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Tuesday, November 25, 2008
Global Watchdogs Ignore World's Poorest
Wednesday, October 1, 2008
"America is the boss of the world, so if it does badly, it affects everyone"
Yes it's true, America is the Boss of World Economies
Check Out Lady D and Mama ASID - To Listen Live 4 - 445 pm Click Here
SPECULATION:
isn't it time for the rampant abuse of America's Wall St. Economy and our national capital to be reigned in and regulated to run without speculation ?
I live on Main St. and I certainly think so.
~RE
The Kaufmann foundation conducted a phone survey on who will save america, here's the results:
Global Bankers Anxiously Watch U.S.
Financial Leaders, Exasperated by American Discord, Realize Limits of Own Powers
By Craig Whitlock and Mary Jordan -Washington Post Foreign Service
Wednesday, October 1, 2008; A12
BERLIN, Sept. 30 -- Central bankers and elected leaders around the world acknowledged Tuesday that they lacked a comprehensive strategy to protect their countries from the global financial crisis and were as dependent as ever on Washington to come up with a solution.
In Europe, France and Belgium propped up another failing bank Tuesday, and French President Nicolas Sarkozy invited his counterparts from Britain, Germany and Italy to an emergency summit. But officials, exasperated by the defeat of the $700 billion rescue plan in Washington, said they were quickly realizing how little power they had to act on their own to confront a rising threat to their economies and financial markets.
"The Americans have no choice," Christian Noyer, head of the French central bank and a member of the governing council of the European Central Bank, told Germany's RTL radio network. "We must have a comprehensive solution."
Added Patrick Steinpass, chief economist for the German Savings Bank Association: "All I can say is that I simply cannot imagine that the Americans will not come up with some sort of a solution. Anything else is outside the realm of my imagination."
In the meantime, banks continued to fail and markets quivered. Dexia, a lender on the verge of collapse, received a $9.2 billion bailout. It was the fifth time since the weekend that European governments have been forced to rescue a threatened institution, shattering the confidence expressed by many officials as recently as last week that their banks would ride out the crisis comparatively unscathed.
Japan's benchmark Nikkei stock average fell by more than 4 percent Tuesday, closing at its lowest level in more than three years. Trading was suspended in Russia for two hours in response to heavy losses, although markets there later recovered. Other major indexes bounced back from heavy losses Monday, with exchanges in London, Paris and Frankfurt, Germany, posting modest gains.
Major Latin American markets regained lost ground Tuesday, as the Dow Jones industrial average rose 485 points.
In India, politicians assured nervous investors that their accounts were safe. "There is nothing to worry about the Indian market," Finance Minister P. Chidambaram said at a news conference. He noted: "We are suffering the consequences of turbulence around the world."
But anxious customers began to withdraw money from India's largest private bank, ICICI, in what analysts called a lack of faith in institutions that lack government backing.
Economic experts in New Delhi advised India's central bank to make more cash available to lenders to ease a credit shortage and restore investor confidence. Indian companies are mired in a liquidity crunch. Foreign investors -- who have been pulling out of road-building, information technology and real estate projects -- fund many private businesses.
"India and other emerging economies are not isolated, and the idea that they are is a real myth," said Rajiv Kumar, chief executive of the Indian Council for Research on International Economic Relations. "What we see happening is investors from abroad pulling back their investments to improve their balance sheets back home. That offers a real picture of doom and gloom for emerging markets like India."
Smaller countries also tried to calm jittery markets. In Ireland, Finance Minister Brian Lenihan announced a plan to guarantee deposits in domestic banks, without limit, for the next two years. The proposal lifted the Irish stock market after it had dropped by 13 percent Monday. "What we're guaranteeing here is the lifeblood of the banking system," Lenihan said. "Were liquidity to dry up in the Irish banking system in the weeks ahead, the inevitable result would be economic catastrophe for this country."
Lenihan called on the European Union to agree on a "common standard of protection" for bank deposits. "We are a small, exposed economy," he said of his country, "more globally exposed than any economy in the E.U."
In recent days, France's president has conducted a flurry of meetings and speeches to address the credit crisis. But Sarkozy has not come up with any concrete proposals to restore order in the markets or prevent other bank failures.
His aides conceded Tuesday that for the moment, the French government was mainly occupied with trying to head off catastrophe.
Last week, Sarkozy proposed holding a global financial summit by the end of the year, after the U.S. presidential election. But reports in Paris said the idea stalled after he received a lukewarm response from President Bush.
Meanwhile, Sarkozy called in the chief executives of nine major French banks to meet with him at the Elysee Palace on Tuesday morning along with Prime Minister François Fillon, Finance Minister Christine Lagarde and Noyer, the Bank of France chief. The main purpose was to ensure that the crisis does not choke the French economy by cutting off credit to businesses and consumers, according to Sarkozy aides.
Georges Pauget, director general of Credit Agricole and head of the French Banking Federation, tried to reassure shareholders and depositors after the meeting, saying the government is ready to act if necessary to bolster weak banks. "The whole French array is solid, diversified, and it benefits from the support of public authorities."
The summit that Sarkozy called for Tuesday would bring together political leaders of the Western European members of the Group of Eight industrialized countries. As described in Paris, the meeting would help restore confidence in European banks and lay the groundwork for a broader international conference to revamp the world monetary system.
Many European leaders said they were horrified at the political infighting that has marked the U.S. Congress's handling of the rescue plan. "I feel they've taken leave of their senses," said Peter Mandelson, the E.U. trade commissioner. "I hope that in Europe, we will not see politicians and parliamentarians replicating the sort of irresponsibility and political partisanship that we have seen in Washington."
In Britain, Prime Minister Gordon Brown called Monday's vote in the House "very disappointing." His chief rival, David Cameron, leader of the Conservative Party, said Europe needed to learn from Washington's mistakes. "Today is a time for us to send a clear message to our political opponents and the country: Let us not allow the political wrangling that took place in America to happen here," Cameron said.
Britain is drafting legislation that would make it easier for the government to step in and save failing lenders. The government is also considering a plan to guarantee private bank deposits up to $90,000, up from the current maximum of $63,000.
So far, however, the European approach has been fragmented. Only 15 of the 27 E.U. member countries use the common currency, the euro.
Lacking ability to fashion a unified response, officials at the headquarters of the E.U. in Brussels pointed their fingers back at Washington, alternately lecturing and pleading with their U.S. counterparts to act.
"The United States must take its responsibility in this situation, must show statesmanship for the sake of their own country and for the sake of the world," Johannes Laitenberger, a spokesman for the European Commission, told reporters.
In Berlin, Chancellor Angela Merkel said it was "of incredibly great significance" that Congress approve a rescue plan by the end of the week, calling it "the precondition for creating new confidence on the markets." Merkel's comments came as German financial officials were finalizing an emergency $51 billion rescue of the country's second-largest commercial property lender, Hypo Real Estate Holding.
Hypo nearly collapsed over the weekend, just days after German Finance Minister Peer Steinbrueck declared that the country's banking sector was "extremely stable" and that the credit crisis was primarily "an American problem."
Last week, Germany and other countries rejected feelers from the U.S. Treasury Department about coordinating a global rescue of ailing banks. But there were signs that European opposition was fading.
Steffen Kampeter, a parliamentary leader on budget issues for Merkel's Christian Democratic Party, said German lawmakers might be receptive to such an approach if Congress is unable to act in the next few days. "This was and is a global problem that requires international solutions," he said. "We expect a signal from the Americans for what type of strategy to follow."
Ordinary Europeans said they, too, were counting on Washington.
"We are looking to America to shine a light, to find a resolution forward, and quick," said Ivan Hallworth, 45, a computer salesman interviewed in a bookstore in central London.
"We're all focusing on Congress and what's happening and looking to America for leadership," he added. "We have every confidence America will pull through."
Jordan reported from London. Correspondents Edward Cody in Paris and Emily Wax in New Delhi and special correspondents Shannon Smiley in Berlin and Karla Adam in London contributed to this report
U.S. Crisis Deepens Divisions in S. America
By Joshua Partlow
Washington Post Foreign Service
Wednesday, October 1, 2008; A13
RIO DE JANEIRO, Sept. 30 -- As his popularity has surged and his nation's booming economy has lifted thousands from poverty, Brazilian President Luiz Inácio Lula da Silva has largely refrained from the angry criticism of the United States that can be heard nearly any day from other South American leaders.
Not this time.
Last week, Lula told the U.N. General Assembly that the "boundless greed" of a few should not be shouldered by all, and on Monday he said emerging economies had done their best to have "good fiscal policy" and "can't be turned into victims of the casino erected by the American economy."
"This crisis belongs to the American bankers, to the European bankers. It doesn't belong to the Brazilian bankers," Lula said Monday. "It's not fair for Latin American, African and Asian countries to pay for the irresponsibility of sectors of the American financial system."
The U.S. financial crisis has stung emerging markets and angered leaders who have swallowed American advice about fiscal responsibility for years. In Latin America, where several leaders have made their ideological differences with the United States a central part of their rhetoric, the crisis appears to have further degraded U.S. credibility.
"They've always been critical of the U.S. for its negative agenda, drugs and immigration, but the economy was seen as the one positive thing, and this crisis probably puts that in a different light," said Michael Shifter, vice president for policy at Inter-American Dialogue in Washington.
Across Latin America, there is a growing division between countries that embrace certain U.S.-backed free-market policies, often referred to as the "Washington consensus," and those that renounce them. The leading anti-U.S. spokesman is President Hugo Chávez of Venezuela, who traveled to Brazil on Tuesday and urged Latin American countries to continue disconnecting from the U.S. economy, which he called a "wagon of death."
"The world will never be the same after this crisis," Chávez told reporters in Manaus, where he met with Lula and Bolivia's President Evo Morales. "A new world has to emerge, and it's a multipolar world."
Chávez predicted oil prices would drop to between $80 and $95 a barrel as a result of the financial turmoil. He also said the crisis shows why it is urgent to speed the creation of a Latin American regional development bank, known as Bank of the South.
Morales said that in Bolivia, companies are nationalized so that people can have money, while the United States "wants to nationalize debt and the crisis of the people that already have money."
Bolivia's finance minister, Luis Alberto Arce, said in an interview that countries such as Bolivia with few ties to international capital markets have just started to feel the impact of the crisis. But if the United States doesn't bolster its economy quickly, he said, Latin American countries can expect declines in commodities prices, exports and remittances from relatives living abroad.
In Argentina, the world's third-largest exporter of soy and wheat and second-largest exporter of corn, concerns are focused primarily on falling commodity prices and the potential for economic slowdown after several years of strong growth. Argentine President Cristina Fernández de Kirchner said Monday in Buenos Aires that "old paradigms are changing."
"We need to have an open mind about the possibility of intelligent interaction between the government and the markets. And forget the theory that the markets have to do all or nothing, and vice versa," she said.
Some analysts and economists worried that the countries that sometimes express antagonism toward the U.S. economic model and emphasize more state intervention -- Venezuela, Bolivia, Ecuador and to a certain extent Argentina -- would exploit the crisis for political benefit.
"I hope that McCain and Obama understand well there is a very, very important debate that will become critical next year, about the ideology of economic development -- whether the state should lead development or whether the market should be the main force," said Carlos Langoni, a former Brazilian central bank president, referring to U.S. presidential candidates John McCain and Barack Obama.
After a sharp drop in the stock market and a devaluation of the local currency against the U.S. dollar, both measures rebounded slightly in Brazil on Tuesday. Since a large percentage of Brazilian exports goes to China, the fate of that economy is of more immediate importance than what happens in the United States. Still, some economists are predicting that Brazil's growth rate, projected to be about 5 percent this year, could fall as low as 2 percent in 2009 if a recession takes hold in the United States.
"For Brazil, this is a very low rate. Brazil was beginning a cycle of sustainable growth," Langoni said. "This would be a very serious drawback."
Special correspondents Brian Byrnes in Buenos Aires and Andres Schipani in La Paz contributed to this report
Young Chinese Rethink U.S.-Style Capitalism
By Ariana Eunjung Cha - Washington Post Foreign Service
Tuesday, September 30, 2008; A13
SHENZHEN, China -- The gray waters around the port of Yantian are ominously empty. It's supposed to be peak season here, a time when the docks are filled with exporters shoveling holiday goods onto freighters bound for the United States faster than the ships are able to receive them.
Instead, irritated truck drivers, logistics coordinators and other workers stand idle, smoking and complaining that business is so slow that their income has dropped by two-thirds, because of the deteriorating U.S. economy, with which this region is so closely linked.
The community that once bragged about its close ties to the United States now rues them.
Li Hongguo, 36, who was ferrying a load of handbags from a factory to the port, said that last year he made one or two runs a day. These days he's lucky to get one job every three to four days.
"America is the boss of the world, so if it does badly, it affects everyone else," Li said.
Nowhere is this view more pervasive than here in China's Pearl River delta, where the majority of companies exist with the single goal of producing products for U.S. consumers.
Stakeholders in China are watching the trials and tribulations of the massive U.S. economic rescue package, rejected Monday by the House of Representatives, as closely as Americans are.
For better or for worse, economists say, China and the United States are like conjoined twins. "The two economies are mutually reliant and mutually influential," explained Hua Min, director of Fudan University's Institute of World Economy in Shanghai.
Once the envy of the nation for its abundant jobs and high wages, Shenzhen -- the birthplace of China's experiment in capitalism -- is experiencing an economic downturn in tandem with the United States.
Industry groups estimate that tens of thousands of factories making products from ball bearings to shoes to furniture have closed over the past year. Weighed down by the problems here, growth in China's gross domestic product for 2008 is expected to slow to a single digit for the first time in 11 years.
On a recent weekday at Yantian, the majestic, nearly 1,300-foot-long container ships that once graced the waters were gone. With shipping volume down for the first time in the port's history -- by 5 to 7 percent depending on the month -- the larger ships had been reassigned to other ports in China with goods headed for anyplace but the United States. Only half-size freighters are left to serve Yantian's port.
"Orders to the U.S. have been reduced by 40 percent," said Angela Hao, general manager for the Shenzhen office of the City Ocean shipping company. "At the moment everybody is struggling, trying to see who will survive."
Sun Junshan, who works in sales for Shenzhen Jiao Technology, said that when she was growing up she thought America was "heavenly -- everyone is living well and there are good benefits for Social Security and medical care."
"Now I feel like China is number one, not the U.S., because China has money," Sun said.
The U.S. economic problems have shaken the foundation of what many Chinese have been taught in the 30 years of Communist leader Deng Xiaoping's "reform and opening up" campaign, which was built around the idea, as Deng famously said, that "to get rich is glorious." The U.S. system that was once held up as a model now seems full of weaknesses.
China's leaders say their country can still learn from the United States -- from its mistakes, that is.
Ever since Shenzhen, just north of Hong Kong, was honored with becoming the country's first special economic zone in 1979, residents of the area have been China's keepers of the American dream. Today the landscape around the city, with its big houses and big cars, is the closest thing China has to U.S.-style suburbs.
Xiong Ming, 28, who works at a shipping company focused on the port of Yantian, is part of a generation that grew up with the gospel of American capitalism.
Raised on Hollywood movies, Xiong built his career on close business relationships with the United States.
When he graduated from college six years ago with an economics degree, Xiong took a marketing job with Cosco, China's premier shipping company. With his strong English skills, he did so well that a former colleague soon offered him a management position at a competitor that sent goods to California's ports in Long Beach and Oakland.
For a while, Xiong prospered. Like other employees, he often made $4,400 to $5,800 a month with commissions -- a fortune in a country where the average annual urban salary is $2,000.
But today most workers are making $750 to $1,500.
If the U.S. economy doesn't pick up, his current employer will probably have to lay off some of its 20 employees in Shenzhen or even shut down. "Right now we haven't hit bottom yet. We see things getting worse and worse," he said.
Xiong, a marketing manager at Dragontrade Logistics, said that if he had it to do over, he would choose to work more with Europe, or emerging economies in areas such as the Middle East, or even with Chinese companies that he once thought were old-fashioned.
The U.S. troubles have made him reconsider the benefits of communist, state-run support, he said.
"In the U.S., the workers at the gold-chip companies are carrying out their desks in boxes," Xiong said. "But in China, the jobs are still here because they are more protected."
Researchers Crissie Ding and Wu Meng contributed to this report.
Pakistan officials: 6 killed in US missile strike
By MUNIR AHMAD - The Associated Press
Wednesday, October 1, 2008; 12:41 PM
ISLAMABAD, Pakistan -- A suspected U.S. missile strike on a Taliban commander's home in Pakistan killed six people, officials said Wednesday, a possible indication that Washington was moving ahead with cross-border raids despite protests from the new government.
The attack was the first since President Asif Ali Zardari warned that its territory cannot "be violated by our friends."
American forces recently ramped up cross-border operations against Taliban and al-Qaida militants in the Pakistan's border zone with Afghanistan _ a region considered a likely hiding place for al-Qaida leader Osama bin Laden.
Late Tuesday, missiles fired by a U.S. drone aircraft struck the Taliban commander's home near Mir Ali, a town in North Waziristan, which borders Afghanistan, said two intelligence officials, who asked for anonymity because they were not authorized to speak to media.
Citing reports from their field agents, the officials said six people died, but did not identify any of the victims.
U.S. officials in Afghanistan or Washington rarely acknowledge the attacks.
Pakistan says the attacks often result in civilian casualties and serve to fan extremism. American officials complain that Pakistan was unwilling or unable to act against the militants.
Militants in the border region are blamed for rising attacks on U.S. troops in Afghanistan and attacks within Pakistan, including the Sept. 20 truck bombing of the Marriott Hotel in Islamabad that killed more than 50 people.
In Spain, a document marked confidential and bearing the official seal of Spain's Defense Ministry alleged that Pakistan's spy service helped arm Taliban insurgents in 2005 for assassination plots against Afghan government officials.
Chief Pakistani army spokesman Maj. Gen. Athar Abbas said the report was "baseless, unfounded and part of a malicious, well-orchestrated propaganda campaign to malign" the Inter-Services Intelligence spy agency.
"ISI is the first line of defense of Pakistan and certain quarters are attempting to weaken our national intelligence system," Abbas said, without elaborating.
The document, which surfaced just after Pakistan's military chief chose a new head of the spy agency, also alleged that Pakistan may have provided training and intelligence to the Taliban in camps set up on Pakistani soil.
The report, which was obtained by Cadena Ser radio and posted on the station's Web site Wednesday, said the spy agency helped the Taliban procure explosives to use in attacks against vehicles.
Pakistan vehemently denies that members of the spy agency have aided the Taliban. In the 1990s, however, the ISI's agents helped build up the Taliban.
U.S. intelligence agencies suspect rogue elements of the spy agency may still be giving Taliban militants sensitive information to aid their insurgency in Afghanistan, even though officially Pakistan is a U.S. ally in fighting terrorism.
Some analysts say elements in the spy agency may want to retain the Taliban as potential assets against longtime rival India and believe Pakistan's strategic interests are best served if Afghanistan remains a weak state.
India and Afghanistan _ and reportedly the U.S. _ suspect the ISI of involvement in the July 7 bombing outside India's Embassy in Kabul, which killed more than 60 people. Pakistan denies it.
In London on Wednesday, British officials announced that the children of its diplomats in Pakistan have been ordered to leave the country. The Foreign Office said the decision was the result of a security review following the Sept. 20 Marriott hotel bombing.
Britain's embassy in Pakistan is one of its largest overseas missions. The Foreign Office said about 60 children of British-based embassy staff are being withdrawn. All are under the age of 8. Any other diplomats' dependents who wish to leave may also do so.
Check Out Lady D and Mama ASID - To Listen Live 4 - 445 pm Click Here
SPECULATION:
- conjectural consideration of a matter; conjecture or surmise: a report based on speculation rather than facts.
- engagement in business transactions involving considerable risk but offering the chance of large gains, esp. trading in commodities, stocks, etc., in the hope of profit from changes in the market price.
- a speculative commercial venture or undertaking
Americas' economic woes are based purely on Speculation and the Speculators have won.
when Americas' Wall St. Bailout stalled; the economies of most of it's co capitalists also took an immediate hit. the debt which will be incurred for the bail out will insure that they have intertwined themselves with america for the next 20 years.
this is a catastrophic miscalculation done by speculators, which are still left totally unrestrained by the new rules of this proposed us bailout. the problem with americas' economy leads back to speculation.
if it were regulated and speculators were forced into the model of traders in other market economies; americas' economic woes would immediately level out. it is the speculators that drive the prices up, without logic.
the illogic of economic speculation is like turning a bull loose in a china shop saying don't worry there's no problem with your breakage. well there is a problem and it's that bull breaking things and not paying for them.
when you see headlines like this - "Financial Leaders, Exasperated by American Discord, Realize Limits of Own Powers"; it's time to clean up the mess.
isn't it time for the rampant abuse of America's Wall St. Economy and our national capital to be reigned in and regulated to run without speculation ?
I live on Main St. and I certainly think so.
~RE
The Kaufmann foundation conducted a phone survey on who will save america, here's the results:
The impact of the current financial situation is hitting people personally:
-- Only 7 percent of Americans believe that "nothing is at risk" for them personally during this economic meltdown. More than one in three people polled (34 percent) see everything--jobs, homes and investments--as equally vulnerable and at risk during the crisis.-- One in four (26 percent) said the impact of the financial crisis will be "very bad" or "devastating" with another 34 percent saying it will be "pretty bad" for them personally.-- Sixty-four percent of Americans think that Main Street will suffer the most severe consequences from the economic crisis; 16 percent think Wall Street will be hardest hit.
The economic crisis has not dampened American optimism, however. Seventy-five percent of those surveyed said that they are or someday will be living the America Dream.
Because they understand the role of entrepreneurs as a creator of jobs, Americans are looking to business leaders instead of government, by a two-to-one margin, to lead the way out of the economic mess. A majority of people (56 percent) trust small-business owners to guide the economy, compared with only 14 percent who trust members of Congress.
While more than 60 percent of people surveyed support the federal government increasing its regulation of the market, more than a third think Congress is in danger of creating too much regulation as it reacts to this crisis.
"History has repeatedly demonstrated that new companies and entrepreneurship are the way to bolster a flagging economy. The American people understand this,"Global Bankers Anxiously Watch U.S.
Financial Leaders, Exasperated by American Discord, Realize Limits of Own Powers
By Craig Whitlock and Mary Jordan -Washington Post Foreign Service
Wednesday, October 1, 2008; A12
BERLIN, Sept. 30 -- Central bankers and elected leaders around the world acknowledged Tuesday that they lacked a comprehensive strategy to protect their countries from the global financial crisis and were as dependent as ever on Washington to come up with a solution.
In Europe, France and Belgium propped up another failing bank Tuesday, and French President Nicolas Sarkozy invited his counterparts from Britain, Germany and Italy to an emergency summit. But officials, exasperated by the defeat of the $700 billion rescue plan in Washington, said they were quickly realizing how little power they had to act on their own to confront a rising threat to their economies and financial markets.
"The Americans have no choice," Christian Noyer, head of the French central bank and a member of the governing council of the European Central Bank, told Germany's RTL radio network. "We must have a comprehensive solution."
Added Patrick Steinpass, chief economist for the German Savings Bank Association: "All I can say is that I simply cannot imagine that the Americans will not come up with some sort of a solution. Anything else is outside the realm of my imagination."
In the meantime, banks continued to fail and markets quivered. Dexia, a lender on the verge of collapse, received a $9.2 billion bailout. It was the fifth time since the weekend that European governments have been forced to rescue a threatened institution, shattering the confidence expressed by many officials as recently as last week that their banks would ride out the crisis comparatively unscathed.
Japan's benchmark Nikkei stock average fell by more than 4 percent Tuesday, closing at its lowest level in more than three years. Trading was suspended in Russia for two hours in response to heavy losses, although markets there later recovered. Other major indexes bounced back from heavy losses Monday, with exchanges in London, Paris and Frankfurt, Germany, posting modest gains.
Major Latin American markets regained lost ground Tuesday, as the Dow Jones industrial average rose 485 points.
In India, politicians assured nervous investors that their accounts were safe. "There is nothing to worry about the Indian market," Finance Minister P. Chidambaram said at a news conference. He noted: "We are suffering the consequences of turbulence around the world."
But anxious customers began to withdraw money from India's largest private bank, ICICI, in what analysts called a lack of faith in institutions that lack government backing.
Economic experts in New Delhi advised India's central bank to make more cash available to lenders to ease a credit shortage and restore investor confidence. Indian companies are mired in a liquidity crunch. Foreign investors -- who have been pulling out of road-building, information technology and real estate projects -- fund many private businesses.
"India and other emerging economies are not isolated, and the idea that they are is a real myth," said Rajiv Kumar, chief executive of the Indian Council for Research on International Economic Relations. "What we see happening is investors from abroad pulling back their investments to improve their balance sheets back home. That offers a real picture of doom and gloom for emerging markets like India."
Smaller countries also tried to calm jittery markets. In Ireland, Finance Minister Brian Lenihan announced a plan to guarantee deposits in domestic banks, without limit, for the next two years. The proposal lifted the Irish stock market after it had dropped by 13 percent Monday. "What we're guaranteeing here is the lifeblood of the banking system," Lenihan said. "Were liquidity to dry up in the Irish banking system in the weeks ahead, the inevitable result would be economic catastrophe for this country."
Lenihan called on the European Union to agree on a "common standard of protection" for bank deposits. "We are a small, exposed economy," he said of his country, "more globally exposed than any economy in the E.U."
In recent days, France's president has conducted a flurry of meetings and speeches to address the credit crisis. But Sarkozy has not come up with any concrete proposals to restore order in the markets or prevent other bank failures.
His aides conceded Tuesday that for the moment, the French government was mainly occupied with trying to head off catastrophe.
Last week, Sarkozy proposed holding a global financial summit by the end of the year, after the U.S. presidential election. But reports in Paris said the idea stalled after he received a lukewarm response from President Bush.
Meanwhile, Sarkozy called in the chief executives of nine major French banks to meet with him at the Elysee Palace on Tuesday morning along with Prime Minister François Fillon, Finance Minister Christine Lagarde and Noyer, the Bank of France chief. The main purpose was to ensure that the crisis does not choke the French economy by cutting off credit to businesses and consumers, according to Sarkozy aides.
Georges Pauget, director general of Credit Agricole and head of the French Banking Federation, tried to reassure shareholders and depositors after the meeting, saying the government is ready to act if necessary to bolster weak banks. "The whole French array is solid, diversified, and it benefits from the support of public authorities."
The summit that Sarkozy called for Tuesday would bring together political leaders of the Western European members of the Group of Eight industrialized countries. As described in Paris, the meeting would help restore confidence in European banks and lay the groundwork for a broader international conference to revamp the world monetary system.
Many European leaders said they were horrified at the political infighting that has marked the U.S. Congress's handling of the rescue plan. "I feel they've taken leave of their senses," said Peter Mandelson, the E.U. trade commissioner. "I hope that in Europe, we will not see politicians and parliamentarians replicating the sort of irresponsibility and political partisanship that we have seen in Washington."
In Britain, Prime Minister Gordon Brown called Monday's vote in the House "very disappointing." His chief rival, David Cameron, leader of the Conservative Party, said Europe needed to learn from Washington's mistakes. "Today is a time for us to send a clear message to our political opponents and the country: Let us not allow the political wrangling that took place in America to happen here," Cameron said.
Britain is drafting legislation that would make it easier for the government to step in and save failing lenders. The government is also considering a plan to guarantee private bank deposits up to $90,000, up from the current maximum of $63,000.
So far, however, the European approach has been fragmented. Only 15 of the 27 E.U. member countries use the common currency, the euro.
Lacking ability to fashion a unified response, officials at the headquarters of the E.U. in Brussels pointed their fingers back at Washington, alternately lecturing and pleading with their U.S. counterparts to act.
"The United States must take its responsibility in this situation, must show statesmanship for the sake of their own country and for the sake of the world," Johannes Laitenberger, a spokesman for the European Commission, told reporters.
In Berlin, Chancellor Angela Merkel said it was "of incredibly great significance" that Congress approve a rescue plan by the end of the week, calling it "the precondition for creating new confidence on the markets." Merkel's comments came as German financial officials were finalizing an emergency $51 billion rescue of the country's second-largest commercial property lender, Hypo Real Estate Holding.
Hypo nearly collapsed over the weekend, just days after German Finance Minister Peer Steinbrueck declared that the country's banking sector was "extremely stable" and that the credit crisis was primarily "an American problem."
Last week, Germany and other countries rejected feelers from the U.S. Treasury Department about coordinating a global rescue of ailing banks. But there were signs that European opposition was fading.
Steffen Kampeter, a parliamentary leader on budget issues for Merkel's Christian Democratic Party, said German lawmakers might be receptive to such an approach if Congress is unable to act in the next few days. "This was and is a global problem that requires international solutions," he said. "We expect a signal from the Americans for what type of strategy to follow."
Ordinary Europeans said they, too, were counting on Washington.
"We are looking to America to shine a light, to find a resolution forward, and quick," said Ivan Hallworth, 45, a computer salesman interviewed in a bookstore in central London.
"We're all focusing on Congress and what's happening and looking to America for leadership," he added. "We have every confidence America will pull through."
Jordan reported from London. Correspondents Edward Cody in Paris and Emily Wax in New Delhi and special correspondents Shannon Smiley in Berlin and Karla Adam in London contributed to this report
U.S. Crisis Deepens Divisions in S. America
By Joshua Partlow
Washington Post Foreign Service
Wednesday, October 1, 2008; A13
RIO DE JANEIRO, Sept. 30 -- As his popularity has surged and his nation's booming economy has lifted thousands from poverty, Brazilian President Luiz Inácio Lula da Silva has largely refrained from the angry criticism of the United States that can be heard nearly any day from other South American leaders.
Not this time.
Last week, Lula told the U.N. General Assembly that the "boundless greed" of a few should not be shouldered by all, and on Monday he said emerging economies had done their best to have "good fiscal policy" and "can't be turned into victims of the casino erected by the American economy."
"This crisis belongs to the American bankers, to the European bankers. It doesn't belong to the Brazilian bankers," Lula said Monday. "It's not fair for Latin American, African and Asian countries to pay for the irresponsibility of sectors of the American financial system."
The U.S. financial crisis has stung emerging markets and angered leaders who have swallowed American advice about fiscal responsibility for years. In Latin America, where several leaders have made their ideological differences with the United States a central part of their rhetoric, the crisis appears to have further degraded U.S. credibility.
"They've always been critical of the U.S. for its negative agenda, drugs and immigration, but the economy was seen as the one positive thing, and this crisis probably puts that in a different light," said Michael Shifter, vice president for policy at Inter-American Dialogue in Washington.
Across Latin America, there is a growing division between countries that embrace certain U.S.-backed free-market policies, often referred to as the "Washington consensus," and those that renounce them. The leading anti-U.S. spokesman is President Hugo Chávez of Venezuela, who traveled to Brazil on Tuesday and urged Latin American countries to continue disconnecting from the U.S. economy, which he called a "wagon of death."
"The world will never be the same after this crisis," Chávez told reporters in Manaus, where he met with Lula and Bolivia's President Evo Morales. "A new world has to emerge, and it's a multipolar world."
Chávez predicted oil prices would drop to between $80 and $95 a barrel as a result of the financial turmoil. He also said the crisis shows why it is urgent to speed the creation of a Latin American regional development bank, known as Bank of the South.
Morales said that in Bolivia, companies are nationalized so that people can have money, while the United States "wants to nationalize debt and the crisis of the people that already have money."
Bolivia's finance minister, Luis Alberto Arce, said in an interview that countries such as Bolivia with few ties to international capital markets have just started to feel the impact of the crisis. But if the United States doesn't bolster its economy quickly, he said, Latin American countries can expect declines in commodities prices, exports and remittances from relatives living abroad.
In Argentina, the world's third-largest exporter of soy and wheat and second-largest exporter of corn, concerns are focused primarily on falling commodity prices and the potential for economic slowdown after several years of strong growth. Argentine President Cristina Fernández de Kirchner said Monday in Buenos Aires that "old paradigms are changing."
"We need to have an open mind about the possibility of intelligent interaction between the government and the markets. And forget the theory that the markets have to do all or nothing, and vice versa," she said.
Some analysts and economists worried that the countries that sometimes express antagonism toward the U.S. economic model and emphasize more state intervention -- Venezuela, Bolivia, Ecuador and to a certain extent Argentina -- would exploit the crisis for political benefit.
"I hope that McCain and Obama understand well there is a very, very important debate that will become critical next year, about the ideology of economic development -- whether the state should lead development or whether the market should be the main force," said Carlos Langoni, a former Brazilian central bank president, referring to U.S. presidential candidates John McCain and Barack Obama.
After a sharp drop in the stock market and a devaluation of the local currency against the U.S. dollar, both measures rebounded slightly in Brazil on Tuesday. Since a large percentage of Brazilian exports goes to China, the fate of that economy is of more immediate importance than what happens in the United States. Still, some economists are predicting that Brazil's growth rate, projected to be about 5 percent this year, could fall as low as 2 percent in 2009 if a recession takes hold in the United States.
"For Brazil, this is a very low rate. Brazil was beginning a cycle of sustainable growth," Langoni said. "This would be a very serious drawback."
Special correspondents Brian Byrnes in Buenos Aires and Andres Schipani in La Paz contributed to this report
Young Chinese Rethink U.S.-Style Capitalism
By Ariana Eunjung Cha - Washington Post Foreign Service
Tuesday, September 30, 2008; A13
SHENZHEN, China -- The gray waters around the port of Yantian are ominously empty. It's supposed to be peak season here, a time when the docks are filled with exporters shoveling holiday goods onto freighters bound for the United States faster than the ships are able to receive them.
Instead, irritated truck drivers, logistics coordinators and other workers stand idle, smoking and complaining that business is so slow that their income has dropped by two-thirds, because of the deteriorating U.S. economy, with which this region is so closely linked.
The community that once bragged about its close ties to the United States now rues them.
Li Hongguo, 36, who was ferrying a load of handbags from a factory to the port, said that last year he made one or two runs a day. These days he's lucky to get one job every three to four days.
"America is the boss of the world, so if it does badly, it affects everyone else," Li said.
Nowhere is this view more pervasive than here in China's Pearl River delta, where the majority of companies exist with the single goal of producing products for U.S. consumers.
Stakeholders in China are watching the trials and tribulations of the massive U.S. economic rescue package, rejected Monday by the House of Representatives, as closely as Americans are.
For better or for worse, economists say, China and the United States are like conjoined twins. "The two economies are mutually reliant and mutually influential," explained Hua Min, director of Fudan University's Institute of World Economy in Shanghai.
Once the envy of the nation for its abundant jobs and high wages, Shenzhen -- the birthplace of China's experiment in capitalism -- is experiencing an economic downturn in tandem with the United States.
Industry groups estimate that tens of thousands of factories making products from ball bearings to shoes to furniture have closed over the past year. Weighed down by the problems here, growth in China's gross domestic product for 2008 is expected to slow to a single digit for the first time in 11 years.
On a recent weekday at Yantian, the majestic, nearly 1,300-foot-long container ships that once graced the waters were gone. With shipping volume down for the first time in the port's history -- by 5 to 7 percent depending on the month -- the larger ships had been reassigned to other ports in China with goods headed for anyplace but the United States. Only half-size freighters are left to serve Yantian's port.
"Orders to the U.S. have been reduced by 40 percent," said Angela Hao, general manager for the Shenzhen office of the City Ocean shipping company. "At the moment everybody is struggling, trying to see who will survive."
Sun Junshan, who works in sales for Shenzhen Jiao Technology, said that when she was growing up she thought America was "heavenly -- everyone is living well and there are good benefits for Social Security and medical care."
"Now I feel like China is number one, not the U.S., because China has money," Sun said.
The U.S. economic problems have shaken the foundation of what many Chinese have been taught in the 30 years of Communist leader Deng Xiaoping's "reform and opening up" campaign, which was built around the idea, as Deng famously said, that "to get rich is glorious." The U.S. system that was once held up as a model now seems full of weaknesses.
China's leaders say their country can still learn from the United States -- from its mistakes, that is.
Ever since Shenzhen, just north of Hong Kong, was honored with becoming the country's first special economic zone in 1979, residents of the area have been China's keepers of the American dream. Today the landscape around the city, with its big houses and big cars, is the closest thing China has to U.S.-style suburbs.
Xiong Ming, 28, who works at a shipping company focused on the port of Yantian, is part of a generation that grew up with the gospel of American capitalism.
Raised on Hollywood movies, Xiong built his career on close business relationships with the United States.
When he graduated from college six years ago with an economics degree, Xiong took a marketing job with Cosco, China's premier shipping company. With his strong English skills, he did so well that a former colleague soon offered him a management position at a competitor that sent goods to California's ports in Long Beach and Oakland.
For a while, Xiong prospered. Like other employees, he often made $4,400 to $5,800 a month with commissions -- a fortune in a country where the average annual urban salary is $2,000.
But today most workers are making $750 to $1,500.
If the U.S. economy doesn't pick up, his current employer will probably have to lay off some of its 20 employees in Shenzhen or even shut down. "Right now we haven't hit bottom yet. We see things getting worse and worse," he said.
Xiong, a marketing manager at Dragontrade Logistics, said that if he had it to do over, he would choose to work more with Europe, or emerging economies in areas such as the Middle East, or even with Chinese companies that he once thought were old-fashioned.
The U.S. troubles have made him reconsider the benefits of communist, state-run support, he said.
"In the U.S., the workers at the gold-chip companies are carrying out their desks in boxes," Xiong said. "But in China, the jobs are still here because they are more protected."
Researchers Crissie Ding and Wu Meng contributed to this report.
Pakistan officials: 6 killed in US missile strike
By MUNIR AHMAD - The Associated Press
Wednesday, October 1, 2008; 12:41 PM
ISLAMABAD, Pakistan -- A suspected U.S. missile strike on a Taliban commander's home in Pakistan killed six people, officials said Wednesday, a possible indication that Washington was moving ahead with cross-border raids despite protests from the new government.
The attack was the first since President Asif Ali Zardari warned that its territory cannot "be violated by our friends."
American forces recently ramped up cross-border operations against Taliban and al-Qaida militants in the Pakistan's border zone with Afghanistan _ a region considered a likely hiding place for al-Qaida leader Osama bin Laden.
Late Tuesday, missiles fired by a U.S. drone aircraft struck the Taliban commander's home near Mir Ali, a town in North Waziristan, which borders Afghanistan, said two intelligence officials, who asked for anonymity because they were not authorized to speak to media.
Citing reports from their field agents, the officials said six people died, but did not identify any of the victims.
U.S. officials in Afghanistan or Washington rarely acknowledge the attacks.
Pakistan says the attacks often result in civilian casualties and serve to fan extremism. American officials complain that Pakistan was unwilling or unable to act against the militants.
Militants in the border region are blamed for rising attacks on U.S. troops in Afghanistan and attacks within Pakistan, including the Sept. 20 truck bombing of the Marriott Hotel in Islamabad that killed more than 50 people.
In Spain, a document marked confidential and bearing the official seal of Spain's Defense Ministry alleged that Pakistan's spy service helped arm Taliban insurgents in 2005 for assassination plots against Afghan government officials.
Chief Pakistani army spokesman Maj. Gen. Athar Abbas said the report was "baseless, unfounded and part of a malicious, well-orchestrated propaganda campaign to malign" the Inter-Services Intelligence spy agency.
"ISI is the first line of defense of Pakistan and certain quarters are attempting to weaken our national intelligence system," Abbas said, without elaborating.
The document, which surfaced just after Pakistan's military chief chose a new head of the spy agency, also alleged that Pakistan may have provided training and intelligence to the Taliban in camps set up on Pakistani soil.
The report, which was obtained by Cadena Ser radio and posted on the station's Web site Wednesday, said the spy agency helped the Taliban procure explosives to use in attacks against vehicles.
Pakistan vehemently denies that members of the spy agency have aided the Taliban. In the 1990s, however, the ISI's agents helped build up the Taliban.
U.S. intelligence agencies suspect rogue elements of the spy agency may still be giving Taliban militants sensitive information to aid their insurgency in Afghanistan, even though officially Pakistan is a U.S. ally in fighting terrorism.
Some analysts say elements in the spy agency may want to retain the Taliban as potential assets against longtime rival India and believe Pakistan's strategic interests are best served if Afghanistan remains a weak state.
India and Afghanistan _ and reportedly the U.S. _ suspect the ISI of involvement in the July 7 bombing outside India's Embassy in Kabul, which killed more than 60 people. Pakistan denies it.
In London on Wednesday, British officials announced that the children of its diplomats in Pakistan have been ordered to leave the country. The Foreign Office said the decision was the result of a security review following the Sept. 20 Marriott hotel bombing.
Britain's embassy in Pakistan is one of its largest overseas missions. The Foreign Office said about 60 children of British-based embassy staff are being withdrawn. All are under the age of 8. Any other diplomats' dependents who wish to leave may also do so.
Bad Man and Batty Man - who say dem deh a bed ? POLICE!
Bad Man and Batty Man - who say dem deh a bed ? POLICE!
October1
HIV Infection Rate for Young Black Men ‘Alarming:’ CDC
By Steven Reinberg - HealthDay Reporter
Thursday, September 11, 2008; 12:00 AM
THURSDAY, Sept. 11 (HealthDay News) — The rate of new HIV infections among young gay or bisexual black men is significantly higher than new infections among whites and Hispanics of the same age, the U.S. Centers for Disease Control and Prevention announced Thursday.
“The number of new HIV infections among young black men who have sex with men is alarming,” Dr. Kevin Fenton, director of the CDC’s National Center for HIV/AIDS, Viral Hepatitis, STD and TB Prevention said during a teleconference.
Among black males aged 13 to 29, the incidence of HIV infection was 1.6 times higher than that of whites and 2.3 times higher than for Hispanics, according to findings published in the Sept. 12 issue of the CDC’sMorbidity and Mortality Weekly Report.
Forty-eight percent of new infections among black men were among those aged 13 to 29, compared with 31 percent for whites and 21 percent for Hispanics. This finding highlights the need to reach men at an early age and teach them about HIV prevention, Fenton said.
“There were more new HIV infections in black men who have sex with men between the ages of 13 and 29 than any other group of men who have sex with men, regardless of race or age,” Dr. Richard Wolitski, acting director of the CDC’s division of HIV/AIDS Prevention, added during the teleconference.
The reasons why young black men are being infected with HIV at a relatively early age aren’t clear. Some factors may include the stigma of homosexuality, lack of access to HIV prevention services, and an underestimation of personal risk, Wolitski said.
In addition, the prevalence of HIV in the black community makes it more likely for someone to become infected, the expert said. Another theory is that many young black gay and bisexual men choose older men as partners, making it more likely for them to become infected, he said.
One expert said the problem may be in education.
“What is going on with young black gay men is a clear indication of our failure to develop messages which are targeted to the communities that are most at risk,” said Kevin Frost, CEO of the Foundation for AIDS Research.
“What we need are programs that speak directly to these communities,” Frost added. “For too long, prevention in our country has been to tell everybody that they are all equally at risk of HIV. In fact, that’s really not true. Twenty-five years into this epidemic, surely we have learned certain groups of people are at greater risk and those are injected drug users, people of color and gay men, particularly gay men of color,” he said.
The statistics were somewhat different for men of other racial or ethnic backgrounds, the CDC said.
White men who have sex with men tend to become infected at an older age. Among these men, the highest number of new infections (43 percent) was among men 30 to 39 years old, according to the report.
“A range of factors likely contributes to new transmission in these age groups,” Wolitski said. “They include difficulty in maintaining safer behaviors for many years or even decades, as well as the stigma of HIV, substance abuse and higher HIV prevalence within this group.”
For his part, Fenton said, “the heavy impact of HIV among white men who have sex with men in older age groups demonstrates the need for ongoing efforts to keep gay and bisexual men HIV-free over the course of their lifetimes.”
For all new U.S. cases of HIV in 2006, white men who have sex with men accounted for 46 percent of cases, followed by gay or bisexual black men, who accounted for 35 percent, and Hispanic gay and bisexual men, at 19 percent.
Women, especially black women, are also affected by HIV. “Compared to women of all races, black women bear the heaviest burden of HIV,” Fenton said.
Among black women, the incidence of HIV was 14.7 times higher than for white women. Among Hispanic women, the HIV infection rate was 3.8 times higher than that for white women, according to the report.
Hispanics are disproportionately affected by HIV, Wolitski said. “Hispanics represent 18 percent of new HIV infections while representing 15 percent of the total U.S. population,” he said. “Men make up 76 percent of new infections among Hispanics, the majority of whom were men who have sex with men.”
In August, the CDC released new estimates of the number of HIV new cases in 2006, in the United States, which now total 56,300 and are significantly higher than the previous estimate of 40,000. “We learned that the HIV epidemic was worse than previously known,” Fenton said.
These findings should renew a sense of urgency about HIV prevention, Fenton said. “To be able to end the HIV epidemic in the United States, it is absolutely essential that we reverse the years of increases of HIV incidence among gay and bisexual men,” he said.
A study by the CDC found that 80 percent of gay and bisexual men have not been reached with intensive HIV-prevention methods that are most effective, Fenton said.
“Today’s analysis serves as a powerful reminder that the U.S. epidemic of HIV is far from over,” Fenton said. “The US epidemic will end only when all of us realize that ending AIDS is possible. We need to reduce the stigmatism, racism and homophobia that impede our ability to fight HIV.”
More information
For more information on HIV/AIDS, visit the U.S. Centers for Disease Control and Prevention.
During raid cops hold … WANTED MAN IN BED WITH MALE
The St Andrew North Police say that yesterday they held the most-wanted man in their division in bed with another man.
THE STAR was told that during an early-morning raid carried out at a two-room house in the Harriman Close area of Jacks Hill, St Andrew, Damion Walker, otherwise called ‘Bruno’, was captured.
Walker was wanted in connection with a double murder that occurred on July 27, 2007, along Park Lane in the Red Hills Road area.
During that incident, Camille Daley and Clive Baker were killed. A warrant had been issued for Walker’s arrest in connection with this crime.
He was also being sought by the police for the murder of Eunice Campbell, who was killed earlier this year along Oddman Lane in the GrantsPen community.
Walker, THE STAR was told, was found in bed with his driver and alleged accomplice, Jason Hart, otherwise called ‘Tallman’. Hart, the police say, is being held for harbouring a fugitive, but could face other charges.
Decline in HIV deaths (In Jamaica)
Chief of Epidemiology and AIDS in the Ministry of Health and Environment, Dr Peter Figueroa, has said that although the incidence of sexually transmitted infections (STIs) continues to rise, the death rate from these infections, particularly HIV/AIDS, has been declining.
This he says is due to the success of the Ministry’s national AIDS/STI programme.
Persons unaware
Dr Figueroa, speaking at the International Conference on Adult Education at the Jamaica Pegasus Hotel, recently, said it is estimated that there are 25,000 to 27,000 people living with HIV in Jamaica and that, as many as 12,000 are not aware that they are living with the virus.
He urged all sexually active persons to get an HIV/AIDS test done in order to adequately tackle this epidemic.
“We need to expand testing. Everyone needs to get tested once you are sexually active and we’re trying to encourage that,” he said.
“We estimated an adult HIV prevalence of 1.5 per cent. For the last 10 years the prevalence of HIV among pregnant women in public clinics, has remained stable at 1.5 per cent. It means that we have been able to put some hold on the spread, but it is not yet adequately going down but what is encouraging there, is that the death rate has come down significantly and that is due to our anti-retroviral (ARV) treatment programme,” Dr Figueroa explained.
He said, however, that the prevalence among those who are most at risk, like homosexuals, is very high and is estimated at 25 per cent. Similarly, surveys show that the rates are significantly high among female sex workers.
Friday, September 26, 2008
It's Time for Political Susu with Lady D and Mama ASID - Friday 09/26/08
The US Bailout is still a Rumor; they fryin chicken and buyin lot-trees
September26
WHO SAYS THE FDIC WON’T RUN OUT OF MONEY AND BE UNABLE TO PAY THESE INVESTORS OFF
IT ONLY HAS 42 Billion - and Washington Mutual cost 700 Million; the Bail Out is estimated to cost 700 BILLION. So Tell Me Where is that going to Leave US ? BANKRUPT or BANKRUPT ?
The US Bailout is still a Rumor; they fryin chicken and buyin lot-trees Yeah I Said It.
the senate and president are sitting up in washington not doing a damn thang, about this financial spaghetti pie; they tryin to serve up as our economy, today. sounds more like Fishy Friday to me.. what y’all think about this ?They Argue, then They Argue somemore.. then they stop arguing and stop talking and start blaming each other.
WHAT ARE THEY DOING ????? EVEN WORSE WHY ARE WE LETTING THEM DO IT ????
Isn’t this what the Posse’ Comatatus is all about ? Somebody call TBoone and tell him to get in his Gas Caddie and Roll Up On Em, Rite NOW.
This Washington Mutual Failure was no sacrificial lamb. this was the first of many which will be led to the slaughter as we watch our savings run red in the streets. It’s Time For A Change Folks.
~RE
Q&A: US $700bn bail-out plan
(bbcnews) The crisis in financial markets has led to the comprehensive bail-out plan |
The plan, which has so far failed to get Congressional approval, is aimed at stabilising financial markets.
Initially Democrat and Republican legislators appeared to have struck a deal. However, the agreement unravelled when a group of Republican legislators objected to the plan on principle.
They are concerned that the package has not been thought through properly, and could cost the US taxpayer too much.
Why is the US government acting now?
The continued turmoil in US financial markets, which has triggered volatility in global share markets, has led US Treasury Secretary Henry Paulson to seek a comprehensive solution to the crisis.
The move comes after the US Treasury pledged $200bn to sort out financial problems at giant government-sponsored mortgage lenders Fannie Mae and Freddie Mac, lent $85bn to shore up insurance giant American International Group, and guaranteed $29bn to support the bail-out of investment house Bear Stearns in March.
The root of the market collapse is the fear that banks and other institutions still hold too many “toxic assets”, which are based on mortgages that are now going bad.
One in 10 US mortgage holders is now 90 days or more in arrears, and one in four families with a sub-prime mortgage is in serious arrears.
What is the Treasury planning to do?
The Treasury is asking for unlimited authority to purchase these “troubled assets” in order to remove the “illiquid mortgage assets” that are clogging the financial markets.
It wants wide authority to purchase any “residential and commercial mortgage-related assets, which may include mortgage-backed securities and whole loans”.
It also wants authority to purchase “any other assets as deemed necessary to stabilize the financial system” after consultation with the chairman of the Federal Reserve.
And it wants complete discretion to determine the timing and scale of any purchase, only subject to the total spending cap of $700bn.
The bail-out plan is scheduled to last two years, after which the authority to buy up assets, but not to sell them, would expire.
Will the plan be accepted?
So far it has faced sharp Congressional criticism and talks to achieve a break-through agreement have broken down. As yet the White House has failed to sway Congress, particularly some Republicans.
In intense discussions, the US Treasury Secretary Henry Paulson reportedly went down on one knee, begging Nancy Pelosi, the leader of the Democrats in the House of Representatives, to help push through the bail-out package.
Mr Paulson has warned that delaying the package would “threaten all parts of our economy”.
Both presidential candidates Barack Obama and John McCain want independent oversight of the plan and assurances that the salaries of the bosses at the benefiting banks would be restricted.
Some Republicans argue that a less financially risky alternative for US taxpayers would be for the government to provide insurance to companies who buy these assets, rather than buy them itself.
How will the US government finance the purchase?
The US government will borrow the money from world financial markets. The proposed legislation gives the Treasury the authority to issue an additional $700bn worth of Treasury securities.
The hope is that eventually the Treasury can sell the distressed assets back into financial markets once the housing market stabilises, perhaps making a profit on the sale.
Others are concerned that issuing more government debt, and virtually doubling the size of the budget deficit, could be inflationary.
The sale could also make the US more dependent on foreign banks, who may be the biggest purchasers of Treasury securities.
Who will carry out the purchases and manage the assets?
The US government intends to appoint agents to manage the purchases, which are likely to be other Wall Street firms.
It says that the assets will be managed privately but that the Treasury “will have full discretion over the management of assets” which it could “sell at its discretion or may hold assets to maturity”.
And any cash received by liquidating the assets “will be returned to the Treasury’s general fund for the benefit of US taxpayers”.
Will the distressed assets be easily priced?
No. This one of the hardest challenges for the Treasury.
It has provided no clear guidance, other than to say that the price of the assets will be determined “by market mechanisms where possible, such as reverse auctions”.
However, since no real market exists for many of these complex financial instruments, judging their true value will be extremely difficult.
Some mortgage-backed securities were recently sold by Merrill Lynch for 22% of their book value, while some regional banks have their assets valued at 50-75% of book value.
It the government bids low for these assets, it will force some banks to sharply revalue their assets, thus increasing the credit squeeze.
However, if they pay too much, they could be accused of giving a windfall profit to Wall Street firms that speculated on a bail-out.
What banks are eligible to take part?
The Treasury initially said that only US banks could sell distressed assets to the government, but after lobbying by foreign banks it now says that “participating financial institutions must have significant operations in the US”, which would include many of the larger investment banks.
However, the Treasury Secretary would have the discretion to add other institutions if “broader eligibility is necessary to effectively stabilize financial markets”.
Some banking organisations, notably in Germany, believe that all banks which hold US mortgage assets should be allowed to participate in the rescue deal.
 The fear was that HBOS might face a run on its deposits like Northern Rock |
The past month has been one of unprecedented turmoil in the financial markets.
Each day has brought an extraordinary development that would have seemed astonishing just the day before.
In the largest bank failure yet in the United States, Washington Mutual, the giant mortgage lender which had assets valued at $307bn (£167bn), was closed down by regulators. It was then sold to rival JP Morgan Chase for $1.9bn.
The US investment bank Lehman Brothers was allowed to go bust while one of the world’s largest insurers AIG was bailed out.
In the UK, a takeover of the biggest mortgage lender HBOS was approved by the government to forestall a run on it by customers.
To try and put an end to the turmoil, the US authorities have been seeking approval from Congress for a $700bn bail-out plan to relieve the US banking system of its mortgage debts and limits were put on so-called “short-selling” of shares, both in the UK and the USA.
BBC News looks at whether the average person is really in a different position from just a couple of weeks ago.
Is my bank safe?
This is what the UK (and US) government and financial authorities have been worried about - that banks exposed to too many defaulting mortgages might collapse.
With the very fear of this causing the financial system to seize up again, the worry was that this prospect might become a self-fulfilling prophecy, with a domino effect undermining the banking system here and abroad.
Hence the rush to ensure that HBOS was taken over, despite the bank and the authorities saying until they were blue in the face that it had lots of money.
What about my savings?
As long as you have less than £35,000 saved with any one UK financial institution, you will not lose if the worst happens and your bank goes under.
That is because of the protection offered by the Financial Services Compensation Scheme.
However, you might have to wait a while to get your money back.
Unlike in the US, where small banks frequently go bust, there is no mechanism in place yet to effect a swift rescue of a UK bank.
If you have more than £35,000 in any one institution you might consider moving some of it to another one.
Will my mortgage become more expensive?
Most likely yes, if you are looking for a new deal.
The cost to banks of borrowing and lending money between themselves has risen again, driving up the cost to banks of funding and offering new fixed-rate and other mortgage deals.
Libor, or the London Interbank Offered Rate, is the rate at which banks lend money to each other, and the three-month rate has reached its highest level since December, rising well above 6%.
Three major lenders have raised some of their mortgage rates - HSBC, Woolwich and First Direct - and other lenders are reviewing their deals.
The takeover by Lloyds TSB of HBOS will also reduce competition among mortgage lenders, tending to make it easier for the remaining lenders to charge that bit more for their loans - or offer less interest on bank accounts.
So mortgages are likely to be set higher above the Bank of England’s base rate than was the case before.
The Bank of England has said the rate of inflation would soon hit 5%, before falling back. Once it is convinced this is about to happen it may well cut rates to help stimulate the economy and overcome the impending economic recession.
So in due course mortgages should become cheaper; but not just yet.
Will this financial crisis make the economy worse?
Let us assume that no more banks get into trouble and that things stabilise.
Even then, the downturn is likely to be worse than would have been the case just a few weeks ago.
Banks and the money they lend are essential to the normal functioning of the economy.
If they have less money to lend, or do so on much more expensive terms, this will inevitably restrain economic activity, just as if the Bank of England had jacked up its bank rate.
Is my job more precarious than before?
Potentially - and not just for bank employees and others in the financial sector.
In more normal times, the big economic news this month would probably have been the further rise in unemployment.
Let us remember what that story is. Unemployment is now at its highest level for nine years at a rate of 5.5%.
Redundancies have been accelerating and the number of vacancies, and those actually in work, is dropping.
Sadly the trend in unemployment is firmly upwards and will probably continue until the economy starts to pick up again.
Wall Street rescue deal stalemate
(bbcnews)House Speaker Nancy Pelosi on ABC Good Morning America
Talks to agree a huge $700bn (£380bn) bail-out of the US financial industry have ended in a “shouting match”.
After several hours of discussions with President George W Bush, a group of Republican members of Congress blocked the government plan.The proposal would have seen the government buy bad debts from US banks to prevent more of them collapsing.
President Bush is due to make a statement about the negotiations at 0935 in Washington (1435 BST).
Both sides have agreed to resume talks later on Friday. The leader of the Democrats in the House of Representatives, Nancy Pelosi, told ABC News that she “hoped” a bailout plan could be agreed within 24 hours, because “it has to happen”.
Financial markets are gummed up because banks do not know exactly how much bad debt they hold and are therefore reluctant to lend to businesses, consumers and each other.
The fall-out of this credit crunch continues to make a huge impact:
- The United States suffered its largest bank failure yet, when regulators moved in to close down Washington Mutual and then sold it to US rival JP Morgan Chase for $1.9bn
- In a co-ordinated move the European Central Bank, the US Federal Reserve, the Bank of England, Bank of Japan and the Swiss National Bank announced new short-term loans to the banking sector worth tens of billions of dollars
- Banks continued to cut costs, with UK banking giant HSBC saying it would axe 1,100 jobs
- Shares in UK bank Bradford & Bingley fell another 20% to 17 pence before recovering slightly.
On Thursday, Democrat and Republican legislators appeared to have struck a deal.
A group of Democrats and Republicans even made a public statement, with Senator Christopher Dodd, chairman of the Senate Banking Committee, announcing that they had reached “fundamental agreement” on the principles of a bail-out plan.
 |  President Bush has lost authority to an extent that must be unprecedented in modern times  Justin Webb North America editor  |
The intense discussions reportedly saw US Treasury Secretary Henry Paulson literally down on one knee, begging Ms Pelosi to help push through the bail-out package.
However, the agreement unravelled when a group of Republican legislators objected to the principle of the plan.
The talks at the White House, led by Mr Paulson and US President George W Bush, then descended into what one participant described as “a full-throated discussion”.
Officials with the campaign team of Republican presidential candidate John McCain spoke of “a contentious shouting match”.
The Republican critics of the bail-out plan worry about both its cost and how it would involve the government in the financial sector. Instead, they want a government-backed insurance policy for the huge amounts of bad debt built up by US banks.
This proposal, however, was described as “unworkable” both by Democrat politicians and some US government officials.
Doubts over presidential debate
Some Democrats were scathing about the lack of support for the Paulson plan.
| FROM THE TODAY PROGRAMME |
Key finance firms ‘probed by FBI’
(bbcnews) The US government has stepped in to rescue some struggling institutions |
The FBI has begun an investigation into four major US financial institutions caught up in the current financial crisis, US media say.
Investigators are reportedly examining possible fraud by mortgage giants Fannie Mae and Freddie Mac, the failed bank Lehman Brothers and insurer AIG.
Top managers at those firms are also being investigated, the reports say.
In the past year, as the US housing market slumped, the FBI began a broad inquiry across the financial sector.
It was prompted by concerns over the way high-risk, “sub-prime” mortgages were being sold.
The FBI has been looking at lenders who sold home loans to buyers on low or unpredictable incomes and also the investment banks that packaged these loans and sold them on.
Bankruptcy
Investigations into the four companies were at an early stage, officials told the Associated Press news agency.
ABC News, citing unidentified sources, said the probes were assessing whether company officials systematically misled investors about the financial strength of their institutions.
The slump in the US housing market has resulted in billions of dollars of losses for these banks and turmoil in world credit markets.
Last week FBI director Robert Mueller said more than 20 large financial firms were already under investigation.
Bail-out
Freddie Mac, Fannie Mae and AIG are all being bailed out by the US government.
And the government recently announced a $700bn bail-out plan that would enable banks to offload their bad debt.
But both Democrat and Republican politicians have voiced concerns that taxpayers could be paying a high price for the risks initially undertaken by banks.
Democrats want help for individuals who stand to lose their homes, as well as limits on pay for the bosses at the firms in question.
If you enjoyed this post, make sure you subscribe to my RSS feed!UK Banks Get a Touch Up after Weak Peroid; Who’s Next, Not US
September26
Take a Look at these Charts and Get Prepared because the economic picture is exactly - HORRIBLE.
I’m sure most of us are not prepared for this type of bad news on a friday - which seems very much like that friday in 1929 when the Depression Began; for us it began years ago when we started preaching against this “Economic Bush Wack-ism”. enough is Enough. do not think that this is the end, because these facts and figures tell a whole different dim story.
It might be time to literally show the banks our feelings when we ALL Grab Our savings and put it in our mattress where it won’t loose any value while you’re sleeping on it.
~RE
The downturn in facts and figures
FALLING GROWTH FORECASTS
Projections for economic growth have been getting more pessimistic as the true nature of the credit crunch becomes clear. To see IMF projections since 2006 select one of these options.
.rads{margin:0 2px 0 0; padding-left:0;} .one{ margin:0 0 0 0;} .two{ margin:0 0 0 0;} .three{margin:0 0 0 0px;} p.f_m{width:416px; margin-bottom:3px;} label.kvote{font-size:11px;}  RISING COMMODITY PRICES  GLOBAL BANK LOSSES Banks and other financial institutions could lose $1 trillion from the credit crisis as mortgage-backed assets have lost most of their value. FROZEN CREDIT MARKETS  COLLAPSING HOUSING MARKETS Underlying the financial market wobbles is a real decline in US house prices nationwide for the first time since the 1930s. JITTERY STOCK MARKETS Stock markets around the world - from Shanghai to London - have plunged, while in the US the Dow Jones industrial average has made big losses this year. |
Bank giant HSBC axes 1,100 jobs
 HSBC hopes the cuts will allow it to weather the storm on financial markets |
Banking giant HSBC is to axe 1,100 jobs worldwide, blaming the current financial turmoil for the decision.
About half of the cuts, which will affect back room jobs at its global banking and markets operation, will take place in the UK.
HSBC employs about 335,000 people around the world.
Last month, HSBC said half year profits fell 28% to $10.2bn (£5.2bn), as it was forced to write-off $14bn from bad debts in the US and asset write-downs.
Meanwhile, pre-tax profits fell 35% to $2.1bn during the same period.
An HSBC spokesman said the firm had opted to reduce its workforce, “because of market conditions and the economic environment, and our cautious outlook for 2009″.
Many of the job-losses will be at the headquarters of HSBC’s investment banking division, which are in London’s Canary Wharf.
Banks around the world have been coming under increased pressure from the credit crisis currently affecting financial markets.
The problems have forced governments to step in and boost money markets as well as bail out a number of companies.
Earlier this year, the UK government had to buy mortgage lender Northern Rock, while in the US lenders Fannie Mae and Freddie Mac have been rescued as well as insurer AIG and investment bank Lehman Brothers filed for bankruptcy.
URL: More cash is injected into banks
 It is the latest in a series of co-ordinated central bank cash injections |
Central banks are taking co-ordinated action to lend extra cash to banks.
The Bank of England, US Federal Reserve, European Central Bank and Swiss National Bank will be involved.
The Bank of England will be lending an extra $30bn (£16bn) for a one week period, $10bn overnight and $40bn in three-month loans.
The Bank of England had been holding auctions of three-month loans once a month but will be holding them once a week for at least the next three weeks.
The central banks said that the extra cash was intended to help banks as they approach the end of the financial third quarter next week.
| Bottom line of all this is that the Age of Anxiety is far from over Robert Peston, Business editor, BBC News |
One of the reasons they have been reluctant to lend to each other has been the fear of further bank failures and the news that Washington Mutual has become the biggest US bank to fail will do nothing to help that situation.
Banks will be able to use their mortgage books as security on the loans.
Separately, the Bank of Japan injected cash into the Tokyo money markets on Friday for the eighth trading day in a row.
It injected 1.5 trillion yen ($14bn; £8bn) into the market, although it later removed 300bn yen of that.
Wednesday, September 24, 2008
It's Time for Political Susu with Lady D and Mama ASID - Wednesday 09/24/08
Most of us are Stymied on what this whole bailout will do to the economy; but we already know it's not good. from all projections made by competent economists - we are in for a repeat of 1929. and fyi this was an engineered crash meant to overwhelm the upcoming elected officials who will be saddled with the tremendous task of making this figure out of thin air. our economy is in shambles thanks to the shrub.why should he be allowed to make such a huge and impacting decision on our lives when he is going to walk away with a clean conscious after he has bankrupted America's Citizens ?
It's time to put a halt to this ramdom excessive risk and stop wall street from assuming it's previous posture as a human marketplace. check out the news from the Obama Camp and the Economists since we already presented the John McCane Lack of Understading Point of View in an earlier post today.
fyi - wall street was formerly the New York Slave Market - Take A Look for Yourself
Remember This Is OUR MONEY and WE HAVE A RIGHT TO SAY HOW IT'S SPENT SO SPEAK UP NOW.URL: Obama calls financial bailout price tag "staggering"
~RE
(reuters.com)
By John Whitesides, Political Correspondent CHARLOTTE, North Carolina (Reuters) - Democratic presidential candidate Barack Obama on Sunday called the $700 billion price tag for a financial market bailout "staggering" and said the final product must protect U.S. taxpayers and include a commitment to new regulatory reforms.
At a rally in downtown Charlotte, North Carolina, Obama laid the blame for the Wall Street crisis on Republican economic policies favored by John McCain, his rival in the November 4 presidential election.
"We're now seeing the disastrous consequences of this philosophy all around us -- on Wall Street as well as Main Street," Obama told the crowd estimated at about 20,000.
"And yet Senator McCain, who candidly admitted not long ago that he doesn't know as much about economics as he should, wants to keep going down the same, disastrous path," the Illinois senator said.
Negotiations over the unprecedented $700 billion bailout opened on Sunday between Congress and the administration of President George W. Bush.
The sweeping proposal would have the Treasury buy up bad mortgage-related debts from financial institutions, including U.S. subsidiaries of foreign banks, to try to stem the worst financial storm since the Great Depression.
"As of now, the Bush administration has only offered a concept with a staggering price tag, not a plan. Even if the U.S. Treasury recovers some or most of its investment over time, this initial outlay of up to $700 billion is sobering," Obama said.
"And in return for their support, the American people must be assured that the deal reflects the basic principles of transparency, fairness, and reform," he said.
TAXPAYERS AND HOMEOWNERS
Obama said any final package must ensure that taxpayers and homeowners were protected. He said it should include a global response and a commitment to broad regulatory reforms that would prevent another crisis.
In separate interviews on financial cable TV channel CNBC, Obama and McCain both called for independent oversight of the financial rescue.
"I think we have to have oversight. I don't think it can be a blank check," Obama said. "We have to make sure that there's some accountability mechanism in it."
McCain also said the proposed bailout should set limits on leaders of financial institutions rescued by the government.
"No CEO of any corporation or business that is bailed out by us, that is rescued by American tax dollars, should receive any more than the highest paid person in the federal government," McCain said.
Aides to Obama said he had spoken to Treasury Secretary Henry Paulson on Saturday and to congressional leaders including House Speaker Nancy Pelosi of California and Senate Democratic leader Harry Reid of Nevada, as well as New York Sen. Hillary Clinton and former President Bill Clinton over the weekend.
Obama has delayed his own proposal for reform until the details of the package are agreed upon. He criticized McCain's approach on Saturday, saying the Arizona senator's fondness for deregulation would put at risk retirement funds in Social Security and the health care plans of many Americans.
McCain addressed a convention of the National Guard in Baltimore on Sunday, largely talking about the war in Iraq and mentioning the financial crisis only briefly.
He said he has proposed a "plan for comprehensive reform of the broken institutions that allowed this crisis to become a grave threat to our economy. At the center of the plan is the principle that we must keep people in their homes and safe guard the life savings of all Americans by protecting our financial system and capital markets."
The visit to North Carolina is Obama's third in the general election campaign. The state is traditionally a Republican stronghold in presidential elections, but Obama has tried to make it competitive this year.
(Additional reporting by Ellen Wulfhorst in Baltimore; editing by Cynthia Osterman)
© Thomson Reuters 2008 All rights reserved
Bailout debate mulls making Wall Street pay
(reuters.com) Mon Sep 22, 2008 7:31pm EDTBy Mark Egan
Paulson's $700B sales jobNEW YORK (Reuters) - The planned $700 billion bailout to shore up the battered U.S. financial system looked set to drag into next week as Washington lawmakers haggled over how exactly they could make Wall Street pay for its rescue.
Stocks and the U.S. dollar tumbled on Monday as emerging details of the plan left many players skeptical that the rescue, which would give powers to the U.S. Treasury Department to buy up toxic mortgage-related debt from financial groups, would work.
"The big detail we want to know is how is the government going to buy these securities, and what they will pay, how that reverse auction will work," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "And the big question is, 'Will this bring us out of the woods?'"
A day after America's last two big investment banks, Goldman Sachs and Morgan Stanley, ended Wall Street's swashbuckling era by securing Federal Reserve approval to become commercial banks, all eyes shifted to Washington.
U.S. lawmakers and Bush administration officials were hammering out details of a deal they hope will end the worst U.S. financial crisis since the Great Depression.
U.S. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke start two-days of congressional hearings on Tuesday to hasten approval of the bailout.
With the economy the No. 1 issue in a U.S. presidential election that is about six weeks away, lawmakers want a plan in place quickly, fearing delay could send markets reeling again.
But with one-third of the U.S. Senate and the entire U.S. House of Representatives up for re-election on November 4, lawmakers will want to sound tough on such hot-button issues as the pay of reckless executives.
"We are not sending a blank check to Wall Street," House Speaker Nancy Pelosi said after holding bipartisan talks.
With so many ideas being floated in Washington on Monday, one congressional aide who asked not to be identified likened the scene to a "Turkish bazaar of public policy ideas."
The crisis has unsettled world markets, and Group of Seven finance ministers and central bank heads promised "heightened close cooperation" to safeguard the global economy.
The latest jitters came after the deal late Sunday scrapped the investment bank model synonymous with Wall Street, ensuring Goldman Sachs Group Inc and Morgan Stanley will avoid the fate of rivals that collapsed or were bought in the brutal meltdown of recent weeks.
Morgan Stanley went a step further, striking a deal with Japan's largest bank, Mitsubishi UFJ Financial Group Inc, on Monday to spend as much as $8.5 billion for about one-fifth of the prestigious 73-year-old investment bank, sending Morgan's shares higher before closing down.
ANGER AT BAILOUT
After Monday's talks, U.S. Rep. Barney Frank, a top Democrat, said the U.S. government would take equity in the companies seeking a bailout. But the U.S. Treasury is against that idea, sources close to Treasury told Reuters.
The White House said it agreed to an oversight board to monitor the bailout, which Democrats had pushed for. And Frank said there was also agreement that the plan should minimize the number of Americans who will lose their homes to foreclosure.
But lawmakers and Treasury officials were at odds on the emotional issue of whether executives at the companies in need of rescue must agree to limits to their compensation.
With details still in dispute, Frank said the legislation could take until next week to complete.
Earlier, U.S. President George W. Bush said, "Failure to act would have broad consequences far beyond Wall Street."
But U.S. Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform, voiced outrage at the notion of any bailout without a cap on executive pay.
"The (Bush) administration's plan ... would enrich the Wall Street executives whose reckless investments caused the financial crisis," the powerful California Democrat said. "The taxpayer is being asked to risk billions to protect the bonuses of investment bankers."
Even some Republicans came out against the bailout.
Alabama Sen. Richard Shelby, the top Republican on the Senate Banking Committee, said he feared the bailout was "neither workable nor comprehensive."
"It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said.
Sen. Chuck Hagel, a Nebraska Republican, told Reuters after a meeting of fellow Senate Banking Committee members, "I suspect there will be opposition. We're not there. We don't even have a product yet."
South Carolina Republican Sen. Jim DeMint called the Bush plan "completely unacceptable."
The uncertainty caused stocks to lose most of the gains seen on Friday, when word of the plan sparked Wall Street's best one-day gain since 1987. The S&P 500 index dropped 3.8 percent.
Buoyed by the dollar's near 2 percent decline, U.S. crude oil futures soared $16.37 to settle at $120.92, the biggest ever jump in a trading session. At one point, oil was up a stunning $25.45, or 24.3 percent.
In a crisis that has lurched from issue to issue since the U.S. economy first showed weakness and home prices began to tumble last year, prompting a credit crunch and the collapse of investment banking, some wondered where it would end.
"The thing that scares me is the breadth of it," said Robert MacMahon, managing director for restructuring at GE Corporate Lending.
Democrats, who control both chambers of Congress, pushed for changes to the plan on concerns that it could expand the powers of the executive branch without adequate oversight -- a frequent Democratic criticism of the Bush administration.
GLOBAL CRISIS
The crisis is threatening global markets. Central banks from Europe to Japan sought to shore up banks by injecting money into the banking system.. Even in the oil-rich Gulf region, the crisis was felt.
The United Arab Emirates Central Bank launched its first-ever emergency funding facility to help fund banks as global lending between institutions shriveled.
The Fed's agreement to convert the once high-flying Goldman and Morgan Stanley investment banks into more conventional depositary institutions was Washington's latest effort to restore calm to chaotic markets and avoid a deep recession.
Both Goldman and Morgan will now face a thicket of new regulations, which will bolster their resources but also curb the spectacular profit growth that made investment bankers among the highest paid in the nation.
The rescue came together after seismic shifts on Wall Street that saw Lehman Brothers Holdings Inc file for bankruptcy, Merrill Lynch & Co Inc agree to sell itself to Bank of America, and the Fed stage an $85 billion rescue of American International Group Inc.
AIG shares gained 23 percent on Monday on reports its investors were hatching a plan to prevent the insurer from falling into government ownership, by repaying the Fed's loan.
Goldman and Morgan Stanley were the last of the big five investment banks that shaped 20 years of Wall Street history after Bear Stearns collapsed earlier this year.
(Reporting by Nancy Waitz, Tom Ferraro, John Poirier, Kevin Drawbaugh, David Lawder, Richard Cowan, Jeremy Pelofsky and Emily Kaiser in Washington; Kristina Cooke, Bill Rigby, Jason Szep and Richard Leong in New York; Jessica Hall in Philadelphia; Blaise Robinson in London; Editing by John Wallace, Jeffrey Benkoe)
Stocks and the U.S. dollar tumbled on Monday as emerging details of the plan left many players skeptical that the rescue, which would give powers to the U.S. Treasury Department to buy up toxic mortgage-related debt from financial groups, would work.
"The big detail we want to know is how is the government going to buy these securities, and what they will pay, how that reverse auction will work," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "And the big question is, 'Will this bring us out of the woods?'"
A day after America's last two big investment banks, Goldman Sachs and Morgan Stanley, ended Wall Street's swashbuckling era by securing Federal Reserve approval to become commercial banks, all eyes shifted to Washington.
U.S. lawmakers and Bush administration officials were hammering out details of a deal they hope will end the worst U.S. financial crisis since the Great Depression.
U.S. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke start two-days of congressional hearings on Tuesday to hasten approval of the bailout.
With the economy the No. 1 issue in a U.S. presidential election that is about six weeks away, lawmakers want a plan in place quickly, fearing delay could send markets reeling again.
But with one-third of the U.S. Senate and the entire U.S. House of Representatives up for re-election on November 4, lawmakers will want to sound tough on such hot-button issues as the pay of reckless executives.
"We are not sending a blank check to Wall Street," House Speaker Nancy Pelosi said after holding bipartisan talks.
With so many ideas being floated in Washington on Monday, one congressional aide who asked not to be identified likened the scene to a "Turkish bazaar of public policy ideas."
The crisis has unsettled world markets, and Group of Seven finance ministers and central bank heads promised "heightened close cooperation" to safeguard the global economy.
The latest jitters came after the deal late Sunday scrapped the investment bank model synonymous with Wall Street, ensuring Goldman Sachs Group Inc and Morgan Stanley will avoid the fate of rivals that collapsed or were bought in the brutal meltdown of recent weeks.
Morgan Stanley went a step further, striking a deal with Japan's largest bank, Mitsubishi UFJ Financial Group Inc, on Monday to spend as much as $8.5 billion for about one-fifth of the prestigious 73-year-old investment bank, sending Morgan's shares higher before closing down.
ANGER AT BAILOUT
After Monday's talks, U.S. Rep. Barney Frank, a top Democrat, said the U.S. government would take equity in the companies seeking a bailout. But the U.S. Treasury is against that idea, sources close to Treasury told Reuters.
The White House said it agreed to an oversight board to monitor the bailout, which Democrats had pushed for. And Frank said there was also agreement that the plan should minimize the number of Americans who will lose their homes to foreclosure.
But lawmakers and Treasury officials were at odds on the emotional issue of whether executives at the companies in need of rescue must agree to limits to their compensation.
With details still in dispute, Frank said the legislation could take until next week to complete.
Earlier, U.S. President George W. Bush said, "Failure to act would have broad consequences far beyond Wall Street."
But U.S. Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform, voiced outrage at the notion of any bailout without a cap on executive pay.
"The (Bush) administration's plan ... would enrich the Wall Street executives whose reckless investments caused the financial crisis," the powerful California Democrat said. "The taxpayer is being asked to risk billions to protect the bonuses of investment bankers."
Even some Republicans came out against the bailout.
Alabama Sen. Richard Shelby, the top Republican on the Senate Banking Committee, said he feared the bailout was "neither workable nor comprehensive."
"It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said.
Sen. Chuck Hagel, a Nebraska Republican, told Reuters after a meeting of fellow Senate Banking Committee members, "I suspect there will be opposition. We're not there. We don't even have a product yet."
South Carolina Republican Sen. Jim DeMint called the Bush plan "completely unacceptable."
The uncertainty caused stocks to lose most of the gains seen on Friday, when word of the plan sparked Wall Street's best one-day gain since 1987. The S&P 500 index dropped 3.8 percent.
Buoyed by the dollar's near 2 percent decline, U.S. crude oil futures soared $16.37 to settle at $120.92, the biggest ever jump in a trading session. At one point, oil was up a stunning $25.45, or 24.3 percent.
In a crisis that has lurched from issue to issue since the U.S. economy first showed weakness and home prices began to tumble last year, prompting a credit crunch and the collapse of investment banking, some wondered where it would end.
"The thing that scares me is the breadth of it," said Robert MacMahon, managing director for restructuring at GE Corporate Lending.
Democrats, who control both chambers of Congress, pushed for changes to the plan on concerns that it could expand the powers of the executive branch without adequate oversight -- a frequent Democratic criticism of the Bush administration.
GLOBAL CRISIS
The crisis is threatening global markets. Central banks from Europe to Japan sought to shore up banks by injecting money into the banking system.. Even in the oil-rich Gulf region, the crisis was felt.
The United Arab Emirates Central Bank launched its first-ever emergency funding facility to help fund banks as global lending between institutions shriveled.
The Fed's agreement to convert the once high-flying Goldman and Morgan Stanley investment banks into more conventional depositary institutions was Washington's latest effort to restore calm to chaotic markets and avoid a deep recession.
Both Goldman and Morgan will now face a thicket of new regulations, which will bolster their resources but also curb the spectacular profit growth that made investment bankers among the highest paid in the nation.
The rescue came together after seismic shifts on Wall Street that saw Lehman Brothers Holdings Inc file for bankruptcy, Merrill Lynch & Co Inc agree to sell itself to Bank of America, and the Fed stage an $85 billion rescue of American International Group Inc.
AIG shares gained 23 percent on Monday on reports its investors were hatching a plan to prevent the insurer from falling into government ownership, by repaying the Fed's loan.
Goldman and Morgan Stanley were the last of the big five investment banks that shaped 20 years of Wall Street history after Bear Stearns collapsed earlier this year.
(Reporting by Nancy Waitz, Tom Ferraro, John Poirier, Kevin Drawbaugh, David Lawder, Richard Cowan, Jeremy Pelofsky and Emily Kaiser in Washington; Kristina Cooke, Bill Rigby, Jason Szep and Richard Leong in New York; Jessica Hall in Philadelphia; Blaise Robinson in London; Editing by John Wallace, Jeffrey Benkoe)
© Thomson Reuters 2008 All rights reserved
the Shady McCane ticket has flip flopped on everything they've said; from what they've done up to this point.
a case in point is Mccane's whole team of advisors - ALL Lobbyists; None Democrat; All For Profit;
When did elections stop being about the issues and more about the attacks against the opponent ?
somehow he seems to be totally unaware that initiating these attacks lead others to examine his politics and in fact his basics. he is not very smart to do this, because his resume' doesn't help. neither does his educational background. McCane admits time and again that he's not prepared.
why would we give the control of our lives for the next four years to some one who thinks a Blackberry is a fruit used in pies. this man does nothing what so ever to give the impression that he's anything other than dumb as number 894 in a a class of 899.. sad; totally a looser. a dumb looser.
do we no longer count in this whole fiasco of a presidential race ?
I'm looking for any light anywhere in that long dark tunnel of lies they call a campaign strategy.
today when I read this article below, I had to literally go get a glass of Ice Water. Yes I suggest You Get One Too, cause this is gonna be a very slow looooooooong read; but well worth again looking at their nonsensical approach to how they'd govern US.
Hey Mr and Ms Shady McCane - I need a Bail Out NOW, not just a hand up. forget AIG and the rest of your big bloated friends. us, the US Taxpayers, the folks you may end up working for need a bailout.
Here's the Jimmy Kimmel translation
so what's your plan for that Shady McCane ?
I have yet to find evidence of the consideration for the us people - so in my simple scheme of thought; I say Forget Them. Let Them Rot. Call the electors in your district and tell them what you think and urge them to vote your conscious not the conscious of the media. Ignore the media. vote with the folks who live on their block and are sharing their circumstances. chances are, they'll avoid the Shady McCane ticket, cause it's just too expensive to keep bailing out the big businesses at the expense of the babies, old folks and unemployed of this country.
nuff said, for tonite - listen to Political Susu tomorrow and you'll get more than you bargain for, believe that baby. we're unraveling this spaghetti and putting a lil sauce on the whole deal.
even a dead journalist gets him to eat his words - Large Up Tim Russert, ya still ballin
a 22 percent unemployment rate is not a psychological problem.. 1.7 trillion dollar net worth loss by americans in the past year is record. oil is higher than it's ever been.. and what is he saying ?
He Doesn't Have That Kind of Expertise ?
'I don't understand Economics and you may know it better than I do' - John McCain July 2008It's Time for a Change; Lets Make ONE NOW !
~RE
John McCain promises bipartisan Presidency
John McCain has moved to portray himself as a bipartisan candidate by promising to move key political staff outside the White House and appoint a Democrat to a top economic job.
Mr McCain said: It's time to show the American people that politics will not be part of this massive effort we're going to have to go on to restore the nation's economy Photo: AP
He has pledged to make a Democrat head of the main financial regulator, the securities and exchange commission, a crucial role following last week's Wall Street collapse.
He will also move the political affairs office, containing the president's main policy-making staff, to another government building.
Barack Obama, the Democratic nominee, initially portrayed himself as a bipartisan figure.
But he has since become a more traditional candidate, largely because of the huge advantage Democrats enjoy this year with President George W Bush's poll ratings in the doldrums.
Mr McCain's two-pronged strategy is for Governor Sarah Palin of Alaska, his vice-presidential running mate, to excite Republican activists and some independent women, leaving the Arizona senator to make a direct play for the centre ground.
Despite the mocking from Democrats, her lack of contact with the media and her uncertain responses to some questions in her first big television interview with ABC News, Mrs Pallin, 44 and a mother of five, continues to be a huge draw.
Some 60,000 were estimated by a fire marshal to have attended Mrs Palin's rally at the Villages, a retirement community near Orlando, in Florida, on Sunday.
"We've got to have a White House that is without politics," Mr McCain said in an interview with the CBS's "60 Minutes".
The taxpayer-funded political affairs office would instead move to the headquarters of the Republican National Committee on Capitol Hill, he vowed..
The Bush administration has been heavily criticised for involving the White House too closely in Republican party politics.
Karl Rove, Mr Bush's chief election strategist, was put on the public payroll until he resigned from a senior job in the political affairs office in August 2007.
Mr McCain said: "It's time to show the American people that politics will not be part of this massive effort we're going to have to go on to restore the nation's economy."
He said that Andrew Cuomo, the scion of a prominent Democratic family and a housing minister under President Bill Clinton, would be an ideal head of the securities and exchange commission.
"I think he is somebody who could restore some credibility, lend some bipartisanship to this effort," he said.
His service under Mr Clinton was a bonus, Mr McCain said, because "he did a good job and he has respect and he has prestige".
Last week, Mr McCain said that he would fire Chris Cox, the former Republican congressman who currently heads the commission.
He suggested that an oversight board made up of figures respected in the business world such as billionaire financier Warren Buffett, an Obama supporter, Mr McCain's Republican primary opponent Mitt Romney, a former Massachusetts governor, and mayor Michael Bloomberg of New York.
At the same time, Mr Obama made a gesture to Republicans, saying that Henry Paulson, the treasury secretary, would be involved in a transition to an Obama administration.
"That doesn't necessarily mean that he'd end up being the secretary [of the] treasury, but I think it's important for us to make sure that those who are currently in charge... are deeply involved in the transition process," he said in a CNBC interview.
Mr McCain said he was worried about the power the treasury secretary wielded.
"I am greatly concerned that the plan gives a single individual [Mr Paulson] the unprecedented power to spend one trillion dollars on the basis of not much more than 'trust me'," he said.
The Alaska Disasta’: Sarah Palin protested at home
Anti Palin Rally in Alaska
“[The] Alaska Women Reject Palin rally was to be held outside on the lawn in front of the Loussac Library in midtown Anchorage. Home made signs were encouraged, and the idea was to make a statement that Sarah Palin does not speak for all Alaska women, or men. I had no idea what to expect.
The rally was organized by a small group of women, talking over coffee. It made me wonder what other things have started with small groups of women talking over coffee. It’s probably an impressive list. These women hatched the plan, printed up flyers, posted them around town, and sent notices to local media outlets. One of those media outlets was KBYR radio, home of Eddie Burke, a long-time uber-conservative Anchorage talk show host. Turns out that Eddie Burke not only announced the rally, but called the people who planned to attend the rally “a bunch of socialist baby-killing maggots,” and read the home phone numbers of the organizers aloud over the air, urging listeners to call and tell them what they thought. The women, of course, received some nasty, harassing and threatening messages.
I felt a bit apprehensive. I’d been disappointed before by the turnout at other rallies. Basically, in Anchorage, if you can get 25 people to show up at an event, it’s a success. So, I thought to myself, if we can actually get 100 people there that aren’t sent by Eddie Burke, we’ll be doing good. A real statement will have been made. I confess, I still had a mental image of 15 demonstrators surrounded by hundreds of menacing “socialist baby-killing maggot” haters.
It’s a good thing I wasn’t tailgating when I saw the crowd in front of the library or I would have ended up in somebody’s trunk. When I got there, about 20 minutes early, the line of sign wavers stretched the full length of the library grounds, along the edge of the road, 6 or 7 people deep! I could hardly find a place to park. I nabbed one of the last spots in the library lot, and as I got out of the car and started walking, people seemed to join in from every direction, carrying signs.
Never, have I seen anything like it in my 17 and a half years living in Anchorage. The organizers had someone walk the rally with a counter, and they clicked off well over 1400 people (not including the 90 counter-demonstrators). This was the biggest political rally ever, in the history of the state. I was absolutely stunned. The second most amazing thing is how many people honked and gave the thumbs up as they drove by. And even those that didn’t honk looked wide-eyed and awe-struck at the huge crowd that was growing by the minute. This just doesn’t happen here.
Then, the infamous Eddie Burke showed up. He tried to talk to the media, and was instantly surrounded by a group of 20 people who started shouting O-BA-MA so loud he couldn’t be heard. Then passing cars started honking in a rhythmic pattern of 3, like the Obama chant, while the crowd cheered, hooted and waved their signs high.
So, if you’ve been doing the math Yes. The Alaska Women Reject Palin rally was significantly bigger than Palin’s rally that got all the national media coverage! So take heart, sit back, and enjoy the photo gallery. Feel free to spread the pictures around to anyone who needs to know that Sarah Palin most definitely does not speak for all Alaskans.The citizens of Alaska, who know her best, have things to say.”
Ladies do your bills cost less than a mans ?
usually my bills don't indicate if they are Penis or Vagina Rate..
I know you are thinking now.. What The.. Whatttt ?
simply put, Shady McCane will work for less than Dick Chaney - I know, Sweet Minty Jesus!
- Why ? well lets take a look at this little ditty from a great news blog I visit often - Wordsmithlind:
I wonder if McCain’s decision to choose Palin as VP-candidate is part of his economic plan. As has been ever so slightly mentioned in the media, McCain voted against the Lilly Ledbetter Fair Pay Act*** which in an essence would close any loopholes in the Civil Rights Act of 1964 thus truly insuring equal pay for equal work. In this day and age, how can anyone be against equal work for equal pay based on sex, race, religion, or any other inequality? Apparently McCain is fine with this (along with 41 others in the Senate) and it seems as if Palin has no problem with this either being that she is standing alongside this man. As a woman, regardless of political affiliation, you would think she would stand up for what is right and just—namely, equality. Instead she sticks with her backwards 1950’s politics. I wonder if she is going to be willing to take a pay cut if she gets into the White House;Uh Huh.. just what I was talkin about - see I knew you'd get it instantly. Booyah !
currently Cheney is receiving $208,100 per year. Now Lilly Ledbetter was making 40% less than her male co-workers for the same work, so that would make Palin’s salary $124,860.
Hey, sorry Palin, that’s just the way the world works according to McCain and yourself and your outdated politics. I quote Palin by saying it is “God’s will.” - end quote.
what kinda foolywang economics is that ?
this coming from the alaska politician who says "Polar Bears Are Not In Danger from Global Warming". Sheesh..
Somebody is gonna slap this woman with a grilled cheese coated lawsuit real soon for these obviously cartoon logic enviromental comments. she would do better to call herself the vice comic. sheesh..
there is almost nothing worse than seeing someone so unprepared trying to run on 'A Teenage Pagent Sash and Royal Wave Platform'(Camilla She Ain't) instead of honest hard experience and readiness for the tough job ahead.
to quote one of my favorite ska songs from long ago "Stand Down Shady - Stand Down"
Shady why do you keep lying when you know that journalists will find your old lies ?
this lil piece is all about the Shady McCane Media Boycott - and believe me I think it's time to highlight their real policy and history as bright as possible.
so what if they refuse to talk honestly ?
That Means their history is the coverage; and it will be factual and without their contrived pagentry. this royal wave of bs is due to pass like stale gas very quickly; as the american public is finding it's logic, in the actions put forth in this humongeous crisis in the financial sector - where John McCane's buddies all make their cheddar, off us poor suckers.
Dig This - from My Friends at Think Progress - go hit em up for a good read on this political mess
Media Threaten Boycott Over McCain-Palin Campaign’s Efforts To Restrict Access»
Earlier today, the McCain-Palin campaign backed out of its promise to allow print journalists from reporting on Gov. Sarah Palin’s (R-AK) U.N. meetings this afternoon. Instead, the campaign wanted to turn it into an elaborate photo op, deciding to allow photographers and a CNN camera crew only. According to Politico, the press have begun to revolt:But the imbroglio began developing Tuesday morning when Palin’s handlers informed the small print press contingent covering her campaign that the print reporter designated to cover the events, Elizabeth Holmes of the Wall Street Journal, would not be allowed to cover the sprays. […]
The campaign also at first moved to bar CNN, the television network designated for pool duty, from sending its editorial producer – basically a hybrid print/video journalist – though the campaign budged when the network threatened to withhold its cameras as well.
-John McCanes' No Talk Express Tour - 09/23/08 in Strongsville Ohio-
With increasingly negative press coverage over these events, the campaign eventually allowed Holmes into the Karzai event for a whopping 29 seconds, and has now agreed to let her cover the next two “sprays” before Palins’ meetings with Colombian President Uribe and former U.N. Secretary of State Kissinger. Earlier in the day, the networks had voted to ban any use of photographs and videos from the event, to protest the lack of editorial presence and deny the McCain-Palin campaign of a free photo op.
Similarly, in Ohio today, Sen. John McCain (R-AZ) ignored questions from reporters on the bailout, prompting one journalist to yell, “Has your bus become the No Talk Express?”
Today at 4 p.m. ET, McCain will be holding a press conference, his first since Aug. 13.
Palin has yet to hold a press availability.
URL: NORML.ORG IL: Palin's Double Standard on Marijuana
When it comes to questions about youthful marijuana use, Sarah Palin is no Slick Willie. "I can't claim a Bill Clinton and say that I never inhaled," the Republican vice presidential candidate told the Anchorage Daily News in 2006, before she was elected governor of Alaska.
Palin has the difficulty reconciling her personal experience with her policy positions, a problem also shared by former pot smoker Barack Obama. Neither of them has a persuasive answer to the question of why other Americans should be arrested for something they did with impunity.
Pot smokers who are arrested do not typically spend much time in jail. But as a 2007 report from the Center for Cognitive Liberty & Ethics noted, they pay a substantial cost that includes not only public humiliation and legal expenses but also collateral sanctions such as "revocation or suspension of professional licenses, barriers to employment or promotion, loss of educational aid, driver's license suspension, and bars on adoption, voting and jury service."
According to figures the FBI released this week, about 873,000 people were arrested on marijuana charges in the United States last year, a record. Pot busts accounted for nearly half of the 1.8 million drug arrests; as usual, the vast majority, about 775,000, were for simple possession, as opposed to cultivation or sale.
This is the fifth year in a row marijuana arrests have increased, an upward trend that began in the early 1990s. Three times as many people were arrested on marijuana charges last year as in 1991. The increase in arrests does not correspond to an increase in use; instead, the chance that any given pot smoker will be busted ( though still small ) is much higher than it was two decades ago. It is also higher than when Palin attended college in the '80s, which is presumably when she tried marijuana.
By way of extenuation, the Anchorage Daily News reported, Palin noted that marijuana "was legal under state law," although "illegal under U.S. law." In 1975, the Alaska Supreme Court ruled that the state constitution, which says the "right of the people to privacy is recognized and shall not be infringed," prohibits the government from punishing people for possessing small amounts of marijuana in their homes.
A 1990 ballot initiative ostensibly recriminalized all marijuana possession, but in 2003, the Alaska Court of Appeals ruled that "a statute which purports to attach criminal penalties to constitutionally protected conduct is void." The following year, the Alaska Supreme Court declined to hear the state's appeal of that decision.
In 2006, the state Legislature, at the urging of Palin's predecessor, Frank Murkowski, passed another law that supposedly made private possession of marijuana for personal use a crime. A judge found that law unconstitutional as well, and the Alaska Supreme Court is considering an appeal of her ruling.
The upshot is that smoking marijuana in the privacy of one's home is just as legal in Alaska today as it was when Palin did it. Evidently, she regrets this.
As Wasilla mayor in 2000, Palin championed a city council resolution opposing a ballot initiative that would have legalized marijuana for adults. In March her administration asked the Alaska Supreme Court to reverse its 1975 decision shielding private marijuana use, arguing the drug is more dangerous than it used to be.In other words, Palin got to smoke pot without worrying about legal consequences and now wants to deny that assurance to fellow Alaskans doing exactly the same thing. "Palin doesn't support legalizing marijuana," the Anchorage Daily News reported in 2006, because she worries about "the message it would send to her four kids."
It's Palin's job to teach her children that certain pleasures are reserved for grownups. The government should not continue to arrest adults who are harming no one simply because her children are easily confused.
Pubdate: Thu, 18 Sep 2008
Source: Chicago Sun-Times (IL)
Copyright: 2008 The Sun-Times Co.
Contact: letters@suntimes.com
Website: http://www.suntimes.com/
Details: http://www.mapinc.org/media/81
Author: Jacob Sullum
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