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economic crisis

Congress, Europe Must Stem Economic Crisis, Obama Says

President Barack Obama speaks on what he believes must be done in Congress and overseas to stem an economic crisis.

The economy at risk, President Barack Obama accused Republicans on Friday of pursuing policies that would weaken the U.S. recovery. He simultaneously urged Europe’s leaders to prevent an overseas debt crisis from dragging down the rest of the world.

At a White House news conference five months before Election Day, the president also said Republican allegations that his administration has leaked classified information for political gain were offensive. He said his administration has “zero tolerance” for any such practice.

Republicans fired back quickly on Obama’s comments on the economy, particularly his insistence that “the private sector is doing fine” when it comes to job creation.

Campaigning in Iowa, Republican rival Mitt Romney said Obama’s view was “defining what it means to be detached and out of touch.”

From the White House podium, the president urged passage of legislation that he said would create jobs — proposals that Republicans have long blocked.

“The recipes that they’re promoting are basically the kinds of policies that would add weakness to the economy, would result in further layoffs, would not provide relief to the housing market and would result … in lower growth,” said the president, who is locked in a close campaign for re-election.

Obama’s tone was markedly different when it came to European leaders, whom he prodded to inject money into the banking system. He also said it is in “everybody’s interest for Greece to remain in the eurozone,” despite the division of public opinion inside the country where austerity measures have been imposed to deal with out-of-control deficits.

“The Greek people also need to recognize that their hardships will likely be worse if they choose to exit from the eurozone,” Obama said.

“The solutions to these problems are hard, but there are solutions,” he said.

The president spoke after several days of difficult turns for his re-election prospects, including last Friday’s report that the unemployment rate had risen slightly to 8.2 percent in May as job creation had slowed, and new signs that the European debt crisis was hurting the U.S. economy.

In the overtly political realm, Wisconsin’s Republican Gov. Scott Walker turned back a recall movement led by organized labor, while former President Bill Clinton stirred controversy by saying Obama should be ready to sign a short-term extension of all expiring tax cuts — including those that apply to the wealthiest taxpayers that the president has vowed not to renew.

The president’s attack on Republicans was part of his campaign playbook in an election in which the economy is the top issue. Romney is campaigning for the White House as better equipped to created jobs, and polls make the race a close one, with only about a dozen battleground states in dispute.

Said McConnell: “The economy would respond much more favorably to providing the tax certainty Americans deserve by extending all the tax rates and assuring employers they do not have to budget for the largest tax increase in American history next year.”

Obama’s opening remarks were part jawboning and part economics lesson.

He stressed the importance of a strong European economy, saying, “If there’s less demand for our products in places like Paris or Madrid it could mean less business for manufacturers in places like Pittsburgh or Milwaukee.”

The president said that if Congress had passed his jobs bill from last fall, “we’d be on track to have a million more Americans working this year, the unemployment rate would be lower, our economy would be stronger.”

“Of course Congress refused to pass this jobs plan in full,” he said dismissively. “They left most of the jobs plan just sitting there, and in light of the headwinds we are facing right now I urge them to reconsider because there are steps we can take right now.”

Congress approved an extension of the payroll tax, which Obama said was helping the economy, but Republicans balked at calls for additional spending to provide funding for teachers, school construction, highways and more, citing concerns about the deficit.

The president said U.S. companies actually have been creating jobs at a faster clip than they did after the previous recession while state and local governments have been shedding them.

“Where we’re seeing weaknesses in our economy is in the state and local governments, often times cuts initiated by governors or mayor who are not getting the kind of help they got in the past from the federal government,” he said.

“If Republicans want to be helpful, if they really want to move forward and put people back to work,” they should enact legislation to permit the hiring of more teachers and law enforcement personnel, he said.

As for leaks of classified information, Obama said his administration has “zero tolerance” for it. Lawmakers are investigating recent leaks of sensitive information about the covert drone and cyberwars against terrorism. Republican Sen. John McCain has accused the Obama White House of leaking the information to bolster the president’s standing on national security grounds.

Economic Crisis

Why The U.S. Will Survive, Thrive Through The Economic Crisis

There has been an overabundance of media buildup over the past three or four years concerning the economic crisis and condition of the U.S. with many doomsday scenarios. There is no doubt that some of these media concerns and fears expressed, whether blown out of proportion or not, are real. Unfortunately, most people don’t have the time, knowledge or inclination to filter the hype to completely understand, as much as necessary, of how the doomsday scenario propaganda by the media can be brought down to their own personal lives and everyday decisions they need to make respect to their finances.

My lifetime occupation of about 35 years has been helping Canadians and Americans to do business, move to or invest in one another’s respective countries. It always intrigues me, even when I am providing serious personal or business advice, of how often people make critical financial decisions, most often erroneously, based on the media-hyped topic du jour.

The numerous different opinions as portrayed on the news media have created fear in the minds of many Canadians investing in the U.S. or even Americans doing the same. Most rational observers would agree there is no doubt that the U.S. does have to do something relatively soon deal with these concerns. How the U.S. deals with these concerns is probably where the focus of people’s attention should lie.

I believe the U.S. will both survive and thrive through this economic crisis for the following reasons:

  • U.S. remains the largest free economy in the world, about 40 percent of the total world financial market.
  • Most of the U.S. debt is internal debt — American-to-American as opposed to American with other countries.
  • At the very hint of any crisis anywhere in the world, investors continually to rush to the U.S. dollar and U.S. treasuries as the safest place to hold their funds on the planet. This not only provides a lot of liquidity for the U.S., but it also keeps U.S. interest rates servicing its debt very low.
  • Like Canada in the 1990s, and Greece, Italy and Spain in 2011, governments eventually come to the realization they must take decisive and painful actions to reduce their debt burden down to manageable levels. I’m sure the U.S. government will come to that point soon if they haven’t already.
  • The U.S. has the largest gold reserve of any country in the world, and we all know what has happened to the value of gold over the past decade.
  • U.S. is the largest exporter of food items that help feed the world; people need to eat so the demand is reliable and growing.
  • The U.S. federal government is considered the biggest landlord in the world owning or controlling billions of dollars of commercial land and properties.
  • Because of the rule of law, knowhow and freedom given to its citizens, the U.S. continues to lead in innovation continuing to create the largest and some of the most successful corporations in the world like Apple, Google, Facebook, Coca-Cola, McDonald’s, Wal-Mart, IBM, Boeing, and the list goes on.
  • The U.S. continues to be the destination of choice for legal immigrants from around the world most of whom are very well educated. Because of immigration and one of the best birthrates in the developed economies of the world, U.S. has sustainable population growth whereas other countries, such as Japan, indicate their populations are shrinking.
  • The U.S. and its citizens have been rated the most charitable in the world.
  • The latest in oil and gas drilling technology and the new discoveries in the Dakotas along with the Keystone pipeline from the Canadian oil sands indicate that the U.S., in a very short time, could be at least North American energy independent and will no longer need to import oil from the Middle East or other unfriendly areas of the world.
  • The U.S., in its 235-year history, has gone through substantially worse crises and rebounded with equal or greater economic growth.

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Consumer Confidence

Consumer Confidence In The New Year Will Influence Buying Decisions

Employment and real estate prices have regularly influenced our economy over the last century. Recently, they have negatively compounded the economic crisis and will most likely continue to be an issue as we fight through to recovery.

What will it take to change the direction of unemployment and low real estate prices? It begins with corporate confidence and consumer spending. Due to the challenges we currently face, many corporations have held on to large amounts of cash. Until corporations feel the worst is behind us and start deploying their large cash reserves, we will see a delay in our recovery. These large cash reserves will be used for research and development, marketing, and most importantly, hiring. Over time, people’s confidence will increase due to hiring, and as this happens people will begin to tap into their savings to start buying goods and services such as clothes, small home appliances, automobiles and vacations.

As more time goes on and we experience improvement with unemployment, people will begin to feel more confident and see the opportunity to invest in the markets. Doors will open for new opportunity for individuals to consider buying homes again. People who thought that owning a home was once out of their reach can now afford to buy. Home buying will certainly increase as we see unemployment decrease, which will benefit most of us — as long as we don’t get greedy again. Slowly, both will recover. Unemployment will most likely come down before real estate goes back up.

Everything is cyclical. Eventually, low unemployment and higher real estate prices will help the economy again. How long will it take? We don’t know. Recovery from a crisis such as the recent recession will take longer than we think. Be patient and use the knowledge we have learned from this recession to plan appropriately for the next crisis.

Bob Matia Managing Partner Squire, Sanders and Dempsey

CEO Series: Bob Matia

Bob Matia
Managing Partner
Squire, Sanders and Dempsey

What impact has the current recession had on the legal profession?
With the credit markets being down as much as they were this time around, the flow of corporate legal business was definitely affected more than in past recessions. A lot of people view law firms as recession proof, and to some extent some of the practice areas within a law firm are recession proof. Litigation, for example, seems to go on and on whether there is a recession or not, and that is in fact happening now in our firm. But this time around, the corporate group was affected much more than in the past and that has caused different challenges.

Do you foresee any long-term changes in how law firms conduct the business side of their operations as a result of the economic crisis?
It’s been a wake-up call for the law profession … I think there was a complacency that had developed among law firms about how carefully they had to watch developing trends. But I think this has been a good wake-up call, so I think you’ll find law firms staying more conscious of staffing and not trying to get too far ahead in staffing; maybe slightly curtailing the kinds of lead hiring we used to do. We hire every year out of law school. We’re having in Phoenix six new lawyers joining us out of the class of 2009.

They were originally scheduled to arrive in October. We’ve deferred that arrival to January of 2010. I think you’ve probably seen in the paper a number of other moves by other law firms, some taking different forms of action. … I think you’ll see tinkering here and there. I don’t think you’ll see vast changes in the way we do things, but we’re looking at it. We’re looking at it on a monthly basis, checking the numbers, trying to see if we see a trend in one practice area or another.

You have represented the city of Phoenix in its dealings with developers of its downtown mixed-use complex. How would you describe the evolution of Downtown Phoenix from a governmental and legislative aspect?
The change in 30 years has just been remarkable. It’s great. … During the course of 30 years, we got a bill passed that established economic development as a major public purpose in Arizona, which has significant implications in that we feel it probably was the turning point in permitting condemnation for economic development purposes, a subject which is not popular in all sectors of the economy. But certainly there were instances where a single property owner could hold up an entire, major, new downtown development, and the governmental units simply had to have a way of dealing with that. Condemnation was one of them and we’re pleased about that. But there’s a new challenge, actually, to the subsidies that cities have made available to developers, both downtown and in other kinds of zones that are created for economic development. The (state) court of appeals has just thrown out part of the subsidy the city of Phoenix gave to CityNorth. Whether that goes to the Arizona Supreme Court depends on the Supreme Court.

For years, we were operating under another court of appeals case, known as the Wistuber case, and I always thought it struck a very good balance between hard consideration and soft consideration on what cities were getting for their subsidies. The problem is that the Arizona constitution has a gift clause in it, which says public bodies can’t give away their money to private interests without getting value back for that money. TheWistuber case made it clear that you could look at things like increased tax revenues and improving job availability, but you also had to have some hard considerations for what you were spending your money on. I always thought  that was a great balance. We’ll see how this comes out.

Given the current economic climate, what changes have you made to future workforce planning?
I think law firms will stay closer to the break-even point on need, on staff. We had the luxury of delaying responses to ups and downs in the economy in the past. Law firms are being much more conscious today of the cost of legal services to clients. Even the largest corporations are getting our attention in terms of trying to give them the very best service we can for the lowest cost. So we’re going to pay a lot more attention, probably, to having balanced legal teams in terms of experience level. For example, on a typical corporate transaction or litigation matter, we will probably pay a lot more attention to what the blended hourly rate would be if you looked at all the people who are working on the account.

    Vital Stats




  • Started with Squire, Sanders and Dempsey in 1966
  • Opened Phoenix office in 1979
  • Listed in the 2009 edition of “The Best Lawyers in America”
  • Selected for inclusion in the 2007 inaugural edition of “Southwest Super Lawyers”
  • Designated a Center of Influence by Arizona Business Magazine in 2008
  • Received law degree from Case Western Reserve University
  • Works with the Arizona Business Coalition, the Arizona Justice Foundation and the Phoenix Community Alliance
  • www.ssd.com