MAJOR PAPERS:

• The Wall Street Journal reported that it is the Bush Administration versus Democrats versus Republicans to decide the strategy to stabilize Federal National Mortgage Association (NYSE: FNM) -- Fannie Mae -- and Federal Home Loan Mortgage Corporation (NYSE: FRE) -- Freddie Mac. The Administration's plan would let the Treasury Department advance a credit line and the opportunity for the government to buy equity in either firm. A package is expected to pass but not before the political and economic ramifications are battled out. Democrats and Treasury want it to be a part of a housing rescue plan; Republications oppose it.
• The Clinton Foundation, headed by former President Clinton, believes it has a pricing agreement in place that it expects will make malaria drugs affordable and available to millions of poor people worldwide, the Wall Street Journal reported.
• The Financial Times reported that UBS AG (NYSE: UBS) and Liechtenstein's LGT Group will today be accused by U.S. Congressional investigators of using the "cloak of bank secrecy laws" to help American clients evade billions of dollars in taxes.

OTHER PAPERS:

• Globes reported that Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) is talks to acquire Barr Pharmaceuticals Inc (NYSE: BRL). The price tag is said to be between $7B and $7.5B.

Apparently rock musician Sammy Hagar is not one of U.S. Sen. John Warner's (R-Virginia) constituents.

Sen. Warner has suggested that the U.S. Congress might want to consider reimposing a national speed limit to save gasoline and possibly ease fuel prices, The Associated Press reported.

However, Warner has not specifically sponsored legislation calling for a roll-back to 55 miles per hour: he has only asked U.S. Energy Secretary Samuel Bodman to research which speed limit would provide optimum gasoline efficiency given current technology, and also wants to know if the Bush Administration would support a Congressional effort to mandate a lower speed limit, The AP reported.

Last 55 mph law: 1973-74

The United States last imposed a 55 mph speed limit in 1974, as part of an effort to conserve gasoline in response to the world's first oil shock, the 1973-74 oil crisis.

It's Uncle Ben versus the Ferocious Fundamentals.

The dollar rose more than 1.7 cents against two other major currencies Tuesday -- a large move in the currency market -- after U.S. Federal Reserve Chairman Ben Bernanke said the world's most important central bank will "strongly resist" any dip in public confidence in stable prices, Bloomberg News reported.

Traders interpreted Bernanke's comments as renewed Fed attention to oil-induced, rising U.S. inflation, and bought the dollar, sending it higher Tuesday at mid-day. The dollar strengthened 1.7 cents to $1.5477 versus the euro, 2.1 cents to $1.9540 versus the British pound, and almost 1 yen to 107.19 versus Japan's yen.

A 'dollar skeptic'

Further, although Chicago Board of Trade futures calculate a 55% chance of a Fed quarter-point interest rate increase in its benchmark rate when it meets next on August 5, currency trader Andrew Resnick remains a doubter.

Are public attitudes toward the U.S. government's economic policy linked to housing prices?

There are other factors involved, but over the past three decades there has been a correlation between the two conditions, The New York Times reported.

When home prices are rising at a pace moderately faster than inflation, consumers tend to think well of the U.S. Government's economic policies, The Times reported, citing Haver Analytics.

For example, during the U.S. housing market's two, prior housing booms, 1984-1987 during the Reagan Administration, and 1996-1998 during the Clinton Administration, consumers, on average, approved of the government's economic policies, The Times reported.

U.S. Treasury Secretary Henry Paulson's prediction that the 2008 tax rebate will create 500,000 jobs may come up a tad short, if a Bloomberg News survey is telling.

The median estimate of economists surveyed by Bloomberg News forecasts a stimulus package-induced job increase on 158,500 -- far short of Paulson's forecast, Bloomberg News reported Friday.

Paulson and other Bush Administration officials are hopeful the stimulus package will create jobs both directly and via spin-off effect -- for example, jobs created in manufacturing when goods are purchased; and jobs created in feeder industries to the manufacturing sector, etc.

The administration views the tax cut as intrinsic to jump-starting a U.S. economy slowed to a crawl (or perhaps already in negative growth) by its worst housing recession in more than 15 years, and by record-high oil and gasoline prices. (Oil traded Friday up $2.21 to $133.02 per barrel. Oil is up about 100% in 12 months.)

Economic Analysis: Analysts and economists vary regarding the tax rebate's job creation potential, and the 158.5K Bloomberg survey estimate is most likely on the mark. It's possible the tax rebate could create 500,000 new jobs, but the U.S. economy would have to experience an extraordinary boost in GDP growth in 2H 2008. The more likely scenario: only modest GDP growth in 2H 2008, which will make the Bush Administration the first administration to preside over a net drop in payrolls since the Eisenhower Administration in 1960, according to the Economic Policy Institute.

When one travels in economists' circles, one tends to tap into the issues, controversies and policy ideas 'dismal science' practitioners are debating.

And one issue economists have rattled around concerns the speed of fiscal policy stimulus, or more accurately, the lack thereof. In the digital age, the internet has propelled a host of speed-enhancing changes, and it occurred to this group of economists that U.S. Government policy is decidedly behind the curve in this area.

Here's why: economist David H. Wang noted that the U.S., in an attempt to jump-start its economy stalled by the nation's worst housing slump in more than 15 years, has implemented a host of monetary policy changes to provide monetary stimulus quicker. The U.S. Federal Reserve cut key, short-term interests multiple times during a 10-week span (and later implemented additional rate cuts), and devised two, new, Fed-administered institutions to address the credit crisis, provide liquidity, and ensure the orderly operation of financial markets.

My Ph.D. adviser David E. RePass, professor emeritus at the University of Connecticut, used to frequently recite an axiom about the U.S. Congress that rings true, regardless of era, or circumstance.

"Congress does not react, unless not reacting will result in the wrath of the American voter."

Well, concerning housing, it looks like Congress sees the wrath of the American voter ahead because the legislative body is starting to react.

Two measures working their way through Congress may ease the housing crisis. The first, a bipartisan Senate measure, is a modest step to address the rise in home foreclosures, The New York Times reported Friday.

MAJOR PAPERS:

• To help stabilize the housing market, the Wall Street Journal reported that the Bush Administration is planning to help create fresh funding for mortgages. The plan, which still requires final approval, is said to ease an excess-capital requirement for government sponsored organizations Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac, and the Federal Housing Administration.
• The Wall Street Journal also reported that a merger between Northwest Airlines Corporation (NYSE: NWA) and Delta Air Lines Inc (NYSE: DAL) may be derailed after Delta pilots notified executives they remain unable to reach an agreement with Northwest pilots on how to integrate pilot ranks should the two combine.
• The Financial Times reported that BAE Systems Plc (OTC: BAESY) won a $715M order to supply nearly 1,500 mine-resistant vehicles from the U.S. government.

OTHER PAPERS:

• The Chinese government has locked out Australian mining giants BHP Billiton Limited (NYSE: BHP) and Rio Tinto Plc (NYSE: RTP) from selling iron ore into its daily spot market, the Sydney Morning Herald reported. Mining sources said that the decision may have already cost Australia up to $300M in export profits.

U.S. Rep. Barney Frank, D-Massachusetts and Chairman of the House Financial Services Committee, Thursday introduced legislation to enable the Federal Housing Administration to insure and guarantee mortgages that have been written down banks and other mortgage holders, Rep. Frank announced in a statement.

Rep. Frank's proposal would permit the FHA to provide up to $300 billion in loan guarantees which could potentially result in the refinance of 1-2 million at-risk mortgages, preventing foreclosures, "protecting neighborhoods and help stabilize the housing market."

OPEC appeared likely Thursday to ignore President Bush and the west's plea for increased production and to keep production at current levels, The Wall Street Journal reported (subscription required).

Further, OPEC ministers gathering in Vienna Thursday for Friday's meeting mulled whether to take action to address what some members believe will be an oil price slide if the slow-growth U.S. economy slows global growth, and consequently moderates demand increases in both crude oil and gasoline, the Agence France-Presse reported.

Kuwait's acting oil minister Mohammed Al-Aleem told the AFP that OPEC was "a little worried about the impact of a slowdown or a recession in the United States" on oil prices. "The price, for the time being, has been going a little bit down," he said. "We'll hear and see what analyses have been done" and he said they make a decision based on those analyses.

As traders and investors digested the impact of the market's latest sell-off on both assets and investor psychology, Tuesday's jolt is likely to speed the passage of a U.S. fiscal stimulus package to boost the ailing U.S. economy, economists and analysts said Tuesday.

President Bush and U.S. Congressional leaders from both parties are expected to discuss this afternoon that fiscal plan, which should aide place $140-160 billion into the econmy, Bloomberg News reported Tuesday.

Fiscal stimulus: sooner the better

Independent currency trader Andrew Resnick, said if Tuesday's market jolt prompts President Bush and lawmakers to agree on a package of tax cuts/rebates and spending increases, then the market's latest gyrations "will turn out to be a blessing in disguise."

Home prices fell 6.1% in the past 12 months -- the largest 12-month decline in at least six years, and a sign that the housing market remains in a pronounced slump, research from the S&P/Case-Shiller home price index indicated Wednesday. In the survey, all 20 metropolitan markets surveyed showed year-over-year price declines.

Analyst C. Leonard Bauer, formerly of Prudential, told BloggingStocks on Wednesday that the October 2007 Case-Shiller data confirms some of the worst fears analysts have about the U.S. housing market heading into 2008.

"This is a sobering statistic," Bauer said. "It confirms a housing market in a deep slump. This is the worst year-over-year decline in prices that I've seen nationally, and I've been following housing for 20 years. The northeast [U.S.] condo slump in the early 1990s saw bigger percentage drops but that was only one section of the market. This is across the board."

What international transaction perhaps best symbolizes the U.S. dollar's rough year of 2007?

Giddy British tourists with more money to spend in New York than, seemingly, Donald Trump?

How about an international attraction that won't take dollars? In November 2007, India's Taj Mahal, one of the seven wonders of the ancient world and India's most popular shrine, announced it would no longer accept the dollar, citing the greenback's weak currency status, and accept only rupees, Bloomberg News reported Thursday.

Since January 2001 or during the past six years the dollar has fallen about 55% against the euro, 35% against the British pound, and about 10% against the Japan's yen. On Thursday the dollar was mixed against the world's major currencies. The dollar gained 0.62 cents to $1.4320 against the euro and 1.50 cents to $1.9831 against the British pound, but fell 0.25 yen against Japan's yen.

When a currency, such as the dollar, declines versus another currency, that means the purchasing power of those holding the dollar declines - - a sort of 'non-legislative' tax increase. It goes without saying that most citizens, and institutions, don't like to hold currencies that decline in purchasing power.

In an essay/column in this week's issue of The New Yorker magazine ("Paulson's Plan," December 17, 2007) writer James Surowiecki offers a more-somber analysis of the subprime mortgage default issue than, say, Financial Times' columnist Martin Wolf.

In Surowiecki's analysis, (which, readers should note, was researched and published before the European Central Banks' infusion of $500 billion Tuesday to ensure year-end liquidity for banks), the current problem is one unlike any other that Wall Street has faced. The problem is not liquidity, as Martin Wolf argued, but 1) high-risk home owners who spent way too much n overpriced houses, and 2) a deep mistrust of the financial system because of the way the system rates and values assets like mortgages.

At issue: Wall Street?

Hence, the Bush Administrations' proposed assistance plan to the mortgage sector and some homeowners, even if it becomes more-encompassing, would not solve the problem: the financial system - - and presumably Wall Street - - simply does not rate and value assets correctly, and the government package doesn't speak to that dimension.

General Electric (NYSE: GE) and Philips Electronics (NYSE: PHG) could be two big winners if the revised Energy Bill passes the U.S. House and is signed, as expected, by President Bush.

The bill, which moved to the House Tuesday after passage by the U.S. Senate, phases-out the use of incandescent light bulbs in the U.S., Bloomberg News reported Tuesday.

The primary replacement bulb technology, at least for next half-decade, would be fluorescent light bulbs, which typically use only 25-30% of the energy of comparable incandescent bulbs. Philips, the largest light bulb maker in the world with sector leadership in Europe, is expected to be a major beneficiary of the law change, along with No. 2 bulb maker General Electric, the leader in U.S. light bulb sales.

A spokesman for President Bush said the president will sign the legislation. Opposed to the original bill, President Bush reversed his stance after lawmakers revised the bill and dropped both a tax increase for oil and gas companies and a requirement that some utilities get 15% of their power from renewable sources.