Why Paulson has not explained the real purpose of the bailout to the American people

Related:“An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention,” Paulson said 18 months ago.Treasury Secretary Henry Paulson declared that the current turmoil in markets and financial institutions ultimately will “make things better.” (September 15, 2008)The mystery has been solvedFor [...] continue reading world news

Wachovia faced a silent bank run

Fearing a loss of funding over the weekend, the FDIC forced the sale.10/02/08 Downtown Charlotte skyline showing the Wachovia First Street Campus headquarters project under construction. DAVIE HINSHAW of the Observer from WCNC’s AirStar36 On Friday, with its stock plunging 27 percent, Wachovia experienced a “silent run” on deposits, but the bigger worry for regulators [...] continue reading world news

U.S. loses 159,000 jobs in September, worst one-month drop in five years

WASHINGTON — As the presidential election season nears its climax, there is growing evidence that the country is slipping into the deepest recession in decades.The latest marker came Friday, when the government reported that employers shed 159,000 jobs in September, far more than expected. That was the worst one-month drop in more than five years [...] continue reading world news

What You Could Get for $700 Billion

The US Congress is going to take another stab at passing the gigantic bank bailout package on Friday. But how much money are we talking about? SPIEGEL ONLINE gives you an idea. $700 Billion. What else could be done with all those zeros? We have some ideas. (AFP)Money makes the world go round — and [...] continue reading world news

Citigroup Girds for Wachovia Takeover Battle With Wells Fargo

Oct. 4 (Bloomberg) — Citigroup Inc., hobbled by $61 billion of subprime-related losses, now faces its biggest takeover battle in a fight with Wells Fargo & Co. for control of Wachovia Corp.Citigroup fell as much as 21 percent yesterday in New York trading after Wells Fargo, the biggest U.S. bank on the West Coast, agreed [...] continue reading world news

World economic crisis: France moves into recession

The French premier, Francois Fillon, today warned that the world was “on the edge of the abyss” as his country moved into an official recession.Fillon’s comments, blaming an “irresponsible” financial system, came as the Dutch government seized control of bancassurer Fortis’s Netherlands operations in a €16.8bn (£13.06bn) deal greed with the Belgian and Luxembourg authorities.The [...] continue reading world news

Europe fights financial storm as bank deal collapses

Nicolas Sarkozy (C) flanked by Angela Merkel (L) and Gordon BrownPARIS (AFP) - The leaders of Europe’s four main economic powers vowed to protect fragile banks in their fight against the global credit crisis as the biggest rescue in German financial history collapsed.France, Germany, Britain and Italy put on a united front, promising a more [...] continue reading world news

Financial Crisis: Hypo Real Estate on brink of collapse

Another top European bank is on the brink of collapse after a consortium of German financial institutions withdrew from a state-led rescue plan agreed two days ago.Hypo Real Estate is the fifth German bank to be bailed out because of the credit crunch Photo: APHypo Real Estate (HRE), the second largest mortgage lender in [...] continue reading world news

Germany guarantees bank deposits

Chancellor Angela Merkel and Finance Minister Peer Steinbrück announcing their plan for Hypo Real Estate in Berlin on Sunday. (Pool photo by Rainer Jensen)FRANKFURT: As German leaders and bankers worked feverishly to rescue a lender considered too big to fail, the government announced Sunday that it would guarantee all private savings accounts in Germany - [...] continue reading world news

Iceland’s economy on brink as lender falters

ICELAND’S Kaupthing Bank is headquartered in Reykjavik, about 1800 kilometres from the City of London, but the financial volcano threatening to erupt on the island could send shockwaves down every high street in Britain.The bank, with liabilities several times larger than Iceland’s gross domestic product, runs accounts for 150,000 Britons. It is also a key [...] continue reading world news

BNP Paribas to take control of Fortis

FRENCH bank BNP Paribas has confirmed it has taken control of ailing finance group Fortis’s arms in Belgium and Luxembourg to create the “leading European bank in terms of deposits.”The deal, thrashed out over a weekend of intense talks, leaves the Belgian and Luxembourg governments with reduced holdings in Fortis, which they partly nationaised [...] continue reading world news

Global Stocks Tumble: $2.5 Trillion Global Equities Erased

Credit Crisis Widens Sam Farhood, left, and James Denaro work on the floor of the New York Stock Exchange prior to the Opening Bell in New York, on Oct. 6, 2008. Photographer: Andrew Harrer/Bloomberg News Oct. 6 (Bloomberg) — Stocks tumbled around the world, the euro fell the most against the yen since its debut [...] continue reading world news

Financial crisis: Stock market suffers its worst fall in history

The UK stock market has suffered its worst one-day fall in history as the banking crisis intensified.The FTSE-100 index of Britain’s biggest companies dropped by 391.06 points - its steepest ever fall - to end the day down 7.9 per cent.The FTSE’s tumble was mirrored across Europe, as markets in France, Germany, Italy and Spain [...] continue reading world news

Stricken Iceland sends out financial SOS

Economy is in turmoil as currency collapses and inflation soarsIceland was seeking the financial help of the US and Scandinavian countries last night as politicians and businessmen scrambled to save the country’s economy.Officials were locked in meetings for most of the weekend, with the Government hoping to come to some sort of resolution before stock [...] continue reading world news

Fed May See Companies, States as Next Crisis Fronts

Oct. 6 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke may find the next fronts of the financial crisis to be just as chilling as last month’s downfall of Wall Street titans: its spread to corporate America and state and local governments.Companies from Goodyear Tire & Rubber Co. and Duke Energy Corp. to Gannett Co. [...] continue reading world news

Lehman chief got $480M

Rep. Henry Waxman asks Lehman chief whether his hefty salary from the failed company is fair.Added: Oct. 06, 2008Source: YouTube continue reading world news

The Dollar is Doomed

When the precious metals were smashed out of nowhere and the dollar started climbing this summer I became very worried. I didn’t question my conviction that commodities are in a bull market, or that precious metals in particular are undervalued. I felt something sinister was at work. Neither move was justified on a fundamental level. [...] continue reading world news

Economic chaos creates surge in homelessness

CAMBRIDGE, Massachusetts (AP) — The number of homeless families in Massachusetts has surged — a spike that has overwhelmed the state’s shelter capacity and forced it to again place homeless families in motels.The number of homeless families living in Massachusetts motels skyrocketed in September 2008.Driving the increase is the sour economy, rising energy costs, escalating [...] continue reading world news

Bank shares plunge again in panicky trading

Shares in Britain’s banks plunged again amid panicky trading following emergency talks with the government over a possible injection of billions of pounds of taxpayers’ money into the banking sector.Royal Bank of Scotland nosedived by almost 40% to 90p in morning trading - its lowest point since the recession of the early 1990s. Barclays, Lloyds [...] continue reading world news

American financier kills his family and himself after losing fortune in credit crunch

Tragedy: A coroner’s assistant brings out a bodyA businessman gunned down five members of his family then shot himself after seeing his family’s fortune wiped out by the stock market collapse.Karthik Rajaram, 45, who had made almost £900,000 on the London stock market, shot his wife, three children and mother-in-law in the head before turning [...] continue reading world news

Pakistan facing bankruptcy

Pakistan’s foreign exchange reserves are so low that the country can only afford one month of imports and faces possible bankruptcy.An investor monitors the index at Karachi Stock Exchange in Karachi, Pakistan Photo: BLOOMBERGOfficially, the central bank holds $8.14 billion (£4.65 billion) of foreign currency, but if forward liabilities are included, the real reserves may [...] continue reading world news

Thursday is D-Day

Forget the stock market gyrations. Forget Bernanke and Paulson’s ineffective, unconstitutional schemes.Thursday’s auction for Lehman’s credit default swaps (CDS) is much more important.Why?Well, if banks are reassured by the CDS auction, it could do more to free up frozen capital than all of the Fed and Treasury’s ill-conceived plans put together.As Bill Gross, [...] continue reading world news

U.S. Stocks Drop; S&P 500, Dow Post Worst Retreats Since 1937

Ben S. Bernanke, chairman of the U.S. Federal Reserve, speaks on a television above a trader in the S&P pit at the Chicago Board of Trade in Chicago, on Tuesday Oct. 7, 2008. Photographer: Joshua Lott/Bloomberg NewsOct. 7 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index below 1,000 for the first [...] continue reading world news

Retirement accounts have lost $2 trillion

WASHINGTON - Americans’ retirement plans have lost as much as $2 trillion in the past 15 months - about 20 percent of their value - Congress’ top budget analyst estimated Tuesday as lawmakers began investigating how turmoil in the financial industry is whittling away workers’ nest eggs.The upheaval that has engulfed financial firms and sent [...] continue reading world news

AIG Executives Blow $440,000 After Getting Bailout

View from the Lobby Lounge TerraceIf you’d just gotten a government bailout, you might be tempted to hold a retreat at a nice California hotel — and that’s exactly what American International Group (AIG: 3.51, -0.36, -9.30%) executives did.The committee on Oversight and Government Reform held a hearing on Tuesday at [...] continue reading world news

Japan’s Nikkei plunges 9.4 percent on crisis fears

A passerby looks at the electronic stock board in front of a Tokyo brokerage Wednesday, Oct. 8, 2008 as Japan’s stock market plummeted 9.4 percent _ its biggest one-day drop in 21 years. The benchmark Nikkei 225 index nose-dived 952.58 points to 9,203.32, a five-year low. (AP Photo/Katsumi Kasahara)TOKYO (AP) - Japan’s stock market plummeted [...] continue reading world news

Fed, ECB, Central Banks Cut Rates in Coordinated Move

A security officer stands outside of the Federal Reserve building in Washington on Sept. 16, 2008. Photographer: Jay Mallin/Bloomberg NewsOct. 8 (Bloomberg) — The Federal Reserve, European Central Bank and four other central banks lowered interest rates in an unprecedented coordinated effort to ease the economic effects of the worst financial crisis since the Great [...] continue reading world news

Russia, Indonesia, Ukraine Shut Exchanges as Stock Rout Worsens

Oct. 8 (Bloomberg) — Russia, Indonesia, Ukraine and Romania shut their stock exchanges after shares plummeted in the worst week for emerging-markets in at least two decades.Russia’s Micex Index dropped 14 percent, having already slumped 20 percent this week, before trading stopped at 11:05 a.m. in Moscow. The exchange won’t reopen until Oct. 10 unless [...] continue reading world news

The bailout has failed

Libor for Overnight Dollar Loans Jumps as Credit Freeze Deepens Oct. 7 (Bloomberg) — The cost of borrowing in dollars overnight in London jumped as U.K. lenders held talks with the government on emergency funding and Iceland nationalized its second-biggest bank amid an unprecedented credit squeeze.The London interbank offered rate, or Libor, that banks [...] continue reading world news

How the crooked bailout was passed by Congress

Fraud, bribery and threats of violenceCongressman Sherman’s entire presentation The Wall Street Welfare ActThere was a simple solution the banking crisis:Guarantee ALL normal banking deposits. That’s what European countries are doing.With bank deposit guarantees, individuals and real businesses would have access to their money and to normal credit.But the White House took a different [...] continue reading world news

Remember 1929 – what seemed to be the end was only the beginning

Dick Fuld, former Lehman Brothers’ chief executive Photo: APThe dismemberment of Dick Fuld, Lehman Brothers’ former chief executive, before a Congressional committee on Monday was a compelling, albeit brutal, event.His televised humiliation was orchestrated by a veteran Democrat, Henry Waxman, whose simple question about Fuld’s alleged $480m of earnings - Is that fair? - [...] continue reading world news

Zeitgeist: Addendum

Related: Zeitgeist, The Movie, Final EditionAdded: Oct 3, 2008Source: Google Video continue reading world news

Central banks all but stop lending bullion

Central banks have all but stopped lending gold to commercial and investment banks and other participants in the precious metals market, in a move that on Tuesday sent the cost of borrowing bullion for one-month to more than twenty times its usual level.The one-month gold lease rate rocketed to 2.649 per cent, its highest level [...] continue reading world news

British banks rated less sound than Botswana’s

Business leaders in Britain rated UK banks a mere 44th in the world for solvency, well behind countries in Africa and Latin America including Senegal, Botswana, El Salvador - and even behind Iceland, whose three main banks have all been taken into national ownership after collapsing into financial turmoil this week.The United States was rated [...] continue reading world news

Bernanke, Paulson Seek Global Help as Crisis Spreads

Paulson yesterday signaled he’s considering pumping capital (=Taxpayers’ Money) into U.S. financial institutions, saying “we will use all of the tools we’ve been given to maximum effectiveness” under the $700 billion Troubled Asset Relief Program.______________________________________________________________________________Henry Paulson, secretary of the U.S. Treasury, left, and Ben S. Bernanke, chairman of the U.S. Federal Reserve, testify before the [...] continue reading world news

U.S. Treasury May Buy Stakes in Banks Within Weeks

Oct. 9 (Bloomberg) — The government is planning to buy stakes in a wide range of banks within weeks as the credit freeze increasingly threatens to tip the U.S. economy into a deep recession.Treasury Secretary Henry Paulson and top aides are still considering options on how the purchases would work, including having the government acquire [...] continue reading world news

GM, Ford, Chrysler Face Bankruptcy Risk on Crisis, S&P Says

Oct. 10 (Bloomberg) — General Motors Corp., Ford Motor Co. and Chrysler LLC, the three biggest U.S. automakers, may be forced into bankruptcy as the global credit freeze damps U.S. sales, Standard & Poor’s analyst Robert Schulz said.“Macro factors could overwhelm them at some point” even as GM, Ford and Chrysler vow to stick with [...] continue reading world news

Dow’s Worst Week Comes to an End

Stocks closed a volatile week with the widest intraday swing on record, in a fitting end to one of the most turbulent five-day periods in financial history.For the first time in its 112-year existence, the Dow Jones Industrial Average swung in a range of more than one thousand points on an intraday basis. The blue-chip [...] continue reading world news

Lehman Credit-Swap Auction: Biggest-ever payout in the $55 trillion market.

A woman speaks on a cell phone inside the headquarters of Lehman Brothers Holdings Inc., in New York, on Sept. 15, 2008. Photographer: Jeremy Bales/Bloomberg NewsOct. 10 (Bloomberg) — Sellers of credit-default protection on bankrupt Lehman Brothers Holdings Inc. will have to pay 91.375 cents on the dollar to settle the contracts, setting up [...] continue reading world news

Black Friday: Run on the System

Stock markets across the world are in a state of hysteria. The tidal wave of sell-offs, which began when Henry Paulson announced the Bush administration’s $700 billion bailout plan for the sinking banking system, has swelled into a global tsunami racing round the globe.Shares fell sharply across Europe and Asia for the fifth straight day [...] continue reading world news

Bonds dry up as funding source; Some government projects on hold

Local governments seeking money for roads, schools and a host of other projects are finding it difficult to secure financing, leading some to put those projects on hold.The demand from investors for municipal bonds has dropped off a cliff in the past couple of weeks, sending interest rates higher and making it more expensive for [...] continue reading world news

Lehman Brothers demise triggers huge default

Lehman Brothers, the bust investment bank, triggered one of the biggest corporate debt defaults in history yesterday as it emerged that the US Federal Reserve is harbouring grave concerns about whether Washington’s $700 billion (£413 billion) bailout fund will avert a financial meltdown.An auction of Lehman’s bonds yesterday determined that the bank’s borrowings were worth [...] continue reading world news

Fannie, Freddie to Buy $40 Billion a Month of Troubled Assets

Oct. 11 (Bloomberg) — Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.Fannie and Freddie began notifying bond traders last [...] continue reading world news

With Spotlight on Pirates, Somalis on Land Waste Away in the Shadows

Above, a severely malnourished baby lay unresponsive on Thursday as the mother and father sat nearby in a feeding center in Afgooye, Somalia.AFGOOYE, Somalia - Just step into a feeding center here, and the sense of hopelessness is overwhelming.Dozens of women sit with listless babies in their laps, snapping their fingers, trying to get a [...] continue reading world news

A £516 trillion derivatives time-bomb

Not for nothing did US billionaire Warren Buffett call them the real ‘weapons of mass destruction’The market is worth more than $516 trillion, (£303 trillion), roughly 10 times the value of the entire world’s output: it’s been called the “ticking time-bomb”.It’s a market in which the lead protagonists - typically aggressive, highly educated, and now [...] continue reading world news

UK: Government to save HBOS and RBS

Government set to become biggest shareholder in top banks as Japanese weigh bid for Morgan StanleyTHE government will launch the biggest rescue of Britain’s high-street banks tomorrow when the UK’s four biggest institutions ask for a £35 billion financial lifeline.The unprecedented move will make the government the biggest shareholder in at least two banks.Royal Bank [...] continue reading world news

Financial crisis: Countries at risk of bankruptcy from Pakistan to Baltics

A string of countries face the risk of “going bust” as financial panic sweeps Asia, Eastern Europe, and Latin America, raising the spectre of a strategic crisis in some of the world’s most dangerous spots.Nuclear-armed Pakistan is bleeding foreign reserves at an alarming rate leading to fears that it could default on its loans.There are [...] continue reading world news

Germany’s Car Industry Crashes

For years, Germany Inc.’s best promotional vehicles have been the world-class luxury cars the country produces. Shiny Audi, BMW and Mercedes-Benz cars are like mobile billboards for excellence, from New York to Moscow, Buenos Aires to Shanghai.But as the global financial crisis begins to take its toll on the real economy, Germany’s export machine has [...] continue reading world news

Only state intervention can save us now, says Merkel

BERLIN: Only the state can restore trust to financial markets now, German Chancellor Angela Merkel was quoted as saying on Sunday amid reports that Berlin was about to unveil a huge rescue package for its banks.“Only action by the state is capable of restoring the necessary trust,” Merkel was quoted as saying by the Bild [...] continue reading world news

Germans Stockpiling Gold Amid Market Panic

Gold dealers can’t keep up with the demandGerman gold dealers have stopped taking new orders for the precious metal as demand has skyrocketed. Gold is seen as a safe investment during the market turmoil.In uncertain economic times, Germans are dumping stocks and shares to take refuge in precious metal, accoring to a Wednesday article in [...] continue reading world news

States warned about impending mortgage crisis

Bush administration, financial industry thwarted efforts to curb greedMore than five years ago, in April 2003, the attorneys general of two small states traveled to Washington with a stern warning for the nation’s top bank regulator. Sitting in the spacious Office of the Comptroller of the Currency, with its panoramic view of the capital, the [...] continue reading world news

JIM ROGERS: GLOBAL BANKERS HAVE UNLEASHED INFLATIONARY HOLOCAUST

Legendary investor Jim Rogers warned during a CNBC interview this morning that global central banks are creating the environment for an inflationary holocaust by their ceaseless overprinting of currency, a measure that isn’t even successful in stabilizing the stock market.Rogers said that the only solution to the market crisis was to let failing banks and [...] continue reading world news

EU Nations Commit 1.3 Trillion Euros to Bank Bailouts

Oct. 13 (Bloomberg) — France, Germany, Spain, the Netherlands and Austria committed 1.3 trillion euros ($1.8 trillion) to guarantee bank loans and take stakes in lenders, racing to prevent the collapse of the financial system.The announcements came as Britain took majority stakes today in Royal Bank of Scotland Group Plc and HBOS Plc. The coordinated [...] continue reading world news

Europe to US: You messed up the rescue, too

The plans for a massive bank bailout by European governments differ strikingly from the U.S. approach.PARIS (Fortune) — First you mess up the world’s financial system. Then you blow the rescue of it. Now let’s show you how to do it properly.That, in a nutshell, is the less-than-flattering message European governments are sending to the [...] continue reading world news