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Stock Market Drops 107 Points During Bush's Speech on the Economy
Posted by Amanda Terkel, Think Progress on October 10, 2008 at 1:46 PM.

Today, President Bush gave an eight-minute speech on the economy, which was meant to reassure the markets. "This is an anxious time," said Bush. "But the American people can be confident in our economic future." However, ABC News notes that during those eight minutes, the Dow Jones dropped another 107 points. The Dow was down 78.70 at the beginning of Bush's address, but at 185.66 by the end.

Dow Dips Below 8,000; Anxiety, Anger at all Time Highs
Posted by Joshua Holland, AlterNet on October 10, 2008 at 11:36 AM.

Is there anger out there? You betcha.

Think about how many people would have traded their left ... whatever to be the guy who punched out the head of Lehman Bros, Richard Fuld ...

Mr. Fuld, who has been testifying on the financial crisis before the US House Oversight Committee, was attacked on a Sunday shortly after it was announced that the banking giant was bankrupt.

Following rumors that the incident had occurred, Vicki Ward, a US journalist, said "two very senior sources - one incredibly senior source" had confirmed it to her. "He went to the gym after ... Lehman was announced as going under," she told CNBC. "He was on a treadmill with a heart monitor on. Someone was in the corner, pumping iron and he walked over and he knocked him out cold.

"And frankly after having watched [Mr Fuld's testimony to the committee], I'd have done the same too."

"I thought he was shameless ... I thought it was appalling. He blamed everyone ... He blamed everybody but himself."

There's a sea-change occurring in our political-economy.

What has basically been a decades-long slump for most working people -- with wages stagnating and the costs of education, health care and everything else rising -- has spread to those at the top, to the movers and shakers of the "new economy," and now we're all suddenly in the same boat.

It shouldn't come as a surprise, really. You can't continue to feed a consumer culture like ours with a declining middle class. But all that pain working America's experienced was obscured by the use of averages -- average incomes that included the immense share taken in by those at the top (In 1972, the top 1 percent of Americans took in 8.7 percent of all earned income, but that figure skyrocketed to more than 20% in 2006, while wages stagnated for nine out of ten U.S. tax-payers. Recently, The Wall Street Journal reported that "the richest 1 percent of Americans in 2006 garnered the highest share of the nation's adjusted gross income for two decades, and possibly the highest since 1929").

What's noteworthy is that the decline in economic security was a distant issue probed mostly by lefty bomb-throwers like me for years, and now questions about our economic paradigm are front and center.

Consider this mind-jangling fact: today, the Washington Post -- long a mouthpiece for the neoliberal economic establishment -- is running a prominently-placed story titled, "The End of American Capitalism?"

This is surely a sign of the apocalypse -- some highlights ...

The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism....

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The Spiral Continues: Panic in the Markets
Posted by Stirling Newberry, Firedoglake on October 10, 2008 at 7:57 AM.

We can solve this panic. And finally the developed world's finance ministers are meeting under enormous pressure because markets are in "freefall" according to traders. For those of you who slept well last night, here is what happened. At the open of Tokyo's stock exchange, the market dropped straight down almost 10%. It then wallowed the rest of the day. This patten was repeated in Europe. Stock prices "rolled off the table." Tokyo ended down 10%, to almost where it fell just before the Iraq War. European markets rolled off the table, and rebounded, right now down around 5%.

It was clear to economists like James K. Galbraith and Paul Davidson, that the solution was not in the realm of high finance, but in the underlying mortgages. Only when there is a bottom to the basis of money, which in our case is assets like houses, will there be a true bottom to the market and the economy.

It is not that "people could not pay back their mortgages," because default rates are high, but not unbearably so. It is that because of the crash in real estate, when someone did not pay back their mortgage and the bank foreclosed, the bank could not get the value of the mortgage back, and it took a long time to sell, or it was forced to take a bigger loss. Blaming a few poor borrowers who were robbed by banks is something that only people in Wingnited States of Nutmerica can believe for long. It was the credit bubble, not the foam, that brought this on.

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Fixing the Financial Mess Would Be Easier if We Weren't Dealing with the World's Worst Scumbags
Posted by Joshua Holland, AlterNet on October 9, 2008 at 11:56 AM.

Seriously, if you haven't signed up for my weekly Corporate Accountability and Workplace newsletter, now is the time. We simply can't fit all the economic coverage we run on our front page, and if you're not getting the Special Coverage newsletter, you're missing out on some really important analysis. Sign up here.

After shelling out $85 billion last month to shore up the books of financial giant AIG -- which is heavily invested in the huge, shadowy and wholly unregulated market for "credit default swaps" -- the Fed authorized another $38 billion in government-backed loans yesterday.

That action may well be a small but necessary step in protecting the larger economy, but it is extremely hard to swallow given that 70 AIG execs went on a half-million dollar junket to a resort spa just a week after the last bailout. Included in the tab at the tony St. Regis resort on the California coast was $150,000 for meals and almost 25 grand worth of spa treatments.

According to the Washington Post, Martin Sullivan, the former AIG chief executive whose "three-year tenure coincided with much of the company's ill-fated risk-taking," is receiving a $5 million dollar performance bonus, and Joe Casano, "the financial products manager whose complex investments led to American International Group's near collapse," is raking in $1 million per month in consulting fees. His task? Sorting out the obscure investment instruments created on his watch.

Just days after Lehman Brothers went belly-up, the bank's foreign staff were outraged to discover that a $2.5 billion bonus pool established before the firm went into bankruptcy would be paid out to Lehman's New York Staff -- an average bonus of a quarter million dollars each.

Imagine how much easier this "bailout" process would be if we weren't dealing with some of the most privileged, arrogant bastards this country has ever produced, and if many of them weren't still living the high-life. The gall of the titans of the financial sector is simply unprecedented.

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AIG Blows Through Taxpayers' Money at the Ritz
Posted by Lisa Derrick, Firedoglake on October 9, 2008 at 7:59 AM.

Less than a week after being castigated by the White House, Congress and Barack Obama for profligate spending at taxpayer expense, the financially disastrous insurance firm AIG is at it again, sending two hundred employees and independent sales agents on a retreat to another ritzy resort, the Ritz Carlton Half Moon Bay on the Northern California coast.

The $400-per-night luxury hotel boasts rooms with either ocean views or  balconies; feather beds with duvets, 300-thread count Egyptian cotton sheets and a choice of 100% goose down or non-allergenic foam pillows; marble bathrooms with separate shower and bathtub; and plush terry cloth robes.

AIG, which received an $85 billion loan from the U.S. government last month and in exchange ceded a 79.9 percent ownership interest, borrowed another $37.8 billion from the Federal Reserve on Tuesday to "replenish liquidity."

Speaking of liquidity, the Ritz Carlton spa offers a:

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AIG Execs Receive a Flogging from Congress
Posted by Lagan Sebert, American News Project on October 8, 2008 at 12:41 PM.

In the wake of the $700 billion bailout, the public is finally getting a look at the faces behind the financial crisis. On October 7, the Committee on Oversight and Government Reform grilled former AIG CEOs Robert Willumstad and Martin Sullivan. During the five-hour hearing the executives tried to dodge blame as congress members harshly criticized their management of AIG and questioned their compensation.

Now Gay People? Flailing Right Blames Everyone but Wall Street for Financial Mess
Posted by Digby, Hullabaloo on October 6, 2008 at 9:56 AM.

From Edroso:

Barney Frank used to live with a top executive at Fannie Mae. Though this had been reported as far back as 1992, conservatives are working it hard now, perhaps feeling that if their attempt to blame the financial crisis on black people doesn't work, they can get some traction blaming it on manlove.

"PART OF WHY THE USA GOT IT UP THE YOU KNOW WHAT," bellows The Astute Bloggers. "HOMO BARNEY FRANK WAS SLEEPING WITH MALE FANNIE MAE EXEC FOR YEARS." Ace O'Spades is of course on it like Lindsay Lohan on Samantha Ronson, and his commenters spray milk (at least we think it's milk) out their noses ("This sickens me on so many levels"). Dad29 assails "back-door-banditry" and asks, "Why should THEY worry about imposing a huge national debt on children?" (Please don't tell Dad29 they're allowed to adopt now, or he'll wear out his slur thesaurus.)

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As the Economy Tanks, McCain's Prospects Dim
Posted by Booman, Booman Tribune on October 6, 2008 at 9:17 AM.

Maybe the stock markets will bounce back and recover before the end of the day, but seeing the Dow Jones index fall below 10,000 for the first time (I believe) in the Bush presidency (lower than when Bush became president), is a symbolic blow of enormous proportions. I've long argued that giving workers a stake in the stock market through 401(k)'s led them to form the false impression that they were members of the investor class. People no longer see Wall Street as the enemy...their net wealth is tied up in those indexes. When the Dow falls, the day they can retire recedes into the future.

If the stock market remains sharply down today and tomorrow, it will again be the economy that dominates tomorrow's townhall-style debate between John McCain and Barack Obama. McCain knows the debate is critical.

...McCain appears to be engaged in especially serious preparations for Tuesday's debate, one of his last opportunities to change the trajectory of a race that may be slipping out of his control. He is certainly doing more formal preparation than he did before last month's debate in Mississippi.

McCain's announced plan was to make every attempt to shift the focus of the campaign off of the economy and onto Barack Obama. In particular, McCain wanted to use a kind of Kevin Bacon seven-degrees-of-separation argument to tie Obama to the dubious activities of people for which Obama bears no responsibility. It was a weak strategy to begin with, but a tumbling stock market will make it impossible. Perhaps even more troublesome for McCain is the fact the Obama campaign has launched a major media campaign to re-raise and educate the public about the Keating 5 scandal. They created the KeatingEconomics.com website where, at noon, they will debut a 13-minute documentary about the scandal, McCain's role in it, and why it mirrors the current mortgage crisis. This line of attack seems immeasurably more topical than McCain's efforts to dredge up the Weather Underground's domestic terror activities.

Moreover, the format of tomorrow's debate is the townhall, where the questions come from ordinary citizens. Obama campaign strategist Robert Gibbs explains the problem for McCain:

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World Markets Tank in Wake of Bailout Passage; Dow Dips Below 10,000
Posted by Joshua Holland, AlterNet on October 6, 2008 at 8:27 AM.

Wow. Investors don't appear to be calmed ...

U.S. stocks plummeted in early trading today as economic turmoil rippled through Europe and investors questioned whether a bailout of the financial sector would be enough to prevent a global recession.

The Dow fell more 500 points mid morning but then retreated to more than 400 points lower by 11:18 a.m. It was the first time since October 2004 that the Dow fell below 10,000. The Nasdaq and Standard & Poor's 500-stock index were both down by 6 percent and by 11:18 a.m. had come back slightly, down 5 percent and 4.7 percent, respectively.

The day started with a negative momentum that has turned into a global panic, said Art Hogan, chief market analyst at Jefferies & Co. "It is just a realization that the global economy is going to be stagnant for the next 12 to 16 months" even with the rescue plan, Hogan said.

[...]

European officials are scrambling to bolster financial firms and Asian investors have grown worried that a global recession will undercut their export-dependent economies. Europe has been forced to prop up other banks in recent weeks. Markets in Asia and Europe were down from between 4 and 6 percent.

[...]

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The Governator Requests $7 Billion Federal Bailout for California
Posted by Matt Corley, Think Progress on October 3, 2008 at 12:57 PM.

California Gov. Arnold Schwarzenegger "warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks." Schwarzenegger's plea comes as the state is "close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans":

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

The state of California is the biggest of several governments nationwide that are being locked out of the bond market by the global credit crunch. If the state is unable to access the cash, administration officials say, payments to schools and other government entities could quickly be suspended and state employees could be laid off.

The Atlantic's Marc Ambinder calls Schwarzenegger's request "easily the biggest story of the day."

Update: The New York Times has more on the fiscal and financial struggles that many states are facing.

BAILOUT ALERT: House Passes Controversial Bill, 263-171
Posted by Steve Benen, Washington Monthly on October 3, 2008 at 10:33 AM.

I guess the second time was the charm.

Congress has passed complex and highly criticized legislation authorizing $700 billion in government money to shore up the nation's stressed financial industry.

The 263-171 vote by the House sends the Senate-passed version to the White House for President Bush's signature. Among many features, the measure would allow the Treasury Department to buy up bad debt from various lending institutions.

Many members of the House voted for the bill even though some said it was not very attractive to them and to their constituents back home. The measure had been defeated in the same chamber on Monday, sending stocks on Wall Street into a record slide.

Given recent events, the partisan breakdown matters quite a bit. On Monday, 60% of the Democratic caucus supported the bill (140 to 95), while 34% of Republicans supported it (65 to 133).

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Lieberman on FOX: Pass the Bailout Because 'It Will Be Good for John McCain'
Posted by Matt Corley, Think Progress on October 2, 2008 at 4:01 PM.

On Fox News today, Sen. Joe Lieberman (I-CT) discussed the downturn in Sen. John McCain's presidential prospects, saying McCain "is behind now because of the economy." Lieberman then said that he hopes the House passes bailout legislation tomorrow because "it will be good for our country."

"But frankly, it will be good for John McCain too," added Lieberman, explaining that "it will get people back to comparing the two candidates free of a sense of crisis that may make them want to turn against Republicans." Watch it:

Lieberman is right that the focus on America's financial problems has been bad for McCain, but it's not because the "sense of crisis" has confused voters.

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Senate Passes Bailout Bill
Posted by Steve Benen, Washington Monthly on October 1, 2008 at 7:12 PM.

Everything went as expected.

The Senate strongly endorsed the $700 billion economic bailout plan Wednesday, leaving backers optimistic that the easy approval, coupled with an array of popular additions, would lead to House acceptance by Friday and end the legislative uncertainty that has rocked the markets.

In stark contrast to the House rejection of the plan on Monday, a bipartisan coalition of senators -- including both presidential candidates -- showed no hesitation in backing a proposal that had drawn public scorn, though the outpouring eased somewhat after a market plunge followed the House defeat. The Senate margin was 74 to 25 in favor of the White House initiative to buy troubled securities in an effort to avoid an economic catastrophe. [...]

Mr. McCain did not make remarks on the legislation. Mr. Obama, in his speech, said the bailout plan was regrettable but necessary and he referred to the stock market drop after the House vote. "While that decline was devastating, the consequences of the credit crisis that caused it will be even worse if we do not act now," he said.

McCain wouldn't even speak in support of the bill he insisted was necessary? Way to step up to the plate, senator.

The package now moves to the House, where it is expected to get a floor vote on Friday.

Gas Lines Return to U.S.: Let's Party Like it's 1973!
Posted by Joshua Holland, AlterNet on October 1, 2008 at 12:55 PM.

Reuters ...

A severe fuel shortage has gripped parts of the southeastern United States, causing long lines at filling stations and symbolizing for some people their fears about the wider economy.

The shortage began two weeks ago in Atlanta, the region's largest city, when oil refineries on the Gulf Coast were shut down by hurricanes Gustav and Ike earlier this month. Parts of north Georgia, western North Carolina and parts of Tennessee were also affected.

The effects on motorists have been dramatic. Most service stations in Atlanta are out of gas, with plastic bags placed over the pumps or signs saying "out".

As a result, drivers are cruising the city hunting for gas -- often with a fuel meter needle hovering close to empty. When they find gas, it's often above $4 a gallon.

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Radio Edits With Heavy Hand in the Name of Fairness?
Posted by Rick Perlstein, Campaign for America's Future on October 1, 2008 at 12:51 PM.

I had an interesting experience on the radio this past weekend. It might have been a telling one—I'm not sure.

On Friday I went to Chicago's public radio station WBEZ to tape a discussion on the week's news for American Public Media's show Weekend America. My co-panelists were comedian Dana Gold and comedian conservative congressional staffer Tara Setmayer. We were asked about the financial collapse. I said it was the fault of the conservative ideology of deregulation. She said it was the fault of Jimmy Carter. Because he passed what she misidentified as the "Community Reinvention Act."

Yes, well, that would be the right-wing smear du jour: the Community Reinvestment Act caused the meltdown, not greedy bankers and the oily politicians who love them. As regular readers at OurFuture.org know, we've called the idea a modern day equivalent of the Protocols of the Elders of Zion—a Big Lie narrative that blames a despised, outcast social group for problems they had nothing to do with, in order to aggrandize the ability of the dominant group to hate and oppress.

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