Business News
Bush promises 'unprecedented' action on financial crisis (4th Lead)
By Chris Cermak Sep 19, 2008, 15:52 GMT
US President George W. Bush (R), with Chairman of the Federal Reserve Ben Bernanke (L) delivers a statement on the economy from the Rose Garden of the White House in Washington, D.C. USA, 19 September 2008. The US federal government is working on a sweeping series of programs that would represent the biggest intervention in financial markets since the 1930s. EPA/SHAWN THEW
Washington - US President George W Bush Friday said it will take a massive government intervention to tackle the root cause of the financial turmoil and prevent a larger spillover into the wider US economy.
Bush said an unprecedented and comprehensive rescue plan, which could run into the hundreds of billions of dollars, was the only way to keep the financial sector from total collapse and prevent credit availability to US consumers from drying up completely.
'The American economy is facing unprecedented challenges. We are responding with unprecedented action,' Bush said in remarks at the White House.
He was flanked by his top finance chiefs Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission chairman Christopher Cox.
'This is a pivotal moment for America's economy,' Bush said. 'There will be ample opportunity to debate the origins of this problem, now is the time to solve it.'
Paulson earlier said he would be working with Congress over the weekend on legislation that would allow the government to buy up banks' mortgage-related assets, which have plummeted in value and are at the centre of the current financial turmoil.
Few exact details of the plan have been revealed, but it essentially involves creating a new government agency that could soak up all the bad assets that are bringing down US financial firms.
Bush said the intervention would require a 'significant amount of taxpayer dollars.' Paulson earlier said the cost would be in the 'hundreds of billions.'
'I am convinced this bold approach will cost American families far less than the alternative,' Paulson said. 'The financial security of all Americans ... depends on our ability to restore our financial institutions to sound footing.'
Bush said he was confident the mortgage-backed securities, which the government is now taking on, would recover their value in the longer term. Their value has plunged due to a record rate of home foreclosures in the US, but Bush pointed out that most Americans still paid their mortgages on time.
Major US stock indices surged Friday morning amid a record volume of trading on Wall Street. The Dow Jones Industrial Average was up 4 per cent. Shares of financial firms surged 20-30 per cent on opening.
Wall Street stocks have been extremely volatile this week and banks have begun hoarding cash in response to a shortage of capital in firms that were dealing in mortgage-related assets.
Comprehensive legislation could be adopted by Congress in the coming week. House of Representatives Speaker Nancy Pelosi acknowledged 'time is of the essence,' after a briefing Thursday night with Paulson and Bernanke.
In the meantime, Paulson said Fannie Mae and Freddie Mac would begin buying up mortgage-backed securities. The two government-chartered mortgage giants were taken control of by the Federal Reserve last week.
The Treasury also announced a 50-billion-dollar guarantee programme for money-market mutual funds as panicked account holders started withdrawing their investments on Thursday. The Federal Reserve in conjunction unveiled new loan programmes to banks involved in money-market funds.
Bush said the action was designed to restore confidence in a 'key element' of the financial market. Investors and consumers could be assured their money-market funds were insured.
The new moves represent a broader approach to dealing with the crisis, as opposed to what Paulson acknowledged had been 'case-by-case' government bailouts and stop-gap measures taken since the beginning of this year.
Also as part of the comprehensive plan, the Securities and Exchange Commission temporarily banned the practice of short-selling, a stock trading technique that critics argue has helped fuel a furious sell-off of financial stocks on Wall Street this week.
Bush said the move was 'intended to prevent investors from driving down the price of particular stocks for their own personal gain.'
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Older Talkback
page: 1
This guy would not step up and deal with a problem if it bit him in the ass (and this one did).
Bush does not lead, and he barely delegates. Paulson is the domestic Petraeus, keeping things glued together, more or less.
'We must act now to protect our nation's economic health from serious risk,' Bush said at a White House press conference. 'There will be ample opportunity to discuss the origins of this problems. Now is the time to solve it.'
============
The FNMA action was taken, after long delays, with a conservatorship on 9/7. Then came Merrill, and the problems with Goldman, Lehman and WAMU. Along with that came AIG, possibly the biggest potential problem of all.
Bush finally takes to the podium NOW, after everyone else has done the heavy lifting, for his usual public bow, followed by a giant fart.
Take this bum, along with Wasilla the Hun, and you get fertilizer.
We have not only a repeat of Katrina, but of Iraq - wait around for someone else to fix it; and then say 'who cares WHY it happened?'.
Idiot McCain says that 'The Economy is strong'; and then lies and says that he was speaking of the 'working man'. News for McCain - the economy is the money supply, jobs, GDP and the rest - people are a RESOURCE, just like capital or manufacturing capacity. This old fart would be unfit to serve on the Commerce Commitee.
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www.businessweek.com/bwdaily/dnflash/content/sep2008/db20080918_661224. htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis
Just two days earlier, Treasury officials had said no broader entity was needed. But rather than easing market woes, the $85 billion federal bailout of insurer American International Group (AIG) sent new waves of fear through the market, as investors tried to assess what other corporations might suddenly turn up insolvent. With the markets down through midday Sept. 18, and lending among institutions all but grinding to a halt, regulators and lawmakers decided a more systematic approach was needed to keep more institutions from buckling under the strain.
(Bush took too darned long to get to this point; and meanwhile frightening the public into believing that nothing would end it. Getting banks to lend is a bigger problem, as well as dealing with unaffordable mortgages not yet in default, and the collapse in housing values underlying eeven mortgages paid up-to-date. The market is reassured for now, but no one knows the ultimate costs. There have also been sizable withdrawals from money-market accounts, which hold short-term corporate paper - and the Fed is looking into extending coverage to those accounts; as that's how businesses borrow short-term.)
www.forbes.com/feeds/ap/2008/09/18/ap5444741.html
BOSTON -
Seeking to soothe investor jitters, State Street Corp. said Thursday that it will not have to consolidate conduits and that its money market funds are stable. Shares of the Boston-based investment services company slid $5.75, or 9 percent, to close at $59. The shares hit a low of $29.09 earlier in the session, a level not seen since 1998.
State Street said in a statement that it would have ample liquidity even if it needed to consolidate, as it raised $2.8 billion in equity capital in June. The financial services firm does not currently have plans to raise more capital.
www.nytimes.com/2008/09/18/business/yourmoney/18money.html?ref=yourmone y
On Tuesday, the Reserve Primary Fund, a giant money market fund whose parent helped invent that investment, said its customers would lose money. Instead of each share being worth a dollar for every dollar invested, it said its customers’ shares were worth only 97 cents. In Wall Street parlance, it “broke the buck,” a rare occurrence.
So far, it appears that no other money market funds have fallen below a dollar a share. And other money market managers have hastened to reassure investors that their money is safe. But the Primary Fund’s announcement did raise this question: What, in today’s world, is truly safe?
In his case, that would be THINKING!
The sad thing is the small people and small business lose and pay. Excutives and boards of these companies will still get there big salaries, big jets and bigger bonuses. No one will face the facts that this group failed big time!
Cox - must agree with McCain - He did nothing to protect the system. He should go. Naked shorts? For Vagas not the market. There is no capitalistic value in investment games - it does not provide growth capital, in fact it absorbs real growth capital.
Cox - must agree with McCain - He did nothing to protect the system. He should go. Naked shorts? For Vagas not the market. There is no capitalistic value in investment games - it does not provide growth capital, in fact it absorbs real growth capital.
==============
Cox was another lame Bush partisan appointment; a former GOP Senator, and this was his reward.
en.wikipedia.org/wiki/Christopher_Cox
McCain voted against Cox's bill:
en.wikipedia.org/wiki/Private_Securities_Litigation_Reform_Act
'The PSLRA was enacted into law by the U.S. Congress over a veto by President Bill Clinton. The U.S. House of Representatives approved the bill by a 319-100 margin, and the U.S. Senate approved it 68-30. Every Republican in the House voted in favor of the legislation, and only four Republicans in the Senate voted against it: William Cohen, John McCain, Richard Shelby, and Arlen Specter.'
Normal 'short selling' is healthy, because the stock has to be purchased in order to cover later. In a normal situation, the short seller is expressing an opinion of over-valuation, and is at real risk when the price move against him. Someone LONG a stock can see it go to zero; but the short seller has potentially unlimited losses. There are 'bear funds' that allow investors to participate.
What happened here was outright manipulation, and the 10-day 'freeze' is there to send a message. When you sell short, you should be borrowing stock to deliver, and paying the lender interest.
Once a stock has been sold to the public, it no longer provides 'growth capital' - that's what the IPO was for.
Ah, welfare at the highest levels. You've got to love it when the very people (rich, 'free market', wall street types) who get up in arms over our government spending on welfare come begging with cupped hands when there own greed gets the best of them. Where is Ron Paul when you need him.
Where's all this money coming from? Still paying off the S&L scandel from the 80's.
Put 'american way to fail' into Google and read the first item for a comprehensive understanding of how it will affect the average american
This is a typical monetarist 'solution' - Throw money at the problem and see where it sticks. Paulson, Bernake, et al chose to relieve the financial institutions of their evil debt burden without getting to the root cause of the problem, which is the millions of homeowner's mortgage debt structures. Millions of foreclosures will still occur, causing even more billions of dollars to be thrown at the bigger problem. Instead, the mortgages should have been frozen in place, so that foreclosures would cease. The mortgagors would pay at their current rate. Put the financial institutions into receivership and let them pay for their errors in ethics and judgment.
U.S. NATIONAL DEBT CLOCK
The Outstanding Public Debt as of 19 Sep 2008 at 06:44:00 PM GMT is:
$9,650,504,450,078.82
The estimated population of the United States is 304,757,428
so each citizen's share of this debt is $31,666.18.
The National Debt has continued to increase an average of
$1.80 billion per day since September 28, 2007!
Concerned? Then tell Congress and the White House!
Bush has run up 9.6 Tril $'s of DEBT.
It was a good ride while it lasted but it looks like the party is over. “Brother can you spare a dime?”
Corporate welfare at its finest. When these investment banks were making huge profits they were all for the 'free market' and no regulation. Now it seems the the prefer free access to taxpayers money. Disgusting! Privatize profits and socialize losses. Hmm, where can I get a deal like that? Oh thats right I can't because, after all, I don't get to take Chuck Schumer et al out to nice lunches.
Why did everyone vote for a 'financial jonah' ,who already had three failed businesess BEFORE he became a President?
i think we need to wait for sp4 to slither in and give his useless oppion of his his useless president.
DID ANYONE EITHER ON WALL ST OR THE GOVERNMENT CALL 'FREE CREDIT REPORT .COM' IN THE LAST YEAR?
Shadenfreude!
What a wonderful word! What a wonderful feeling!
Nobody, absolutely nobody commented on it, but that extremely short speech Dubya made was a total joy to behold. I enjoyed it immensely.
I enjoyed his scrunched up features, that horrified 'Let me out of this presidency!' look hidden behind the squint, his totally defeated body language, his hurried exit. Hell, the little bastard almost RAN for cover.
He was a man who had just glimpsed the sheer magnitude of his ineptness, the crowning achievement of his stupidity.
His reign was failure, his legacy is disaster. His name will forever only come up in tones of contempt and will be synonymous with immense power wrongly attributed to and misused by a fool.
All the terrorists on earth wouldn't be able to do as much damage as he did right under everybody's nose, legally and legitimately ... well, semi legally and semi legitimately anyway. That will be a point for future consideration.
In a nutshell, here was a man who now knows beyond the shadow of a doubt that he is indeed The Worst President In History.
Shame!
Anathema!
Bye bye, Dubya...
Spitfire
by corporations and both parties are bought off.
That is why neither party and neither candidate talks about it.
Obama wants these bail outs just as much if not more that McCain. That is how the game has been playing for ages.
It is a super elite top 1% of the top 1% that is ruling over us and that own the vast majority of wealth.
The simple minds are at it again, it's all Bush's fault. Everything always is.
This crisis originated in the housing market and banks giving out loans to people who had no business getting them. Bush wanted to reform Freddie and Fannie but the democrats stopped him. That is just public record and can be proven. The democrats, especially Dodd, Obama and Barny Frank have been on the take from freddie and fanny (Obama even employs the failed CEO of Fanny as a financial adviser)... If you look at who stopped regulation of these out of control companies that lost the economy billions you can look to the democratic presidential nominee among others.
good time to announce a plan to stop taxing people who do not own their own homes.
Even Obama would never do this. Or I guess I should say, especially Obama because for all his talk about tax relief, when it comes right down to it, he wants us to pay more social security and income taxes even though we cannot afford real estate.
That is the central issue. Prices are insane. And now with this bailout, the bubble will continue.
And in the meantime, they will try to tax, and build, and tax, and build, and we will all die from global warming and pollution and the loss of our water supply.
It's all unsustainable.
Not to mention criminal - it should be a crime anyway. Poor Martha.
Obama-He is a very flashy man. But his policy of anti-globalization, protectionism, is going to be -- and card checks -- are going to do two or three things. It's going to give us a lot of inflation. They're going to ruin our relationships with the rest of the world. And they are going to slow down the rest of the world, too. And they're going to make people frightened to add to employment. You are going to find companies leaving this country if it's -- if you put a protectionist wall around it. You're going to get -- his policy is really very, very naive, old-fashioned, 1960s.'
You say: 'They're going to ruin our relationships with the rest of the world'
Here's a news flash for you: You don't have a relationship with the world that even a 10 cent hooker would advertise. Bush/Cheney and company have totally f*cked your reputation.
'You don't have a relationship with the world that even a 10 cent hooker would advertise. '
Here's a news flash for you: You don't speak for the rest of the world you pathetic loser. You just speak for your mommy's basement.
Here's another news flash: Even if you did, the rest of the world can kiss my American ass.
Pucker up, bit*h.
The times, they are a changin'...
The repugnicans made a winner out of one of their worse losers. Admittedly, there are a few respectable politicians on the repugnican side of the fence, but for some reason they had to make that little Bush moron president. Opportunism, I suppose.
Some people may not care whether the president is the world's laughingstock, and that's their right. Dubya's propelled himself right next to Nixon in the 'Repugnican presidents We'd Rather Forget' pantheon. His fading from the public eye will be an immense relief.
I don't mind McCain's age. Honest. He could be thirty five or even older than he is now. Same same, G.I.!
What I don't like about him is what he actively represents: the old school.
Old ideas framed with tired power words. Old and VERY tired tactics like turning the tables on his opponent and falsely declaring HIMSELF the maverick (yawn); pulling a Palin Bunny out of a hat for no good friggin' reason other than to influence the feminist lunatic fringe (oh hum); turning the tables on his opponent and creating a non event by declaring the black guy has used the race card (yecch), and my favorite : creating a fantasy where his opponent is a traitor because there's a picture of him NOT wearing a flag pin.
McCain seems to think we're all idiots by making this election some kind of kindergarten popularity contest. I beg to differ.
McCain has tried all along to coddle favor with a beast called 'The All American Retard'. The All American Retard is a drone that will predictably go all 'Sieg Heil!'ish whenever McCain screams 'AMERICA!'. McCain has positioned himself to be that moron's saviour in a country that is slowly but surely growing beyond literacy and getting smarter.
Patriotism is one thing. Manipulation is another. Manipulation that exploits patriotism cheapens and therefore erodes patriotism. From this proposition, draw your own conclusions as to WHOM is the traitor...
Stupidity has always been the repugnican's best weapon. It has become all the more potent lately because the stupids of America have grown desperate as they sense their numbers dwindling. Dubya' reign of intellectual decay may very well be the repugnican party's swan song, however. They'll just have to change if they want to survive.
Change is not their strong suit. The rhetorical equivalent of eating from their collective noses seems to be.
Obama does not present an alternative, he IS an alternative. He lived, he lives it.
First of all, the economy has to be saved by any means. THEN fail safe mechanisms have to be implemented so that this will never occur again. Buffet's time bomb is here, gentlemen.
Deal with it.
Spitfire
... and, by the way, someone should take out scientology.
Spitfire
I think spitfire speaks out what many americans desperately want,real change .Meanwhile the GOP Internet task force is doing it's worst to pin this crisis on the first victims of it :those that borrowed from the banks to buy a house.I've seen items on TV about people in the USa losing their livelihood and homes, once wealthy and now living in tents ,it only takes a freak accident like cancer or another serious disease to throw entire families into deep misery .I don't want to exaggerate the scale of those events,but to blame those people is an insult to intelligence.THe caues are of course much less trivial and are to be found in the past.More precisely in the Reagan era when te financial bubble started to inflate until it exploded now in everybody's face .Remember Reagan saying that the markets are magic ?Remember him saying that the worst words to be hear by american are:I'm from the government and I 'm coming to help you ?Do you.These were perhaps only vague slogans that sounded like music in the ears of many americans .But their true meaning was that financial markets had to be deregulated,all government control on them had to be banished and the whole sector had to be auto -regulated by the bankers themselves.Understanding that is the first step in understanding the current situation.Now let's go to the next event that lead to the current crisis in which the US taxpayer will have to pay for the broken system .I'm talking about the bubble of the real estate market .THat is a market which obeys the same rules all over the world :Real estate takes on value due to various economical circumstances over the years .They have been raising for decades nowin a spectacular manner .Every bank wanted to profit from that of course and so many americans where lured by the banks into this market with promises about quick money.A few mechanisms were to buy a house above your means;bankers proudly used the phrase ninja credits for these insane loans;no income,no job,no assets.The idea behind that was simple .If you cant pay the mortgage the banks sell the house and make a hefty profit .Yes,wahatever happens the banks always won in this scenario.Until of course the real estate bubble burst.Suddenly people that could not repay their loans became a real risk.Repossessing a house meant losing money for the banks .Now let's introduce another equation into this scenario that lead to the current crisis;investment bankers turning mortgage loans into investment merchandise .It looked like a simple and clever idea to spread the risks as the banks started trading outstanding mortgage contracts for cash money ,at least from the bankers perspective ,at least as long as thereal estate values continue to rise .But what happens when the real estate markts either stagnate or collapse ?Quite simply the whole mechanism meant to create investment opportunities based on selling the mortgage loans to investment banks collapses with it .And as these debts have been traded from bank to bank to bank and to yet other banks without anybody knowing where they are ,the investment banks were in real trouble .The CEO's of those banks had taken great risks and mad lots and lots of money from the deregulation that was mostly the work of Reagan and so their incomes combined culminated year after year until they went completely through the roof in 2007 when the CEO's of the investment banks has an income of 85 billions of dollars combined in salaries and bonus ,per year .So greed was the engine to the crisis.Greed from the investment bank that were allowed to operate anything for profit ,even turning debts into investment merchandise,a totally insane concept that doesn't happen in Europe .But as the debts have been traded allover the world the crisis spreads outside the USA .I just hope that no US pension funds have invested in that sector and thus lost the savings of their members .Te situation is already bas enough as it is .Every US citizen has more than 30.00 dollars in debt,thanks to the crisis,the war in Iraq and the overspending on weaponry by the army .30;000 dollars for every human being in the USA,for a family of four that means 120.000 dollars ,just to even out the budget .When Clinton was president there was a surplus .Now this ,no wonder the GOP focuses on smear rather than political issues for their electoral campaign.With some form of success even,it amazes me that there are still people voting for those that lead you in this crisis.And they even say to you they'll get you out without having to raise income taxes for the wealthy ?How then?Any clues ?
So where does Bush propose to find all these billions of to bail out all these bad investments ?
At the end of the day it will be the long suffering American taxpayer who has to pick up the bill and who at the end of the day will have to pay huge increased taxes.
Thank you G.W.Bush. MORON.
Every US citizen is now more than 30.00 dollars in debt,thanks to Bush.
You can easily confim this by looking up the
US NATIONAL DEBT CLOCK
www.brillig.com/debt_clock/
All the debts will be covered by loans, most of which will be from China, Russia and the Middle East. The interest then due on these loans will put the US in hock for decades as well as giving an overall control on the economy to overseas countries
The land of the free has turned into the land of the fee
I miss the days when the biggest problem America had was the sex life of the president. Can we just go back to that please?
..who, exactly, do you think sewwd the seeds of these messes?
The guy getting bobbed in the White House.
Mess in Iraq - left for nxt guy
Bin Laden - left for next guy
Mortgage mess - left for next guy
worthless N. Korea treaty - left for next guy
What did the last guy do?
White Water
FBI records scandal
Travel office scandal
money for trade deals with China
money for influence peddling
All this for salmon flavored cee gars.
Bush? He got a mop and bucket handed to him
America has always been a nice concept. It´s a great name, maybe the greatest ever. I would put Hong Kong in second, close, but Hong-Kong-ese is nowhere near as good as 'American'.
It's nice to wake up here in the Socialist United States, thanks republicans.
'..who, exactly, do you think sewwd the seeds of these messes?'
In a nutshell: SP4 and people like them. They ignore fraud, make excuses for fraud, try to pretend fraud does not exist. They are complicit in fraud through their purposeful ignorance, which makes them a criminal.
All con artists and people that commit fraud need to go to jail.
page: 1
lanceSep 19th, 2008 - 16:18:15
'There will be ample opportunity to debate the origins of this problem, now is the time to solve it.'
What a frinkin' idiot!
Everyone knows the cliche:
You can't solve a problem unless you know what it is, its origins.
What Bush is suggesting is to spend more money and build up more debt. Like a mentally ill person, he is addicted to debt spending and will do anything to get his hands on more money.
Lets debate for real instead of making up stories of WMDs and other things.
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