Lehman Brothers victims take to the streets
Posted: Sep 28, 2009 by Geraldine Blecker
Two weeks have gone by since Germany’s “Lehman Brothers victims” demonstrated outside the former Lehman headquarters in downtown Frankfurt on September 15, the first anniversary of the investment bank’s collapse.
(Frankfurt), September 28, 2009 – More than 300 gathered, mostly seniors, many in wheelchairs, on crutches and Zimmer frames, carrying their homemade banners pronouncing their discontent and protesting the loss of their retirement pensions and life savings, due to the greed and negligent advice of their own banks.
Beginning at Frankfurt’s district court, the protesters route took them along the “Zeil”, the city’s golden mile, past various banks and financial institutions, where they stopped to loudly chant their slogans, wave their banners, and sing a song or two. The parodies were not without irony. “My money lies over the ocean” was performed outside the Dresdner Bank, while “Where has all the money gone?” was directed at Citibank, both of whom, along with the Frankfurter and Hamburger Sparkassen (FRASPA and HASPA), are accused of having taken their investors for the biggest ride.
An estimated 40,000 small investors – among them a notable number of senior citizens – have been affected, many of whom lost their life savings when the financial consultants at their own banks, promised high commissions, aggressively “advised” them (often per insistent telemarketing) to purchase the worthless Lehman paper.
What do they want? Their money back. All of it. The victims are demanding a complete reversal of the Lehman transaction and full restitution to compensate for alleged malpractice and deliberately misleading advice supplied to them by their banking institutions. And they are calling for a stricter political stance and tighter government controls on financial and investment consultants, if confidence in the banks is to e restored. According to Peter Kyritz, one of the demonstration’s organizers, “The advice of the banks can no longer be trusted.”
Further demonstrations took place in Berlin and Hamburg, where protesters waved their worthless Lehman Brothers certificates accompanied by a coffin – just to emphasize the point. In Berlin, the action group has even set up a small theatre group with the slogan, “We’ve had enough, we want our money back,” to draw attention to their plight.
Unfortunately, the Frankfurt demo got little TV coverage, as it coincided with a glittering media event: the opening of the IAA (International Automobile Show). There’s irony for you.
Nevertheless, it seems that a few cages have been rattled. The first financial institution to react has been the Sparkasse Hannover who, in order to avoid a long-lasting legal battle, announced on September 21, 2009, that it would provide general restitution to their 1,000 Lehman clients, the amount of compensation based on date of purchase. Those who bought the securities prior to March 16, 2008, to be compensated with 50% nominal value, while everyone who bought after that date could expect 75%.
The Lehman victims action group see this as a step in the right direction, and hope that other banks will follow suit. As Peter Kyritz says, “The Sparkasse Hanover has got the message. An expensive decision can sometimes be cheaper in the long run. Client trust is a major asset.”
Ilse Aigner, German Minister for Consumer Protection said, “This does still not suffice,” going on to announce that more compensation must be provided for the Lehman victims.
In Frankfurt, Germany’s financial capital, “Lehman victims” from all over the country are gathering to protest against their situation and disappointment at the banks, financial institutions and overall political stance.
Tuesday, September 15, 2009, marks the first anniversary of the collapse of Lehman Brothers, formerly the fourth largest investment bank in the US and the only major financial institution that, unlike Fanny Mae, AIG, Bear Stearns and JP Morgan - to name but a few - was not bailed out by the US government. Now occupied by Barclays, the Lehman building at New York’s 745 Seventh Avenue shows hardly any trace of last year’s turbulence. But the effects of the bankruptcy, which put more than 25,000 out of work, are still echoing around he globe.
In Germany, for example, about 40,000 security-oriented investors, among them a notable number of senior citizens were divested of their life savings. To serve their own interests and earn high commissions, many of the country’s major banks and building societies, including Citibank, Dresdner Bank, the Postbank, as well as the Frankfurt and Hamburg Sparkassen (Savings Banks), aggressively “advised” their trusting clients, many of whom had been customers for decades, to purchase the worthless Lehman paper. Which, in many cases, was pitched as a AAA security. It is unrealistic to suppose that the banks involved were not at least partially aware of the actual value of these securities at the time.
Here in Frankfurt, Germany’s financial capital, “Lehman victims” from all over the country refuse to take it lying down. To mark that gloomy day, they are gathering and going on the march to protest against their situation and disappointment at the banks, financial institutions and overall political stance. Denying all responsibility or accountability to their clients, the banks and building societies continue to entrench themselves behind individual and unsatisfactory “good will” or “ex gratia” settlements, without any admission of guilt or acknowledgement of debt - forcing their clients to take legal action. As there is no such thing as a class action suit under German law, these lawsuits are being dealt with one-at-a-time by the German courts. A long and wearisome process, the banks are dragging it out for as long as they can, possibly in the hopes that some of the plaintiffs may just pop off before getting to court.
At 2:30 p.m. on Sept. 15, dressed in black, Lehman casualties from all over the country will be gathering outside the Frankfurt District Court building. From here, the demonstrators will continue along the Zeil to Konstablerwache and the Hauptwache, to assemble outside the former Lehman Brothers branch in the Rathenauplatz. On the way, they will be stopping off at the branches of the various banks and building societies involved, to give loud voice to their frustration and discontent at their business policy. At Rathanauplatz, a mobile Information centre will be set up to explain the actual situation and demands of the Lehman victims to the public and the press. The victims are demanding a complete reversal of the Lehman transaction and full restitution, to compensate for the often proved malpractice and deliberately misleading advice supplied to them by their banking institutions.The demonstration is scheduled to wind up at approx. 5:00 p.m. following a closing event and press conference.
But this is just one activity of many. In addition to the major demonstration in Frankfurt, further regional campaigns will be taking place simultaneously in Hamburg, Bremen and Berlin. And let’s not forget the rest of the world. Small investors have suffered similarly in the US, Belgium, Austria, England, Spain, Switzerland, Italy, Poland, the UAE, Taiwan, Singapore and Hong Kong, where a demonstration is likewise planned.
One year along, the recession seems under control, the stock markets are picking up and the banks are reviving with the aid of billions of dollars of government bailouts. But the memory of Lehmans and its downfall will take a long time to diminish.
- but still faces heavy opposition
Los Angeles (Weltexpress) - “That is the height of irresponsibility. It is shameful,” said President Obama at the news that upwards of $18bn worth of bonuses bad been paid out to Wall St. executives from the bailout funds earmarked to prop up the crumbling economy. “There will be time for them to make profits and there will be time for them to get bonuses. Now is not that time.”
Faced with massive nationwide job loss, a record high of 4.78 million Americans were on unemployment as of Jan. 17, according to the US Dept. of Labor, who reported a total loss of 2.6 million jobs in 2008, representing the largest drop in employment since 1945.
Some major US firms have announced significant job cuts this past week, which will affect thousands of workers as the economy slips further into decline. The most recent, US construction equipment company Caterpillar, is to cut approx. 20,000 jobs, amounting to almost 18% of its total workforce, after reporting a 32% fall in profits. Ford Motors announced a $5.88bn. quarterly loss, after going through more than $5bn bailout cash, while General Motors is cutting a further 2,000 jobs. Eastman Kodak announced plans to cut 4,500 jobs, following an unexpected quarterly loss, and four US airlines have likewise reported heavy losses, resulting in Boeing’s plans to cut 10,000 jobs. 3M will cut its capital spending by 30% and America’s third largest wireless provider Sprint Nextel is to cut 14% of its workers, representing around 8,000 jobs. Home Depot announced plans to cut 7,000 jobs and close its smaller Expo chain, while electronics chain Circuit City has already gone under.
Restoring confidence in the economy will be a daunting job for former NY Federal Reserve Bank head Timothy Geithner, sworn in by the senate last Monday as the new US Treasury Secretary. Faced with such job losses, President Obama stated that the government could not allow “distractions” or “delays” in implementing the $825bn stimulus plan currently under debate, which he hopes to put into effect as early as mid-February.
The bill was passed by 244 votes to 188 in the House of Representatives without one single Republican vote: the Republican stance being that that the package is too costly, does not include sufficient tax cuts and is likely to be ineffective. The President is determined to seek a compromise, urging the government not to “drag our feet or allow the same partisan differences to get in our way,” and to act with a “sense of urgency”` and “common purpose” on the bill, which is scheduled to go before the Senate next Wednesday.
The president announced that most of the money in his stimulus package would be used “immediately”, to create as many as 4 million jobs, predominantly in the private sector, and has promised greater accountability. To this effect, the government has posted a website: www.recovery.gov, enabling the public to track how the funds are being spent.
Although Republicans do not have enough votes in either the House or the Senate to veto the bill, they could still manage to hold it up for weeks. The President is hoping to create 2.5 million jobs in the green sector, and has also activated plans to allow the state-wide curbing of fuel emissions. His goal here is to create new jobs by combining increased fuel efficiency with new technological advances. As it stands, the bill represents a $275bn tax cut for companies and individuals, with $540bn for such initiatives as repairing the infrastructure ($30bn for road and bridge repair), higher unemployment benefits ($36bn). Those on unemployment are now able to access Medicaid, itself to be extended by $87bn; investment in scientific research and new technology ($11bn for a green electricity grid), $20bn to go on computerizing medical records, $79bn to aid state governments, as well as $41bn to the school sector, which includes renovating approx. 10,000 schools.
Los Angeles (Weltexpress) - On this historic Tuesday of January 20, 2009, before a jubilant crowd of more than a million in the nation`s capital - many of whom had waited more than 10 hours in the biting cold - and with unprecedented security, Barack Hussein Obama, age 47, took the oath of office from Chief Justice John Roberts as the 44th president of the United States, thus becoming America`s first Afro-American president.
Taking the stage, the new president graciously thanked his predecessor, George W. Bush, saying that he was "humbled by the task before us, grateful for the trust you have bestowed, mindful of the sacrifices borne by our ancestors," at the same time conceding that "we are in the midst of crisis."
Without even a surreptitious glance at a monitor or referring to any notes, (apparently he was still rehearsing until moments before the ceremony), President Obama delivered an eloquent and moving speech: "Our nation is at war against a far-reaching network of violence and hatred." A stirring mixture of gravitas and hope, such as the American people have not heard in decades: "Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. Homes have been lost, jobs shed, businesses shuttered. Our health care is too costly, our schools fail too many, and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet."
"The time has come to set aside childish things," he proclaimed: "Today, I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. "But know this, America - they will be met." Although the United States continues to be "the most prosperous, powerful nation on Earth," he added that "everywhere we look there is work to be done. Starting today, we must pick ourselves up, dust ourselves off and begin again the work of remaking America." His administration has vowed to do this by building roads and bridges, and expanding the nation`s infrastructure, to "restore science to its rightful place," and "transform our schools and colleges and universities to meet the demands of a new age."
As the Bush family departed by helicopter, President Obama and Vice President Biden adjourned to the President`s Room, where Obama signed the documents confirming his Cabinet appointments, six of whom were approved by the US Senate, among them Janet Napolitano as Secretary of Homeland Security and Steven Chu as Energy Secretary. Hillary Clinton`s approval as Secretary of State was postponed, however, after a republican senator demanded a further debate to clarify some foreign donations made to a foundation headed up by her husband and former president Bill Clinton. This is due to take place tomorrow (Wednesday), and Mrs. Clinton`s nomination confirmed by vote immediately thereafter.
Tens of millions watched the inauguration on TV across the globe and Obama devotees in other countries held their own festivities. In Barack Obama`s ancestral village of Kogelo in Kenya, for example, thousands danced under a gigantic banner bearing the simple text: "Congratulations our son, our hope."
Citigroup to split - further bank bailouts
Los Angeles (Weltexpress) - Foundering Citigroup, still the world`s largest bank, has announced plans to split the company in two, after reporting a quarterly loss of $8.29bn against an $8.9 million deficit for the previous year. The two new companies: Citicorp, which will continue the firm`s traditional banking operations; and Citi Holdings, which will assume the company`s brokerage business and its dodgiest asset portfolio. "Given the economic and market environment, we have decided to accelerate the implementation of our strategy to focus on our core businesses," said Vikram Pandit, Citigroup`s chief exec, "This will help in our ongoing efforts to reduce our balance sheet and simplify our organization. We are setting out a clear road-map to restore profitability."
Citigroup cut 52,000 jobs last year and made a net loss of $18.7bn, apparently due to the collapse of the US mortgage market and the resulting global credit squeeze. "We are committed to helping the financial markets recover as quickly as possible," said Mr. Pandit, adding that a serious reshuffle and further exits could be expected from Citigroup`s board of directors, following the departure of former US Treasury Secretary Robert Rubin. Citigroup announced that it is seeking a "strong manager" to head Citi Holdings, while its current management now has the tedious chore of salvaging what can be saved from the mass of toxic debt.
Citigroup was granted a $45bn bail out by the Federal Government last autumn - $400 million of which was used to sponsor the New York Mets, ensuring that its name and logo "Citi Field" would appear on the team`s new stadium in Queens - with a further guarantee of up to $306bn to cover the bad loans and securities on its books.
In exchange for 6% of its stock, making the US Government its largest shareholder, Bank of America (BoA) is likewise to receive a further $20bn from the TARP fund - over and above the previous $25bn bailout. The Government will further underwrite $118bn of its most distressed assets - any losses here incurred to be funded by the US taxpayer. This move, designed to help the largest bank in the US soak up losses sustained by the acquisition of Merill Lynch. BoA reported a $1.79 billion loss for the fourth quarter, as opposed to a profit of $268 million for the previous year, not including the losses incurred by Merill Lynch, which reported a $15.3 billion loss for the fourth quarter, representing its first quarterly loss for 17 years. Perhaps BoA will now consider reducing some of its costs by cutting back on its fleet of nine aircraft.
Incoming President Obama announced his dissatisfaction with the way the first $350bn in the Troubled Asset Relief Program (Tarp) had been allocated after being approved last year by Congress. "There hasn`t been enough oversight," he said. "We found out this week in a report that we are not tracking where this money is going." It seems to have been an expensive rehearsal. Let`s hope the next load of taxpayer`s cash does not just disappear into another black hole.
Los Angeles (Weltexpress) - In his final and somewhat emotional TV address to the American people, out-going President George W. Bush maintained that he had always acted in the best interests of the nation and strongly defended his two terms in office.
He said that his administration had brought democracy to Iraq: “Iraq has gone from a brutal dictatorship and a sworn enemy of America to an Arab democracy at the heart of the Middle East and a friend of the US.” And to Afghanistan: “Afghanistan has gone from a nation where the Taliban harbored al-Qaeda and stoned women in the streets to a young democracy that is fighting terror and encouraging girls to go to school.”
He likewise asserted that he had acted firmly and decisively to overcome the threat of complete financial meltdown. “It’s a very tough time for hardworking families. But the toll would be far worse if we had not acted.” Adding that, with determination and hard work, American economic prosperity would be restored, although he did not say by whom.
He did admit, however, that given the chance, there are certain things he would have done differently: “There is legitimate debate about many of these decisions but there can be little debate about the results.”
One can only wonder what planet he is living on.
Frankfurt (Weltexpress) - Never before in US history has an in-coming President faced so many political and economic challenges. Upon assuming office on January 20, 2009, Barack Obama will have to tackle an economic depression of global proportions, mass US job loss, volatile oil prices, corporate and government corruption, international terrorism, not to mention wars on multiple fronts.
US consumer confidence dropped to a record low in December, influenced by the grim unemployment statistics and ever-plummeting home prices caused by the credit squeeze and a record number of mortgage foreclosures. According to a recent survey, the US housing market is suffering its worst slump since the Great Depression of the 1930s.
To battle the recession, the US Federal Reserve has drastically slashed its key interest rates from the September 2007 level of 5.25% down to almost zero, warning that “the outlook for economic activity has weakened further” and predicting that rates would stay at their presently low levels “for some time”. This is the lowest it has been since 1954 and represents an increased risk of inflation the lower it drops. Already infusing billions into the banks and financial institutions, the Federal Reserve is also buying up bad mortgage debt and deliberating upon the wisdom of buying government bonds, as did the Japanese government in its fight against deflation in the late 1990s.
In a recent speech, President-elect Obama said that he and his administration would likewise be doing their utmost to boost the economy, as the central bank’s methods were not having the desired result. “We are running out of the traditional ammunition that is used in a recession, which is to lower interest rates,” he said. “That`s why the economic recovery plan is so absolutely critical.” Mr. Obama has vowed to create at least 2.5 million jobs within his first two years of office, as well as upgrading the nation’s infrastructure.
As for government/corporate corruption - or “extravagance”, if you prefer, this is undeniably on the rise, or rather public awareness has grown as the topic edges into the media spotlight and more information is made available.
Barack Obama has advised the Senate to veto the nomination of Mr. Roland Burris, the individual proposed by Illinois Governor Rod Blagojevich (currently facing corruption charges) to fill Mr. Obama’s vacant seat in the US Senate. Mr. Burris, 71, was attorney general for the State of Illinois from 1991 to 1995, also unsuccessfully running for the Senate and position of Illinois governor in 1984 and 1994, respectively. “Roland Burris is a good man and a fine public servant,” said Mr. Obama. “But the Senate made it clear weeks ago that they cannot accept an appointment made by a governor who is accused of selling this very Senate seat. I agree with their decision,” also adding that Mr. Blogojevich himself should resign. Mr. Blagojevich, who continues to deny all misconduct, however, has vociferously opposed all calls for him to step down. “Please don’t allow the allegations against me to taint a good and honest man,” he said. Which did not impress Democratic Senate leader Harry Reid one iota, “Anyone appointed by Governor Blagojevich cannot be an effective representative of the people of Illinois.”
Then there’s the scandal surrounding hedge fund guru Bernard Madoff, facing fraud charges to the tune of $50bn, which has already had global repercussions. Released on $10 million bail, he is currently under house arrest and next scheduled to appear in court on January 12.
What has been referred to as a “serious agency breakdown” by SEC head Christopher Cox, has led to his initiating an internal inquiry to discover just why the Security Exchange Commission (America’s chief financial regulatory authority) had been unable to detect the fraud sooner, despite having received warnings about Handoff’s doings as early as 1999. Said Mr., Cox, “Credible and specific allegations regarding Mr. Madoff’s financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff, but were never recommended to the commission for action.”
Victims of Madoff’s “Ponzi” scheme (after Charles Ponzi, known to have first used it in 1919, which basically means using money from Peter to pay Paul, or new investor funds to repay old) include some of the world’s largest banks and financial institutions, as well as many charity organizations, and hundreds of private investors, with potential losses running into billions. Among them is the Bank of Santander, Spain’s largest bank and owner of UK banks Abbey, Alliance & Leicester and Bradford & Bingle, together with the UK’s HSBC and Royal Bank of Scotland who, between them all face losses of upwards of $5bn. France’s second-largest bank Crédit Mutuel and Japanese financial giant Nomura are facing potential losses of up to $303 million, while charity organizations, New York’s JEHT and Stephen Spielberg’s Wunderkinder Foundation among them, have also suffered huge losses.
This far-reaching fraud has already claimed the life of at least one victim. Kirk Stephenson, 47, COO of private equity company Olivant, overcome by financial ruin, died after flinging himself before a morning commuter train in Buckinghamshire less than two weeks ago.
And while US homeowners are struggling to make ends meet, the government is dishing out billions of bucks worth of bailouts to the auto industry and finance sector. A study conducted by Associated Press has revealed what has actually been happening to taxpayers’ dollars: In 2007, the amount of $1.6bn was paid out in salaries, bonuses, and other executive compensation to the top dogs of the very banks and financial institutions that Congress has just seen fit to bail out.
In a society where incompetence and poor performance seems to be abundantly rewarded, AP’s research (based on annual financial statements filed with the SEC) revealed that the aggregate sum given to about 600 executives would easily cover the costs of bailing out 53 of the 116 banks that have so far been “rescued” - at a cost of $188bn. Rewards were even granted to the executives of those banks whose pitiful performance last year presaged the very financial meltdown that sent them scurrying to D.C. for a handout. Although some did, in fact, scale down their exec compensation in line with their poor results, benefits totaling millions of dollars were still paid out, taking the form of everything from cash bonuses and stock options to personal use of company jets and chauffeured limousines, memberships in exclusive clubs, luxury vacations, professional management services and expensive home security systems, averaging out at $2.6 million per head. Here are some specifics:
Goldman Sachs president and CEO Lloyd Blankfein got almost $54 million in compensation last year, with the company’s top five execs receiving a total of $242 million, although the company announced that seven of their head honchos will be forgoing cash and stock bonuses this year and working for their basic salaries of $600K. The Company’s spend on auto leasing and chauffeurs amounted to as much as $233K per exec.
Compensation to Richard D. Fairbank, Capital One Financial Corp. chairman was reduced by $1 million, but he still walked away with $17 million in stock options. The company received just over $3.5bn bailout money in mid-November. San Francisco’s Wells Fargo, recipient of $25bn taxpayer funds, gave $20K to each of its top execs to pay for “personal financial planners”. As did the Bank of New York Mellon Corp., who gave their CEO Robert P. Kelly $66,748 to pay his personal financial planner, over and above his $975K salary and $7.5 million bonus, as well as spending just under $179K for his chauffeur-driven limo and $846K to relocate from Pittsburgh to Manhattan. JPMorgan Chase, given a $25bn bailout, paid just over $211K for Chairman James Dimon’s jet travel from Chicago to New York. And we all remember the scandal surrounding insurance conglomerate American International Group Inc. who, after receiving a bailout totaling $150bn in October, treated its execs to a luxury vacation at an exclusive California spa-resort at a cost of $500K, so as to “relieve their stress”.
But the record holder must still be Merrill Lynch CEO John A. Thain, former Goldman Sachs CEO, who earned $83 million last year, ($57,692 salary, $15 million contract-signing bonus, with an extra $68 million worth of stock options) as a special reward for his company’s $7.8bn loss; although having only joined the company in December 2007, he cannot actually be blamed for that year’s poor results. Still, to public outrage, he is insisting on his $10 million cash bonus for this year, when Merrill Lynch has already received billions worth of bailout money.
The TARP (Troubled Assets Relief Program), specifically designed to buy up bad mortgage debt and other distressed assets, was redefined last month, whereby the Treasury was directed by the current administration to infuse funds directly into the banks and financial institutions in order to stabilize the economy; setting certain limits on executive compensation and golden parachutes to exiting execs, without actually putting a ceiling on such salaries and bonuses. Nor did Congress seem to require any formal business plan, nor details as to what use would be made of the bailout funds so cavalierly granted to these institutions.
Six of the financial institutions that received billions of taxpayers’ money, including Citigroup (recent recipient of a $45bn bailout and planning to use $400 million of it to sponsor the New York Mets, so its name and logo (“Citi Field”) can appear on the team’s new stadium in Queens), Wells Fargo, Bank of America, JPMorgan Chase and Morgan Stanley, continue to own and operate fleets of company jets used to transport their execs, citing reasons of “security” to explain the personal use to which some of these aircraft are put. While others have told their shareholders that jet and chauffeured limousine travel give their top management “time to focus on their jobs,” despite the disdain and media outrage to which the CEOs of the Big Three carmakers were subjected in October, when they flew to Washington from Detroit in three separate corporate jets to ask for a federal bailout. But banking and financial execs seem to have been immune to such criticism. Probably because they didn’t have to go begging to Congress, so no one asked how they got there.
Which brings us back to AIG with seven aircraft - one of the largest fleets among all bailout beneficiaries, only exceeded by Bank of America (who received a $15bn bailout) with nine aircraft: “Our aircraft are being used very sparingly right now,” said an AIG spokesman, although as a gesture, the company has canceled its order for four new planes, but will continue to sponsor UK soccer club Manchester United to the tune of $125 million, so the team will wear the company logo.
As far as the producers of private jets are concerned; it’s all just a tempest in a teacup. “What people don’t understand is that business jets are mobile offices,” said a Gulfstream spokesman, adding that the media shit storm has not affected business nor reduced the orders for new aircraft.
Now that the US banking and auto industries have received billions of dollars from the American taxpayers, despite their common histories of greed and excess, poor management and resistance to both self-regulation and technological change, the question must be asked: Who is next in line? Is it the airlines? The shopping malls and real estate companies? Is it the Hollywood film industry and/or the music business - both known to be riddled with greed and change-resistant? With Washington dishing out free cash, all have indicated their eagerness to partake and the government seems inclined to continue doling out the funds; despite the fact that the Treasury’s emergency measures have been unable to put a stop to the hemorrhaging.
it is clear that the government must act more forcefully and not shy away from imposing regulation and supervision upon the financial institutions and markets, instead of bailing them out and allowing them to continue their transgressions, virtually financing them to perpetuate the damage. This is not the 1980s, where real assets were in play; the current crisis involves virtual, financial products of no discernible value - mostly derivatives. And no one really knows where it will end.
Autor: Geraldine Blecker
Abfassungsdatum: 04.01. 2009
All rights to the author
Update: Berlin, 04.01. 2009
`I intend to stay on the job.`
Frankfurt (Weltexpress) - Arrested last week and charged for trying to sell Barack Obama`s vacant seat on the Senate, among other things, Governor of Illinois Rod Blagojevich is loudly proclaiming his innocence and refusing to resign. "I am not guilty of any criminal wrongdoing," he said, "I intend to stay on the job - I will fight, I will fight, I will fight until I take my last breath."
As far as this charge is concerned, it is the governor`s sole duty to select a successor to represent his state in the US Senate; whether this can be done in exchange for cash, however, is a matter for debate. But Mr. Blaogjevich has other corruption charges to answer, which include soliciting bribes in exchange for political actions, and seeking to use state funds to get people fired; namely certain editorial personnel of the Chicago Tribune who have expressed criticism of him and his actions. "I`m dying to answer these charges - I am dying to show you how innocent I am," he said.
But Lieutenant Governor, Pat Quinn is not prepared to be patient. "Our state cannot wait while the chief executive battles in a court of law while we have so many major decisions that affect the welfare and safety of the people of Illinois," and loudly called for the governor to step down, "The Governor is clearly impeded in his ability to carry-out his executive functions."
Bush overrules Senate
Frankfurt (Weltexpress) - After being passed by Congress, rejected by the Senate and then passed and rejected yet again, President Bush categorically overruled these decisions last week and elected to dish out $17.4bn worth of loans to two of the Big Three automakers by year`s end: $9.4bn to GM and $4bn to Chrysler, with a further $4bn in the pipeline. Ford will try to go it alone. The money is to come from the original $700bn rescue plan earmarked for the financial institutions, $350bn of which has already been committed and, as such, does not require congressional approval.
The car makers have until March 31, 2009, to get their act together. President-elect Obama hoped that they would not "squander this chance to reform bad management practices," going on to advise, "The auto companies must bring all their stakeholders together, including labor, dealers, creditors and suppliers, to make the hard choices necessary to achieve long-term viability."
While President Bush was loath to intercede in the consequences of free trade, he weighed up the option of allowing the auto industry to be hoist by its own petard, at the risk of total annihilation and mass job loss. "Under ordinary economic circumstances, I would say this is the price that failed companies must pay," he said, "But these are not ordinary circumstances. In the midst of a financial crisis and a recession, allowing the US auto industry to collapse is not a responsible course of action."
An initial attempt by the Big Three to acquire $25bn was rejected by Congress in November, followed by a further bid, this time for $34bn. The last request for a $14bn loan was rejected by the US Senate less than 2 weeks ago. The final figure of $17.4bn has now been agreed. I must admit to being baffled by the numbers.
The automakers have announced that they will be tightening their belts and drastically cutting production: GM to close down 30% of its North American production. Ford tagged an extra week onto the normal 2-week Xmas holiday in 10 US plants, with Chrysler announcing a one-month halt in 30 factories. But more radical and long-term cuts will be needed if the industry is to survive.
After almost six weeks of back-and-forthing and although already approved by Congress, negotiations on the auto industry bailout plan ultimately collapsed in the Senate, unable to cross the final hurdle. The UAW (United Auto Workers Union) refused Republican demands to slash next year's wages to bring them into alignment with the Japanese industry, sticking hard and fast to its present contract with automakers, not due to expire until 2011.
Although the three big automakers had originally asked for a $25bn loan, they recently upped the ante to $34bn, which Congress swiftly downsized to a potential interim loan of $14bn to keep the industry alive until the end of the year. Referred to critically by some as just "kicking the can down the road," the bailout has been vociferously unpopular with the American public, 61% of whom feel that the industry should be given no support at all. "The three US auto companies need to be seriously restructured in order to survive," is the general consensus, and there have been no guarantees that this is likely to occur.
With only a one-man Senate majority, the Democrats needed some Republican votes in favur of dishing out immediate aid to Chrysler and GM, without which the two companies face ruin. Ford, in a slightly better position, says that it may need future funding. But the Republicans were not to be moved. According to Sen. Bob Corker, "We were about three words away from a deal," while Harry Reid, Senate Majority Leader was "terribly disappointed," referring to it as a "a loss for the country. The Big Three collectively employ about a quarter of a million and the collapse of negotiations could lead to massive job loss.
According to White House spokesman Tony Fratto, "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy, while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable." Be that as it may, some lawmakers felt the $14bn bridge loan to be excessive, while others thought that the amount was not sufficient to make a significant difference and represented nothing more than tossing good money away after bad. US auto sales have fallen drastically this year, reflecting a global downturn for the industry as a whole.
Said Harry Reid; "I dread looking at Wall Street tomorrow - it's not going to be a pleasant sight," And right, he was. Shares fell sharply around the world in reaction to the news. European markets plummeted, with the UK's FTSE-100 down by 176.3 points. The Nikkei dropped 5.6%, auto stock being among the most seriously affected; Toyota, Honda and Nissan stock all fell by a minimum of 10%, while Honda has already announced that it is pulling out of the 2009 Formula One, in order to save costs.
Now I am no economic analyst, but it must be clear to anyone with a brain that either there is a production surplus, or simply no customer demand for the vehicles being produced. The huge amount spent by the US auto industry on prime-time TV advertising is currently focused on last-ditch campaigns to boost sales by offering advantageous car financing - some dealers even going so far as to offer "two for the price of one", as opposed to the extra safety or fuel-saving messages advertised only months ago.
If anyone asked, I would say to Detroit: "If nobody wants to buy what you're selling, then you better change your product line."
President-elect Announces his National Security Team
Los Angeles (Weltexpress) - “I have no doubt that Hillary Clinton is the right person to lead our State Department and to work with me in tackling this ambitious foreign policy agenda,” announced the President-elect in Monday’s news conference in Chicago, confirming, her nomination as Secretary of State after weeks of speculation. “Hillary’s appointment is a sign to friend and foe of the seriousness of my commitment to renew American diplomacy and restore our alliances,” he said.
In this morning’s televised press conference, Obama officially named the other nominees for his National Security Team. These include Robert Gates, who will be keeping his current position as Defense Secretary which he has held for the past two years under the Bush administration. Retired marine general Jim Jones will be Obama’s principal national security adviser. Eric Holder will assume the post of Attorney General. Governor of Arizona Janet Napolitano will be Secretary of Homeland Security, while Susan Rice will be America’s permanent ambassador to the UN. “I am confident that this team is what we need to make a new beginning for American national security,” Obama said.”
In response to recent critique that his nominees are all old Washington hands and can hardly be regarded as representing the change he has been advocating, he said, ”We are going to combine experience with fresh thinking,” and went on to say, “The vision for change comes first and foremost. That`s my job.”
There is optimism that his chosen team is proof of his bipartisan stance and his confidence in his own leadership abilities.
Los Angeles (Weltexpress) - In a concerted, almost paramilitary assault, gunmen armed with AK-47s, rifles and grenades from a hitherto unknown group calling itself the "Deccan Mujahideen", attacked at least 7 locations in southern Mumbai between 8-9 p.m. (local time) Wednesday night; opening random fire at two luxury hotels, a railway station, the Jewish Center, a hospital, and a cafe popular with westerners. The attack was frighteningly well-coordinated.
In a siege that has gone on for more than 48 hours, so far approx. 327 have been injured and at least 170 killed, including 15 police officers, 2 commandos, 81 Indian nationals and 14 foreigners, among them a Japanese businessman, 8 Americans and 1 Italian. 9 Militants have likewise been killed and 9 more arrested, one of whom is a Pakistani citizen, according to officials. More news is coming in by the minute.
Two of the terrorists were killed when an elite troop of Indian commandos, more than 100-strong, stormed the Oberoi-Trident Hotel, freeing more 93 hostages this Friday morning, including 20 very relieved members of an Air France crew, although police found 24 dead. This hotel is now "back under control," although according to military spokesmen, at least one gunman and "two or more hostages" still remain in the Taj Mahal Palace, where Indian commandos have already found at least 30 bodies in one of the salons. The situation there is still far from over, the hotel rocked by fresh explosions and continuous rapid gunfire.
Overnight, gunmen stormed the Chabad Lubavitch offices in the Jewish Centre, which has since been surrounded by troops who finally put an end to this siege only hours ago, abseiling from helicopters down to the roof. Unfortunately they found the bodies of 6 Americans when they got there, including a Rabbi and his wife from Brooklyn.
The extremely disciplined suicide mission, arriving by sea in small speed boats, targeted Britons, Americans and Jews. Freed hostages and eyewitnesses claim that the holders of British and American passports were being singled out. The gunmen are apparently young and in their 20s and, based on their targets, some experts maintain that the operation "carries all the DNA of an al-Quaeda operation." India`s Foreign Minister Pranab Mukherjee, on the other hand, said earlier that initial evidence "leads us to believe that some elements in Pakistan may be connected to these events," although it was too early to provide any further details. Pakistani Foreign Minister Shah Mehmood Qureshi, however, urged: "This is a collective issue. We are facing a common enemy and we should join hands to defeat the enemy."
President-elect unveils Economic TeamLos Angeles (Weltexpress) - Two months before taking office, President-elect Barack Obama has named his top economic advisers, whose first job will be to “shape a big stimulus package to jolt the economy into shape.” Saying at Monday’s press conference in Chicago, “Even as we face great economic challenges, we know that great opportunity is at hand - if we act swiftly and boldly. That`s the mission our economic team will take on.”
President of the New York Federal Reserve, Timothy Geithner will be the next treasury secretary. Mr. Obama described him as a man who offers “an unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency.” Mr. Geithner worked closely with secretary treasurer Paulson on the recent Wall St. bailout.
Former treasury secretary to the Clinton administration, Lawrence Summers is to be director of the National Economic Council. Regarded as one of the country’s most brilliant economic minds, he will be one of the president’s chief advisors in initiating his stimulus plan to revive the economy. “Larry has earned a global reputation for being able to cut to the heart of the most complex and novel policy challenges,” said Mr. Obama, “I am glad he will be by my side. And I will rely heavily on his advice as we navigate the unchartered waters of this economic crisis.”
Co-director of the National Bureau of Economic Research and renowned economic historian, Christina Romer will head the president’s Council of Economic Advisers. Mr. Obama also named Melody Barnes as director of his Domestic Policy Council.
Acting with record speed, Mr. Obama has already gathered the members of his national security team, including former Democratic rival Hillary Clinton as Secretary of State - after more than a week of “will-she, won’t she” media hoopla.
Of his new team, Mr. Obama said, “I look forward to working closely with them in the months ahead. And that work starts today, because the truth is, we don’t have a minute to waste.” His prognosis for the future was grim. “We are facing an economic crisis of historic proportions,” going on to say that, “most experts now believe that we could lose millions of jobs next year,” and stressed the need to, “put aside politics and partisanship and work together, starting immediately with economic reforms.” He said that it was important to “reform how business is done in Washington and how the budgeting process works,” in order to “create a sustainable and responsible budget scenario down the line.”
“We will have to do more than one thing at a time,” he said, emphasizing his resolve to create “2.5 million new jobs within the first part of my administration. He went on to say that, “Our financial markets are under stress. While we can’t underestimate the challenges we face, we also can’t underestimate our capacity to overcome them.”
When asked by a member of the press exactly how much was needed for the stimulus package, whether it was $700 bn. or more in the region of a trillion USD, Mr. Obama replied, “I will not discuss numbers now but it is important for my economic team to come back with a recommendation. And it must be significant enough to jolt the economy.”
Another member of the press mentioned that to date there had been an “ad hoc approach to rescues,” with special regard to the foundering auto industry, asking Mr. Obama how “his team might differ.” To which Mr. Obama responded, “Moving forward, we can’t allow the auto industry to collapse. On the other hand, we can’t just write a blank check to an auto industry that has been resistant to change. I am surprised that they did not have a better thought-out proposal when they appeared before congress. Any further investment should create a long-term sustainable auto industry, instead of just kicking the can down the road. Nobody wants to see more job loss. But taxpayers don’t want to see more money wasted, so we will have to see a plan.”
This followed hard on the heels of the government’s decision to rescue the distressed Citigroup - the banking giant founded in 1812 with 200 customers in 100 countries - with an immediate $20 bn. investment in exchange for preferred stock, in addition to guaranteeing up to $306 bn. of the bank group’s dodgy assets. “To stabilize the equity, we had to put behind us the issue of Citigroup’s ability to withstand whatever would come,” said Citigroup CFO Gary Crittenden. The cash injection will come from the $700 bn. rescue fund created last month.
In a televised press conference of this morning (Wednesday), Mr. Obama announced the appointment of two new members of his cabinet.
Former economic advisor to President Clinton, Peter Orszag, will be his director of Office Management & Budget, and will take steps to impose discipline on his budget, with Robet Nabors named as his deputy. Mr. Obama announced that although this is not the sum of his economic team, they will join those he has yet to appoint; namely the secretaries of energy, labor, commerce, health and human services.
On January 20, 2009, Barack Obama will become the 44th President of the United States and fully intends to “hit the ground running.” He will be taking on the greatest economic challenges the country has seen since the Great Depression of the 1930s.
The CEOs of Detroit`s Big Three carmakers have spent the last two days cajoling Congress for a $25 bn. loan to bailout the auto industry. Unfortunately they did not further their cause by arriving in three separate company jets.Los Angeles (Weltexpress) - The CEOs of Detroit`s "Big Three" carmakers: Alan Mulally of Ford, Robert Nardelli of Chrysler, and Richard Wagoner of General Motors, have spent the last two days cajoling Congress for a $25 bn. loan package to bailout the auto industry.
Unfortunately they did not further their cause by arriving in three separate company jets - at an approx. cost of USD 20,000 for each return trip from Detroit to D.C. At a hearing before the House Financial Services Committee, Rep. Gary Ackerman wasted no time taking them to task, "There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off them with tin cups in hand, saying that they`re going to be trimming down and streamlining their businesses." He went on, "It`s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."
When asked to comment, the three auto corporations said that it was standard policy for their CEOS to travel by private jet for "security reasons". To quote a Chrysler spokeswoman, "while always being mindful of company costs, all business travel requires the highest standard of safety for all employees," which fell somewhat short of pacifying critics. Thomas Schatz, president of the watchdog group Citizens Against Government Waste said, "If it is simply the company`s money at stake, then only the shareholders can be upset or feel as it might be excessive," calling it "outrageous."
Obviously all three sharing a single jet was not an issue, as Ackerman pointed out, "Couldn`t you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it." A GM spokesman countered, "Making a big to-do about this when issues vital to the jobs of millions of Americans are being discussed in Washington is diverting attention away from a critical debate that will determine the future health of the auto industry and the American economy."
Despite which, the White House seems adamantly opposed to using any of the USD 700 bn. of taxpayers` money to aid the floundering automakers and elected to cancel today`s test vote when it became obvious that it would not pass, although congressional leaders are said to be working feverishly behind the scenes to thrash out some kind of compromise that would offer some relief by the end of the year.
General Motors` Richard Wagoner told the Committee that the industry "needs a bridge to span the financial chasm that has opened up before us," attributing the auto industry`s current dilemma to the worsening global economy, as opposed to any mismanagement. Committee Chairman Christopher Dodd, however, felt that it was "seeking treatment for wounds that were largely self-inflicted." Republican Senator Mike Enzi of Wyoming added that the greater financial crisis was "not the only reason why the domestic auto industry is in trouble," pointing out that "inefficient production" and "costly labor agreements", made US manufacturers unable to compete with their foreign rivals.
Wagoner countered that despite some opinions to the contrary, his company has "moved aggressively in recent years to position GM for long-term success. And we were well on the road to turning our North American business around." He said that collapse of the industry "would be catastrophic," resulting in the immediate loss of millions of jobs, as well as "economic devastation (that) would far exceed the government support that our industry needs to weather the current crisis."
GM seems to be the hardest hit of the Big Three with its shares down 15%, the lowest in 66 years, and is known to be delaying payments to its dealers in order to conserve cash. Ford, although better positioned to weather the storm, is likewise at its lowest ebb for 26 years.
The strictest and most far reaching ethics rules of any transition team in history.
Los Angeles (Weltexpress) - Head of the presidential transition team John Podesta said that the President-elect would establish "the strictest and most far reaching ethics rules of any transition team in history," going on to state in a Washington press conference that Mr. Obama had "pledged to change the way Washington works and curb the influence of lobbyists." Mr. Barama, together with his Republican rival Senator John McCain, had wasted no words during his campaign in accusing lobbyists of selfishness and corruption.
He plans to initiate new guidelines, barring such lobbyists as are currently active in soliciting the government from working with the transition, nor may they seamlessly continue to work with the transition on any specific policy in which they have been actively engaged over the past year. The additional stricture was also added to inhibit any subsequent lobbyist currently working on the transition from petitioning the government on their specific policy sector for a further 12 months, promising the "most open and transparent" transfer of power in US history.
There are still no specifics from the transition team, however, of who would be appointed to such key cabinet positions as Treasury Secretary or Secretary of State.
Outgoing President Bush, after his first meeting with the President Elect and the first Lady at the White House on Monday, said to CNN news: "I know I`ll miss certain things about the presidency. I also know I`m looking forward to getting home, so I`ve got mixed emotions." While, according to AP reports, Laura Bush is currently in discussion with various publishers about writing her memoirs.
First meeting between President Bush and the new President elect Barack Obama in the White House
Los Angeles (Weltexpress) - The first meeting between outgoing President Bush and the new President elect Barack Obama took place on Monday in the Oval Office. The meeting - called somewhat hurriedly due to the war and the economic crisis - lasted almost two hours and was described by both sides as amicable and constructive. Although little detail was disclosed, a subsequent statement issued by the president-elect reported that the talks had been wide sweeping, covering the war in Iraq, the financial crisis, the matter of the transition itself and various economic issues, with special regard to housing and the automobile industry. According to the statement, the incoming and outgoing presidents, "had a broad discussion about the importance of working together throughout the transition of government in light of the nation`s many critical economic and security challenges."
But the new president-elect is hardly kicking his heels, patiently waiting to be inaugurated on January 20. According to the Washington Post, a list of more than 200 executive orders has been compiled for immediate attention. Such orders, including those on stem cell research, abortion, environmental issues and oil drilling in Utah, could be repealed. "There`s a lot that the president can do using his executive authority without waiting for congressional action, and I think we`ll see the president do that," said an Obama spokesman, adding that they were also keeping a close watch on the possibility of any executive decisions being implemented by the outgoing administration at the eleventh-hour.
According to reports, for example, Mr. Obama`s team is preparing to immediately come to grips with the situation in Guantanamo Bay, whereby some captives of the widely-disparaged internment camp would be released, others turned over to the US penal and judicial systems, while others still - prohibited from public trial due to national security issues - could be arraigned before a completely new court, specifically created for the purpose.
Meanwhile, the American public has high hopes for the new administration, with seven out of ten (65%) of American adults predicting that the country will be better off in the next four years.
Police Almost Outnumber Protestors
Los Angeles/Santa Monica (Weltexpress) - About 2,500 to 3,000 demonstrators gathered on the streets of LA on Thursday afternoon protesting against the recently passed ban on same-sex marriage known as Proposition 8.
The crown convened at 2.00 p.m. outside the Los Angeles California Temple of the Church of Jesus Christ of Latter-day Saints, to protest against the Mormon support of the proposition and moved west, blocking off Santa Monica Boulevard and tying up westbound traffic.
According to Lorri L. Jean, head of LA`s Gay and Lesbian Center, the Mormon Church donated more than USD 15 million to support the ban. "It is a travesty that the Mormon Church bought this election and used a campaign of lies and deception to manipulate voters in the great state of California," he said, "No one`s religious beliefs should be used to deny fundamental rights to others. Our civil rights are inalienable."
The Salt Lake Church of Jesus Christ of Later-Day Saints published a statement setting forth its opposition to same-sex marriage. "It is important to understand that this issue for the church has always been about the sacred and divine institution of marriage - a union between a man and a woman, " going on to state that, "Allegations of bigotry or persecution made against the church were and are simply wrong."
Just last May, the California Supreme Court ruled it unconstitutional to limit the state of marriage to unions between men and women, resulting in 18,000 same-sex marriages over the past six months: Proposition 8 now puts the legal status of these couples in jeopardy. Already three petitions have been filed with the state Supreme Court contesting the validity of Proposition 8 since it was passed on Tuesday.
Although the demonstration was peaceful, with only four arrests for disorderly conduct, judging by the turn out, LA`s finest were obviously expecting trouble.
Los Angeles (Weltexpress) - Barack Obama won a historic victory of 338 to 156 electoral votes, (52.3%) in an unprecedented voting turnout - more than 130 million - and has been elected as the first black President of the United States.
For many voters (approx. 60%) the economy was a determining factor, while 90% maintained that neither race nor age were an issue. But almost all of America feels that it has taken part in an historic event; the moment being especially emotional for many African-Americans.
After capturing the majority in the key states of Pennsylvania and Ohio, Obama went on to take California and, more surprisingly, Florida, Virginia and Colorado - all solid Republican states - finally turning much of the US map to blue. At the same time, the Democrats added five seats to their majority in the Senate, and also boosted their majority in the House of Representatives, representing the strongest Democratic majority in Congress for more than thirty years.
"Yes, we can," was the motto of the moving speech the President Elect gave before tens of thousands of euphoric supporters in Grant Park, Chicago, many of whom were weeping with joy, "It's been a long time coming, but tonight - change has come to America."
This was preceded by a most gracious speech by his opponent John McCain, conceding defeat and offering his wholehearted support, likewise encouraging that of his party - in my opinion, one of the most articulate and sincere of his entire campaign. President elect Barack Obama warmly praised his Republican rival, calling him a "brave and selfless leader," who "has endured sacrifices for America that most of us cannot begin to imagine." He had words of gratitude and affection for his family, promising his daughters that that they "have earned the new puppy that's coming with us to the White House."
But he went on in a more serious note, "Even as we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime - two wars, a planet in peril, the worst financial crisis in a century." A presidential election that has crossed all barriers of race and class, "The road ahead will be long. Our climb will be steep. But America - I have never been more hopeful than I am tonight that we will get there," said Barack Obama. He went on to say, "If there is anyone out there who still doubts that America is a place where all things are possible, who still wonders if the dream of our founders is alive in our time, who still questions the power of our democracy, tonight is your answer."
Joe the Plumber, whose name is neither Joe, nor is he actually a card-carrying plumber, is weighing up his options. Although his time in the limelight may turn out to be brief, the world certainly seems to be his oyster right now.
|© Article from EuropeFront.com - European News Network|
Sarah Palin described as a “whack job”
Los Angeles (Weltexpress) – With only a week to go before the presidential election, the two Republican candidates appeared onstage to thunderous applause from a large audience at yesterday’s rally in Hershey (home of chocolate), Pennsylvania. “By the way, when two mavericks join up we don’t agree on everything, but it’s a lot of fun,” said McCain, only moments after Sarah Palin had been described as a “whack job” by one of his aides.
Although the “fun” may have been lacking, if there was any open rancour in the Republican camp, it was not evident from the apparent show of harmony, in which Senator McCain made his most fervent and powerful speech of his thus far tepid campaign. “It’s wonderful to be back in Pennsylvania and it’s wonderful to fool the pundits, because we’re going to win Pennsylvania!” he declared confidently, although national polls put him significantly behind his opponent.
Mr. McCain continued to attack Mr. Obama for his apparent defeatist policy in Iraq, as well as for his response to comments made by “Joe the Plumber,” an American voter who has somehow achieved the status of a political authority; his opinions on everything from economic policy to the War in Iraq being quoted at large. “Stand up, stand up, stand up and fight!” declared McCain, “Let’s go win this election!” His performance was powerful, but many feel that it is too late to make any difference.
Will Pennsylvania be the new Florida? the media are asking. For PA is the only state that voted Democrat in 2004 and the Keystone State’s 21 electoral votes have become a key issue since Republican support is diminishing rapidly in Ohio, Florida, Minnesota, Colorado, Georgia and - surprisingly enough, even in McCain`s home state of Arizona where he is only 2 points ahead of his Democratic rival.
Markets fail to rally despite billions injected by federal governments
New York (Weltexpress) - Despite the billions that various federal governments have recently injected into their floundering financial institutions, global markets have failed to rally. Investors throughout the world have been steadily dumping their stock portfolios and moving into less risk-related forms of investment, i.e. government bonds and securities - notwithstanding the lower yield announced by the US Treasury on Friday - a sure sign of gloomy economic prospects and investor insecurity.
The Dow fell by 3.6 percent, scrabbling its way back up from an earlier 5 percent decline, with the Nasdaq falling by 3.2 percent. London and Frankfurt were both down by 5 percent, while Paris followed suit at just above 3.5 percent. In Asia, Tokyo plummeted by 9.6 percent, Seoul by 10.6, and Hong King by 8.3 percent. Brazil was down by 7 percent, while Moscow plunged more than 10 percent and suspended trading until October 28.
Oil prices continued to sharply decline, despite OPEC`s recent daily 1.5 million barrel slash in production. US crude likewise fell, closing at USD 64.15, with London Brent dropping to USD 62.07. The British pound fell to USD 1.52 - its lowest one-day decline for six years - before bouncing back a few cents to USD 1.58, while the Euro fell to its lowest 2-year ebb of USD 1.25.
There was a slight improvement in the dollar 3-month lending rate, at 3.52 percent, representing that a hesitant amount of confidence has been restored to the banking sector in light of recent government rescue plans. The good news being that banks now seem somewhat more inclined to lend to each other.
But many critics felt that Mr. Greenspan, who resigned in 2006, had himself fueled the problem, Democrat Henry Waxman, committee chairman more specifically accusing him of having rejected pleas to regulate the markets and keeping bank rates too low for too long, thus giving rise to the shaky credit surge. „The list of regulatory mistakes and misjudgments is long,“ said Mr. Waxman. „Our regulators became enablers rather than enforcers. Their trust in the wisdom of the markets was infinite.“
Mr. Greenspan came close to acknowledging liability - but not close enough in some opinions - when he admitted to having made a „partially“ wrong decision and that his tactics might have been „flawed“, but went on to vindicate himself, „because I`d been going for 40 years or more with very considerable evidence that it was working exceptionally well.“
The question of Mr. Greenspan`s responsibility does not change the fact, however, that serious fears of a global recession and major uncertainty still prevail internationally, despite the recent measures taken by various governments to support their individual markets and financial institutions.
|Republican Powell crosses party lines|
New York (Weltexpress) - Republican and former Secretary of State Colin Powell crossed party lines on Sunday, announcing his endorsement of Barack Obama for president, “because of his ability to inspire, because of the inclusive nature of his campaign, because he is reaching out all across America.” Some, however, maintain that the matter of race played a crucial part in his decision.
Having wavered over the past few months over whether to vote for Obama or his long-time friend and colleague, Republican nominee Senator John McCain, Powell said, “I know both of these individuals very well now. Both of them are distinguished Americans and either one of them would be a good president,” although he admitted to concern about McCain’s reaction to the current economic crisis and also to the lack of competence and experience on the part of his ticket-mate Governor Sarah Palin. The continued negativity of McCain’s campaign ads as opposed to any positive strategy was an added factor, together with the tendency of certain Republicans to generally demonize Muslims, many of whom were currently serving in the US military in Iraq and Afghanistan, Powell went on to say.
“I continue to respect and admire General Powell,” said McCain in reaction to the news, saying that Powell’s support of Obama, “doesn`t come as a surprise.” He then went on to stress that he himself had been endorsed by five former secretaries of state and other erstwhile military leaders.
The Republican Party’s continued smear campaigns are indeed thought to have boomeranged and played a significant role in McCain’s loss of popularity. Senator McCain, for his part, continues to describe his opponent’s economic policies and tax schemes as “socialist”, saying, “I think his plans are a redistribution of the wealth.”
And plenty of wealth certainly seems to be finding its way into Democratic Party coffers. Obama’s campaign manager David Plouffe announced that they had raised the unparalleled amount of more than USD 150 million in campaign contributions during the month of September alone. McCain’s response, “I think you could make that argument that Obama is seeking to buy victory, but we’re not going to let him.”
Well, he has a few days’ grace, as Senator Obama announced yesterday that he will interrupting his campaign for several days to visit his ailing, 85-year old grandmother in Hawaii. Despite Obama’s lead in the presidential race - not sufficient to ensure victory, according to some sources, his staff are said to be feeling jittery about his absence.
But Senator Obama will be back on the campaign trail this coming Saturday, with only two weeks to go before the presidential election on November 4.
Tense and Touchy
Washington (Weltexpress) - The mood was tense as the two candidates faced off more aggressively than hitherto at Thursday`s final (thank goodness!), televised, presidential debate at Long Island`s Hofstra University with CBS News moderator Bob Schieffer acting as referee.
Amidst a fair amount of mud-slinging, the opponents focused on key domestic issues and the state of the economy, the topic closest to the hearts of American voters. In conflict on their plans to restore the economy in the face of news that the US deficit had broken all records at USD 455 bn. - an amount not including the recently approved USD 700 bn. bailout - Mr. McCain proposed an additional 52 bn. dollars` worth of tax cuts for retirees suffering from the financial crisis, while Mr. Obama proposed an extra USD 60 bn. emergency budget to help states particularly hard hit, aid the unemployed and encourage the creation of more jobs. Mr. McCain went on to announce his plans to cut profligate government spending and attacked his Democratic opponent for wanting to raise taxes on higher earners. Mr. Obama countered that although „nobody likes taxes,“ investment in the economy was essential and it had to come from somewhere.
Talk however soon returned to the well-trodden paths of character smearing, in the course of which Arizona senator McCain attacked his rival for extravagant spending on negative TV-ads. Mr. Obama retaliated, saying that it was McCain who had been running the smear campaign which, according to polls conducted by both the New York Times and CBS News, has totally backfired. Many voters cited his attacks on Obama as the major reason why the Republican nominee has gone down in their estimation.
Unfazed, Mr. McCain moved seamlessly into his oft-repeated allegations that his opponent has been lying about his links to former „terrorist“ and now university professor Bill Ayers, with whom he served on a charity committee. Obama repeated that he had been a mere child at the time of Ayers` radical activities in the late 1960s and that „Mr Ayers is not involved in my campaign. „
Mr. Obama for his part, once again emphasized Mr. McCain`s links to and support of President George W. Bush and his policies. Mr. McCain countered, „Senator Obama, I am not President Bush. If you wanted to run against President Bush, you should have run four years ago.“ To which his rival replied, „If I have occasionally mistaken your policies for George Bush`s policies, it`s because on the core economic issues that matter to the American people, on tax policy, on energy policy, on spending priorities you have been a vigorous supporter of President Bush.“
On the subject of energy, Mr. Obama advocated alternative energy sources, as well as stressing the urgency for the US automobile industry to manufacture more fuel-efficient vehicles, while Mr. McCain expressed his support of nuclear power and additional offshore drilling for fossil fuels.
Turning to moral issues, Mr. McCain attacked his rival for his recent vote in the Illinois senate against the banning of abortion, which Mr. Obama forcefully defended.
All national polls and surveys put the Democratic candidate well ahead of his Republican rival.
US to invest 250 billion in major banks
New York/Washington (Weltexpress) - In an effort to restore stability to the floundering financial market and ease the credit crunch, the US government announced its plan to use just over a third of its USD 700 bn. bailout budget to purchase stock in a large number of US banks, in addition to its plans to take over a large amount of mortgage-related debt and enhance bank deposit insurance.
Following Gordon Brown`s lead in the UK, President George W Bush said that this would help to re-establish confidence in the banking sector and, although it was a step the government would have preferred to avoid, it would not represent a permanent situation. The banks would be able to repurchase their stock from the government, once stability had been restored.
This step follows that recently taken by the UK government, which on Monday announced that it would invest an amount totaling GBP 37 bn. into certain of its major banks (Royal Bank of Scotland, Lloyds TSB, and HBOS), while European leaders, (namely France, Germany, and Spain), took similar measures, declaring that they would likewise be investing more than 1 trillion euros to bolster continental banks. Japan, too, announced that it would likely implement a similar plan.
Investors heaved a sigh of relief and global stock markets bounced back somewhat in reaction to this news with the Dow up 137 points by days end, and the FTSE and DAX up by 3.2 percent and 2.7 percent, respectively. And even Iceland is more optimistic, where trading resumed on its stock exchange for the first time since last week`s suspension.
After White House talks with G7 heads and the IMF, US President Bush urged a serious global response to the international financial crisis, although he announced no new policies.
Washington (Weltexpress) - After White House talks with G7 heads and the IMF, US President Bush urged a serious global response to the international financial crisis, although he announced no new policies.
Speaking on Friday to G7 finance ministers from Britain, Canada, France, Germany, Italy and Japan, as well as head of the IMF Dominique Strauss-Kahn and World Bank President Robert Zoellick, President Bush said, "We must ensure the actions of one country do not contradict or undermine the actions of another. In an interconnected world, no nation will gain by driving down the fortunes of another. We are in this together. We will come through it together."
On Friday, US Treasury Secretary Henry Paulson likewise confirmed US plans for partial nationalization by investing directly in the banks, following similar recent moves in the UK. This will be the first action of its kind since the 1930s.
After the talks, Mr. Strauss-Kahn of the International Monetary Fund warned that, "Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown." He endorsed the G7`s previously announced five-point plan to unblock the credit freeze by guaranteeing inter-bank lending, possibly initiating further cuts in tax and interest rates, and restoring the crumbling mortgage market - although some critics say that the plan lacks specifics. He went on to say that the IMF was prepared to lend money to countries in dire need, mitigating his note of gloom in a later news conference, "The first co-ordination between advanced countries and the rest of the world is now on track."
Fifteen major European leaders are scheduled to meet at a summit in Paris today in an attempt to develop a common strategy to alleviate the escalating financial crisis and, according to French Economy Minister Christine Lagarde, put "meat" on the "skeleton" of the G7 five-point plan. French President Nicolas Sarkozy and German Chancellor Angela Merkel will be making a number of proposals at the summit, but after a meeting in eastern France on Saturday, warned that Europe could not expect a joint financial rescue modeled on the US government`s USD 700 bn. bailout. Chancellor Merkel said that "there is no question of a European fund," while Mr Sarkozy added that such action would create "gigantic problems". Ms. Merkel said, that governments must "redirect the markets so they serve the people, and not ruin them." She did not, however, say precisely how this was to be achieved.
Infected by panic, US, European and Asian markets continued their downward spiral at the end of this turbulent week, despite reduced rates and the recent infusion of funds by the central banks. It is yet to be seen how the markets will react when they open on Monday.
Candidates stick to major issues with only the occasional sly dig
Washington, D.C. (Weltexpress) - With less than four weeks to go before the November 4 election - and the Dow below the 10,000 mark for the first time since 2004 - NBC newscaster Tom Brokaw moderated last night`s second, 90-minute presidential debate at Belmont University, Nashville, TE.
Interest was high - just about everyone was in front of their TV set at 9 p.m. last night to watch the two presidential candidates square off in a „town hall“ style debate. The uncommitted studio audience posed their questions directly to the senators, while additional questions were selected from the more than 6 million emails submitted by the public.
The economic crisis and foreign policy were the dominant themes and the candidates stuck pretty much to the major issues at hand, keeping their respective smears to a minimum, despite days of dreary televised character assassination.
While both senators agreed that something has to be done to help the US middle class during the current financial disaster, their approaches were very different. „The middle-class needs a rescue package. And that means tax cuts for the middle class. It means help for homeowners so that they can stay in their homes,“ said Mr. Obama, who suggested unwinding certain tax cuts granted by President Bush during his first term in office, directed at benefiting the rich. Mr. Obama claimed that he would reduce taxes imposed on middle-income earners, as well as boosting government-sponsored projects in order to create jobs. „I would order the secretary of the Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes,“ suggested Mr. McCain. This would involve the government buying up USD 300 billion dollars` worth of such bad mortgages and is far beyond the USD 700 million (actually USD 850 bn. including the add-ons) bailout only recently signed into law. „Is it expensive? Yes,“ the Republican candidate went on, „But we all know, my friends, until we stabilize home values in America, we`re never going to start turning around and creating jobs and fixing our economy.“ He mentioned other government spending cuts, even going so far as to suggest the reduction of Social Security benefits, „We are not going to be able to provide the same benefit for present-day workers that retirees have today.“
He placed blame for the mortgage crisis squarely upon the „greed and corruption“ of corporate CEOs, triggered by Fannie Mae and Freddie Mac, known to have contributed significantly to the Obama campaign, while Obama argued that it was due to the deregulatory policies initiated by President Bush and supported by McCain.
Corporate greed is, by the way, the subject of another scandal. Less than one week after being bailed out to the tune of an unprecedented USD 85 billion, insurance giant AIG, „held a week-long retreat for company executives at the exclusive St. Regis resort in Monarch Beach, California,“ Democratic Congressman Henry Waxman told the House Committee on Oversight and Government Reform on Tuesday. „Less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation.“ The bill came to more than USD 440K, according to invoices, broken down into USD 200K for rooms, USD 150K for meals and USD 23K for spa treatments, while „average Americans are suffering economically. They`re losing their jobs, their homes and their health insurance,“ said Waxman.
Incidentally, the Department of Defense`s annual budget is currently set at USD 480 billion - not including the USD 10 billion being spent every month in Iraq. There was no mention of any cutback here. At the same time, when asked if the current economic crisis would affect America`s role as „peacemaker“, Mr. Obama remarked that such military influence could not be maintained while the economy was in decline, adding that it had been a grave mistake to invade Iraq in the first place, „I don`t understand how we ended up invading a country that had nothing to do with 9-11,“ while Mr. McCain accused Obama of opposing the „surge“, maintaining that he lacked the essential knowledge and sound judgment to be a capable commander-in-chief.
Moving to other parts of the world, McCain said that Obama had been, „wrong about Russia when it committed aggression against Georgia,“ going on to denounce Obama`s repeated talk of crossing into Pakistan in pursuit of bin Laden. He quoted Theodore Roosevelt, when he advised that the commander-in-chief should „talk softly, but carry a big stick.“ Obama countered, describing McCain`s self-professed judgment, „This is a guy who sang â€˜bomb, bomb, bomb Iran`, who called for the annihilation of North Korea - that I don`t think is an example of speaking softly.“ As far as he is concerned, while keeping military options open, Washington must use all means at its disposal, including diplomatic talks and economic sanctions in order to achieve its goals.
As to the energy crisis and environmental issues, both candidates agreed that both traditional and alternative fuel sources had to be developed, McCain opting for nuclear power stations and increased off-shore drilling for fossil fuels, while Obama emphasized conservation and the development of alternative energy, such as wind and solar power.
A number of polls, including those conducted by CBS News and CNN, all suggest that Mr. Obama came out more than fifty percent ahead of Mr. McCain in the debate.
CIAV - Coalition for Iraq + Afghanistan Veterans
Washington, D.C. (Weltexpress) - On the eve of another major presidential debate, a plummeting Dow on Wall Street and panic in the global markets, a very different, though no less significant kind of meeting is taking place in the nation`s capital.
While Democrats and Republicans, in their GWOT (Global War on Terrorism), are strongly divided on US defense (ok, war) policy, i.e. whether troops are to be withdrawn from Iraq and sent to Afghanistan, or the surge in Iraq is to be bolstered, one thing is certain: More troops means more veterans. And the rights and after-care of returning military veterans seem to be regarded by both parties as an issue far separate from the wars that create them.
The second 3-day conference of the Coalition for Iraq + Afghanistan Veterans, or CIAV, consisting of some 45 agencies nationwide that address the vital issues facing active duty, veterans, their families and survivors, convened at Washington`s Marriott Wardman Park Hotel. Among those taking part were non-profit organizations and agencies, including the American Pain Foundation, California National Guard Family Assistance Fund, Disabled American Veterans, the National Coalition for Homeless Vets, the Navy-Marine Corps Relief Society (the oldest non-profit vet organization of all, founded in 1902), the Tragedy Assistance Program for Survivors (TAPS), as well as coalition founder, San Francisco-based Swords to Plowshares set up in 1974 to deal with the concerns and after-care of returning Vietnam Vets. Although ranging in size from 5 to 20,000 employees, these community-based organizations and others like them have one thing in common: all are dependent on government funding and private donations - which have always been hard to come by - and more so now in the present economic climate.
Their goal: to capitalize on their individual strengths by joining forces and working together to break down the barriers between the military and civilian community and improve the quality of services available to the active military, a new generation of war veterans, and their loved ones.
The wounds of war last beyond the battlefield and too many veterans leave service suffering permanent mental and physical disability, and without any prospects of stable housing or employment.
Here are some statistics:
Approx. 1.7 million have been deployed in the GWOT, mainly in Iraq, 34 percent more than once;
For every death on the battlefield, there are 7 wounded;
46.6 percent of regular forces are under 25, many of them teenagers who left home for the first time and return to an already unstable environment with the added stress of combat;
According to the VA, I5,653 vets have been treated for substance abuse so far in 2008 and the VA further confirms 18 suicides daily among the entire vet population, with 1,000 suicide attempts per month. The VA Suicide Hotline set up in July 2007, received 43,294 calls during its first six months of operation.
18 percent of returning vets are unemployed, of the remainder 25 percent earn less than USD 21,840 per annum;
1 in 4 military families owe money to predatory lenders at interest rates of 400 percent or higher;
Nearly 2 million vets are uninsured, two-thirds of whom are also unemployed.
Although the VA (U.S. Dept. of Veterans Affairs) is a laudable institution, it is still a government body and, as such, bureaucratic obstacles and delays are unavoidable and serve as an added discouragement to vets seeking care. Nor does the VA, already over-extended, have the capacity to meet rising veteran needs, e.g. the backlog of disability claims has risen to more than 600,000. As of April 2008, the number of GWOT claims filed was 287,790. And filing is only the beginning; it takes approximately 183 days for an initial decision, with some claims taking up to 10 years to be resolved.
So, while the government is dishing out billions of dollars to Wall Street in its financial rescue scheme - referred to by some as the „Executive Welfare Plan“ - perhaps it should spare some thought - and budget - to providing services and resources for the new veterans it seems determined to create.
For more information, click on:
With less than 24 hours to go before the next key presidential debate, Barack Obama strikes back with a vengeance.
Washington, D.C. (Weltexpress) - After Governor of Alaska and Republican VP nominee Sarah Palin accused Barack Obama of consorting with terrorists - or rather one terrorist in particular, University of Illinois professor Bill Ayers, former member of the 1960s radical group Weather Underground, besides intimating that further attacks on Obama were on the cards - the Democratic presidential candidate has retaliated with a two-pronged attack. Accusing John McCain of being more interested in conducting a smear campaign than in working on a plan to save the economy, on the one hand; and condemning him for his involvement in a 1980s financial scandal, on the other.
One of the Keating Five, the epithet given to the five senators who were investigated by a Senate ethics committee for their manipulation of certain securities and banking regulatory authorities for the benefit of business magnate Charles Keating (ultimately convicted of fraud), although it was proved that McCain had been slightly less involved in the scandal than the others. Publicly censured for having „poor judgment,“ McCain referred to the incident as „the worst mistake of my life.“
Be that as it may, the Obama campaign has produced a video about the unfortunate affair which is currently being circulated on the Internet. As Obama`s campaign manager David Plouffe righteously declared, „The McCain campaign has tried to avoid talking about the scandal, but with so many parallels to the current crisis, McCain`s Keating history is relevant and voters deserve to know the facts - and see for themselves the pattern of poor judgment by John McCain.“ And as if the video isn`t sufficient, viewers can click on to a special website for a 13-minute documentary for further juicy details about Mr. McCain and the Keating scandal. Where will it all end?
Mr. Obama said at Sunday`s rally in North Carolina, „Senator McCain and his operatives are gambling that he can distract you with smears rather than talk to you about substance,“ going on to add, „They`d rather try to tear our campaign down than lift this country up. It`s what you do when you`re out of touch, out of ideas and running out of time.“ And this is the fundamental message of a new TV ad for the Democratic campaign scheduled for imminent cable broadcast, describing McCain as „Erratic in a crisis. Out of touch on the economy.“
What was that old proverb about throwing stones and living in glass houses?
New York (Weltexpress) - In preparation for the forthcoming second presidential debate, Republican VP nominee Sarah Palin „takes the gloves“ off to accuse Barack Obama of hobnobbing with terrorists; thought to be part of a wider Republican campaign to defame Mr. Obama`s character.
The terrorist in question is Bill Ayers, one of the founders and former member of the militant group Weather Underground that actively opposed the Vietnam War in the 1960s and was alleged to have been responsible for a number of bombings in the US. Apparently some years ago Barack Obama served on a charity committee with Mr. Ayers, now a highly-respected professor at the University of Illinois. Only a child at the time the group was active, Obama has since denounced Mr. Ayers` radical history, as has Mr. Ayers himself.
Democratic spokesman Hari Sevugan accused the Republicans of gutter politics, maintaining, „What`s clear is that John McCain and Sarah Palin would rather spend their time tearing down Barack Obama than laying out a plan to build up our economy.“
At a rally in Colorado, Governor Palin said it was time „to take the gloves off,“ going on to portray Obama as one who regarded the US „as being so imperfect, he is palling around with terrorists who would target their own country,“ while Obama played a clean game, criticizing his opponent`s plans for healthcare, a vital issue for voters.
House passes Bailout Plan with 150 billion dollars` worth of added incentives
New York (Weltexpress) - After rejection by the House on Monday and the Senate`s passing of the new version on Wednesday, the US House of Representatives was finally coerced - there`s not other word for it, really - to pass what must be one of the most unpopular bills in US history.
Despite major dissent during the House debate, the plan was adopted by 263-171 votes, but only after 150 billion dollars` worth of new tax incentives had been added to the package to sweeten the voters of both parties, although many still expressed grave doubts. The plan`s hard-core opponents continued to strongly maintain that it is an act purely designed to benefit Wall Street, while House Speaker Nancy Pelosi was only one of many who felt that it would likewise benefit the American people as a whole and urged that the action was essential, „to avoid economic catastrophe“, going on to optimistically declare, „The bright light of accountability will protect the taxpayer.“ Accountability by whom, one wonders.
Aimed at buying up the toxic debits of Wall Street`s faltering financial institutions, President Bush signed the bill into law at 2.45 p.m. on Friday, just before taking off to his Texas ranch for the weekend, praising legislators for their „spirit of co-operation.“ „In coming together we have acted boldly to prevent a crisis on Wall Street becoming a crisis in communities across the country,“ he said in a TV interview, although acknowledging that there were indeed grave anxieties about the cost of the plan and how it would actually be put into effect. Nevertheless, Treasury Secretary Henry Paulson swore that action would be swift to get the rescue package up and running, while Ben Bernankem, Chairman of the Federal Reserve, praised the House, declaring that the bailout was a vital step towards stabilizing the economy. But Georgia Democrat John Lewis was the one to put it in a nutshell, when he said, „I have decided that the cost of doing nothing is greater than the cost of doing something.“
So, what are these new amendments that finally convinced Congress and the Senate to act against their better judgment? An increase of USD 150,000 on savings account protection (from USD 100,000 to USD 250,000), increased child tax relief and additional aid for hurricane victims, as well as tax incentives for small businesses, mainly aimed at encouraging the development of alternative energy. Who could object to that? But let`s have some specifics on that extra USD 150 bn worth of new tax breaks, which raises the rescue plan to an all-time high of USD 850 bn.
Arrows: A tax break for producers of a certain type of arrow mainly used by kids in archery (I guess it`s better than bullets) at a total 10-year cost of USD 2 million;
Wool: Tax incentive for the manufacturers of worsted wool textiles and clothing at a total 10-year cost of USD 148 million;
Rum: Tax incentive on rum imported form Puerto Rico and the Virgin Islands at a total cost of USD 192 million;
Racetracks: Reducing racetrack depreciation from 15 years to 7 at a total 2-year cost of USD 100 million;
And less absurd:
A USD 10-million tax incentive allowing employers to grant benefits to workers who commute on bikes;
Movies: A total of USD 478 million tax incentives over 10 years, allowing US film production companies to deduct production costs from their taxes. (Incidentally, California has been pursuing this for a long time in an attempt to curb „runaway productions“)
Economically speaking, Wall Street reacted with a 250-point surge in the Dow prior to the vote, but wavered shortly thereafter, closing with a 1.5 percent drop. And while one man`s disaster is another`s opportunity, the Wells Fargo bank announced its intended purchase of distressed rival Wachovia for USD 15.1 bn,
The one and only vice-presidential debate
New York (Weltexpress) - Governor and former mayor Sarah Palin put in a better performance than anticipated at last night`s eagerly-awaited, 90-minute vice-presidential debate - the only one of the campaign - at Washington University, St. Louis. The almost prurient interest in her performance turned the debate into somewhat of a media spectacle and generated a huge amount of viewer feedback: comments on FaceBook and MySpace, for example, revolving around such vital political issues as her deportment and hairstyle.
Folksy, down-home, one-of-the-people (a stance that always terrifies me, quite frankly; I don`t want people like you and me running the nation), her dialogue spiced with sayings like `heck of a lot` and `Main Streeters like me` - in a transparent appeal to working class voters - Palin kept carefully to script, and put her points confidently across with polite persistence.
Affably challenged with incisive critique by her Democratic opponent Senator Joseph R. Biden Jr., who has himself twice sought the presidency, she has obviously learned much since her recent uninspiring TV interviews. Although she can hardly be said to have gained much ground in quashing the general misgivings on the depth of her knowledge and experience and Mr. McCain`s judgment in selecting such a newcomer for his VP. `I do respect your years in the U.S. Senate,` she said to Mr. Biden, `but I think that Americans are craving something new and different and that new energy and that new commitment that`s going to come with reform. I think that`s why we need to send the maverick from the Senate and put him in the White House, and I`m happy to join him there.` The expression `maverick` in relation to McCain seemed to be a favorite of Ms. Palin, which eventually galled Mr. Biden sufficiently to respond, `He`s not been a maverick when it comes to education - he has not supported tax cuts and significant changes for people being able to send their kids to college,` going on to say, `He`s not been a maverick on the war. He`s not been a maverick on virtually anything that generally affects the things that people really talk about.`
The debate revolved around the now familiar issues of taxes, the economy, the energy crisis, and even same-sex marriage and, of course, turned to the war fronts of Iraq and Afghanistan. Asked about her opinions regarding an Iraq exit strategy, Palin hailed McCain`s support for a fresh `surge` of US troops in Iraq, going on to attack Obama`s stance against further federal financing: only one of her many grievances against Obama`s policies on taxes, energy and the Iraqi war.
`Go to a kids` soccer game on Saturday and turn to any parent there on the sideline and ask them, How are you feeling about the economy?` said Ms. Palin, `And I`ll betcha you`re going to hear some fear in that parent`s voice` fear regarding the few investments that some of us have in the stock market - did we just take a major hit with those investments?` Mr. Biden made a characteristic response, emphasizing McCain`s unawareness of and disassociation from the problems of the people, `It was two Mondays ago John McCain said at 9 o`clock in the morning that the fundamentals of the economy were strong,` going on to say, `Eleven o`clock that same day, two Mondays ago, John McCain said that we have an economic crisis` That doesn`t make John McCain a bad guy, but it does point out he`s out of touch.`
But Senator Biden finally managed to get his and his party`s point solidly across, when he said, `The issue is how different is John McCain`s policy going to be than George Bush`s` I haven`t heard how his policy is going to be different on Iran than George Bush`s. I haven`t heard how his policy is going to be different with Israel than George Bush`s. I haven`t heard how his policy in Afghanistan is going to be different than George Bush`s. I haven`t heard how his policy in Pakistan is going to be different than George Bush`s. It may be, but so far it is the same as George Bush`s.`
And that, my friends, is the crux of the matter.
Combat returns to the House of Representatives
New York (Weltexpress) - The US Senate passed the USD 700 billion financial bailout plan last night by 74 votes to 25; tossing it back for reconsideration by the House of Representatives, who rejected the former version on Monday, rocking global markets.
Apart from additional tax relief aimed at the renewable energy industries, but also including other currently unspecified, forms of business and a one-year freeze on Alternative Minimum Tax, the new version ups the ante for insured bank deposit limits. But the bill still remains unchanged at its core, enabling the Federal Government to buy up so-called “toxic” mortgage-related assets, believed to be the cause of the haemorrhaging credit market. While advocates of the rescue plan argue that these very assets represent a high potential profit for the government upon resale, many maintain that it merely favours Wall Street at the cost of Main Street. But it is nevertheless hoped that this compromise will provide the basis for a joint bill to be submitted to President Bush by week`s end.
Following the vote, Senate Republican leader Mitch McConnell admitted that the plan does not constitute a final solution, but is a positive step, adding, “This has been the Senate at its finest… In the years that I`ve been here, I can`t recall a single time where - this close to an election - both sides have risen above the temptation to engage in partisan game-playing, if you will, to address an issue of great magnitude.” While Democratic Senator Christopher Dodd praised both parties alike, “We`ve got many difficult months ahead to get this right. The road in front of us is going to be difficult and long.”
Presidential candidates John McCain and Barack Obama returned to Washington in time to cast their votes. McCain saying, “In the case of this bill, I am confident there are enough people of goodwill in both parties to help see America through this crisis,” while Obama warned that unless speedy action was taken, “millions of jobs could be lost, (and) a long and painful recession could follow,” and added a final warning, “there will be a time to punish those who set this fire.”
Senate votes Wednesday
New York (Weltexpress) - Only two days after the USD 700 billion bailout plan was rejected by the House, the Senate will vote on the revised bill after the sun goes down this Wednesday evening. Although the House has been adjourned in observance of the Jewish holidays and not officially scheduled to reconvene until noon on Thursday. Both presidential nominees confirmed that they would attend.
Modifications to the bill were announced by Senate Majority Leader Harry Reid, and Minority Leader Mitch McConnell on Tuesday night. As Reid said in a statement; `Senate Democrats and Republicans believe it is essential that we work quickly on this important legislation to restore confidence to our financial system and strengthen the economy.`
New provisions include raising the FDIC (Federal Deposit Insurance Corporation) insurance ceiling from USD 100,000 to USD 250,000 per account in order to re-establish market confidence, tax incentives for renewable energy, Alternative Minimum Tax relief, as well as a `Mental Health Parity` provision, requiring health insurers to treat mental and physical illness equally. According to White House spokesman Tony Fratto, the administration welcomes the `modified bill`, while Speaker Nancy Pelosi said, `House Democrats remain strongly committed to a comprehensive bill that stabilizes the financial markets, restores confidence, and protects taxpayers.`
If passed, the bill will allow the federal government to purchase mortgage-related debt from financial institutions, giving them leeway for further lending. Its supporters maintain that this would prevent a major financial crisis, while its adversaries view it as an intolerable taxpayer burden and only a temporary relief for Wall St.
Still, there was optimism on the street and stocks picked-up on Tuesday, with the Dow recovering 485 points.
Wall St. reacts in shocked amazement
New York (Weltexpress) - Wall St. reacted in stunned shock at Monday`s news that Congress had rejected the USD 700 billion financial bail out plan. Experts are already predicting the biggest economic crisis the country has known since the Great Depression.
The Dow Jones plummeted 777 points, or nearly 7 percent, to 10,365 - the biggest drop since the crash of October 1987, with the NASDAQ down by almost 200 (more than 9 percent) to 1,983.73 - and Republicans and Democrats blaming each other for the debacle. More than four hours of heated debate for and against from both sides - whereby some of the plan`s advocates did not hesitate to point out its failings - finally resulted in a House vote of 228 to 205 against the financial bailout.
According to George Stephanopoulos in an interview on ABC news, “You had this economic crisis, the market`s bearing down, you had the President of the United States, the Speaker of the House from another party, united Congressional leadership across the board, and both presidential candidates giving cover, and the bill still went down. We have never seen anything like this.”
But President Bush and House leaders are still determined to push the bill through and analysts are trying to predict just what moves they will make in pressing forward, suggesting that the current administration may well be forced to offer certain concessions to the Democrats for a unilateral decision. According to a Democratic spokesman, Speaker of the House Nancy Pelosi is, for the moment, “committed to a bipartisan bill,” and expected to introduce another version of it later this week; one more likely to gather Democratic support and appeal to liberals. Republican leaders have, in fact, blamed Pelosi for the defeat, claiming that her partisan speech, “700 billion is a number that is staggering, but tells us only the costs of the Bush administration`s failed economic policies,” was responsible for “poisoning” their own party`s support. While others, of course, blame the Democrats as a whole.
To quote the New York Times, “over a trillion dollars vanished from Wall Street on Monday.” And the panic seems to be spreading worldwide, with stocks plummeting in Asia. Tokyo`s Nikkei 225 plunged by more than 544 points, or 4.6 and the Hang Seng fell by 5.5 pecent with 3-3.5 percent loses in the indices of Seoul and Singapore. London`s FTSE 100 was down by approx. 4.16 percent, the CAC in Paris by 4.9 and the DAX fell 3.87 percent. A Washington Post headline reads: “the turmoil that began on Wall Street now spans the globe.”