October 10th, 2008
07:30 AM GMT
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LONDON, England - I read a few surveys lately that alarmed even me. When asked the best place to keep your money, the stock market, a bank deposit CD, or under your mattress, 45 percent of those responding said under the mattress. Another survey showed 60 percent of those polled said a depression is likely.

Watch me talk about the Business 360 question of the week and your responses to my blogs

Not even I, who has been bearish long before this financial meltdown began, believe a depression is likely. That would imply among other things massive unemployment. I don't see that happening. A global recession, absolutely. And even that may have been prevented if authorities had responded sooner to the current crisis, including the ill-fated decision to allow Lehman Brothers to fail.

What authorities are dealing with now is a crisis of confidence that has a stranglehold on the financial system, most people have been affected directly or indirectly. You know from my previous blog that I strongly doubt the bailout plan the U.S. Congress passed would fix the economy there.

Now Treasury Secretary Hank Paulson is coming around to the idea that recapitalization of the banks does make sense. It would be a much better use of the $700 billion than just buying up the toxic debt. The bill passed by Congress allows for that, but up until now it wasn't where Hank and Company were putting their emphasis. It still remains to be seen how far they will go with recapitalisation versus buying up the toxic debt.

The UK government has come up with the most sensible plan to dealing with the crisis, one that has won kudos on both sides of the Atlantic. But what's still missing is a coordinated global approach for the recapitalisation of banks. It's needed. A global interest cut and other actions by central banks aren't enough to restore confidence.

The fallout from the credit crisis is too far along to prevent a global recession. But unless governments pull out all the stops and take radical action, confidence will continue to erode and economies will continue to weaken.  And those fearing the worst may not seem so extreme.

Tell me what you think, do you think governments need to recapitalize the banking system?  What will it take to restore confidence in the banking system? Do you think those who say a depression is likely are right or wrong?

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soundoff (166 Responses)
  1. Steve

    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.

    October 10, 2008 at 7:42 am |
  2. Giovanni

    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.

    October 10, 2008 at 8:04 am |
  3. Lem Bray

    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?

    October 10, 2008 at 8:22 am |
  4. George

    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" .

    October 10, 2008 at 8:22 am |
  5. Phyllis

    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.

    October 10, 2008 at 8:24 am |
  6. Victor Dumont

    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

    October 10, 2008 at 8:26 am |
  7. AbuSufyan

    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

    October 10, 2008 at 8:27 am |
  8. jacob schonberg

    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

    October 10, 2008 at 8:33 am |
  9. Ivan

    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.

    October 10, 2008 at 8:37 am |
  10. Miguel Llorens

    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?

    October 10, 2008 at 8:43 am |
  11. Joe

    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.'

    October 10, 2008 at 8:46 am |
  12. Lem Bray

    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

    October 10, 2008 at 8:48 am |
  13. stuart

    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?

    October 10, 2008 at 9:00 am |
  14. TOPE FASUA

    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.

    October 10, 2008 at 9:00 am |
  15. Mike Chase

    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

    October 10, 2008 at 9:01 am |
  16. stuart

    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

    October 10, 2008 at 9:03 am |
  17. Abhiram Modak

    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.

    October 10, 2008 at 9:07 am |
  18. Robert Holley

    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.

    October 10, 2008 at 9:20 am |
  19. Ashwin Ramcharan

    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

    October 10, 2008 at 9:25 am |
  20. Markus Schlegel

    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.

    October 10, 2008 at 9:38 am |
  21. B. Stephens

    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...

    October 10, 2008 at 9:43 am |
  22. Robert

    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.

    October 10, 2008 at 10:07 am |
  23. Anton Martaus

    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!

    October 10, 2008 at 10:11 am |
  24. S. Gorski

    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.

    October 10, 2008 at 10:15 am |
  25. Peter Kramer

    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.

    October 10, 2008 at 10:18 am |
  26. Rod

    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.

    October 10, 2008 at 10:30 am |
  27. Umar Fahim Khan, from Pakistan

    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 !

    October 10, 2008 at 10:36 am |
  28. mac

    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

    October 10, 2008 at 11:13 am |
  29. John

    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.

    October 10, 2008 at 11:23 am |
  30. Jane Doe

    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?

    October 10, 2008 at 11:26 am |
  31. Eboracum

    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.

    October 10, 2008 at 11:30 am |
  32. Luis A. De Jesus

    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.

    October 10, 2008 at 11:31 am |
  33. Mother of Oz

    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 ...

    October 10, 2008 at 11:34 am |
  34. Mehmet Kurtkaya

    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.

    October 10, 2008 at 11:40 am |
  35. L W R

    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

    October 10, 2008 at 11:48 am |
  36. Ferrero

    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.

    October 10, 2008 at 11:49 am |
  37. Michael

    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.

    October 10, 2008 at 12:08 pm |
  38. kubota japan

    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.

    October 10, 2008 at 12:18 pm |
  39. Rajen Raval

    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

    October 10, 2008 at 12:25 pm |
  40. H. Hicks, Florida

    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)?

    October 10, 2008 at 12:26 pm |
  41. jose isla

    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

    October 10, 2008 at 12:49 pm |
  42. Marcelo

    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....

    October 10, 2008 at 12:49 pm |
  43. L W R

    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?

    October 10, 2008 at 12:55 pm |
  44. Mykhaylo, Ukraine, Kiev

    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 !!! ???

    October 10, 2008 at 1:25 pm |
  45. Jason

    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.

    October 10, 2008 at 1:53 pm |
  46. Chris Lynch

    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.

    October 10, 2008 at 1:54 pm |
  47. Leaping Frog

    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!!!

    October 10, 2008 at 2:01 pm |
  48. Maria Garcia, Madrid Spain

    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.

    October 10, 2008 at 2:02 pm |
  49. Peter D.

    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.

    October 10, 2008 at 2:15 pm |
  50. Raju

    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.

    October 10, 2008 at 2:25 pm |
  51. Carlos Ibarra

    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.

    October 10, 2008 at 2:28 pm |
  52. ALECO -----NOKOMIS,FL

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

    GIVE ME A BREAK

    October 10, 2008 at 2:48 pm |
  53. major farooq razavi

    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.

    October 10, 2008 at 2:54 pm |
  54. Michael Levinson

    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

    October 10, 2008 at 3:17 pm |
  55. Steve R. McAllister

    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.

    October 10, 2008 at 3:30 pm |
  56. A European

    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.

    October 10, 2008 at 3:31 pm |
  57. Suresh Pillai

    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.

    October 10, 2008 at 3:48 pm |
  58. too bad

    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.

    October 10, 2008 at 3:59 pm |
  59. murat

    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..

    October 10, 2008 at 4:29 pm |
  60. patricia forrest

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

    October 10, 2008 at 4:47 pm |
  61. Nuno Luz

    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.

    October 10, 2008 at 5:10 pm |
  62. Kate MacDonald

    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

    October 10, 2008 at 5:15 pm |
  63. Steve Mierzejewski

    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.

    October 10, 2008 at 6:21 pm |
  64. James

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

    October 10, 2008 at 6:23 pm |
  65. John K.

    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?

    October 10, 2008 at 6:23 pm |
  66. shaukat

    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.

    October 10, 2008 at 6:28 pm |
  67. Sinead

    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 ....

    October 10, 2008 at 6:30 pm |
  68. Wajid Rizvi

    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.

    October 10, 2008 at 6:34 pm |
  69. Simon B

    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.

    October 10, 2008 at 6:42 pm |
  70. Michael

    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!

    October 10, 2008 at 6:45 pm |
  71. CoryJames

    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.

    October 10, 2008 at 6:45 pm |
  72. Nancy Walker

    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

    October 10, 2008 at 6:47 pm |
  73. Dag

    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

    October 10, 2008 at 6:50 pm |
  74. ThreeMeals

    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.

    October 10, 2008 at 6:54 pm |
  75. Johann Schmidt

    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

    October 10, 2008 at 7:07 pm |
  76. BlackRaiser

    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?

    October 10, 2008 at 7:10 pm |
  77. Ray

    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.

    October 10, 2008 at 7:14 pm |
  78. Joseph Crowley

    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!

    October 10, 2008 at 7:15 pm |
  79. Joe Berardo

    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.

    October 10, 2008 at 7:16 pm |
  80. c. amor

    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.

    October 10, 2008 at 7:20 pm |
  81. Joseph Crowley

    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.

    October 10, 2008 at 7:23 pm |
  82. Vaidy

    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.

    October 10, 2008 at 7:26 pm |
  83. ca - Canada

    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.

    October 10, 2008 at 7:29 pm |
  84. Richard GF

    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.

    October 10, 2008 at 7:45 pm |
  85. Attah Opoku, London

    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.

    October 10, 2008 at 7:46 pm |
  86. Christine (Fremont, CA)

    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!

    October 10, 2008 at 7:50 pm |
  87. Florin Lawyer from Ploiesti,Romania

    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 .

    October 10, 2008 at 7:56 pm |
  88. Eric Johnson City,TN

    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!!

    October 10, 2008 at 7:57 pm |
  89. Infanter

    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.

    October 10, 2008 at 7:58 pm |
  90. Taytelbaum MC

    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?

    October 10, 2008 at 8:07 pm |
  91. Peter Vithus

    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.

    October 10, 2008 at 8:22 pm |
  92. Claude

    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

    October 10, 2008 at 8:25 pm |
  93. David, WA

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

    October 10, 2008 at 8:40 pm |
  94. Farouq Olayinka

    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

    October 10, 2008 at 8:44 pm |
  95. Oswald Platteau

    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.

    October 10, 2008 at 8:55 pm |
  96. Torben Petersen

    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.

    October 10, 2008 at 9:24 pm |
  97. Wolfgang Truebger

    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.

    October 10, 2008 at 9:36 pm |
  98. frank

    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.

    October 10, 2008 at 10:03 pm |
  99. Lily

    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.

    October 10, 2008 at 10:21 pm |
  100. Steve

    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.

    October 10, 2008 at 10:28 pm |
  101. Tomas

    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.

    October 10, 2008 at 11:53 pm |
  102. Nanasei Kyerematen

    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?

    October 10, 2008 at 11:58 pm |
  103. John Davis

    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?

    October 11, 2008 at 3:03 am |
  104. Hector Erazo

    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.

    October 11, 2008 at 3:07 am |
  105. Linda

    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.

    October 11, 2008 at 3:45 am |
  106. Ahmed Basat

    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 – devalued property repossessed
    Builder/Developer: built the house – taken the money – and shows massive profit.

    The House Committee must investigate the nexus between builders and developers and the Wall street financiers – probabaly at an individual level – for possible conspiracy.

    It is not beyond possibility that some sub-prime borrowers were part of the conspiracy to bilk the bank of its money.

    Ahmed Basat

    October 11, 2008 at 5:50 am |
  107. Roger Crowley

    I might ask where the governments plan to get all this money to buy the banks. Do they just plan to print more money (I know they don't pay with real paper, but it's the same idea)? With unemployment rising, governments are receiving less money in the form of tax revenues. So maybe, instead of the government spending more money to bail out irresponsible decision-makers, it should be concerned with tightening its belt and bailing out the common, working person on the street (and not Wall Street).

    October 11, 2008 at 5:57 am |
  108. Uma in Liverpool, UK

    Dear Mr Benjamin,

    The Soviet and Chinese experiments in economic 'socialism' failed. They now have some sort of highly centralised, highly regulated capitalism.

    The US and Western European (though we never went as far as the US) experiments in laisser-faire, free-market capitalism has failed. The sooner everyone faces that fundamental truth, the better for everyone!

    Highly centralised, highly regulated capitalism, where nobody becomes obscenely rich, by gambling with the money of people who have no say in the matter, would be a much safer system. If people want to gamble on the stock market, let 'em! Don't risk people's pensions, and school money, like that! That is theft.

    I would like to see a globalised financial system, with the same rules for financiers and other shady types (insurance people, actuaries, hedge-fund managers, investors) across the world - no tax havens, no tax loopholes, no tax shelters, no super-ultra-megarich people who have more money than AFRICA. Equitable pay for workers, wherever they are, based on how hard they work - not bonuses and perqs - so nurses, and cleaners, can LIVE on what they make, and executives still do well, but are not obscenely rich. (There is no excuse for paying footballers and rock stars millions... There is no excuse for paying ANYBODY that kind of silly-money!)

    Clean, safe, comfortable, eco-friendly housing, available to everyone who needs it, whether they are just starting out, between jobs, disabled, or elderly.

    Housing that people can afford, which isn't the bare minimum, available to all working people. No kicking pensioners out - for any reason except damage to the house.

    US-style medical care, only socialised, to everybody, no exceptions. I've been on Medicare/Medicaid in the USA. It's GREAT!

    So, doctors may have to learn not to expect excessive remuneration. They'll ALWAYS have some private patients.

    EVERYONE needs to learn to live within his/her means. That ethic was not instilled in the Late Boomers, and after us. No easy credit.

    TRANSPARENCY in all financial matters - regulated by non-political bodies, who can't be bought.

    Regulate! Regulate! Regulate!

    High-quality, free education for everyone on the planet. Start 20 years ago!

    ECO-jobs.

    Banks should be places where people can store their money, add to it, withdraw from it. None of this fooling around with the money being moved around. Keep it in cash, in the building. Whatever security problems that poses, deal with them. NO IMAGINARY MONEY!

    Not yet, anyway. Mom & Pop banks. No chains. All deposits 100% guaranteed by the government. Mortgage lenders and insurance people need to not be the same as account-holding banks. Family banking, like family-medicine, with relationships between small businesses and their banks.

    Small town simplicity. It's SAFER.

    If I HAD any money, I'd sew it up inside a pillow or something. I'm disabled, and live hand-to-mouth. Now, thanks to the greed of those at the top, those of us who were ALREADY poor, are looking at questions like 'how little can I eat, in my already dubious state of health?'

    The Chancellor of the Exchequer has virtually come out and said that WE are in a Depression. At the beginning of September, he said the 'UK economy is worse than it's been in 60 years'. Hmm. 1948. That's bang in the middle of the Post-War Depression. He's not talking like that now... he got slammed for telling the public what we already knew.

    October 11, 2008 at 6:13 am |
  109. Greg Atkinson

    I think the banks need to be stablised and they also need to start lending again. I have no problem with banks being bailed-out as long as they give back over time, the funds that have been injected to them. Bank CEO's and top executives also need to show some humilty and take big pay cuts until things get back to normal.

    This is not the end of the world, it is just another bubble and most of us probably did our bit in helping the bubble form..and we will all now feel some pain now it has burst.

    Cheers,

    Greg

    http://www.shareswatch.com.au/blog/

    October 11, 2008 at 7:22 am |
  110. Khoo

    The US govt should set up a company to take over those banks or buy up the major of shareholding of the those ailing banks and release back all the banks back to the public once the finacial system is stabilized. Besides, the govt should tighten the regulation & tighten the enforcement to ensure the banks have a proper risk management (proper risk assessment loan and check & balance for the non performance loans). This idea is getting from how Malaysia get over the Financial crisis in 97

    October 11, 2008 at 7:32 am |
  111. Joey Legarda

    America is really trying to buy it's self out of this Financial nightmare. Unlike the other countries a different degrees trying to keep their economies on course from this financial storm.
    After this nightmare is over. America surely can't continue leaveing the so called "American way or american dream" w/c really translates to nothing but leaveing beyound their means.
    Because all the mega billions being used today will surely hunt them in the near future in the form of higher taxes & lowered standards of leaveing.
    I leave in Asia & fill a great injustice being done to less developed countries.
    Just because Americans must all have houses even those who can't afford to pay for a house & they must have car loans & all material trimmings just to show an artificial sence of prosperity.
    Americas high leaveing has always been at the cost to other lesser developed nations.
    Today who will be paying for
    Americas reckless ways?
    Since we are talking of a crisis of confidence, perhaps it will help that Bush appears less on National TV. Anybody else can go talk about the economy but let it not be Bush under whoes watch America has lost a lot of prestige & respect.
    I don't think the world is looking up to the U.S. for leadership in these times. Because America will only do what is firstly in their interest.
    It's really their mess & everybody else is collateral damage.
    The crisis of confidence is really about the American way of doing things.
    The crisis of confidence is the greed that American capitalissim has promoted.
    Because America has always done whatever it wants.

    October 11, 2008 at 7:35 am |
  112. Simon

    A crisis of confidence or crisis of GREED ?

    Politicians, Banks, Bankers and investment companies gambled and lost.

    To cover-up this huge blunder, a starting a WAR is always the answer to deflect the issue and gain unlimited patriotic support.

    I'm afraid America will start one soon and it wont be on Iceland.

    October 11, 2008 at 8:14 am |
  113. Gerardo, TX

    The $700 Billion should've been loaned to help people who's homes are in foreclosure. Then have them pay back the loan at a lower interest rate along with maybe 25 to 50% of the tax returns they would normally get going to principal. This way the people keep their homes and the government gets their money back. $700 Billion could save alot of homes. The Banks could've prevented this by reducing the interest rates and monthly payments. SO IT TAKES A LITTLE LONGER, YOU'RE STILL GONNA GET PAID!!

    October 11, 2008 at 9:34 am |
  114. Darryl Etcher

    In these tough times Wal-Mart's stock does well.
    The sky isn't falling – if you have choices . . . choose with common sense.

    October 11, 2008 at 11:07 am |
  115. Andreas

    The party is over and it is time to switch on the lights. While everyone is waiting for a magic solution I think we better get used to the idea that the speculation economy is over. The immediate crisis of confidence between financial institutions needs to be dealt with swiftly and globally and the solution is new legislation and not merely liquidity infusions. Although this will hurt to fix, returning to 'proper' capitalism (read away from pure speculation) will in long run be a good thing. Governments should now focus on limiting the effects on the 'real' economy, try to isolate the financial crisis as far as possible. We (sweden) have been here before and there is definitely light at the end of the tunnel.

    October 11, 2008 at 11:15 am |
  116. presseisen

    solution to this crisis:

    1) immediate further interest cut in the US:1%;ECB:2%;
    China & Japan do as they wish;

    2) 100% toxic debts to be removed via a clearingsystem where they can be sold to the public(mainstreet); purchases to be made 100% tax-deductible;To be finished in 3 months.

    3) banking system; to be semi-nationalized i.e. 50% state; 50% of the boards civil servants to be placed on a rotation scheme for
    max. 4 years; strong regulations;max. salarysystem,no bonusses.
    To be finished in 3 months.

    4) Tier 1: minimum 10%. To be finished in five years.

    October 11, 2008 at 12:50 pm |
  117. Keulen

    "We all living in America.....America, America !"
    "We all living in America.....America, America !"

    "Coca-Cola, Mickey Mouse and some times WAR..."

    The police of the world are asking the 'criminals' to fund their police station. One God, One Nation , One big hole in there budget.... whahaha.

    Greatings from the 'little country' under the sea level, the people who may smoke pot, kill unborn childern and go to work on a BIKE (with specials bike roads) !!!

    Happy holiday and please don't kill your self.
    A dead slave has no value !

    October 11, 2008 at 1:09 pm |
  118. Christian Tepfer

    Based on what I try to understand about the banking and monetary system I see this crisis as losing money that never existed in the first place.

    Greed eats brain?

    October 11, 2008 at 1:14 pm |
  119. Keulen

    T minus 10.000.000.000.000 seconds before lift-off..... and counting.....

    If every american pay's back 100,- dollar a month it's only
    440.000.000 x 100,- = 44.000.000.000 month...

    10.000 / 44 = 227 Month's = 18,93 years.

    --------------------–

    So i wish every 'american' a good time as his job.
    So go to bad early and tomorrow: rise and shine, a new working day has begone..... for the next 20 years !

    October 11, 2008 at 1:34 pm |
  120. Dexter

    My comment is not analytical nor political, but emotional. I think Todd is right when he wrote that "What authorities are dealing with now is a crisis of confidence." What worries me is that every time I see George W. Bush on TV trying to tell us they're in charge, I lose more confidence. It's not just that he's the same man who tried to sell the world the existence of WMD in Iraq. It's also that he seems so incompetent. I don't think I'm alone in that feeling. Trust and confidence are based on competence and good intentions. Bush probably is one of the least trusted leaders in the world today on those criteria.

    October 11, 2008 at 1:47 pm |
  121. Keulen

    It's all about trussed.... and we are not convinced that the Americans want to work for there money. so there for you have to pay 12% intress rate. And dont get it for free any more....

    WORK FOR IT !!!

    it's normal for 'non-super' people like americans.
    Or just ask your 'God' for some money, if you don't want to work for it.

    Satan will LOVE to give money for free....
    just take it !! and spent it on christmas gifts !! or gas !!

    Don't worry.... you can truss Satan (and me).
    He doesn't want his money back....

    He just wants to get something else...
    like your buildings....
    your cars....
    your companies.....
    your infra-stucture....
    your food.....
    your life.

    Happy holidays and remember....

    "loan money to buy x-mas presents: 'ITS GOOD FOR YOUR ECONOMY'" (Satan has approved and written this message !)

    October 11, 2008 at 1:59 pm |
  122. tr

    Here's the solution.....the Amero. It's already been minted in advance to this completely foreseen dollar meltdown.
    What's the conversation with the G7 now in Washington? When and how they are going to spring this on the American public; that the dollar is completely done. A flat-lined currency.
    Why aren't news outlets reporting on this? The Amero is a done deal already. Why isn't CNN reporting this?
    Panic? Come on CNN get ahead on the story and spill the beans.
    Maybe the panic will be lessened? If nothing else, your RATINGS will go up.

    October 11, 2008 at 2:19 pm |
  123. Johann Schmidt

    "Indoctrination" - the inability to see anything wrong, or the total absence of self-reflection, understanding one's effects on their surroundings.

    Media suppression of what is the real issue here – the enormous debt – it is all so heavily imprinted into minds through "scientific support", research projects and political rhetoric – that people are completely unable to even think in different terms.

    Now it is dawning on them that "something is wrong", and they are struggling – just like anyone fighting an addiction or breaking away from a religious cult where their "brain real-estate" is so heavily invested in the ideologies and social structures...

    It will be interesting to see if anyone sobers up – like the US comptroller general David M. Walker did – and who will be stuck with the bill in the end. It looks like taxpayers around the world are being strong-armed at the G7 meeting today. Anyone who believes that "altruism" and not "pragmatism" is at work here – are sadly under-educated.

    October 11, 2008 at 3:13 pm |
  124. connie

    What on earth happened to personal responsibility? I just watched a segment on CNN where the Johnson family is more than $50,000 in debt with the repo man knocking at their door, threatening their cleaning business. The reporter &anchors couched this as a story about people suffering because of the economy.

    Incredulously, the background in their home showed a 50-inch flatscreen television, grandiose furniture and decorations; and during the interview, one of the Johnsons was shoveling food into her mouth.

    Am I losing my mind or was this really a story about people living beyond their means and mis-managing their money?

    October 11, 2008 at 4:08 pm |
  125. John

    I have this simple theory solution:

    The big storm started letting Lehman fail.

    They knew it was a mistake but didn't want to be critized for using taxpayers money for a bailout. Now everybody knows they loose less money with a bailout rather than seeing all they have disapear.

    So if we go back and fix the cause (goverment bailingout Lehman out of chapter 11), bondholders and preferredstockholders will gain confidence again and start investing together with goverments.
    This will also help insurers of billions of Lehman bonds, etc.. and the domino effect of this.

    Naturally is has to be combined with Fed rates almost 0%, goverment investment in banks up to 49% as stockholders, and the cash injections required.
    I think this could change the course of the market from one day to the other.

    October 11, 2008 at 5:31 pm |
  126. Uma in Liverpool, UK

    @ Simon

    In case you hadn't noticed, because you've been living on the Moon for the last seven years, the USA already started not one, but two wars. They can't afford to fund them properly, which is why neither war is going to end up being anything other than an exercise in gratuitous violence.

    War isn't a big confidence-builder in the States, these days. (Nice change, actually...)

    @ Joey Legarda

    I hear you, and I couldn't agree more. Perhaps, now, after All This, the USA will not get whatever it wants, any more! That may be unrealistic optimism.

    @ Greg Atkinson

    Bubble, schmubble! US laisser-faire, free-market capitalism is a failed experiment! It's time to rework the entire economic system from the ground up!

    @ Linda

    In light of the scenario you describe - abject poverty for the many, with 'land barons'? I see no reason to calm down. How is a return to Feudalism a good idea?

    @ Nanasei Kyerematen

    Very good question. I'll add another one: who'll finance the R&D to develop it?

    @ Wolfgang Truebger

    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.

    Uhh... no. Your assumption is faulty. Faulty premise –> false conclusion. There was an abundance of fraud. We're talking about US BANKS here!!

    @ David, WA

    ;-) Thanks for that!

    @ Florin Lawyer from Ploiesti,Romania

    Stop throwing money into the Ocean.

    Best advice anyone could give, but will any government listen? Of course not! They have to look as though they are doing 'everything possible', even while the IMF declares the worst doom and gloom we've heard since it has existed!

    @ ca – Canada

    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.

    Good question! And, what's wrong with being a pessimist, when that's the same thing as being a realist? BTW, until the 1970s, in the USA, if all the information was recorded correctly, all US banks had to recognise anything as a valid cheque. So, one could record the date, the payee, the amount, the bank account number, and sign a pig, or a sleeping bag, or an overripe banana, and banks used to have to accept the cheque. Then they automated the equipment, and started requiring standard-size paper cheques. How dull of them!

    @ John Davis

    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?

    Yes, actually. I can, and I do. Thomas Jefferson didn't trust banks. He thought they were 'dangerous'. He was right. Thomas Jefferson wasn't Christian, either. Good on 'im! Smart lad, our Thomas Jefferson! (Or 'your' Thomas Jefferson - he was a bit of both.)

    @ Peter Vithus

    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.

    Quite. To say nothing of a fair few dead and wounded Iraqis, and the destruction of their country... again.

    @ Major Farooq Razavi

    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.

    In fact, Christianity, Judaism, and most major World religions have laws against usury. There are civil laws, based upon religious law, against usury, all over the world. I have very great respect for Islam, for many reasons - particularly for intolerance of religious hypocrisy. However, with all due respect to yourself and your faith, Islam is not the only tradition which frowns upon intoxication, gambling, usury, prostitution, adultery, violence, greed, pride, laziness, and outright theft! Sadly, most people are weaker in the practice of their faiths than you are.
    If all Christians followed Christian law, the world would be a better place by far. If all Hindus followed the principles of Hinduism, the same would be true.

    @ Mac

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

    RIGHT THERE WITH YOU! To quote the famous US Labour-Organiser, Joe Hill: 'Don't mourn. Organise!'

    @ Ashwin Ramcharan

    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!

    Ahh... So this is the 'Human Beings Are Exactly Like Squirrels, Only Less Cute' theory of economics. Perhaps you should publish a paper on your up-to-the-XIXth Century Social-Anti-Darwinist position?

    This has to be one of the loonier angles I have seen, on the whole financial situation. You manage to make it nicely sexist, as well. Actually, you make an excellent case for the rounding up and imprisonment of 'Alpha' males!

    @ Steve Mierzejewski

    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.

    :-D Will you SHARE?? You are right.

    @ Joe

    ‘Too big to fail’ should be ‘too big to exist.’

    APPLAUSE!!

    @ Ray

    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.

    You're absolutely right, Ray. I lived in the States for forty years, and would go back in a heartbeat. Generalisations about 'The USA' are impossible.

    On the other hand, the US government is fair game. Now, so are reckless US banks, greedy US financiers, and incompetent US factota (read: Hank Paulson).

    @ Kate MacDonald, Average Canadian

    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.

    Now? NOW? No, Kate, it would have been good for the John McCain-like, Starznstripes-waving, war-mongering, xenophobic, 'City-on-a-Hill', unnecessarily blxxdy Messianic, self-righteous, triumphalist 'socialist'-phobic, US-first, 'Greatest Country on Earth' rhetoriticians, politicians, and the general US public, who don't learn geography in schools, to have looked outside their borders, without aiming missiles, about 150 years ago!

    The US Civil War, which broke the trade between the agricultural South, and Britain - the real reason for the War (slavery was a side-issue) - and forced the South to sell to the Industrial North, was the beginning of the end of attention paid to the 'rest of the world'.

    The XXth Century was a marvel of looking outside the US borders with suspicion and hostility - only to join - or start wars.

    I am crossing my fingers, and hoping that the globally educated Senator Obama wins the US Presidency. Perhaps he'll be able to get kids interested in studying world-globes, and maps, and learning about other countries, like the 'foreigners' in Canada, for a start! LOL.

    Incuriousity breeds ignorance, which in turn, breeds judgementalism. It has not made the USA into a 'super power'. It's just a 'stupid power'. Now, it's not even that. Praise the gods. Something good had to come of All This.

    October 11, 2008 at 6:56 pm |
  127. pattie stahl

    As for the 700 billion dollar bail out, it seems to me that if the government just sent $1 million dollars to every american family, allowing us to pay off or pay down our mortgages, pay off our revolving debt, purchase cars, send our kids to college, start up business or just plain invest it., Wouldn't this be effective in avoiding bank failures, pump up the stock market, encourage entreprenuership that would turn this economy around by providing jobs and maybe, restimulating creativity and give confidence back to the American People People would put the money right back into the economy,
    one way or the other.

    The average American works one year for 7 months pay.Pretty pathetic. So much of our money is given to one form of tax or another.
    We should consider a flat tax, if we did that ,everybody would be equal. Everytime someone spends a dollar, there should be a tax . This should create a ton of money that could be pumped into the economy. If this kind of tax was in place, we could do away with income and property taxes.
    Also illegal immigrants, should be dealt. with. If we allow the workng immigrants to pay taxes and allow them to pump thier money into the economy. Consider a possible fine them for commiting the illegal act for entering illegally, but allow them to become citizens, if they are working responsible illegal aliens.

    October 11, 2008 at 7:01 pm |
  128. M C Crockett

    Do you think those who say a depression is likely are right or wrong?

    Unless the respondent is over the age of 70, they are most likely to be wrong. I'm not terribly convinced that anyone under the age of 80 would really understand what a depression really is.

    If we are under 70, all that we've experienced are recessions. Even our perception of what constitutes a recession will depend on whether we were employed in an industry that was affected and were laid-off.

    People that have outstanding credit card debt, clearly, haven't been laid-off during a recession. I have been laid-off and can attest that there is a fundamental change in one's view of debt. Debt is something to be avoided. Also, you tend to save more just in case this happens again.

    To ensure that I could survive being laid-off again, I save between 15 and 20 percent of my income. To keep pace with inflation, roughly 90 percent of my savings has been invested in stocks. This leads to the question: Why are so many people liquidating their stock holdings?

    That's a more important question than asking whether or not we are going into a depression.

    October 11, 2008 at 8:34 pm |
  129. george costa

    We are facing a very serious economic situation and it seems that the government is asleep at the wheel.

    We're hampered by a "lame duck" administration and an ineffectual Congress. A Congress that seems to be more concerned about getting re-elected than addressing this issue.

    What happened to the urgency that accompanied the $700 billion TARP?

    What we get are platitudes. Enough with "action plans", "economic crisis" "we're on the precipice", "we've looked into the abyss", "we'll come out of this", "the american people....".

    How about, this is what we are going to do and here is the timeline?

    Here's what needs to happen. Since 70% (?) of our economy is driven by the consumer, we need the "ultimate consumer" ( the Federal government ) to step into this situation. We need massive amounts of Federal spending.

    Recapitalize the banking system and force consolidation ( we have some 9000 banks in the US - 8900 too many ).

    Expand unemployment benefits to 52 weeks.

    Moratorium on foreclosures. Allow the homeowners, under stress some temporary relief.

    Rebuild infrastructure ( roads, bridges, railways ). Funnel the money to the states, so they can revive their economies.

    Provide tax incentives to new technologies ( alternative energy, clean use of coal, nuclear ). Set goals for energy independence.

    Provide tax incentives to companies that create employment, in the US. Enough with outsourcing.

    Create a National Healthcare Administration, that will provide healthcare for every single American. This would help industries, like automotive, that are burdened with legacy health care costs. I would make that industry my first priority.

    This will require massive funds, but the pay off will be huge. It will rebuild our physical and financial infrastructure, bring confidence back to Americans and insure a future and a place of prominence for America.

    October 11, 2008 at 8:37 pm |
  130. K Suresh

    American paper economy has gone bust. Best step forward to teach these Americans to live within means, eat within limits and be respectful to nature.

    October 11, 2008 at 9:24 pm |
  131. Dave Strauss

    How much more does the government and the country have to take in this crisis before someone takes action against the bankers. As money is put in to these institutions in the form of cash, credits, additional insurance & federal reserve lending to them they refuse to open up credit and or loans to business and borrowers. They are hoarding the money as if they are dictators and were entitled to have this money back. These jerks need to go to jail

    October 11, 2008 at 9:55 pm |
  132. Howard in USA

    The fundamental problem is that the US economy (in fact, the whole world economy) is a House of Cards built on the quicksand of debt. The subprime lending catastrophe is simply the result of the extreme to which the housing segment of the economy had to go the preserve the delusion of eternal growth. And when that wing of the House of Cards collapsed and slid away into the quicksand on which it was built, it sent major cracks rocketing through the remainder of the structure. Now, if the housing sector was the only unsupportable wing, we could perhaps fix the cracks and rebuild the wing on solid ground. But, there is no solid ground. The quicksand also consists of

    - consumer debt totalling approximaterly 2.5 trillion dollars (more
    than $7000 for every man, woman, and child in this country). And
    this debt must necessairly grow faster than the GDP in order to
    sell all the new cars, appliances, ipods, cell phones, luxrury
    services, entertainments, etc. that must be sold every day in order
    to keep the workforce employed. And the vast majority
    of this consumption consists of highly discretionary purchases. America is tthe world's consumert, and as credit tightens, unemployment rises, and consumers cut back or declare bankruptcy, demand may shrink significantly.

    - unknown quantities of worldwide commercial debt created and
    traded by the commercial and investment banks for huge fees
    and bonuses but having no underlying value.

    - evergrowing government debt at all levels which can never be fully
    redeemed or monitized but must be serviced or defaulted. The
    king of this debt is, of course, the federal government which is in
    hock to the world to the tune of over eleven trillion dollars.

    - a monetary system which is as much as 90% debt. The M2 money
    supply (which is composed people’s directly spendable assets) is
    estimated at almost eight trillion dollars, of which perhaps eight
    billion is hard currency. The remainder is credit extended by
    financial institutions which is backed only by the ability of debtors
    to repay or by the ability some government agency to absorb the
    loss.

    October 11, 2008 at 11:16 pm |
  133. FromEuroZone

    Simple question scared me the other day. What should I invest in, if I wanted to keep my money safe?

    I could be missing something, but there isn't any obvious choices. Everyone keeps saying that shares are dirt cheap, but everyone stops short of saying which companies are going to make profit next year. And in the end every investment runs to that wall. Nothing is certain as companies keep reporting smaller than expected profits, flat growth and job cuts. Every sector, every continent. Never seen anything like it

    People say that this is credit crunch, caused by lack of money moving. I think it is possible cause for this, but I think this has already morphed beyond that as I fail to see how easy loans could help to turn this around.

    Sure, somebody would take advantage of it, but increasingly it seems to me, that most companies would not even want an access to loan any more, at any interest rate. They simply have no need for investment money as they are dialing back production and expenses. Quite simply, the demand is drying up and in that situation no sane businessman is going to seek a loan. Unless of course it is for the very purpose of keeping his company from going under, but again that kind of loan isn't something that is going to turn the markets around, is it?

    October 11, 2008 at 11:32 pm |
  134. Chris

    As “the Bank of England announced its plan to nationalize... the British banking system”! The “Treasury Secretary Henry Paulson said Friday that the Bush administration will move ahead with a plan to buy stock in financial institutions”
    I disagree with Soros that “This current economic disaster is self-generated”!
    The disaster was generated by “the dysfunctional government, Senate and Congress”!
    During 2007, pertaining to the “ most pressing issues facing the nation”, on CBS
    60 Minutes, The Comptroller general... stated, “the biggest ECONOMIC PERIL facing the nation is being ignored and the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility"! The fact is, as The Controller general stated, “a tsunami of spending that could swamp our ship of state”! He was correct “it did swamp our ship...”!
    The fact is, there was a “breach of duty, intent, knowledge, recklessness” to inflict harm.The faith in the “dysfunctional government, the free market economy and the Constitution, as a whole are gone! “The corruption has been ramped”!
    Soros states, “The world is collapsing... “ it is not an understatement.
    The elected official in Congress and Senate “sit idle and deregulate just about everything for self serving, enrichment and corruption. Did nothing to the diminution, subversion. destruction of the Economy, the War, the Financial system, the Health care, the Social Security etc...!
    The justice system branch of government is not any better – they turned blind eye too!
    Operating under Socialism – to nationalize – centralize the financial system
    for special interest groups and denying the people to “participate in power “ is doom to
    fail!

    October 12, 2008 at 12:30 am |
  135. Ali

    Money makers are running out of profits – whoops it's a confidence crisis! All of a sudden everybody cries for a socialist approach of government help. Bankers and traders refuse to do their work. Their on strike, that's what I'd call it. Don't they have to fear loss of their jobs?

    Instead of supporting banks, give government money into my hands to decide what on my own to do with it. (I would probably put it on a bank – I'd trust them).

    October 12, 2008 at 6:48 am |
  136. Theo

    The present stock declines and credit crisis are just the tip of the iceberg.

    October 12, 2008 at 10:02 am |
  137. Joe Halligan

    The Sarbanes-Oxley Act of 2002 is mandatory. ALL organizations, large and small, MUST comply.
    Why are you not taking the law as a plan to correct and prosecute the fraud that has taken place and future enforcement of SOX?
    The legislation came into force in 2002 and introduced major changes to the regulation of financial practice and corporate governance. Named after Senator Paul Sarbanes and Representative Michael Oxley, who were its main architects, it also set a number of deadlines for compliance.
    The Sarbanes-Oxley Act is arranged into eleven titles. As far as compliance is concerned, the most important sections within these are often considered to be 302, 401, 404, 409, 802 and 906.
    An over-arching public company accounting board was also established by the act, which was introduced amidst a host of publicity.

    October 12, 2008 at 10:32 am |
  138. Bruno

    Recapitalize banks might be a good idea... if the governments, US or UK, had any money to do it... which is not the case !

    The money actually splashed everywhere has no real value... it is created out of nothing by the Fed and just contributes to increase deficits. To flush banks with that kind of money creates a serious risk of money depreciation or hyperinflation in the near future.

    One has to understand that the crisis doesn't stem from a liquidity problem but a confidence problem... banks have plenty of cash but refuse to lend because they don't trust ecah other anymore.

    In fact, the actual crisis results from an excess of credit and cash... trying to solve it by injecting more of both is like trying to cure an alcoholic by forcing whisky into his mouth !

    October 12, 2008 at 10:37 am |
  139. Georges

    It is understandable why 45% of the people would prefer the mattress as a safe place to deposit their money. In fact the banks were entrusted by two main missions: Safeguard our life savings and lend money to genuine business to develop the economy. The banks failed twice: 1) they screwed up our economies so we do not know anymore whether it is still safe to keep our them (or what is left) with the banks, 2) they did not lend to genuine businesses but they rather invested our hardly earned money in opaque and exotic papers and other financial leveraged bets that they insured with unregulated swaps (not to mix with insurances which are regulated) and rated the "insured exotic financial tool" AAA by the rating agencies. In fact the banks failed their missions totally, greedy investment bankers screwed the real economy with their toxic products and rating agencies failed to do their evaluation job correctly. And now everybody is asking why there is a loss of confidence in banks and institutions?Moreover the loss of confidence is also in our leaders: unfortunately we have leaders without leadership, vision, character, charisma or knowledge in economy or finance. We badly miss now Churchills and Washingtons. In summary we are left alone in the dark. It is time to shake up and protect what is left from our western culture and values, development, financial system and mostly our liberal economy. It is time to remember that morality can live with liberalism and vice versa and it is time to investigate to find out who are the bastards who initiated and promoted the securitization of subprime/CDOs/CDS and the like in the amount of several 10s of trillions of dollars. Is there any accontability anymore? Why a bonus winner is easily indentifiable and a financial criminal Wall Streeter is not? All this to say that our developped Western World may survive this full blown crisis but if we do not put some rules and regulations quickly the next crisis will be deadly.

    October 12, 2008 at 11:09 am |
  140. krsnakhandelwal

    The best solution will to reduce the bench mark rates for the govt bonds to (-) 2% (minus two percent) per annum. This minus two percent is for the surety of payment and capacity of govt to tax for this purpose. This will make market for the shares of profit generating companies and such companies will readily find lenders. The govt and for that matter the tax payers will not have to incur cost for utilising money borrowed from public for rescue act. The skeptics will place money with teasury and the bold will lend money to good corporates through the inermediate banks or directly. There has been no destruction assets or drying up of raw material sources. The lands are still growin food andconsumptionof goods and sevicesstill is in vogue.

    After the balance is achieved , the reversion to currency backed with assets will be the solution , the world has o move towards it and also towards a common currency and a world's central bank.

    courtsey http://www.krsnakhandelwal.wordpress.com

    October 12, 2008 at 11:24 am |
  141. Mario

    Given that
    1. Mr. Bush's dream and ambition was to be remembered as a peace maker
    2. The USA face the worst crisis ever, because of their greed and
    3. The USA are the only ones who started wars in the last 20 years,
    I dare say that Mr. President's dream will be fulfilled. They won't have any money to start any more wars.
    God bless... America! And if He doesn't, He'll bless the rest of us!

    October 12, 2008 at 2:29 pm |
  142. melodee

    When did 'WE " become 'ME"?? I'm more important,wise,valuable, worthy of respect; simply because I'm rich??? PLEASE!!!!!!! In our world when we celebrate excess (THE HOUSEWIVES OF..., MY SWEET 16, ETC.); and things are "better" cause they are newer, faster,bigger or more expensive. When does the finger pointing stop?? Suck it up. We all own a piece of the problem, even if we contributed with only our ignorance or silence. Envy, greed, hate, anger, and the need to be right; got us here. Tolerance, hope, compassion, remembered humanity, hard work and common sense will get us back. Hopefully stronger, smarter and a little braver than before. I've worked all my life, invested/saved what I could, did what I was told,volunteered for years; and am now passively poor. Well back to work I'll go, knowing I've learned from this- HOW ABOUT U????? The true greatness of America is it's enourmous diversity-the peoples of the world strive to live here(some even seek prestige in hating us); let's acknowledge we need to change some things, re-learn to listen,realign some priorities. BE RESPONSIBLE FOR OURSELVES!!!!! Stop the finger pointing. No one answer is the only right answer, all of the time. Good intentions can have untoward consequences-so let's admit the errors, apologize and move on; a little wiser and more cautious but forward. I AM A BUYER!!! HOW ABOUT YOU!!!!!

    October 12, 2008 at 4:34 pm |
  143. kalindra bhatt

    The cheif exeective gets paid over £5 million for what he does for the group bank Royal Bank of Scotland. I have got saving in Natwest and I am poor pensioner. He should be sacked I want to know whether my money is safe
    He should bot be paid a single penny for his very effiencinet management that has led for the crisis.

    October 12, 2008 at 6:47 pm |
  144. Dave Lierman

    I think CNN and all th news organizations have an obligation to do what they can to help with this financial crisis. Today most news outlets no longer report the news.....they try and create it. Sensationalizing every tid bit that is reported as news doesn't do any good for the american people. I suggest you stop trying to get ratings for one minute and think about the futrure of this country. You can have a positive impact by simply building confidence with the american people.

    Or you can report that we are in the worst financiqal crisis in history, and keep going in that direction until CNN shutters it's doors and you no longer have a job.

    October 12, 2008 at 8:19 pm |
  145. Gordon Inglis

    Hi Todd
    Recapitalising the banks across the world is without doubt of crucial importance, but co-operation between governments across boundaries and blocks is seminal: It seems to me that to do anything with this tidal wave, Iceland needs to be given a great deal of input. It's banks outgrew the Icelandic wrapper. The recapitalisation of the banks based around Kaupthings ( and taking the other national banks under the one banner) would allow the Icelandic Government to take an equity position ( perhaps part IMF funded ) and other Governments and Sovereign Funds additional equity especially where economic linkages are strong as with UK and Europe. There is a real role here for Russia also and additional funding is to be welcomed as indeed would funds originating in Doha from whence Icelandic Bank equity has been purchased very recently in the case of Kaupthings. The peak of this tumultuous financial tsunami is in the North Atlantic and Iceland must not be abandoned, sacrificed nor scapegoated – there are too many consequences beyond it's borders for that.

    October 12, 2008 at 8:39 pm |
  146. Johan,Netherlands

    Dear Mr. Benjamin

    I agree with most of your bearish sayings and predictions
    while most people asking/begging for light at the end of the
    tunnel I still stand in front of it entering that LONG BIG BLACK HOLE

    One can impossibly compare the 1929 depression with the present
    situation because circomstances are very different now
    governments should not allow at random which bank should
    live or die ,afterall they have permitted and accepted global
    industry which is becoming beyond their control

    Of course they are worried because there is no good for them
    to be done : NOBODY KNOWS WHAT TO DO !
    They have given it all away for the sake of the PRIVATE SECTOR

    And NOW we are asking the same homosapiens that brought
    us in the first place to this disaster to SAVE us !
    I still think that governments are not and should not be there to
    help out or manipulate world markets/bourses
    they should remember that all of them are chosen by the people
    for the people to serve their needs

    Remember, a lot of our countries are filthy rich by means of the
    GOLD reserves we own and cannot sell or use
    The price of gold then shall implode (so what) but most of all
    inflation will sky-rocket to Zimbabwe standards (no option)

    AT LAST : The effects of this mess are going to affect the REAL ECONOMY It will take Decades to Recover ! Even your children
    and next generation could feel todays HORROR

    October 12, 2008 at 9:32 pm |
  147. Steve

    Hi Todd, Nice to hear your optimism. How does the derivatives issue that I don't fully understand but which appears to be large and largely not addressed figure in to potential recovery, or continued unrest.

    October 12, 2008 at 10:03 pm |
  148. deuel woodward jr.

    When a person feels depressed they see everything in terms of worst-case scenarios. They act based on what they fear is true, not on what they hope is true. The microcosm is the mirror image of the macrocosm.
    When large numbers of people see the future in terms of worst-case scenarios, there is a possible self-fulfulling prohecy effect than could have dire consequences. No cnange of course in the right direction will happen until the herd mentality pulls back from the brink of despair, and experiences the audacity of hope.

    October 12, 2008 at 10:29 pm |
  149. norman

    The credit crunch has been orchestrated by governments of developed countries [G7] in partnership with their countries financial houses.They do the talk but not the walk ,whilst billions of dollars are wiped off the stock exchange week after week.The corporate world are not voicing their anger by confronting their country`s leaders.I wonder why.
    This is my opinion. For years governments have been telling their workers that the state pension fund coffers are empty.Huge amount of baby boomers are due to take their retirement which is going to put pressure on the economy.
    The plan has come together,pension values have been reduced by 40 -60% due to the stock market crash and pensioners will have to work longer, whilst governments and the corporate world are laughing all the way to the bank.
    And they want to blame it all on the subprime,

    October 12, 2008 at 11:08 pm |
  150. Stephen Ó Hanlon

    I was telling friends three or four months ago that we were heading for a world wide recession. I was right on the money. Why could’nt it be avoided? If a bystander like myself could see it coming then you can be very sure our governments knew about it too.

    In the coming months and years it will probably also become clear that the multi billion bailout for banks worldwide is the biggest scam in modern history.

    October 13, 2008 at 5:08 am |
  151. carlnorberg

    The remaining problem of this crise is not the lack of confidence in the market. The ever remaining problem of this system is the way of how money is created, and how this process is regulated.

    In this actual matter, the question of value of money, is somehow neglected, maybe for a reason.

    More fictionally created money without true real value, is only more of the problem, and less of the solution.

    So tell me what good the society becomes of saving private banks?

    October 13, 2008 at 7:59 am |
  152. andrew irikefe

    Money, in whatever form it exists, brings out the Truth in an individual, a corporation, and in nations. That is, it reveals the true character of the entity that controls it, good or bad. And so the management of money must be done in Truth. Regardless of what measures governments the world over take to stave off crisis in their economies, it is incumbent upon money managers to embrace truth in their dealings or the problems will no doubt reoccur.

    October 13, 2008 at 8:07 am |
  153. Sean C

    The system can't be saved... period ! The reason banks are hoarding cash is not because the are afraid to lend to each other, the reason is they all have MASSIVE exposure to credit default swap, interest rate swap liabilty. The dollar amount is so big, so unreal, that if the public understood there really would be panick on the streets.
    The Leham swaps were just settled at about 360 billion, and there is about 350 banks on the hook which need to pay in 2 weeks. That is just the tip of the iceburg!
    I don't care how much money the world governments provide, the swap exposure coming down the road is so vast, it will blow the banking system right into orbit.

    October 13, 2008 at 8:38 am |
  154. John Nicholas

    In Friday's FT Alistair Darling wisely wrote of ‘the confluence of the worst financial crisis for generations and the surge in commodity prices’. Watching the reaction of commodity and oil prices will give us an idea about what the finance ministers need to think about next.

    October 13, 2008 at 9:36 am |
  155. Phil Overton

    Paul Krugman (Princeton and The NYT) has consistently warned about this very crisis.

    I'm very pleased that, today, he has been awarded the Nobel Prize for Economics.

    October 13, 2008 at 1:58 pm |
  156. Nina

    A ticking time-bomb?
    The UK plan is the one that makes the most sense in this extreme volatile environment , but bailout plans and recapitalization of banks are not enough to stabilize the banking system and restore confidence. What about the unregulated derivatives market and the credit default swaps huge losses? The CDS are very much a core to this market and there is a need for much stricter regulation and transparency among these financial instruments. According to ‘The Independent’ newspaper the derivatives market is worth more than $516 trillion, (£303 trillion) or about 10 times the value of the entire world's output, a "ticking time-bomb"? Billionaire Warren Buffet called them ‘weapons of mass destructions’!

    October 14, 2008 at 9:18 am |
  157. Richard Kennedy

    As Nancy Pelosi suggest a second financial suport plan of +/- $1 trillion USD is not out of the question, we need to stand behind our American investors, banks and finacial institutions if we (Americans) are to continue being the number one economic global leader, timing is everything during this financial crises.

    Richard Kennedy
    Kalispell, MT

    October 14, 2008 at 10:11 am |
  158. Nzola Miranda

    At last its paying off being from the underveloped and emerging economy. Its a bad turn good, which leaves our system imune from the current global financal crisis. Angola has the world leading double digit GDP growth for three years running, a shy 6.5% banking rate and only 10% of total deposits are turned into loans/credit. High street bank credit rate is increasing.Highest oil producer in Sub-Saharan africa, non-oil industry growing fast and general consumer spending on a all time high. So for those visiory investors out there consider Angola with huge ROI opportunities.

    Nzola Miranda
    GE Oil and Gas – Angola

    October 15, 2008 at 2:05 pm |
  159. Lassana Sanogo

    There has been a lot of talking, blame games but what people/investors really care about is reliable actions geared towards bringing confidence in the banking system. We are being told that heavy weight banks are still hesitant to lend to smaller banks, why can't the Feds use part of the 700 billion dollars to do that? What happened to the G7 meeting, was there any consensus reached for the world leader to have a common approach to stop this Tsunami? Let’s start acting before it’s too late!

    October 16, 2008 at 8:36 am |
  160. vineet

    yes, you are correct this is only matter of confidence, i know so many people who don't have any finacial problem but they lost confidance.

    no depression only lack of confidance....

    October 16, 2008 at 11:30 am |
  161. jose fernandes

    The european leadears are once again meeting to solve the financial storm.
    Again, they have " operated" the patient ( the finance institutions). But they are looking like the surgeon that forgets to stich the wound.
    Unless "main street " is also bailed out (considerable drop of interest rates for considerable period) we are going ,and THEM , to plow for potatoes and alike!!! ( that is for those that are lucky enough to own a bit of land).
    Just room for thought

    October 16, 2008 at 12:58 pm |
  162. adladdin slate

    Well I think the economy is the most important subject. This is what we, as nation must focus on. However, my question to Obama would be how could we make the big companies (American) bring the jobs back to America, and not allow the big companies to think of how to put extra dollars in their pockets by keeping jobs overseas? My thinking is simple; CEO’s of companies would not put more in their pockets, but put more in employee’s pockets, which leads to more spending in every middle town America’s own pockets stimulating the economy. “Made in the USA”, is not seen very often anymore, only “Designed in the USA.” Any Chinese person will tell you that 100% made in America quality is the best! That tells any person a clear message. Bring the quality back home on our soil, like the 50’s and 60’s. I am in the military; however, this is a time of economic power not military. Knowledge and Technology will win wars, and this is part of bringing our companies back home. America should think as a group toward economic innovation and leadership, as Japan did in the 80’s and early 90’s, not so single hearted.

    October 16, 2008 at 3:09 pm |
  163. Emile Barry

    The financial crysis we are presently in was predicted by the Web Bot project. Which also predicted much dire consequences to follow. Events are now happening in China and India which will mushroom and spread. Our inept leaders are incapable of convincing the masses that everything will be OK. President Bush showing up on the morning news is evident that everything is NOT OK. Things are much much worst than what they are letting on. They are lying to the masses in order to stem the tide of what is to come, in short time. The population of the planet along with its energy demands are much greater than the period of the Great Depression, ergo the events which will unfold will be proportionally greater. Just as the demands of expanding empires brought on WWII so will the demands of the masses of all nations bring on WWIII along with a much higher body count. It seams that the predictions of the first president Bush concerning a "New World Order" is about to unford before our eyes in real time. If the Web Bot project is correct we are about to travel back into the stone age.

    October 17, 2008 at 5:56 pm |
  164. Shan Saeed

    Tod
    I think there's a lack of confidence issue right not. There's also some misconception about recession. Recession is not a business cycle, its a consumer cycle, when consumers dont spend, businesses dont invest and economy recedes.........This recession may not last long.....
    The safeest option right now is Gold where its going down................Gold is considered to be playing safe in these turbulent times...it was trading at $257 per ounce in 2001 and $ 1000 in March 2008. Gold is trading at $ 690 per ounce right now...........I would bet on Gold...............

    With kind regards,

    Shan Saeed
    Uni. of Chicago
    Graduate School of Business
    Chicago

    October 30, 2008 at 10:56 am |
  165. Angus Harper

    Living in Sydney it is hard for me to sense just how low confidence in the USA is. Here the banks have not been as badly affected by the sub prime write offs but the worldwide slowdown will affect us. However the thing that concerns me if government is going to fund these losses and even recapitaise these banks is their lending practices going forward. Another question that might be asked is what are these bankers being taught at business schools. They seem to be taught that they can work be paid enormous amounts of money without taking any responsibility for their actions. Angus Harper Sydney

    November 3, 2008 at 2:12 am |
  166. santoshwebseo

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