready to go."

The Green Ball, of course, was billed in the manner that carbon neutral. The emissions generated from the electricity used at the end were offset by buying emissions-reduction credits from Native Energy, which supports Native American, farmer-owned, community-based renewable energy projects. It was a accident of electricity, judging from the megawatt sound method. "It’s a bit loud," aforesaid Paula DiPerna, executive vice-president for the Chicago Climate Exchange, who regretted not bringing earplugs.

But no one was really querulous.

"This is wonderful," said Denise Bode, CEO of the American Wind Energy Assn. "It’s a tremendous pep rally for the fight to come."

In his inaugural address, the President calls because changes in energy, health care, and infrastructure in order to deal with the economic crisis

Watch full size video:

Barack Obama is sworn in as the 44th U.S. President by Supreme Court Chief Justice John Roberts in front of the Capitol in Washington on Jan. 20, 2009. Timothy A. Clary/AFP/Getty Images

By Theo Francis

In an inaugural address at once soaring in style and optimistic in tone, President Barack Obama kept the arrangement front and center, quick construction the case that tackling the country’s deep economic problems would require both undaunted, immediate action and sweeping changes to the population’s infrastructure and its energy and health-care sectors.

Although he offered no new specifics, Obama cast the goals of the proposals he has been shaping in grand terms, promising to "harness the sunshine and the winds and the soil to firing our cars and run our factories" and "wield technology’s wonders to make light health care’s quality and humble its costs," according to prepared remarks.

Without pointing fingers too specifically, he briefly scolded potential opponents "who question the scale of our ambitions—who suggest that our system cannot brook too many big plans." He admonished that "their memories are short. For they have forgotten the sort of this country has already done; that which free men and women can achieve when imagination is joined to common purpose, and necessity to courage."

Obama, who became the people’s 44th president and the first African American to hold the office, spoke to a crowd that stretched beside the National Mall, essentially unbroken from the U.S. Capitol to the Lincoln Memorial. Generally good-natured despite temperatures in the mid-20s and the threat of snow, some toward the construct of the huge vulgar herd sang "Hey, hey, hey, goodbye," an liable reference to the end of the Bush Administration. They switched to chants of Obama’s name as the introductions of other dignitaries dragged on.

The Reverend Rick Warren, a polemical and conservative evangelical minister whose assertion against gay rights drew protests from many more liberal Obama supporters, offered a largely nondenominational prayer, asking God for the one and the other forgiveness and guidance, but uncharacteristically invoking Jesus Christ only at the end and in exterior stipulations.

Calling for each end to "stale political arguments," Obama laid the ground for what many predict determine be an expansion of the federal control’s efforts indiscoverable for many generations.

"The question we ask today is not whether our direction is too big or in addition small, but whether it works—whether it helps families find jobs at a suitable wager, care they can afford, a retirement that is dignified," he said in prepared remarks. "Where the answer is aye, we intend to move forward. Where the answer is no, programs will end."

Throughout, his tone was upbeat, giving ground of hope that the nation could rise above its economic troubles and work through the denunciation of fright and the wars in Afghanistan and Iraq. And while he touched on in which place the blame lies in spite of the economy’s crisis—oratory generally, as he has increasingly bestowed since captivating the Presidency on Nov. 4—he didn’t dwell on it, declaring that the "question before us" is not "whether the market is a force as far as concerns good or ill."

"Its power to generate wealth and expand freedom is unmatched, but this acme has reminded us that without a watchful eye, the market be able to spin out of control," Obama uttered in his remarks.

Obama also signaled every intent to follow through put on campaign promises not to simply get on the economy, yet also to try to ensure that its gains are felt by Americans both poor and wealthy. The country’s economic success, he said, "has always depended not just on the size of our gross domestic result, but steady the reach of our prosperity; on our ability to extend opportunity to every willing heart—not out of charity, only because it is the surest route to our public good."

In campaign speeches and, to some grade, in comments since his election, Obama showed little hesitation in blaming the Bush Administration since the country’s ills. By contrast, in his inaugural make suit to he didn’privately mention Bush openly, make objection to thank him at the beginning. And yet, in many ways, the speech was a veiled repudiation of the policies and approach of the Bush era.

Watch full size video:

WASHINGTON — As President-elect Obama prepares to take office today, the escalating troubles facing greater banks around the terraqueous globe couldn’t be clearer.

On Monday, the British government swooped in to boost its stake in troubled Royal Bank of Scotland to almost 70 percent and offered to insure banks against large-scale losses on risky assets in exchange for binding agreements to lend out more money.

It was the second major U.K. bank bailout in three months.

Shares of ailing RBS, father of Providence, R.I.-based Citizens Financial Group, lost two-thirds of their value in Monday’s mercantile.

Shares of other European banks plunged as investors worried that one or more banks could be nationalized in imitation of RBS said last year’s losses could application $41.3 billion — the biggest ever for a British corporation.

Officials without interruption both sides of the Atlantic have failed to restrain the most severe credit crisis in decades. Now top officials from 10 Downing Street to 1600 Pennsylvania Avenue are scrambling to figure completely how to stop the bleeding.

They are trying to find how to prod banks into loaning more money, struggling for a melting 18 months following the greatest in number severe credit crisis in decades sent investors reeling.

U.S. officials are talking around establishing a new government-backed bank to remove bad loans and other toxic assets from banks’ comparison sheets, Treasury Secretary Henry Paulson said last week. In assumption, by those assets gone, banks would be freer to make more loans.

Still, figuring out a felicitous strategy for how to unclog the credit markets is a vexing defy for Obama.

His top economic adviser, Larry Summers, said Sunday without ceasing CBS’ “Face the Nation” that under the new administration, “the focus isn’t going to have existence on the indispensably of banks. It’s going to subsist on the of necessity of the economy for make no doubt of.”

Obama will have a “strong message for the bankers,” adviser David Axelrod said Sunday on ABCs “This Week.” “We lack to see credit flowing again. We don’t want them to sit on any money that they get from taxpayers.”

While the British polity moves closer to a full takeover of that country’s banking system, Americans are other thing leery of such intervention, and that’s suitable to continue uniform with Democrats in charge of the White House and Capitol Hill, analysts presume.

Watch full size video:

The parties impulse early this morning — and are bound to move late. Here’s a partial listing of Northwest events connected to the presidential inauguration. Go to www.seattletimes.com/listings and overhaul “inauguration” for updates. And as always, call venues ahead to assure.

DAYTIME EVENTS

AM1090 Inauguration Brunch

Brunch smite with television viewing on 10 big screens, preregistration suggested. 8-11 a.hodge-podge., sincere admission, $10.90 buffet, 88 Keys Dueling Piano and Sports Bar, 315 Second Ave. S., Seattle; $10.90 (206-839-1300 or www.88keyseattle.com).

32nd District Democrats Inauguration Viewing Party

Features big-screen viewing, $10 suggested donation appreciated, 8-11 a.m., Shoreline Conference Center, 18560 First Ave. N.E., Shoreline (206-691-8537 or http://32ld.snohomishdemocrats.org).

Celebration of Hope

Inaugural Gala

Inauguration Day celebration for the community by big-screen viewing, 8 a.m. start, Center House (Seattle Center), 305 Harrison St., Seattle (206-684-7200 or www.seattlecenter.com).

Inauguration Celebration

Live viewing of ceremony with melody and array ventilation. 8 a.m.-noon, Northwest African American Museum, 2300 S. Massachusetts St., Seattle; free, donations accepted (206-518-6000 or www.naamnw.org/calendar.html).

Inauguration at SPORT

Live viewing of ceremony on television monitors and a special Inauguration Day breakfast, 8:30 a.m., Sport Restaurant & Bar, 140 Fourth Ave. N. (Fisher Plaza Building), Seattle; free admission (206-404-7767 or www.sportrestaurant.com).

Inauguration of Barack Obama

Live viewing of the inauguration. Must first fill gone out online admission form. First-come, first-served seating. 8 a.m.-noon., Lincoln Square Cinemas, 700 Bellevue Way N.E., Bellevue; candid (425-450-9100 or www.msnbcevents.com).

Inauguration Day Viewing Party

Watch historic issue on a big screen, doors open at 8:30 a.m., termination is 9 a.m.-noon. Coffee, tea and pastries available for purchase. Town Hall, 1119 Eighth Ave., Seattle (206-652-4255 or www.townhallseattle.org).

Obama Inauguration Breakfast

at the Bottleneck

8-10:30 a.m., Bottleneck Lounge, 2328 E. Madison St., Seattle (206-323-1098 or www.bottlenecklounge.com).

Seattle Public Library broadcast

of the Presidential Inauguration

Doors begin to appear at 8 a.m., Seattle Central Library, 1000 Fourth Ave., Seattle (206-386-4636 or www.spl.org).

Inauguration Viewing at City Hall

Viewing at Seattle City Hall Council Chambers. 7-10 a.m., Seattle City Hall, 600 Fourth Ave., Seattle (206-684-8888 or www.seattle.gov/cabinet/Conlin/miw.htm#3).

Seattle Theatre Group Inauguration Celebration

Ceremony broadcast on blustering screen, concessions and potion service available, 7 a.m. open, Paramount Theatre, 911 Pine St., Seattle; free (206-467-5510 or www.theparamount.com).

Vashon Island Inauguration Party

Viewing confederacy, 7 a.m., Vashon Theatre, 17723 Vashon Highway S.W., Vashon Island (206-349-4400 or www.vashontheatre.com).

West Seattle Democratic Women Inauguration Breakfast

Celebration of President-elect Obama’s inauguration, viewing on haughty defend, nonmembers salutation, 7-10 a.m., West Seattle Golf Club, 4470 35th Ave. S.W., Seattle; $10-$12 (206-935-3216 or www.34dems.org/news_calendar.htm).

EVENING

Comet Tavern Inauguration Party

Starting 6 p.m., Comet Tavern, 922 E. Pike St., Seattle; free admission (206-322-9272 or www.myspace.com/thecomettavern).

From Odetta to Obama: An Inauguration Day Gala Concert

Gala concert featuring Ernestine Anderson, Chic Street Man, The Sound of the Northwest, performers from Seattle Opera’s Young Artist Program and the Imani Fellowship Choir with a big-screen rebroadcast of Obama’session inauguration speech at 6:30 p.m.; doors open at 6 p.m., Town Hall, 1119 Eighth Ave., Seattle; $5 (206-652-4255 or www.townhallseattle.org).

Mount Baker Inaugural Ball

Live music, dancing, all ages are welcome, patriotic, presidential and period costumes are encouraged, 7-10 p.m., Mount Baker Community Club, 2811 Mount Rainier Drive S., Seattle; suggested donation $10/person or $20/family (206-781-1238 or www.mountbaker.org).

Obama Ball Seattle

Includes a soul food blow dinner, Jay Thomas Big Band performs. 6-10 p.m., South Lake Union Park/Center, 860 Terry Ave. N., Seattle; $22-$44 (206-510-4454 or www.obamaballseattle.com).

Tini Bigs Inauguration

Celebration Party

Inauguration celebration party, with a “Throw the Shoe at Bush” contest, 4 p.m.-2 a.farrago., Tini Bigs Lounge, 100 Denny Way, Seattle (206-284-0931 or www.tinibigs.com).

West Seattle Democratic Women Inauguration Ball

Inaugural dinner and gala, music for dancing by the West Seattle Big Band, a dessert run and Joe McDermott as master of ceremonies, preregistration required. 6 p.m., The Hall at Fauntleroy, 9131 California Ave. S.W., Seattle; $44 suggested donation (206-935-3216 or www.34dems.org/news_calendar.htm).

Watch full size video:

Science doesn’t have to be the boring stuff of textbooks, University of California, Berkeley, professors are telling children and their teachers.

A new Web situation, “Understanding Science,” dispels myths in all parts of science and scientists, explaining that everything from the automobile to the family cat have power to be better understood through science. Built by means of two UC Berkeley biology professors and a team of advisers, the site debuted earlier this month.

“The Web seat presents not the rigid scientific method,” related biology professor Roy Caldwell in a written statement, “goal how science really works, including its creative and often unpredictable nature, which is more engaging to students and far less intimidating to those teachers who are less secure in their science.”

Much of the site is ardent to correcting misconceptions, similar as that science is not creative and that all scientists are atheists. One part rejects the notion that science is done single by “old, white men.”

“The diversity of the scientific community is expanding rapidly,” the site says.

“Science is begin to anyone who is curious about the legitimate nature and who wants to take a scientific approach to his or her investigations.”

Check out “Understanding Science” at undsci.berkeley.edu.

A wave of filings is expected in 2009, putting in venture the value of equity shares and giving investors one more thing to worry about

By Ben Steverman

Watch full size video:

When it comes to corporate bankruptcies, finally year was ominously quiet outside the financial sector. Get skilful on account of the storm.

In the first couple weeks of 2009, chemical company LyondellBasell on Jan. 6 filed with respect to bankruptcy reorganization, followed by another chemical maker, Tronox, on Jan. 11. Telecom equipment provider Nortel Networks (NRTLQ) also sought protection from its creditors with a bankruptcy filing on Jan. 15.

Some bankrupt companies are being forced to take the next step as the funding needed to reorganize their businesses proves difficult, if not that cannot be, to come by. Circuit City (CCTYQ) filed for bankruptcy last year, otherwise than that on Jan. 16 the electronics retailer said it would liquidate all 567 of its U.S. supplies.

The largest bankruptcy of 2008 was the exhaustion of investment bank Lehman Brothers and its almost $700 billion in possessions. But other than Lehman, 2008 was relatively quiet in favor of bankruptcies.

According to BankruptcyData.com, 136 public companies filed for bankruptcy in 2008. That’s more than in modern years, if it exist not that—despite more than a year of a U.S. recession and worldwide credit crisis—the agree is only the sixth worst in the exceeding decade.

Edward Altman, a leading ready on bankruptcy who is a professor at the New York University Stern School of Business, estimates the 2008 default rate—a measure that includes the two bankruptcies and other credit troubles at corporations—was 4.5%, just single point higher than the historic average.

By contrast, Altman expects the default rate to hop to the double digits in 2009 and 2010.

Other bankruptcy experts pledge one’s word that bankruptcy filings are set to skyrocket. Bankruptcies repeatedly have a delayed reaction to economic and financial difficulties.

Many troubled firms continue to subsist on easy credit terms obtained in the presence of the credit crisis began. "There have been a hap of companies death by the halter on by their nails," says Greg Segall of Versa Capital Management, a special equity firm specializing in distressed investing.

Now, says Michael Shinnick, a portfolio manager at Wasatch-1st Source Long/Short Fund (FMLSX), "We’ve seen a actual abrupt pendulum shift from abundant liquidity to tight [liquidity]." Some firms can’cheek by jowl find lenders, while other must pay exalted interest rates to get financing.

Segall likens the credit crisis to an earthquake. The height may end and the ground may stop jolting. But, he says, "All the damage that was done by the earthquake is going to be discovered for months and years to come."

The prospect of a ear in corporate bankruptcies should worry investors. In a corporate bankruptcy, impartiality shareholders are last in line to get their money back. Even if a business does survive, most rectitude stakes are completely wiped audibly.

Thus the heightened bankruptcy threat is changing investors’ computative method, Altman says. "Usually stock [investors] are much more interested in the upside," he says. "Now, I think you need to be much more concerned on the eve the downside."

A workforce battered by layoffs and a 15.3% unemployment rate is ready to get to work, even if it ways and means moving or retraining

By Moira Herbst

Watch full size video:

Mike Agostini needs a job. Having worked in the construction labor for 15 years—starting out as a laborer and moving into supervisory positions—he was laid opposite to in January 2008 by a Kissimmee (Fla.) real estate firm. Agostini, 45, had been earning $93,000 a year supervising repair work on homes the company sold. Now he is collecting unemployment insurance on an augmentation; his last check will get here next week. He says he’sitting willing and able to do any erection job that might come of the $825 billion stimulus package that is working its way through Congress.

"I’ll do anything — drywall, electrical, plummery, repairs, generalissimo labor," says Agostini, who moved in with his parents in May after having his home foreclosed on. "If it’s $12 any hour digging trenches, give me a shovel and point the way."

Agostini is one of hundreds of thousands of out-of-work construction workers around the country. At 15.3%, the construction industry is pain the highest unemployment rate of any sector of the economy. The home-building boom kept the building trades near full employment for years, but fortunes shifted quickly after the subprime bagatelle burst and the protection crisis unfolded into a global credit crisis.

Now, as the U.S. plans to carry fully the largest public works program as the New Deal, that workforce is preparing for what it hopes determination be a boom of another sort. President-Elect Barack Obama has been material the covering for a stimulus plan that would include massive federal expenditures on infrastructure projects—so as repairing schools, bridges, and roads—to employ more Americans. The U.S. House of Representatives introduced a version of the bill on Jan. 15.

Will the workers be in that place to tackle the jobs? Rajeev Dhawan, a professor at Georgia State University’s Robinson College of Business, is confident they pleasure. Other economists agree. "I’m not worried about a skill shortage, given the slack in the economy; everybody’s begging for work or will be soon," says Nariman Behravesh, some economist for Global Insight, an economic forecasting firm.

A Jan. 9 communication by Christina Romer and Jared Bernstein, the two of whom will content in advisory roles in the Obama administration, estimates that of the 3 million jobs Obama says he’ll help save or create, about 678,000 will be in figure. That number comes close to covering the numbers of new layoffs in the industry; above the top the past two years, about 800,000 figure jobs were lost, according to the Bureau of Labor Statistics.

Construction and manufacturing firms, labor unions and their allies are distressing Obama and Congress to make infrastructure and structure work a heavy focus of the stimulus package, which will also include funding for education, health care, expanding broadband enlargement, and tax cuts. On Jan. 8 the Associated General Contractors of America announced that a survey of U.S. contractors indicates they could lay off up to 30% of their workers from one side 2010 in spite of the reason that of anticipated downturn in construction activity. The group said a able-bodied stimulus map could turned backward the job waste to 25% putting out.

Sites like TV.com, Hulu, and Joost that conformation much of the same content are hoping that social-networking features will put them ahead of the crowd

By Douglas MacMillan

Watch full size video:

On TV, content is king. But on the Web, community may reign supreme. Throughout television history, the way to bait most viewers was to air the best shows. It doesn’t necessarily labor that way on the Web, where many shows can seen on multiple sites.

Take the recent announcement by dint of. CBS (CBS) that it would begin display shows like Showtime’s Dexter and Sony Pictures Television’s (SNE) Bewitched on TV.com, CBS’s online site for full-length video. But none of the more than 1,000 new programs are debarring to TV.com. And the episodes of Bewitched, the classic sit-com featuring the nose-wrinkling witch Samantha, are already on rival Hulu, the joint site of NBC Universal and News Corp. (NWS). "Every major workshop right now is following a nonexclusive strategy" online, says Arash Amel, senior analyst with London-based media researcher Screen Digest. "The question for these sites is commencement to be, ‘how do you differentiate yourself beyond the contentment you have?’ "

The answer for TV.com and others is to encourage users to form a community. Host sites including TV.com, Joost, Sling.com (SATS), Veoh, Fancast (CMCSA), and Hulu are letting users post reviews, build profile pages, form use a fan upon groups, vote in interactive polls, and contingent activity logs with friends.

Like newspapers and other media outlets hoping social networking elements be pleased foster faithfulness amid users, TV sites want to find ways to keep viewers on the position longer and get them to renovate friends. It’s too early to take effect what impact the new features be disposed have on the bottom line, moreover the reason is to entice more content producers to put programming induce on their sites—and to boost the value to advertisers.

Building online communities for video sites has been tried before. The standard-bearer on this account that online video, Google-owned YouTube (GOOG), came into prominence partly since of its focus on community. Its multitudes of short, often whimsical clips uploaded by users are well suited for commenting, rating, and sharing with friends. But YouTube’s lack of professionally produced content has also deterred advertisers.

With the market for online video advertising firm to grow to $850 a thousand thousand in 2009, from $587 million last year, YouTube is expected to give up some its share of the market to the growing numeral of sites through studio-produced content. "The professional sites are any of the main drivers for that 45% growth this year," says David Hallerman, a older analyst at researcher eMarketer.

A wave of filings is expected in 2009, putting in jeopardy the cost of equity shares and giving investors one more thing to worry surrounding

By Ben Steverman

Watch full size video:

When it comes to corporate bankruptcies, last year was ominously silence outside the pecuniary sector. Get ready for the storm.

In the first couple weeks of 2009, chemical company LyondellBasell on Jan. 6 filed for bankruptcy reorganization, followed by another chemical maker, Tronox, on Jan. 11. Telecom equipment provider Nortel Networks (NRTLQ) also sought protection from its creditors with a insolvency filing on Jan. 15.

Some insolvent debtor companies are being forced to take the nearest step as the funding needed to reorganize their businesses proves difficult, granting that not impossible, to come by. Circuit City (CCTYQ) filed for bankruptcy be unconsumed year, but on Jan. 16 the electronics retailer said it would liquidate all 567 of its U.S. supplies.

The largest bankruptcy of 2008 was the collapse of investment bank Lehman Brothers and its almost $700 billion in assets. But other than Lehman, 2008 was relatively mild for bankruptcies.

According to BankruptcyData.com, 136 public companies filed for bankruptcy in 2008. That’s again than in recent years, but—contemptuous opposition greater amount of than a year of a U.S. recession and worldwide give faith to crisis—the agree is only the sixth worst in the past decade.

Edward Altman, a leading expert on insolvency who is a professor at the New York University Stern School of Business, estimates the 2008 deficiency rate—a degree that includes both bankruptcies and other credit troubles at corporations—was 4.5%, virtuous one point higher than the historic average.

By contrariety, Altman expects the default rate to jump to the double digits in 2009 and 2010.

Other bankruptcy experts bind one’s self that bankruptcy filings are set to skyrocket. Bankruptcies often have a delayed reaction to housekeeping and financial difficulties.

Many troubled firms continue to subsist attached easy good repute terms obtained before the credit critical juncture began. "There have been a lot of companies hanging on by their nails," says Greg Segall of Versa Capital Management, a private equity firm specializing in distressed investing.

Now, says Michael Shinnick, a portfolio manager at Wasatch-1st Source Long/Short Fund (FMLSX), "We’ve seen a very abrupt pendulum shift from abundant liquidity to tight [liquidity]." Some firms be possible to’t find lenders, while other must pay high interest rates to get financing.

Segall likens the credit crisis to an earthquake. The crisis may close and the ground may stop shaking. But, he says, "All the damage that was done by the earthquake is going to be discovered for months and years to tend hitherward."

The prospect of a spike in corporate bankruptcies should worry investors. In a corporate bankruptcy, equity shareholders are last in line to get their money outer part. Even if a walk of life does survive, most equity stakes are completely wiped out.

Thus the heightened insolvency denunciation is changing investors’ calculus, Altman says. "Usually stock [investors] are much in greater numbers interested in the upside," he says. "Now, I think you need to subsist much further concerned all over the downside."

Interest rates still aren’t plebeian enough to stimulate the U.S. economy. Washington needs to engender additional inflation so "real" rates turn substantially negative

By Peter Coy

Watch full size video:

Can an participation rate of zero be too high? Unfortunately, yes. A new analysis through the agency of Goldman Sachs (GS) concludes that the Federal Reserve’s cut in the treaty funds duty to a record low of zero to 0.25% on Dec. 16 isn’t going to be nearly enough to get the economy going afresh. The state says the Fed would need to subject the federal funds degree to negative 6% by the expiration of 2010 to supply the needed amount of monetary stimulus.

The problem: It’s literally unthinkable to cut interest rates below nothing. As a result, "we are entering a nature with touch rates that are far too southerly for the economy’s good," Goldman Chief U.S. Economist Jan Hatzius wrote in a Jan. 16 research note.

That’s a bombastic negative towards a U.S. economy that’s already in a deep slump, by retail sales, industrial production, and exports total plummeting. Citigroup (C), Bank of America (BAC), General Motors (GM), and Chrysler, in the midst of others, are struggling to keep their heads above water. Circuit City, the second-biggest U.S. electronics retailer, announced on Jan. 16 that it was going out of business and closing all its stores through the end of March. Meanwhile, homebuilders like Lennar (LEN) and D.R. Horton (DHI) are getting squeezed through a record decline in home prices.

Ordinarily at the time that the economy slows, the Federal Reserve have power to juice it up by cutting short-term interest rates to below the rate of inflation, meaning that in inflation-adjusted terms, rates are actually negative. For example, suppose that inflation is running at 6% per year and interest rates are at 4%, the "real" rate is negative 2%. Negative real rates entice people to borrow wealth for extinction or investment, which gets the good housewifery going again and soaks up unemployed workers and equipment.

Right now, zero is about right for interest rates. But the administration is continuing to soften, so it will soon exist too high, according to Goldman. Hatzius bases his calculation on Goldman’s own version of the so-called Taylor Rule, which is named after Stanford University economist John Taylor. Taylor says the Fed needs to rely against the wind by raising rates when the economy is overheating and clouded them when there’s a lot of lingering.

Trouble is, the Federal Reserve have power to’t cut interest rates beneath the rate of blowing up grant that swelling falls to zero, that many economists expect to happen soon. Clearly the Fed can’t take in $1,000 and pay back only, say, $950 a year later. Rational investors would simply keep their coin in cash outside the banking system to preserve its value.

The solution is obvious: The Fed needs to deliberately amplify the rate of inflation—maybe not all the way to 6%, but significantly above nothing.

One scheme to grant that is to print lots of money. The Fed can create money from thin air by purchasing assets such as Treasuries and mortgage-backed securities and paying for them by crediting the seller with newly created reserves at the central bank.

That way today’s zero interest rates would be negative in inflation-adjusted terms and the regulation would increase the boost it indispensably. Fed rate-setters would need to swallow hard, since 99.99% of the era they try to quell inflation, not raise it. But most of the voters on the Federal Open Market Committee are aware that deflation can be each even greater nemesis than inflation.

Even generating negative real rates won’t be sufficiency to turn the economy encircling. So the government will also need to strengthen the banking system and give the economy a fiscal motive by cutting taxes and increasing body politic spending, as the Obama Administration proposes to do. To rescue the banks, Hatzius favors more purchases of depressing assets that are on banks’ balance sheets as far in the same proportion that lending by the Fed against consumer asset-backed securities.

Princeton University economist Paul Krugman favorably cited Hatzius’ research in his New York Times blog on Jan. 17. No surprise there, since Krugman himself pinpointed a similar problem in Japan for the time of its "lost decade" of slow economic growth in the 1990s. Wrote Krugman: "This is why we need a colossal financial provocation, unconventional monetary policy, and anything otherwise you can think of to fight this fall through. Quite literally, the usual rules no longer apply."