Hi Todd,

Just seen your interview on CNN international. I agree that it will require a colaboration with all governments to guarauntee interbank lending as well as some shrewd monetary policy decisions from the individual countries. However, even with these in place the time it will take for the outcome to take effect could be anything up to two or three years.

Like a storm the financial crisis has taken a life of its own. Can you legislate the power and momentum of a storm ? The best we can do now is to try to survive it because evacuation was never an option.

When do the insurance companies start to fall? Yes, AIG went and a small company in Japan. But I have been expecting more. Aren’t they the ones who wrote most of the derivatives guaranteeing the sub prime loans or were they prevented from getting into this by regulations?

There should be a need to consider whether the recapitalisation to financial institutions from government is the only avenue to save those companies. Once a precedent is set, any future trouble that crops up will then be sheltered by the government. There are pros and cons anyway. These companies have been paying taxes during good times, as such assistance should be granted in failing and dire moments. But on the other hand, the minority investors and the citizens on the street , their life savings and retirement plans will be affected. So, will the government provide such assistance just like they are bailing out financial institutions? My answer is, they should compensate and this compensation should come from rescued companies by imposing higher or windfall taxes and a mechanism has to be in place to do this. It’s call “Pay Back Time” .

Hi, Todd,

I have a question regarding our financial future. A relative told me that when someone dies, any money owed from credit card purchases and unpaid upon the person’s death, remains, of course, unpaid.

With the baby boomers in their 60’s now, what will happen further to our economy, if as these baby boomers approach older years they start buying a lot with their credit cards, fully knowing that their credit card bills will never have to be paid in full.

Thank you.

Let the markets crash its the decision of the people who invested with confidence then and cry now because they made a mistake. They believed in the companies that they invested in.

Those of us who have stayed o the sidelines and been prudent have now a chance to make our money in long term investments.

The tables are turning for those who had not, and who now have a chance to have. Haha let it go bust in 10 years i may be a multi millionare

Hey USA the big capitalism of the world big bully of the world too look at you Now Who is laught ?

For years you have bully the world with your big Banks

It karma!

salam

USA has damaged the confidence in the share market very badly -
Shares are a valuta completely without any regulation and the falling prices on the shares will undermine the solidity off all banks - insurrance companies - pension funds - you name it

The loss of confidence in shares will allso damage capital for new interprices - and any kind of change in respocible leadership in big companies -

Yes we will get a big recession just because USA did not take responcibility for lack of control in the lending and financing institutions.
selling bad debth disquised as safe loans to big banks around the globe will make future cooperation very difficult -
Its a good idea to buy shares in the insurance companies , banks ect - the English system is better than the USA system

many greetings from Danmark

this all is the product of make-believe.Banks should be forbidden to do anything else but take deposits and lend money- in a ratio 10 to 4 to hedge against insolvency.What many call euphemistically “crisis” is plain and simple INSOLVENCY.

How would recapitalization work? Will the governments get an equity stake immediately that allows them to order the intervened banks to lend to each other? Would Treasury officials do it on a case-by-case basis? Order each bank to lend to every other bank that requests short-term funds?

We’ve already seen the Fed direct a tsunami of liquidity and discount lending and an alphabet soup of special facilities at the banks and they’re still not lending (!). How can anyone know whether recapitalization will work unless officials actually begin to micro-manage the semi-nationalized banks and start directing money to specific recipents? Is that the future of the global banking system? True, the private sector has failed miserably, but what hope is there bureaucrats will do it better?

I think that there is too much emphasis on banks and the markets. These institution do not represent real wealth. Real wealth are goods and services that are provided to people. We need our economic policies to be based around the fact that wealth is created through real world goods and services. The financial markets could not exist if it weren’t for real world wealth generators.

A recession, at least in the US, was and is inevitable. If you look at the US balance of trade, current account balance, government deficit, public debt, etc, it is clear that the US has for too long lived beyond its means. That means a recession is necessary to get the US back into a state where wealth produced is wealth created; contrary to the present system of debt financed consumption.

And never forget that this recession is may very well turn into a depression if world oil is peaking now. If world oil production is peaking now, a depression of unseen proportions will be at hand. The Great Depression was purely structural. This Depression could be geological. Or oil production could peak in 2020 and then we can do this all over again.

Last thing: ‘Too big to fail’ should be ‘too big to exist.’

Am I understanding direvatives correctly? Banks and insurance companies sold “insurance” on investments. The sub prime mortgages were the first to go and now the stock market itself is creating a demand for claims against this paper.

Seems to me it is like the shell companies of the 1920s. Insurance was sold to the investor and to anyone who just wanted to buy the insurance as a gamble. Thus the total direvative potential liability is, by one chart I saw, twice the total world wealth.

And the fidler wants to be paid.

Lem Bray
Ueki Machi, Kumamoto, Japan

From where comes the connection between the value of shares on the stock market and the fundamental problem of lending between banks? They can lend right now but don’t like the rates. It is not a liquidity problem at all. Similarly, if banks made bad loans, fire their managers, sell their assets (including property) and reimburse savers first. Why not? Because the banks are deliberately mixing this all together to scare politicians into maintaining their fairy-land. Who said shares and house prices should always rise? Banks did because it is how they make money. Share prices are back at levels of a few years ago only so why the panic on this front? Or the surprise?

Hi Todd.

I dont think it will be the best option for the US government to put tax payer’s money into recapitalising banks, if that’s what you suggest. On the one hand, that will amount to massive nationalisation, the same type of things that Hugo Chavez is roundly criticised for. On the other hand, it will let the bankers get away with a slap on the wrist. Most analysts, like you, knew this was going to happen, perhaps the scale could not be guessed.

The bankers got carried away, and the crisis of confidence is largely fuelled by public perception of their past, present and even future activities. Talk about all those big salaries, bonuses and golden parachutes. What nobody is saying is that the marked-to-market accounting that was used and that is much vilified today, presumed that if transactions go into losses before maturity then profits need to be coughed up, whether by the company or by private individuals who have shared profit. Confidence will only be restored when we hear of how much those bankers have been asked to bring back. Not before. These guys are trillionaires, whether in the US or here in Nigeria, a third world country.

Dear Mr. Benjamin (Toddybear),

First, allow me to welcome you back. You have been missed. As usual your comments were well considered and sensible. There is nothing wrong with the concept of the government taking steps to mitigate the financial meltdown that is underway. The problem with it is that it fails to recognise the globalisation of the financial industry. Simply buying up “toxic assets” is a sort of financial bandaid for a major trauma.

There is nothing wrong with government regulating the banking industry. Regulation does not impinge on basic freedoms in banking any more than traffic laws impinge on individual freedoms. A substantial element in the current problem was the end of Glass Stiegel Act an the separation of commercial and investment banking. Controls on bank leverage and liquidity levels is important to the solvency of banks. It is not necessary for government to own the banks to re-institute such controls. The depression of the 30’s was the trigger for the first round of bank regulation. We are starting the 21st century equivalent earlier in the century.

Forcing the taxpayer to become a stockholder in the banking industry is a questionable initiative, but far better than simply using stockholder funds to buy up assets that being generous can be described as of questionable value. I for one would be far happier with shares of Morgan Chase or even Citi than a bunch of mortgage derivative securities. At least I know what the shares are.

I agree that a coordinated global approach is an absolute necessity to resolving the financial crisis. It does not require a socialistic approach to achieve this. Privately owned banks operated very well with some regulation for more than half a century in the 20th, a move backward but coordinated internationally would permit the same thing to occur again.

Again, welcome back.

Mike Chase

To add to my comments, perhaps we can get back to the idea of ‘work’ producing things rather than what banks jokingly called ‘products’ which are mainly illusions based on ever distant real assets and asset valuations. Real products are produced by real work which actually requires real effort - little of this is in evidence in the banking system

Let us try to do following:
1) Let us stop the blame game, specially the post mortems. Look, nobody wanted this to happen. People (in Decision making positions) did what they thought was right at that point in time.
2) Don’t look for analogies. There are no analogies. 1930 depression was different. It is wrong to compare.
3) Don’t take common man’s opinion, it is mostly useless and there is no value add, only emotional outbursts. There is currently no room for emotions.
4) Stock Markets are useless indicators (they always were). They denote nothing. Don’t go by them and don’t give them too much importance.
5) Last and the most important thing - Keep common sense intact. There is really nothing bad that has happened actually.

Keep trying and building confidence. Tell people that people would still wake up in the morning, people would want a house to stay, food to eat, a car to drive…All people habits are still going to be same, so don’t panic.

Australians have never subscribed to the American ’small government ‘ model and our banks are just fine. Governments must regulate to prevent the obscenity of the poor having no health insurance and banks to have cash to cover their loans.
Our ‘little Johny’ tried to introduce the ‘American way’ and promptly got booted out of office and how can it be that the populous of the (at present) most powerful country in the world are not required by law to vote for their chief? Wonder if Bush still thinks the US of A is envied by most of the world.
Unfortunately the virus has spread beyond the US for two reasons. Greed and fear.

What we see is the result of the greed instinct embedded in human beings. When we were living in caves we gathered as much nuts as we could, through exercising greed.

Now some dominant Alpha males have been gathering money instead of nuts to the extend that, through governance manipulations, they have broken the system of healthy greed.

Greed has a function in human beings, greed is here to stay, greed is good, greed is what we need it to survive!

Ashwin Ramcharan

Todd,

I think that everything the governments can do now in terms of general policy measures is tantamount trying to feed a lion with a pea.

I think, in Austria they get it. Vienna closed its stock exchange, so should the rest of the markets if and when a market falls more than three per cent on the day or down volume is more than double that of the recent six months.

Cmpare the market to a dance hall where a fire breaks out. You may wait for the stampede to take its tall or you may fire a shot into the air to get an orderly one-by-one exit. Eventually, an orderly retreat will take a lesser death toll. This is about psychology, and suspending some markets could maybe break the cycle.

As for the credit crunch? I only see the central banks get into business of lending to the consumer through nationalized institutions. The middle men of the past need to be taken off line, and quick. There is no reason to believe they are going to manage fresh tax payers’ money than the lost assets of the past.

Hi Todd,
I find Joe’s and Mike Chase’s comments to be interesting and food for thought.
Recapitalisation with proper regulation of the banking industry may not just be enough. Buying up toxic debts smacks too close to the failings and risks from derivatives/credit mortgage crisis activities, in other words, it seems to be in the lines of the same thoughts and practices that has already brought on the financial crisis. Besides putting good money into bad is never a good thing. If the banking industry has gone so sour as reported, someone should really look at the bottomline. Restructuring is necessary, merging may be necessary, the range of activities or legitimate businesses each bank or financial institution is allowed to go into should not overlap or allowed into so much risk or risk related ventures. Whatever happened to protecting the interests of the investors?
cheerio…

The current crisis has many causes, primarily lack of regulation and oversight, but the immediate issue now is a crisis of uncertainty. Banks and investors are uncertain of asset valuation. Banks will not lend to eachother or busness with that prevailing uncertainty. There is a lack of transparancy.

Three steps are needed:

1. Federal liquidity injection directly to banks
a. develop a valuation of these spoiled assets based on what the government would pay
b. requiree the banks to re-value their assets and post their balance sheets on the internet in 14 days
c. the fed then re-capitalizes select banks and allows some others to fail or be taken over.
2. Added regulatory oversight and regulation
3. New tax structure
Eliminate all corporate tax breaks. Roll them into a massive revenue neutral restructure with the top corporate tax rate at about 28%, manufacturing at 24%. Allow a 2% further reduction provided the employer provides at least 80% health care coverage to employees.

Do not bail out the automakers.

So banks are not lending? Well, them lending too much got us where we are at the first place. A little prudence and less unfounded confidence may actually help.

Government bailouts are just painkillers, not medicines. They will help to maintain the distortions that caused this mess. Being an advocate of free market, I put blame on govt interventions in the past (whoever came up with the idea that everybody should own a house, regarless of the fact that they cant afford it?), and more govt micromanagement will make it worse. Of course, banks make long term promises and it is important to make sure that they will deliver on them. So govt (who else?) should set up some framework to ensure this. But these should be long term rules, stable and foreseeable, not ad-hoc actions without any long term logic behind them. This will just contribude to chaos and lessen the confidence further. Bailouts also deny accountability - people need to bear consequences of their decisions, otherwise they wont make good choices in the long run.

One of conditions of the free market is that people know what is going on. This is near to impossible, given the complexity of the instruments coupled with secretivity of banks. “Crisis of confidence” is then a logical outcome of this lack of transparency - past overconfidence was unnatural, this is a correction to normal level, given the state of the affairs. People ceased to believe in wild guesses - finally!

The reason we are in the mess is that money was too easy to get and no Government is going to fix it by simply dumping more money into the mess.

Institutions loaned money because they could get it. And because they could get it they made it too easy for their customers to borrow it.

The same scenario is happening with many governments, particularily the US. Our US politicians have been and are creating enormous US debt because it has been easy for them to borrow money or print more.

Shouldn’t the solution focus from a “bottom up” perspective rather than the “top down” perspective I am only hearing about.

There is an ever greater need for nations to provide money. Due to bankruptcies, not all of this money will come back. Incoming taxes will be less and less as more and more people are beginning to lose their jobs. So, what’s to be done? The state borrows more money? Who’s willing to lend? I don’t see why a depression would be unlikely. We should not have allowed debt to increase as much as it has. Let it be a lesson for the future. State guarantees? Well, we have seen in Iceland how little that can be worth when there really isn’t any more money to borrow.

Yes, given the evidence of free-marketers to regulate themselves and with appently no confidence in anything in the banking industry, government should be pro-active now. If it’s a national security asset and it’s under attack and it is, we have to protect it, even if our government has to put it under their control. Since government has de-regulated or sub-contracted, the nightmares just keep coming. Enron anyone. Halliburton anyone. Alot of our military is sub-contracted and thats costing us a fortune.
When I left the military I remember saying, “I’m not woried about the enemy, we have enough bombs to kill’em a thousand times over. I’m worried about our own country men.” ” We the People of the United States of America” have turned on each other, even in the midst of two wars. Shameful and destructive! We have torn the fabric of this country from its people, to its maufacturing, to its farming, technology, innovation and now banking. Personally, I’m very angry to observe that businesses choose to ship out and setup American made manufacturing and technology bases in foriegn countries. In countries known to not be not so friendly to the US. So the trade off is; we give them great manufacturing and production capabilities so we can buy cheap pots in the US, while losing jobs and lowering our wages. If the government wants a stake in the banks, I say it’s a good start to regulating some our national security assets.
By the way, last time I checked when you go to war and dismantle the enemy’s military and see their leader hung. I’m pretty sure that’s the definition of victory. Some politicians continue to claim we haven’t won in Iraq. Do the world a favor and shut up!!! Start supporting the idea of bringing the Willing, the Brave and the Couragous home. We won!! Get over it and I pray the country will too.

Hi Todd ,
I think that an even bigger crisis will strike when the credit crunch takes its toll on credit cards. I heard yesterday that Bank of America’s credit card defaults have risen to 6% in recent Quarter. Can anyone imagine the impact if credit card defaults begin to emerge nationwide? Not every American has a mortgage, but surely, there are more credit cards than there are People in the US !

I think you need full dose of reality here - this is the FRB system finally canabalising itself … which is what it has been designed to do !!

keynesian economics does not work long term - he said that before he died - but nobody (and especially those in power at the moment) was listening !!

Watch these videos and weep - then get angry - then start the revolution !!

http://www.youtube.com/watch?v=ThXpjmfyiMQ
http://www.youtube.com/watch?v=sanOXoWl0kc
http://www.youtube.com/watch?v=kTv1fo6sKmo
http://www.youtube.com/watch?v=3qicabStQkc
http://www.youtube.com/watch?v=7kpSbkaD4tM

Isn’t amazing that the first President in the history of the United States to hold an MBA, seconded by a vice president who headed one of America’s largest corporations, and supported by a Treasury Secretary who chaired one of the largest investment banks in the US, have been able to so royally screw-up the economy and crash the federal budget in such a short period of time. Doesn’t say much for a Harvard MBA nor, for that matter, much the educational or business acumen of America’s supposed business “leaders.” Give management of the economy to a plumber. At least they know how to detect a leak and stop it before a flood.

Can we try an experiment that would cost nothing? While there was some validity to the housing market crash - it could have been contained to those areas that really needed an adjustment (ie California) and also all of the speculators that wanted to get into the flipping business - get a real job and go back to buying lottery tickets. What I would like to see is a switch with the medias constant fear based reporting…”Terror on Wall Street” etc. Have you ever heard of a self-fullfilled prophecy? How bout instead of constantly trying to tear the country down - you guys use your power for some good. I gaurantee - the market is a direct REFLECTION of your contstant negativity. So….lets see what a positive spin would do for us?

Todd,

Thanks for your analysis which is lucid as usual. I feel that both recapitalization of banks and quarantine of toxic debt by governments are essential and above all co-ordinated action by the world’s major financial players. In this last connection, I am particularly dismayed by the lack of co-ordinated action to get ahead of the curve in the EU and Euro area. The predicament of Iceland, which is sinking without any helping hand other than Russian, is a horrible example which risks being repeated elsewhere if international co-operation is not stepped up dramatically.

Seems to me that the world top minds have not figured out yet why we are in this grave economic crisis. In order to solve a problem you first have to understand it. The culprit of the economic crisis is the OIL. Multiply the effect of oil prices in the economy and what that does to each household. The average family budget has been hit well in excess of $500 to $1000 per month. The impact of that is less savings, defaulted credit cards, less house sales causing lower house prices, and defaulted mortgages. Greed and lack of regulation are nothing new. These are underlying problems of the system. The price of oil has surfaced these underlying problems, but the real culprit, what is new is the excessive price of oil.

The solution: remove oil trading from open markets. Uranium is not sold in open markets. Oil should not be sold in open markets because it is a commodity that severely impact national security. Fix oil price at $50.00.

There was never a need for any government to bail out financial institutions, insurance corporations etc and there is certainly no need to bailout by offering recapitalisation funds etc It is indeed predictable how one US bailout leads to bailouts in other countries …. greedy corporations double dipping as usual!

Let the meltdown (created by these irresponsible and greedy profiteers and stupid government mismanagement) continue on its way … let there be fire sales/capitulations and the markets/assets/commodities will go back to a more realistic price. People who invested and reaped massive profits can now cop massive losses for all I care. People who refuse to work (parasites who also continue to reproduce parasites expecting taxpayers to provide a luxurious level of support for all of them) but want everything handed down to them can suffer for all I care. People who live beyond their means, buying big mansions, luxury goods, luxury holidays etc can suffer for all I care.

Inflation has always been artificial and artfully controlled by certain profiteering people/sections/stupid governments and by nincompoops who were/are/continue to be stupid by paying exorbitant unrealistic prices for goods/commodities/house/etc etc

Here in OZ, we have Tweedle Dee & Tweedle Dum running our country with Tweedle Dee saying “We have to have a strong budget to fight inflation ” (what utter rubbish!), orchestrating man-made inflation/interest rates rises etc etc (not due to normal demand/supply forces), wanting to set up a new commodity (ETS) which is just a load of greenwash and Tweedle Dum spending our hardearned taxpayers’ funds gallivanting and strutting like a peacock around the world spewing nonsense in English and Mandarin …

No bailout of any kind required … Yi Ren Zho Shi Yi Ren Tang (in Mandarin) …. let’s hope all the Tweedle Dees and Tweedle Dums running countries have the minimal intelligence required to understand this phrase … if not, I guess they can always ask their numerous assistants/entourage paid for by the long suffering taxpayers!

Vi Va La Meltdown …. The Meltdown We Had to Have !!!!!

to bring back some sanity for future generations …

Todd I know you have been very cautious all along but you are still making a mistake in your assumption that free market capitalism will survive this. It will not. The ship has sank. Now you need new thinking that’s what is missing.

Capitalist societies will have to be reorgrnized. If you do not think outside the box you are still looking at short term solution.

Nationalizations will occur beyond banking around the world. But that should follow with basic logcal thinking. To think in terms of society too, instead of relying solely on a collection of individuals pursuing their self interest.

In fact what the central banks are trying to fight now are the individuals who are trying to get themselves out of this stampede, because captalism inherently has this fear, you save your own rear, otherwise you are bust. This fear and panic is very much capitalism made and if you look at the big picture, the world as a whole should be just fine with all these advances in technology, production, education, arts and humanities.

Please don’t be deaf and dumb as well!!

1. The government must take control and bring the Inter Banking Lending Intrest rates parallel with the base rate, and the treasury/BoE should bump -up all the banks with any money lost as result of fixed Inter Banking lending rates.

2. Purchasing of the bad assets: the government should practically buy back the properties defaulted on by-to-let mortgages and move in the council tenants for next 3-5 years.

3. Finally ,as a temporary measure The Treasury / BoE should take a massive position on the London Stock Exchange and Money Market just to resuscitate and to keep the heart of the economy going.

this will somve the problems over night !!

Kind regards

Professor of world Economics

Recapitalization is not good enough.

Nationalizing the debt (also called toxic assets) was a mistake. Ensuing panic was bound to happen. Americans depended on their politicians to listen to good counsel. So far,, Mr. Paulson’s and Mr. Bernanke’s have not called it right.

Hundreds of economists wrote an open letter to congress, urging politicians not to vote positive on the bail-out plan. Nationalizing the entire lock, stock and barrel of failing banks is the best call of the day. This action is about the only effective method in gaining back the confidence of the market.

Extraordinary problems need extraordinary solutions. Not just big solutions, but solutions that will be effective with the available resources. At the moment it seems that investors (especially small investors) are fleeing the market or, more importantly, not investing in the market as there is no visible incentive for them to take the risk of a further major downward plunge. Instead they are moving their money out of the market and into cash or stashes. The markets fall and the mattresses get higher.
I have zero background in economics, but it would seem to me that by reducing the absolute risk the the small investor at this time, it may be possible to entice many small investors to start putting money back into the market.
Has anyone considered a tax incentive for investors who invest in solid long term investments, and then stick with them? While you can claim tax benefits for losses in market investments, managed funds etc when you cash out, you get no incentive to hold firm and ride out the losses. Perhaps the governments of the world should consider an incentive where individuals can claim a percentage of net losses within the market over a defined period, but only on investments held within the market for the entire period. Controls can be placed on the types of investment that would benefit, and amounts could be incrementally decreased over a period of time (months/years) to prevent a mass exodus at the time of expiry. It seems to me it would have the following benefits:
1. Governments can focus the benefits on areas that will have the most impact, and avoid irresponsible risk taking.
2. Small investors would benefit from extra protections, and the plan would not be a bailout of irresponsible companies.
3. An influx of cash and investors in long term investments would have a stabilizing effect
4. The better the markets do, the less it will cost the taxpayer - benefits are only paid if the investor makes a loss.
5. As any investor losses will be a tax write off, not a bailout, reckless investment should be minimized.
5. Real money from the base level of investment will be more powerful than the paper money tied up in leverages, etc.
6. More investors will be enticed to move their money from cash and stashes into the markets, where it can boost the economy instead of the mattress.

It looks not the matter of confident,it looks purely the matter of widsom.
Economic elites in past 50 years can’t be reliable on the crisis of once in hundread years.
I sometimes goto youtube,and there i know,senate Ron Paul had been predicted this crisis.
Maybe there is so much ppl i dont know who had been predicted this crisis before it happens.
Seek them and give power position.
they’ll know how to solve this crisis cause they can predict it.
At least they would do better than FRB men are now doing and failing.

Hi Mr. Benyamin,
I thought you were on vacation ( in some remote russian dacha!!!)
Welcome back. I enjoy your razor sharp wits.
Mr. Quest on the other hand appears to be in DENIAL! Sad story.
Greed had taken over the conscious and now the cumulative effects are recochetting.
It seems everybody has a private theory.
I have none. So let be it!
Keep worrying.
Rajen

If the Hank does use some or all of the $700 billion for recapitilization of banks–what happens when they fulfill loans against it?

Will he have to come back to the taxpayer again and again if individual unemployment, underemployment doesn’t improve? It is unlikely in an economy where individuals are now drowning in debt, facing historic unavailability of jobs–or settling for lower wage jobs–they will be able to increase their savings plans. Without increased savings % to capitalize future loans–won’t the banks be right back in the same boat in just a few days, weeks?

And what about all that toxic debt leverage the taxpayers approved the purchase of (unwillingly)?

Close the mayors stocks markets ,or all of them ,one or two weeks until the goverments put capital to the banks and restore the confidence

The crisis could´ve been avoided if banks would´ve refrained from lending money to poor people to buy SUVs, big houses at the beach etc… Poor people should have been warned they do not have rights to consume beyond their income. I am poor, I don´t have ilusions of owning a SUV because I know they are bad for nature, I might not be able to cope with the installments and walking or using the public transportation is ok by me. 99% of population are selfish, competitive beasts unable to have compassion, intellectual brain thoughts and mainly are jealous creatures. My neighbor got a new car, I must got one too…
Well, now suffer the consequences….

They claimed Communism never worked hence they created Democracy based capitalism !!!

Now that : For the Banks…… , By the Banks…….. , of the Banks…… is gone what’s next then?

I am not surprised that almost half of people want to save their money under the matrass (I recommend to put money under the pillow - it is safer ). Whom we give our money for? For those, like Leamen Brothers’s CEO, who will spend them for luxury houses, expensive cars? And after that, these CEOs get another $700 bln to buy more expensive cars !!! ???

I think politicians and experts (particularly US ones) shuld stop talking about this, we had enough analysis and expert advice on how bleak the future is, they make it worse. Just listen to this guru Poulson and Fed Chairman, they keep saying this will take a loooong time to fix etc, never says how they will to fix it, what steps are being taken. The man was fighting for $700 billlion, he said congress had no choice but to pass the bill, wouldnt you expect him to have a plan of execution in the bag ready to go? This is a joke, he has the money now for two weeks, the world is falling apart waiting for him to do something . If he leaves it for another 2 weeks there will be no need to do anything and he will be gone if democrats get in.
One gets the feeling US experts dont walk the talk themselves, they know its a mess, knew it for years but dont know how to get out of it. Now they are calling everyone to help bail them out, which is fine, but its creating this grave fear on everyone that US failing banks and company’s will take everyone down with them.
I know we cannot decouple US but the best approach would be for each market to ignore wall street and US banks and help their own market, this would send positive signal to Wall Street while Poulson gets his acts together to sort themselves out. For example, I dont see why Asian market particularly here in Australia needs to react to Wall Street the way it does, some of these companys and banks dont have anything to do with US. We have a surplus, commodity price has gone down a bit but not 5-8% each week. We need to stop thinking US is crashing and its the end of the financial system as we know it, nothing could be farther from the truth.

In these times of panic selling, the one thing that is always overlooked is that someone is buying. The buyers are getting some great bargain prices this week.

The Federal Reserve Act. This is behind all the current crisis. The $700 billion is being handed to the FEDR, what a joke! These are the people who has caused this ‘crisis’ to make themselves richer. What the Government needs to do is to revisit it’s constitutional pledges as set out by it’s founding fathers who made it clear that the Government should be in charge of coinage, the creation of money.

The FEDR are private bankers, no one dares critisisze or investigate them, but they withdraw currency from the economy to depress, even close down business they want to acquire or the assets of them. They print money and sell to the US government at interest. Any loan the public receives are just debts piled on the Government who then dispenses these to the general public. Americans, you fools, wake up and smell the coffee!!!

How to restore confidence

Gather up all the accountants, internal auditors and operations people of each major bank and have them draw up an accurate list of toxic assets and their counterparties (from mortgages to derivative securities)

THEN make the amounts pubic and show the world how, in the case of the U.S., the amount that needs to be allotted to each respective bank by the Fed is enough to allow each bank to pursue business as usual. Only with such public proof will confidence be restored.

Problem 1: how to make sure noone hides any toxic assets during this process. Some supervisor needs to be watching….

I used to work at a financial institution and know how difficult it is to translate derivative instrument characteristics into terms that can be monitored by the Operations and Risk Management Departments.

And the Government thought that the Wall Street was immune to punishment by the Main Street. We will just protect our friends in Wall Street by giving them public money, they said. No, the Public will TAKE all the money away from the bastards, without asking the crooked government first. Issue a “package” for that, pigs.

The deby is toxic because most of the loans out there are still bad. One would think that these banks would fix that first. Plug the bleeding. They are still intent on evicting people instead of working things out.

Bank of America through a lawsuit by California and other states already started doing that.

Throwing money at the banks right now is like throwing fuel onto a fire. These financial “gurus” would most likely go off to a resort to celebrate.

The Gov.t should have a conference call with the lenders. Unfortuntaley the banks don’t want to lose their margin. I’d pass a law to eliminate all interests, set a single fixed 6% interest with no points for whoever wants to sign on to, effective immediately.

Our biggest problem is our president has stuck his head into the sand. I guess he doesn’t like the stink him and the republicans have created.

I think you are right about the crisis of confidence. However this crisis of confidence will cause a substantial decrease in the consumption level in the U.S. and this will be transferred worldwide. The real price of the companies will be the result of the adjustment to this new low level of consumption not the surreal level that the U.S. lived with through abuse of credit cards and other mechanisms for so many years.

THE GEORGE BUSH, McCAIN REPUBLICAN PLAN—DESTROY THE AMERICAN ECONOMY, THEN CLAIM ONLY THE REPUBLICANS CAN SAVE THE ECONOMY.

GIVE ME A BREAK

ALLAH states in Al Quran,
O you who believe! Devour not usury , doubling & quadrupling (the sum lent) fear the wrath of ALLAH (GOD) AND OBSERVE YOUR DUTY, THAT YOU MAY BE sucessful.
This is Ayat 130 of Surah Ale Imran.
your salvation lies in folliowing the USURY (INTEREST) FREE ISLAMIC monetary system that abhors & sternly forbids usury ie interest for it is the curse that is the source of exploitation of humans on earth. usury is dirty, corrupt, absolute greed & total exploitation of poor & needy by the lusty rich persons or countries.
Thus this wrath of our lord on all the so called rich countries of the world.
Try stopping this financial armageddon from our lord on this monetry system which has been for over 3 centuries the source of exploitation of the poor nations by the lusty & so called rich but perveted G7 or 8 or 9 or 10 countries of the west plus Japan.
Our lord has struck down therefore give up this usury follow our ISLAMIC monetry system which is lust & interest free & get bliss & happiness & salvation from our one & only lord ALLAH or GOD.
The choice is yours.

First to Charles Hodson…”We should not be afraid of fear…” is something that FDR said and not JFK.

Second: I always thought that when you spend money on something and not get anything in return you can cause resessionary or depressionary sprials. This usually happens during periods of war of which we are in the middle of two. It is interesting to me that nobody has mentioned the monies that are being spent on the wars as contributing to the economic problems that are going on now.
This was similar to 1920-1933 period of U.S. HISTORY
Thank you

It seems our leaders did not foresee the effect of increasing the maximum guaranteed deposits. The moment deposits were guaranteed to 250K in the USA, people can safely take out all their money form the market, put it in a 6 month term deposit (before the rates were slashed), and ride out the storm safely. The dollar might lose value, but if the crisis is indeed global, so will all other currencies. The policy should have been the opposite: no guarantees. That would have forced people to pour their money into the stock market and hope for the best. The problem is that it would have also meant disenchanted voters.

Wheather you blame the Community Reinvestment Act of Carter (later modified by Clinton), or the decades long complete lack of supervision of Allen Greenspan, the extreme bonuses/lack of morality of bankers, CFO’s and CEO’s, the Bush administration’s war budget, or the ridiculous amount of borrowing for the average American, one thing is very clear : America is no super power anymore. A country that is not capable of looking after its own people in terms of health care, work and income and wellbeing should not lead the world nor attempt to set standards for the rest.
Your country has been plundered and sold out by your own people, allmost dragging the rest of the world along with your downfall.

Well, expect no sympathy from us in the rest of the world.
You have got only yourself to blame for this.

The crisis of confidence still persists because the financial models which are in vogue in the CDOS and other complicated derivative models have still not been replaced across the board .For this to happen some more invetsment Banks have to declare there loses and in the process go bankrupt.

well today is the day if the markets close up i think we stand a chance for a short 18 mounth recession, but if our market falls below 7842 at the close it will be along cold economic winter for us all.remeber the world is watching and there is no where to hide.

the government should lets those stinking banks go down instead of helping them to go on screwin citizens. the government should bail out the people who have lost everything because of those banks but not pomp more money in a terrible system, 700 billion can rescue 100% of the people who are now losing homes, who cant etc properly etc. and for those who still ask if we are going into a depression, man are yall blind. does a presisdent have to say yall were in a depression before yall see that it is,, were already there and who doesnt see that is running behind the fact, i know who aint in a depression, and thats the greedy big shots at wall street and the us officials, they aint giong to a cheaper supermaket..

my 401k since dec of2007 has lost 7,000 dollars who gets does the money .

Investor confidence wont be recovered until consumer confidence is not restablished.

So govs should stop helping banks and start putting that money working for the tax payer.

As a Canadian I’ve always wondered when the USA always took such great pride of being a “Super Power”, why would anyone want such a title? Just because you claim you are “superior” doesn’t mean anyone agrees with you.

Do the American people realize that their country is responsible for what is happening in the world right now? Do they feel any remose or responsibility? The countries that are regulated - what some Americans refer to as “socialism” aren’t nearly as effected as your “democratic” society and the effect that is being felt is because their association with you. I watch CNN regularly and no one ever mentions how countries who are regulated are faring - so do the American people even realize what’s being done to them in comparison? And these countries are regularly looked down at as “less then”, “inferior” … looks like they might have been right eh?

Now would be a great time for Americans to look outside of their own borders to learn about the cultures and value systems of other countries. The more informed you become the less vulnerable you will be - you have been lead to believe that your way is the only way. I would say all indicators are that the philosophy may not be accurate.

John McCain, my friend, is smug, pompous, rude and extremely old school in his thinking. If he gets voted as President on November 4th I will actually end up feeling very sorry for the average American. You already have huge credibility issues around the world and if you think he or Palin will do anything positive you are only kidding yourself.

I sincerely wish the Average American well,

Signed,
An Average Canadian

Back in March or April, you read my comment on CNN. At that time, I stated that “the worst was yet to come”, upon which the other commentator recommended that I “take some happy pills”. Well, I hope he kept a few for himself.

The bailout plan should be more correctly called the bailout experiment because it was not based on any previously known cause and effect. No matter what action is taken, the market will probably hit bottom around 6,000 and stay there for a long time as too many people will be afraid to experience the trauma again. The U.S. will be lucky if it does not go bankrupt or if it is not forced to print money. Yes, I realize this sounds pessimistic, but I am stocking up on “happy pills” just in case I’m right.

Do you think $700 Billion is really the problem or the right people, doing the right thing?

I can se that cnn as other tv stations increase this panic by saying just 10 minutes ago “the bad things not starting yet”, “this is the mother of all financial melt down” and other things that frighten people. is this serious?

It is time to reconsider to all banking and financial system. we can not afforded to free every thing there should be a check’n balance from got side other wise all the system claps.

Yes, yes, yes recapitalisation of banks is vital now. This, coupled with active moves on strengthening financial markets regulation, may bring some confidence to the markets. Potential flights of capital must also be avoided, thus a global approach is crucial. The meltdown has demonstrated how globalised our world has become, making a coordinated global solution the only possible solution to be considered ….

We all know things are bad but this is not the end of the world. I believe the market is oversold, and there are some good buys, like GM, Ford and P&G, these companies are not going to go away even if there is a recession, and when this down turn is over these companies will give a good return on the investment.

I think the only way to solve this crisis is to think about how people used to get money along time ago and then apply it now. It took thousands of years for this but i think atleast they should study it and think about a way of using it now or the whole world would crash.

With Poulson and Bernanke on the rampage like a bull in a china shop, Who would buy bank shares?

The man from the government is here, now your shares are worthless!
Even the government buying shares is diluting the value of existing shares..same effect!

What I would like to know is how does the housing mortgages go bankrupt, but my school loan lives on?!?! I think its about time all of us with ridiculous school loans ban together and just say….”you know what? I am not paying anymore!”

How about the government looks at the ridiculous interest rates that college loans are at? Before long, we will all do what others did with their homes and say forget it, I can’t pay and I wont pay…what are they going to do about it? Take my diploma away?

Socialize College, not banking and housing markets.

Yes, Todd, I do believe we are headed for a depression. This was revealed to me in 2005 and we are seeing it develop now.
Production will slow down and grind to a halt in many factories. Much unemployment–bread queues. As the market tumbles so shall consumer confidence fall until the fallout resembles the 1930’s depression.

Yours,
Nancy

Good evening,
Why is gold not going to record highs when we are facing a possible depression and certnaly a resession. According to theories gold is seen as a safe haven, but today the gold is plummeting when the crisis is in at it’s high, for now.

Best regards
Dag, Norway

This is what happening following our great leader, Dalai Lama - Karma, according to Sharon Stone, cursed by the ghosts from the quake. Hope you all rest in peace now.

Now that fiscal conservativeness is returning to the US, and consumers are forced to handle their debts instead of inflating super-sized consumption… everyone keep talking about the “world economy problem,” and how fiscal conservativeness, oversight and transparency must return… how is the US going to handle it’s debt? Or is that not an issue - since it is a “world problem?” Can the US work their way out of the debt - like European countries and emerging markets did? How long will that turn around take?

China is reducing growth from 11% to 9% and Brazil down from 8% to 7% — how much growth does the US need in the coming decades to handle their debt? Or is debt only an issue for consumers - not nations?

Regards,
Johann, Brazil

I think your views and discussions of the “confidence” crisis are too narrow. People have not merely lost confidence in the free market, but also in the political system, in registration and voting schemes, in personal health conditions, etc. This is a major identity crisis. The America Dream has to be redefined - or at least retold - with clarity to calm the public. Bush failed to do this and instead engendered fears of eroding rights. Who wants to invest in a shaky market that supports torture of prisoners, spying on citizens, and no constitution to speak of?

When I read through the coments posted here, I was surprised at the amount of ‘finger-pointing’ going on, particularly at America and at Americans in general.

I am an ‘average American’ who has lived in Germany now for eight years. I love the European cultural atmosphere and am fascinated by the process of European unification which has been going on slowly over here for the last thirty or so years.

Don’t rush to judge Americans or America! If you haven’t lived for a long period of time in that large and extremely complex country, it is hard to understand just how difficult it is, at an individual level, to get a real concept of how things really work in the rest of the world. Trust me on this - it is not as easy as you might think!

I am also sure many of you have friends and acquaintances who have lived in America for a period of time and became ‘Americanized’ in their world view (i.e. - less aware, more superficial in their outlook). It’s sort of hard to explain unless you have seen it/experienced it up close.

I also think you shouldn’t rush to judge America because for all of our weaknesses and failings, we are at our core a very compassionate and caring people, — even if our world view is sometimes off-base.

I think that most Europeans know this about America and Americans and that they are simply frustrated right now. At least I hope so. If it comes down to another depression, we are all going to need one another. We are all in this together, for better or for worse.

As a small/medium business owner of 46 employees that will soon undoubtedly deal with the negative impact of this current economic crisis, one has to ponder the strategic thinking of governmental rescue packages and plans for ‘big business’ as they have historically rarely worked. It appears dramatically unfair to SME owners like myself, that governments haven’t and would never consider assisting entrepreneurial businesses, even if such businesses earn the large majority of national tax revenues. Maybe a very different approach should be considered? Unfair that entrepreneurs, who risk it all, bear the brunt of risk with the least possibility of any help!

Todd,

The problem with the global economy is directly related to those few people with Trillions of dollars at their disposal to manipulate the markets at will. Have we not learnt to control such reckless behavior from men likes George Soros who in 1992 was dubbed “the man who broke the Bank of England”. How many bells have to ring before we stop the Gleesons of this world who act without any sense of moral or civil responsibility.

I think this is a very complicated matter but it does seem as though the government invested to heavily in National Security and Defense. At the end of the Cold War, there were those that warned of the dangers of being the sole superpower. At the same time many people failed to acknowledge the fact that Asian markets have not only become industrialized producers but have become consumer markets too. I think this may just be a natural course of events based on the link between economics and ecology. Not only were we greedy in the States but we were wasteful and complacent in our consumption. Now, the rest of the world has a chance to take the lead, financially, and America has the chance to correct some of the ways we do business at home and overseas.

As a small/medium business owner of 46 employees that will soon undoubtedly deal with the negative impact of this current economic crisis, one has to ponder the strategic thinking of governmental rescue packages and plans for ‘big business’ as they have historically rarely worked. It appears dramatically unfair to SME owners like myself, that governments haven’t and would never consider assisting entrepreneurial businesses, even if such businesses earn the large majority of national tax revenues. Maybe a very different approach should be considered? Unfair that entrepreneurs, who risk it all, bear the brunt of risk with the least possibility of any help.

It is clear result of artificial and speculation proned growth for the last 4-5 years in the global scenario. The same world was praising each other when grow in the last 4 - 5 years. Too much of food will never suit anyone. Only controlled and well defined growth will be healthy. Greedy investments will result only in huge losses like this. Greed of politicians and business people result in huge job losses, higher inflation. But middle and poor classes will be terribly affected.

Hi Todd,
I believe that the success of either, or any strategy lies in the perception of the people. Having said that, i also believe that the access to info which has increased exponentially, will serve to increase the magnitude of the outcome. Now add the recent evolution to less imposition on liquidity ratios - and the ability of banks to own investment companies - and the zero down mortgage which makes it far more likely for home owners to walk away from “their” asset. This makes the foundation of the capital markets very fragile. (we are seeing the beginnings of those results). As the governments respond, whether preemptively or not, it will create a temporary increase in security that will decrease as the increase in currency “production” drives the value of currency down. It is also important to recognize that the banks would all have jumped on the “over extend” band wagon in the bear market to be able to compete there, so it is just a matter of how long they can hold out before they too are insolvent. As they fall and the government has to rescue them, whether in advance as you suggest, or after the fact through depositor insurance, the currency will continue to devalue until it is no longer the preferred (reliable/stable) trading medium. At that point, who will pay for the police etc, and how? How many chickens and sacks of grain does the government have to trade on this new market - to ensure social stability. Hate to be a pessimist but - what goes up must come down - and the very decisions that made for huge successes during recent times will make for huge failures in the months to come and we’re all in it together.

At Gettysburg, Abraham Lincoln talked of ….the government of the people, by the people, for the people.

What you see in the markets is action by the people.

The ultimate remedy will also be (different) action by the people - when they choose to do so.

I believe the world leaders are behaving like the markets; they only respond to speculations. Speculations that the America bail-out would work, the speculations that the British-style of bail-out would work, and now the speculations that “a certain firm action” from the world leaders will solve the problem.
The leaders are failing to think through the problem and come out with a real solution but only react to speculations in the financial sector.
I hope some one out there will sit down and come out with a well thought through solutions to end this mess we find ourselves in.

It is a shame that our current political leaders (all of them) have allowed this crisis to happen. They’ve brought this country down! Enough already!

Stop throwing money into the Ocean.
The plan to assist banks and financial institutions is both doomed and unfair .
It is doomed because nobody knows exactly how the banks “ stand”.The original black holes are ever increasing to staggering figures .
The plan originally announced is increasing too .This induces further uncertainty and erodes confidence .
It is unfair because private financial institutions and their shareholders are assisted by the government trough tax payer’s money and the rest of the economy is not .By the way ,what is the difference between the interest rate of the assisted bank and the interest rate of the Federal Reserve .
The world economy needs a development plan sustained both economically and politically .For example the immediate production of electric cars , enormous infrastructure plans ,a reduction of bureaucracy and a significant reduction in government expenditure .
An extraordinary adaptable world economic plan established by world political leaders would give the investors the needed horizon .

I think under the current economic status, it would be the ideal time to pass the fair tax into law and let us the american people fix the problem!!

I am surprised at the general incompetence at all levels in America today, regarding the current economic crisis. This is not the America of before. There are so many experts of all stripes spewing explanations, prognostications, reasons, conjectures, etc filling up air time with empty words, pointing fingers in all directions but not working towards a solution.
Since it seems that the current culture is to make a quick buck regardless of the consequences, corruption has permeated throughout the American fabric and now we are facing that reality.
All the money in the world is on earth, not floating in space, Therefore, the economy is like an air mattress, if you push on one end, it swells on the other. If you push on both ends it swells toward the middle. Therefore I humbly suggest the following: “Operation Jumpstart”. Give a rescue/stimulus package to both ends of the economic spectrum simultaneously. The big Wall Street banks are being rescued, NOW, give consumers, regular folks some of the 700 billion in the form of a cash stimulus. This money will go back into the neighborhood business and banks and into the general economy, at the same time that big banks are again lending each other. Instead of allowing unemployment to grow, people could afford their necessities with this cash, as if everybody was employed and the economic engine picks up speed again and the markets would stabilize in time. Of course, corrupt people should be prosecuted and corrupt practices eliminated.

T.B.,

it has got you talking about extremes this time. Mass unemployment and so forth.

Apropos, if you had not talked about these matters of extreme situations, than I would be really worried.

M.C.Taytelbaum.
P.S. Ahum… your tie, it hit you that bad didn’t it?

In hindsight it is easy to see how the this card house finally collapse - it could only be a matter of time akin to a pyramid scam. Of the assets - money invested in the stock markets worldwide - only 1/4 to maybe 1/3 have been real existing ! The rest has been air money - non-existing ! Either borrowed money without any secure collateral or overrated , pumped-up assets, values of stocks, companies etc.
Another point to make is that in old days the main reason for investors to buy stocks was to get a dividend a share of the company’s profit. The stock market was geared towards raising capital to develop a business idea, expansion etc. It was in short a lot more longsighted investment than in nowadays, where speculators flip stock daily or more. Psychology more than reality determines the value of stocks.
Hedge funds should probably never have been allowed as well.
The stock market has been turned into one big CASINO, where roulette being the main game. I

In the real estate market, I have always doubted the health and soundness of introducing the Zero installments - only interest -loans. Along with offering financing of more than 80% the property value this has lead to an overinflated marked, where prices was not a true reflection of values. There has been no reserve assets - no equity ! So when the markets goes down it causes not just scattered mortgage foreclosures, but thousands of them.

regard
peter vithus
danish citizen living in UAE

On another note as a European I astonish how the american tax payers has allowed the white house to rob them in daylight ! The cost of the war in IRAQ has without a doubt been overpriced by the contractors, the big cooperates like Haliburton etc. that have profitted millions of dollars from the sweat and blood of the american soldiers.

I fully agree with your comments. I also think Gordon Brown idea is very smart in comparison to the US bail out plan. There are other options which the USA should be considering that are similar to the UK plan.

For example, consideration should be given to i.e. buying the toxic debts with a warrant attached to them - giving the government the right to convert into a number of shares into the future rather than the redeemable preference share option. This could be negotiated over the medium to long term, in terms of maturity and exercise date. On conversion warrant holders will have the option to convert to equity with the gained going to us the tax payers.

The problem with redeemable or irredeemable preference shares are that a fixed dividend is required, rank above ordinary equity holders. Considering that this is now liquidity as well as a solvency problem the banks need room to stabilise the situation in the short run.

I disagree with Richard Quest comment to some extent as this is now an economic issue driven by the credit crises. Therefore, the consequence would be very painful to us the ordinary public and wider business community from an economic perspective.

The 360 cycle from receivable to payables required stimulation to facilitate growth or stability and would be unthinkable if financial (from payroll to working capital management, FX transaction, to hedging and other debt obligation is lapsed or defaulted) as a result of this crisis. - There (yes) the politicians could leave the situation and allow all corporate institutions to fail – however once recession loom then it would be devastated to everyone.

It also seems as if the USA legislative approach to corporate governance was ineffective to this issue

Finally I’m glad to see you back Tod – was wondering were your were

Save Your Money!!! Cancel your cable television Subscription.

To those advocating recapitalization,how does this help d ability of banks to lend money to one another,at best it improves d balance sheet.Basics of banking is that banks only lend from deposits and borrowings from other banks,so of what use is the recapitalization if it cant be lent to others and bizs that need funding.We need to restore confidence in the banking system and this can only happen when banks become comfortable with lending to one another.This to my mind can only happen when we remove the source of this discomfort,which is the huge exposure to subprime mortgages.I believe the focus should be on eliminating the toxic debt and this is why i favour Paulsen plan of taking out these debts but with focus on those institution that can easily make this happen with govt aid.Let govts take out the debt in whatever way but at a profit to the taxpayers with regultions that ensure banks dont keep this injected funds in their vaults.Regulation would really come very handy .Farouq Nigeria

It is time for politicians and economic experts to SHUT UP THEIR MOUTHS. I am absolutely convinced things in the economy will go better based only on the common sense of people.

At first states should be responsible for their banking systems. This means that stats should guarantee all kinds of deposits in the industry. For this the banks should pay let’s say 1% of their balance as a premium so tax payers will make money if government can make the system work and lose money if they don’t . This (I hope) could work as an incentive structure making sure that politicians will do their outmost.

Secondly - in this situation where bank deposits and money market lending are secured exactly as if it was governmental security – it should be possible to get the industry to sell some of large holdings in T-bonds and other governmental securities so cash can be moved back to the money markets and these markets can start to function again.

We then should see a flatter yield curve and together with the working money markets it (I hope) would stop the race to the bottom at the chock (read stock) markets. This is based on the assumption that it would stabilize the stock markets if the selling of stock for providing liquidity could be replaced by ordinary money market transactions.

This should be effective from Monday at 9:00 (all over the world) because as others has pointed out if we cannot stop the development on the stock markets half of the pension funds and insurance companies in this world (and the next) will be in great difficulties in the middle of next week.

Such a regime should be upheld for two to three year and banks should not be allowed to pay out dividends in this period. Option programs for management should be prohibited and every single bank should be scrutinized until we are sure that balances and auditing is correct.

A unified global standard for banks should be implemented and a super national body should be set up for controlling the global banking industry. Only banking products approved by the super national authorities should be allowed. Banking products should be treated as drugs and not be allowed on the market unless they are tested.

Banks with too low or negative equity should be recapitalized and sold (or forced to merger with suitable parties) at the end of the guarantee period.

Well as you see I want G7, G20 and the EU system to have a busy weekend. It is something along these lines that is needed in order to avoid a massive destruction of wealth and restore my confidence in the global banking industry.

People around the globe bought certificates from US banks, which certified that all papers are based on mortgages. I assume
that no certificates have been sold based on fraud. This means, that all the certificates represent real values. And the houseowners, who took the mortgages were able to pay the initial interests and amortisation.
My assumption is, that the problems arising did not stem from people
declaring bankruptcy, but mainly from variable interest rates in
connection with short term credit periods. If this is right, the solution lies in an action on fixing the interest rates for all mortgages on a lower level and fixing the credit periods for at least ten years. This could have been done by the US government already one year ago.

The mechanism of selling the certificates worldwide was based on the high interest rates. These high rates were backed by increased interest rates forced on the houseowners. By doing so the banks were able to get foreign money as much as they needed, because the financial system of the US was rated AAA. By exporting the loans inside finance packages the total volume of the problem of bad loans was partly hidden to the public for a long time.
Some people say greed was driving buyers of US certificates, others say it was trust. Whatever the reason was, the buyers should also take a share in solving the mortgage problem. I think a reduction of the interest rates and a ten years credit period on all certificates could
at least reduce the problem to a more easily to handle level. And in ten
years the prices of the homes can come back to a normal level. This will bring back confidence to the people, the economy and in the end to the rest of the world.
The loss coming from reduced interest rates would in my opinion cost far less than the actual price the world has to pay. I have no idea, to what amount the damage in money and international respect will sum up for the US.

78 dollar oil…
put a smile on my face.The little guy without stocks and bonds will at least be able to fill his tank with the little money he has left.The moment things pick up on wall street it is back to high priced oil.

Watching cnn today I felt the traders were reacting like gamblers playing blackjack.They are in Vegas, lost money the whole week and finally with their last dollar they hear the dealer go ‘blackjack’.They go home happy
forgetting that they actually lost more the whole week.

in time of crisis like this, leaving odd lot or golden shares in your account for the purpose of attending AGM is the best move.
i knew of a fund with the purpose of acquiring door gift and voucher had paid his investors 5% a month for the last 6 months..
In depressed days, Shareholders sell their gift at any price, acquiring it and resell it to his dealers within days and rake in >100% margin. The turn around is incredible..
In bad time, there are chances, just listen and pay attention to good ideals.

I think these efforts will put a blip in the graph, but you can’t hold back the tide. A bottom is reached when nobody is calling the bottom, not when investors are pumping money into tech stocks like the past three days hehe. Apple, a stock extremely susceptible to a recession ended up 9% today, I think the bottom is a good 20% away at least.

I’ve been thinking about the acclererators of the crisis. I would like to see, when the dust has settled, a research on how the electronic communications has made it easier for the snowball to roll, how news coming by the minute has created havoc and doubt where things could have been settled if information hadn’t been coming so rapidly. May sound radical and maybe even naive but it’s just a thought that has been germinating during this storm that my country, Iceland, is weathering.

The influence of technology on globalisation has changed the structure of the world economy, among other factors such as innovation and greed. The Global financial crisis requires a global framework for a comprehensive solution but do existing institutions such as the Bretton Woods institutions provide a reliable source of authority to put in place a global regulatory and supervisory framework to resolve and prevent global financial crises? What technology platform would be required to secure a global financial regulatory and supervisory institution?

Banks will start lending again the moment they can charge adequate
interest rates to cover their risks. Credit was sinfully abused over the
last several years. Now banks want far higher rates of return for the money they loan. Governments are trying to get banks to loan their money at inadequate rates. This is against the best interest of these banks. Can you blame banks for not cooperating?

If you are going to avail mugshots of the alleged culprits of the current credit fiasco, then you must add Alan Greenspan to the top of the list in fairness and truth. As an important leader with a contempt for government, one who ignored an array of warnings to stem the unabated greed on Wall Street, he can not be ignored or shielded simply because he is revered as the “oracle.” A libertarian indoctrinated by likes of Ann Rand and perhaps Cold War rhetoric and propaganda, he has philosophically adhered to the naive notion that individuals pursuing their interest will in the end provide a benefit to the whole of society. Maybe so, but not on Wall Street. I know, I am in the industry. Libertarians are simple trusting people who have an undying faith in the selflessness of man. Give a break. This did not start with Bush; it started with Reagan, Gingrich and, yes Bill Clinton, take some blame.

Okay, everyone needs to CALM DOWN. All this hype is only making things worse. Has anyone ever considered that this needed to happen? Has anyone ever thought that maybe this will force some families to be families again? Has anyone ever considered that this could put children back in neighborhoods playing ball with each other versus in an organized venue or possibly allow (maybe even force) one parent to stay home with their children again? Has anyone considered that this “crisis” is a way of leveling the playing field, just a little again? With the average American gross salary (in 2006, as reported by the NY Times) being $60,000 (rounded up) I highly doubt many of these people are affected. Where they will be affected, however, is job loss. This is what we need to be working on. If we lose jobs, we have more people on public assistance than ever. If people lose their homes, we have land barrons again. If our children cannot get a college education because we cannot get loans in the future we have an uneducated American work force and we are putting our future in the hands of other countries. I’m sorry people are losing some of their retirement income or some of their college funds, but things need to be put in perspective. Chances are, you won’t lose it all–CALM DOWN.

Guess who made m0oney from the boom that led to the sub-prime crisis and are still hanging on to it?

Answer: Builders and Developers!

They built the houses for the people who really could not afford them taking the loan money given by Wall street.

Net Result: Home owner - foreclosure
Home Loan giver - deva