Q: In simple form, do government statistics calculate GDP by simply adding up the sales of all business firms in one year, or do they add up all the transactions in an economy? please provide an example

Submitted by Fred from Miami

A: It's not as simple as simply adding things up, there is a lot of estimation, weighting etc but I think what you are getting at is there more than just what is produced or provided as a service and the answer is yes. In fact, things like Medicare and Medicaid payments get wrapped up in this, as do other government transfer payments... some believe that for this reason GDP is not the accurate gauge of economic activity that it is presumed to be an actually overstates the health of the economy.

Answered 10/07/10 17:28:24 by Kevin Hall and Tony Pugh

Q: How can i contribute to the Universal Economic Crisis and give me brief background of what will be the effect of Global Warming after 5 years?

Submitted by Yen Ada from Philippines, Quezon City

A: Hmmmmm.... I guess I'd say invest in guayaberas and other forms of tropical clothing? Sorry, that's a question well beyond our realm of understanding or expertise.

Answered 10/07/10 17:25:20 by Kevin Hall and Tony Pugh

Q: these were federal reserve banks (private property). Is it socialism to bail them out. Why not give the money to the people who pay the taxes? And to hell withthe federal reserve.

Submitted by fred falconer from indianapolis in

A: Tired of hearing the socialism mantra. If you don't like socialism, do away with Medicare and the veterans health care, because those actually do have elements of so-called socialism. Many European, especially Scandanavian economies have experimented with "socialism" with varying degrees of success. When I think of socialism, I think Cuba and Venezuela, places with state intervention into markets for political, not social, gain. The unpopular bailouts were designed to save the healthy by shoring up the sick. We may soon face this Sophie's choice on the mortgage mess. The government has favored, aided, and at times directly supported or sought to kill industries, sectors or businesses throughout our long history. It's unrealistic to think that at certain times amid certain challenges that there won't be an overlap.

Answered 10/07/10 17:24:04 by Kevin Hall and Tony Pugh

Q: do and can tax cuts pay for themselves

Submitted by clay from hugo, minnesota

A: nope. most conservative economists say as much, folks from Bush era like Glenn Hubbard, Greg Mankiw and others. They do say, however, that lower taxes are helpful as one of several things that foster business activity, but they, along with Greenspan, Bernanke and just about every major economic thinker reject the idea that lower taxes generate enough economic activity to create offsetting inflows of revenue. Just ain't so....

Answered 10/07/10 17:19:03 by Kevin Hall and Tony Pugh

Q: MAKE THE TAX CUT STARTING AT 250,000 DOLLARS AND SAVE THIS NATION; THAT BUSH BANKRUPTED BEFORE HE LEFT OFFICE. I THINK HE DID IT DELIBERATELY AND WITH MALICE

Submitted by Jackie Wilson from Elephant Butte, NM

A: Hmmm, Elephant Butte... might this be a sophisticated prank?

Answered 10/07/10 17:17:12 by Kevin Hall and Tony Pugh

Q: Did it occur to you to ask Robert Reich how he knows that the economy is a zero-sum game? If the percentage of income earned by the top 10% grows, but the income of the middle 10% or bottom 10% also grows, is anybody worse off. If you are going to flog his book, shouldn't you at least ask how the growth in the income of the top 1% CAUSES lower income classes to be worse off?

Submitted by Dan Bishop from Charlotte, NC

A: I don't think he was saying they are worse off, in facto he actually noted rightly that there has been job and income growth at the bottom end. But the real accumulation of wealth has been at the very top and there's been a severe shrinkage of wealth in the vast middle. Middle skill jobs are disappearing to technology, automation, foreign competition, outsourcing, regional demographic changes and a number of other issues. And he pointed out that the last time we had such income disparity was right before the Great Depression. I have a problem with a direct comparison because it was a far less evolved economy than it is today, but you can't argue that the disparity has grown and continues to grow. His point is without a strong middle, where most people are, there isnt the aggregate demand for goods and service, the rich can't spend us as a nation into prosperity. That's his view and it makes for interesting discussion. Nobody said his word was gospel.

Answered 10/07/10 17:16:43 by Kevin Hall and Tony Pugh

Q: We have successfully grown a Detail business which requires delivery trucks and personnel for selling and delivering products. Business has been established for 2.5 years and my personal credit took a hit due to a divorce 3 years ago. What banks would be candidates to request $25K - $30K under the new SBA lending by community banks passed last week ? Thanks in advance for your help. Warren

Submitted by Warren Fondrie from Hubert, NC

A: Don't know of specific banks but I think you ought to reach out to your local community bank for starters and lay it on the line like you just did here. Tell them you want to tap these new government programs for small businesses and that you are worried that your recent hit to credit might be a problem. Those aren't big sums you are seeking and is the kind of lending the programs aim to spark.

Answered 10/07/10 17:13:17 by Kevin Hall and Tony Pugh

Q: Now that the bill has been passed to help small business owners which banks will be participating how soon and how do you get assistance.

Submitted by Glenda Hassell from Stuart Florida

A: Can't say which banks per se, but community banks have been aggressive users of the expanded loan guarantee program. I think your best bet is to find your local or regional SBA office and start from there.

Answered 10/07/10 17:11:25 by Kevin Hall and Tony Pugh

Q: Not a question but a thank you that you did get a reaction from one of the papers. I will ask again why are 82 people without their money and these guys closed the United steel Building scam opened up another Super Steel same con and Florida law enforcement can not do anything. This same scam was tried in Ga. by different people after the 4th complaint the scamers were arrested. Amazing!!!! Thanks Again

Submitted by David E. Gentry from Comer Georgia

A: good to hear

Answered 10/07/10 16:51:18 by Kevin Hall and Tony Pugh

Q: To what extent did Fannie Mae's 1. mission to extend home ownership to people not traditionally home owners and 2. their lobbying of congress, contribute to imprudent high risk loans in the private sector?

Submitted by james kohut from santa cruz california

A: We've written pretty extensively that Fannie and Freddie were not the cause of the problem, that Wall St issuance of mortgage backed securities accounted for most of the problems, but Fannie and Freddie did get into that game in a big way in 2006 and 2007 in response to losing their market share to Wall Street. They exacerbated the problem but they were not the source. As for the second question, does anyone really believe that the Clinton administration "forced" banks to go out and make imprudent loans? It's a nice narrative but departs wildly from the truth. Wall Street encouraged unregulated non-bank lenders to originate loans that investment banks bundled into securities that they sold to unsuspecting investors. Investors snapped them up because ratings agencies said they were tripleA investment grade. The ratings agencies were paid twice by Wall St, first as consultants who determined the makeup of the pool of loans, then for the ratings. Read our Pulitzer finalist package on Moody's and Goldman (on our website) for how all that went down. This is a story of Wall Street's greed, nothing more and nothing less.

Answered 08/26/10 18:17:58 by Kevin Hall and Tony Pugh

Q: Is there a difference between tax cuts (eg the bush tax cuts) and government deficit spending (eg the stimulus package) in effectively stimulating the economy?

Submitted by james kohut from santa cruz, california

A: This is too narrow a forum to answer this question. Tough one, not to mention that the biggest advocates of trimming the deficit also demand that tax cuts be extended without finding a way to pay for that difference. It all depends on how the money is being used. hard to argue that the tax credits for homebuyers, cash for clunkers and energy efficient appliances weren't all successful. they were and they stimulated demand. they were never intended to pull the economy back to growth but to help give a push to a private sector that for a variety of reasons remains unwilling to invest and hire. Offering more tax cuts won't do much if consumers continue to pay down debt and are afraid to spend. Complex issue in complex times. Lot of rhetoric being thrown around but truth is there are no easy answers for what ails us.

Answered 08/26/10 18:13:35 by Kevin Hall and Tony Pugh

Q: Has the obama stimulus package done enough to encourage small business prosperity in the consensus of most experts?

Submitted by james kohut from santa cruz, california

A: Boy that's a tough one, there are programs for small business but most of it is outside the stimulus program. The SBA has been very aggressive and is worthy of praise, very little community bank lending is happening without the SBA at this point, but as for the stimulus there was money that was going to come from TARP repayment or left over TARP money that was going to go to community banks if they could should that their small biz lending exceeding last year's small biz lending. that was delayed forever and I believe died on the vine.

Answered 08/26/10 18:10:37 by Kevin Hall and Tony Pugh

Q: I am looking for a home modification loan the banks will not help because of my credit score and value of home. I am looking at Maxim Mortgage Solutions they can help me under the Obama relief they want some money upfront to start the process and they also have a form to sign that if it does not go through I will get my money back. There rates are 1%- 4% not bad. They have been in business for a while and gave me references to call (and I did) . How do you feel about ?

Submitted by Patty Pantone from malden,ma

A: I can't give investment advice but I'd be very wary of anybody who wants money upfront to provide mortgage modification help. at the end of the day, whether or not you get modification is determined by a lot of factors outside the control of you or who is fighting for you. these include who the investors are that own the pool of loans in which your mortgage is packaged, how much equity you have in your home, what's going on in your area with home sales, size of the glut locally etc. lots of factors and the servicer holds many of the cards without having to share info with you. Be wary of promises.

Answered 08/26/10 18:07:54 by Kevin Hall and Tony Pugh

Q: Why can't the repaid stimulus be used to build or upgrade factories to provide areas across the states possible manufacturing jobs?

Submitted by Anthony Miller from Phoenixville,PA.

A: The administration has tried to redirect some of the incoming TARP repayments for things such as small business loans and the like and Republicans insist it should be used to pay down the national debt.

Answered 08/26/10 18:05:33 by Kevin Hall and Tony Pugh

Q: Can the government ceate a debt reduction fund,with Americans sending $1 to $5 or whatever they can afford to a specific place, with the understanding all funds received go directly to debt reduction with no administrative fees ?

Submitted by Anthony Miller from Phoenixville,PA.

A: Interesting concept.

Answered 08/26/10 18:04:51 by Kevin Hall and Tony Pugh

Q: There is a tremendous amount of debt in the housing market. Why where contractors buiding 500,000 dollar homes that few could afford ? Would'nt it have been better to build $100.000 homes instead ?

Submitted by Anthony Miller from Phoenixville,PA.

A: Can't argue with you on that one, chalk it up to the phrase about investing, applies to any bubble, that investors chase past returns. past performance, as we know now, does not indicate future success.

Answered 08/26/10 18:04:28 by Kevin Hall and Tony Pugh

Q: Obama's Mortgage-relief...Are all banks required to accept this program?

Submitted by Cheryl from Turner, ME

A: No, only the ones still receiving govt support, namely Citi, many are volunteering but it is up to them as to whether a homeowner is offered the govt plan or a range of less generous company modification plans. very little has changed.

Answered 08/13/10 14:04:51 by Kevin Hall and Tony Pugh

Q: i didn't hear anything abouta tier 5 which is suppose to help us 99ers did it really get voted on an pass?

Submitted by Rob Campanile from leesburg.fl

A: My understanding is that it finally passed, after much delay

Answered 08/13/10 14:04:02 by Kevin Hall and Tony Pugh

Q: What role did Fannie Mae and Freddie Mac play in the mortgage crisis in 2007-08, and how accurate is the conservative accusation that they caused the crisis because of their involvement in the subprime mortgage market?

Submitted by John Mulqueen from New York, NY

A: here's a link http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html#storylink=misearch We did a story during the presidential campaign debunking this, and AFTER the elections regulators came out and agreed, including the FDIC and Fed chairmen. Wall St firms ate Fannie and Freddie's lunch, the two got in the game late in response but they were not the driver, nor was Bill Clinton pushing for minority loans. Where Fannie and Freddie did contribute and greatly is that since they were not on the govt balance sheets and had benefits private sector didnt, when the trouble in housing started investors who own mortgage bonds and Fannie and Freddie stock wanted explicit guarantees that the instruments they were holding would be paid in full. Fannie and Freddie had been quasi govt entities, chartered by Congress but operating like private firms. It invited a lot of fraud and abuse in accounting NOT in mortgage lending, as they had tougher standards than the private sector did. Now in government conservatorship, they remain the only game in town.

Answered 08/13/10 14:03:32 by Kevin Hall and Tony Pugh

Q: When I was in highschool (1960) one-in-seven persons had half of the income. Now one-in-35 has half of the take home income. How bad does this disparity have to get before the system just grinds to a halt? How does this compare to Russia in the early 1900 hundreds?

Submitted by Sam Veneer from Pueblo, Colorado

A: I don't know how it compares with 1900's Russia but it clearly speaks to the widening income inequality, which has transcended GOP and Democratic administrations and has been a continued march since the 1970's... there are all sorts of partial explanations, ranging from return on investment in higher education to social policy issues. Not an easy issue to define causes or solutions, but clearly it will be a hot issue in coming tax debate.

Answered 08/13/10 13:58:41 by Kevin Hall and Tony Pugh