By Sen. Bernie Sanders, AlterNet. Posted September 21, 2008.
If the economy is on the edge of collapse we need to act. But we can't just give away $700 billion of taxpayer money to the banks.
For years, as a member of the House Banking Committee and now as a member of the Senate Budget Committee, I have heard the Bush Administration tell us how "robust" our economy was and how strong the "fundamentals" were. That was until a few days ago. Now, we are being told that if Congress does not act immediately and approve the $700 billion Wall Street bailout proposal these "free marketers" have just written up, there will be an unprecedented economic meltdown in the United States and an unraveling of the global economy.
This proposal as presented is an unacceptable attempt to force middle income families (and our children) to pick up the cost of fixing the horrendous economic mess that is the product of the Bush Administration's deregulatory fever and Wall Street's insatiable greed. If the potential danger to our economy was not so dire, this blatant effort to essentially transfer $700 billion up the income ladder to those at the top would be laughable.
Let us be clear. If the economy is on the edge of collapse we need to act. But rescuing the economy does not mean we have to just give away $700 billion of taxpayer money to the banks. (In truth, it could be much more than $700 billion. The bill only says the government is limited to having $700 billion outstanding at any time. By selling the mortgage-backed assets it acquires -- even at staggering losses -- the government will be able to buy even more, resulting is a virtually limitless financial exposure on the part of taxpayers.) Any proposal must protect middle income and working families from bearing the burden of this bailout.
I have proposed a four part plan to accomplish that goal which includes a five-year, 10% surtax on the income of individuals above $500,000 a year, and $1 million a year for couples; a requirement that the price the government pays for any mortgage assets are discounted appropriately so that government can recover the amount it paid for them; and, finally, the government should receive equity in the companies it bails out so that when the stock of these companies rises after the bailout, taxpayers also have the opportunity to share in the resulting windfall. Taken together, these measures would provide the best guarantee that at the end of five years, the government will have gotten back the money it put out.
Second, in addition to protecting the average American from being saddled with the cost, any serious proposal has to include reforms so that we end the type of behavior that led to this crisis in the first place. Much of this activity can be traced to specific legislation that broke down regulatory safety walls in the financial sector and allowed banks and others to engage in new types of risky transactions that are at the heart of this crisis. That deregulation needs to be repealed. Wall Street has shown it cannot be trusted to police itself. We need to reinstate a strong regulatory system that protects our economy.
Third, we need to address the needs of working families in this country who are today facing very difficult times. If we can bail out Wall Street, we need to respond with equal vigor to their plight. That means, for example, creating millions of jobs through major investments in rebuilding our crumbling infrastructure and creating a new renewable energy system. We must also make certain that the most vulnerable Americans don't freeze in the winter or die because they lack access to primary health care.
Finally, we need to protect ourselves from being at the mercy of giant companies that are "too big to fail," that is, companies who are so large that their failure would cause systemic harm to the economy. We need to assess which companies fall into this category and insist they are broken up. Otherwise, the American taxpayer will continue to be on the financial hook for the risky behavior, the mismanagement, and even the illegal conduct of these companies' executives.
These are the last days of the Bush Administration, the most dishonest and incompetent in modern American history. It is imperative that, at this important moment, Congress stand up for the middle class and for fiscal integrity. The future of our country is at stake.
http://www.alternet.org/workplace/99690/
Sen. Bernie Sanders was elected to the U.S. Senate in 2006 after serving 16 years in the House of Representatives. He is the longest serving independent member of Congress in American history
Monday, September 22, 2008
Sunday, September 21, 2008
Truthiness Stages a Comeback By FRANK RICH
Looking for Reality
NOT until 2004 could the 9/11 commission at last reveal the title of the intelligence briefing President Bush ignored on Aug. 6, 2001, in Crawford: “Bin Laden Determined to Strike in U.S.” No wonder John McCain called for a new “9/11 commission” to “get to the bottom” of 9/14, when the collapse of Lehman Brothers set off another kind of blood bath in Lower Manhattan. Put a slo-mo Beltway panel in charge, and Election Day will be ancient history before we get to the bottom of just how little he and the president did to defend America against a devastating new threat on their watch.
For better or worse, the candidacy of Barack Obama, a senator-come-lately, must be evaluated on his judgment, ideas and potential to lead. McCain, by contrast, has been chairman of the Senate Commerce Committee, where he claims to have overseen “every part of our economy.” He didn’t, thank heavens, but he does have a long and relevant economic record that begins with the Keating Five scandal of 1989 and extends to this campaign, where his fiscal policies bear the fingerprints of Phil Gramm and Carly Fiorina. It’s not the résumé that a presidential candidate wants to advertise as America faces its worst financial crisis since the Great Depression. That’s why the main thrust of the McCain campaign has been to cover up his history of economic malpractice.
McCain has largely pulled it off so far, under the guidance of Steve Schmidt, a Karl Rove protégé. A Rovian political strategy by definition means all slime, all the time. But the more crucial Rove game plan is to envelop the entire presidential race in a thick fog of truthiness. All campaigns, Obama’s included, engage in false attacks. But McCain, Sarah Palin and their surrogates keep repeating the same lies over and over not just to smear their opponents and not just to mask their own record. Their larger aim is to construct a bogus alternative reality so relentless it can overwhelm any haphazard journalistic stabs at puncturing it.
When a McCain spokesman told Politico a week ago that “we’re not too concerned about what the media filter tries to say” about the campaign’s incessant fictions, he was channeling a famous Bush dictum of 2003: “Somehow you just got to go over the heads of the filter.” In Bush’s case, the lies lobbed over the heads of the press were to sell the war in Iraq. That propaganda blitz, devised by a secret White House Iraq Group that included Rove, was a triumph. In mere months, Americans came to believe that Saddam Hussein had aided the 9/11 attacks and even that Iraqis were among the hijackers. A largely cowed press failed to set the record straight.
Just as the Bushies once flogged uranium from Africa, so Palin ceaselessly repeats her discredited claim that she said “no thanks” to the Bridge to Nowhere. Nothing is too small or sacred for the McCain campaign to lie about. It was even caught (by The Christian Science Monitor) peddling an imaginary encounter between Cindy McCain and Mother Teresa when McCain was adopting her daughter in Bangladesh.
If you doubt that the big lies are sticking, look at the latest Washington Post/ABC News poll. Half of voters now believe in the daily McCain refrain that Obama will raise their taxes. In fact, Obama proposes raising taxes only on the 1.9 percent of households that make more than $250,000 a year and cutting them for nearly everyone else.
You know the press is impotent at unmasking this truthiness when the hardest-hitting interrogation McCain has yet faced on television came on “The View.” Barbara Walters and Joy Behar called him on several falsehoods, including his endlessly repeated fantasy that Palin opposed earmarks for Alaska. Behar used the word “lies” to his face. The McCains are so used to deference from “the filter” that Cindy McCain later complained that “The View” picked “our bones clean.” In our news culture, Behar, a stand-up comic by profession, looms as the new Edward R. Murrow.
Network news, with its dwindling handful of investigative reporters, has barely mentioned, let alone advanced, major new print revelations about Cindy McCain’s drug-addiction history (in The Washington Post) and the rampant cronyism and secrecy in Palin’s governance of Alaska (in last Sunday’s New York Times). At least the networks repeatedly fact-check the low-hanging fruit among the countless Palin lies, but John McCain’s past usually remains off limits.
That’s strange since the indisputable historical antecedent for our current crisis is the Lincoln Savings and Loan scandal of the go-go 1980s. When Charles Keating’s bank went belly up because of risky, unregulated investments, it wiped out its depositors’ savings and cost taxpayers more than $3 billion. More than 1,000 other S.&L. institutions capsized nationwide.
It was ugly for the McCains. He had received more than $100,000 in Keating campaign contributions, and both McCains had repeatedly hopped on Keating’s corporate jet. Cindy McCain and her beer-magnate father had invested nearly $360,000 in a Keating shopping center a year before her husband joined four senators in inappropriate meetings with regulators charged with S.&L. oversight.
After Congressional hearings, McCain was reprimanded for “poor judgment.” He had committed no crime and had not intervened to protect Keating from ruin. Yet he, like many deregulators in his party, was guilty of bankrupt policy-making before disaster struck. He was among the sponsors of a House resolution calling for the delay of regulations intended to deter risky investments just like those that brought down Lincoln and its ilk.
Ever since, McCain has publicly thrashed himself for his mistakes back then — and boasted of the lessons he learned. He embraced campaign finance reform to rebrand himself as a “maverick.” But whatever lessons he learned are now forgotten.
For all his fiery calls last week for a Wall Street crackdown, McCain opposed the very regulations that might have helped avert the current catastrophe. In 1999, he supported a law co-authored by Gramm (and ultimately signed by Bill Clinton) that revoked the New Deal reforms intended to prevent commercial banks, insurance companies and investment banks from mingling their businesses. Equally laughable is the McCain-Palin ticket’s born-again outrage over the greed of Wall Street C.E.O.’s. When McCain’s chief financial surrogate, Fiorina, was fired as Hewlett-Packard’s chief executive after a 50 percent drop in shareholders’ value and 20,000 pink slips, she took home a package worth $42 million.
The McCain campaign canceled Fiorina’s television appearances last week after she inadvertently admitted that Palin was unqualified to run a corporation. But that doesn’t mean Fiorina is gone. Gramm, too, was ostentatiously exiled after he blamed the economic meltdown on our “nation of whiners” and “mental recession,” but he remains in the McCain loop.
The corporate jets, lobbyists and sleazes that gravitated around McCain in the Keating era have also reappeared in new incarnations. The Nation’s Web site recently unearthed a photo of the resolutely anticelebrity McCain being greeted by the con man Raffaello Follieri and his then girlfriend, the Hollywood actress Anne Hathaway, as McCain celebrated his 70th birthday on Follieri’s rented yacht in Montenegro in August 2006. It’s the perfect bookend to the old pictures of McCain in a funny hat partying with Keating in the Bahamas.
Whatever blanks are yet to be filled in on Obama, we at least know his economic plans and the known quantities who are shaping them (Lawrence Summers, Robert Rubin, Paul Volcker). McCain has reversed himself on every single economic issue this year, often within a 24-hour period, whether he’s judging the strength of the economy’s fundamentals or the wisdom of the government bailout of A.I.G. He once promised that he’d run every decision past Alan Greenspan — and even have him write a new tax code — but Greenspan has jumped ship rather than support McCain’s biggest flip-flop, his expansion of the Bush tax cuts. McCain’s official chief economic adviser is now Douglas Holtz-Eakin, who last week declared that McCain had “helped create” the BlackBerry.
But Holtz-Eakin’s most telling statement was about McCain’s economic plans — namely, that the details are irrelevant. “I don’t think it’s imperative at this moment to write down what the plan should be,” he said. “The real issue here is a leadership issue.” This, too, is a Rove-Bush replay. We want a tough guy who will “fix” things with his own two hands — let’s take out the S.E.C. chairman! — instead of wimpy Frenchified Democrats who just “talk.” The fine print of policy is superfluous if there’s a quick-draw decider in the White House.
The twin-pronged strategy of truculence and propaganda that sold Bush and his war could yet work for McCain. Even now his campaign has kept the “filter” from learning the very basics about his fitness to serve as president — his finances and his health. The McCain multihousehold’s multimillion-dollar mother lode is buried in Cindy McCain’s still-unreleased complete tax returns. John McCain’s full medical records, our sole index to the odds of an imminent Palin presidency, also remain locked away. The McCain campaign instead invited 20 chosen reporters to speed-read through 1,173 pages of medical history for a mere three hours on the Friday before Memorial Day weekend. No photocopying was permitted.
This is the same tactic of selective document release that the Bush White House used to bamboozle Congress and the press about Saddam’s nonexistent W.M.D. As truthiness repeats itself, so may history, and not as farce.
http://www.nytimes.com/2008/09/21/opinion/21rich.html?em&exprod=myyahoo
Copyright 2008 The New York Times Company
NOT until 2004 could the 9/11 commission at last reveal the title of the intelligence briefing President Bush ignored on Aug. 6, 2001, in Crawford: “Bin Laden Determined to Strike in U.S.” No wonder John McCain called for a new “9/11 commission” to “get to the bottom” of 9/14, when the collapse of Lehman Brothers set off another kind of blood bath in Lower Manhattan. Put a slo-mo Beltway panel in charge, and Election Day will be ancient history before we get to the bottom of just how little he and the president did to defend America against a devastating new threat on their watch.
For better or worse, the candidacy of Barack Obama, a senator-come-lately, must be evaluated on his judgment, ideas and potential to lead. McCain, by contrast, has been chairman of the Senate Commerce Committee, where he claims to have overseen “every part of our economy.” He didn’t, thank heavens, but he does have a long and relevant economic record that begins with the Keating Five scandal of 1989 and extends to this campaign, where his fiscal policies bear the fingerprints of Phil Gramm and Carly Fiorina. It’s not the résumé that a presidential candidate wants to advertise as America faces its worst financial crisis since the Great Depression. That’s why the main thrust of the McCain campaign has been to cover up his history of economic malpractice.
McCain has largely pulled it off so far, under the guidance of Steve Schmidt, a Karl Rove protégé. A Rovian political strategy by definition means all slime, all the time. But the more crucial Rove game plan is to envelop the entire presidential race in a thick fog of truthiness. All campaigns, Obama’s included, engage in false attacks. But McCain, Sarah Palin and their surrogates keep repeating the same lies over and over not just to smear their opponents and not just to mask their own record. Their larger aim is to construct a bogus alternative reality so relentless it can overwhelm any haphazard journalistic stabs at puncturing it.
When a McCain spokesman told Politico a week ago that “we’re not too concerned about what the media filter tries to say” about the campaign’s incessant fictions, he was channeling a famous Bush dictum of 2003: “Somehow you just got to go over the heads of the filter.” In Bush’s case, the lies lobbed over the heads of the press were to sell the war in Iraq. That propaganda blitz, devised by a secret White House Iraq Group that included Rove, was a triumph. In mere months, Americans came to believe that Saddam Hussein had aided the 9/11 attacks and even that Iraqis were among the hijackers. A largely cowed press failed to set the record straight.
Just as the Bushies once flogged uranium from Africa, so Palin ceaselessly repeats her discredited claim that she said “no thanks” to the Bridge to Nowhere. Nothing is too small or sacred for the McCain campaign to lie about. It was even caught (by The Christian Science Monitor) peddling an imaginary encounter between Cindy McCain and Mother Teresa when McCain was adopting her daughter in Bangladesh.
If you doubt that the big lies are sticking, look at the latest Washington Post/ABC News poll. Half of voters now believe in the daily McCain refrain that Obama will raise their taxes. In fact, Obama proposes raising taxes only on the 1.9 percent of households that make more than $250,000 a year and cutting them for nearly everyone else.
You know the press is impotent at unmasking this truthiness when the hardest-hitting interrogation McCain has yet faced on television came on “The View.” Barbara Walters and Joy Behar called him on several falsehoods, including his endlessly repeated fantasy that Palin opposed earmarks for Alaska. Behar used the word “lies” to his face. The McCains are so used to deference from “the filter” that Cindy McCain later complained that “The View” picked “our bones clean.” In our news culture, Behar, a stand-up comic by profession, looms as the new Edward R. Murrow.
Network news, with its dwindling handful of investigative reporters, has barely mentioned, let alone advanced, major new print revelations about Cindy McCain’s drug-addiction history (in The Washington Post) and the rampant cronyism and secrecy in Palin’s governance of Alaska (in last Sunday’s New York Times). At least the networks repeatedly fact-check the low-hanging fruit among the countless Palin lies, but John McCain’s past usually remains off limits.
That’s strange since the indisputable historical antecedent for our current crisis is the Lincoln Savings and Loan scandal of the go-go 1980s. When Charles Keating’s bank went belly up because of risky, unregulated investments, it wiped out its depositors’ savings and cost taxpayers more than $3 billion. More than 1,000 other S.&L. institutions capsized nationwide.
It was ugly for the McCains. He had received more than $100,000 in Keating campaign contributions, and both McCains had repeatedly hopped on Keating’s corporate jet. Cindy McCain and her beer-magnate father had invested nearly $360,000 in a Keating shopping center a year before her husband joined four senators in inappropriate meetings with regulators charged with S.&L. oversight.
After Congressional hearings, McCain was reprimanded for “poor judgment.” He had committed no crime and had not intervened to protect Keating from ruin. Yet he, like many deregulators in his party, was guilty of bankrupt policy-making before disaster struck. He was among the sponsors of a House resolution calling for the delay of regulations intended to deter risky investments just like those that brought down Lincoln and its ilk.
Ever since, McCain has publicly thrashed himself for his mistakes back then — and boasted of the lessons he learned. He embraced campaign finance reform to rebrand himself as a “maverick.” But whatever lessons he learned are now forgotten.
For all his fiery calls last week for a Wall Street crackdown, McCain opposed the very regulations that might have helped avert the current catastrophe. In 1999, he supported a law co-authored by Gramm (and ultimately signed by Bill Clinton) that revoked the New Deal reforms intended to prevent commercial banks, insurance companies and investment banks from mingling their businesses. Equally laughable is the McCain-Palin ticket’s born-again outrage over the greed of Wall Street C.E.O.’s. When McCain’s chief financial surrogate, Fiorina, was fired as Hewlett-Packard’s chief executive after a 50 percent drop in shareholders’ value and 20,000 pink slips, she took home a package worth $42 million.
The McCain campaign canceled Fiorina’s television appearances last week after she inadvertently admitted that Palin was unqualified to run a corporation. But that doesn’t mean Fiorina is gone. Gramm, too, was ostentatiously exiled after he blamed the economic meltdown on our “nation of whiners” and “mental recession,” but he remains in the McCain loop.
The corporate jets, lobbyists and sleazes that gravitated around McCain in the Keating era have also reappeared in new incarnations. The Nation’s Web site recently unearthed a photo of the resolutely anticelebrity McCain being greeted by the con man Raffaello Follieri and his then girlfriend, the Hollywood actress Anne Hathaway, as McCain celebrated his 70th birthday on Follieri’s rented yacht in Montenegro in August 2006. It’s the perfect bookend to the old pictures of McCain in a funny hat partying with Keating in the Bahamas.
Whatever blanks are yet to be filled in on Obama, we at least know his economic plans and the known quantities who are shaping them (Lawrence Summers, Robert Rubin, Paul Volcker). McCain has reversed himself on every single economic issue this year, often within a 24-hour period, whether he’s judging the strength of the economy’s fundamentals or the wisdom of the government bailout of A.I.G. He once promised that he’d run every decision past Alan Greenspan — and even have him write a new tax code — but Greenspan has jumped ship rather than support McCain’s biggest flip-flop, his expansion of the Bush tax cuts. McCain’s official chief economic adviser is now Douglas Holtz-Eakin, who last week declared that McCain had “helped create” the BlackBerry.
But Holtz-Eakin’s most telling statement was about McCain’s economic plans — namely, that the details are irrelevant. “I don’t think it’s imperative at this moment to write down what the plan should be,” he said. “The real issue here is a leadership issue.” This, too, is a Rove-Bush replay. We want a tough guy who will “fix” things with his own two hands — let’s take out the S.E.C. chairman! — instead of wimpy Frenchified Democrats who just “talk.” The fine print of policy is superfluous if there’s a quick-draw decider in the White House.
The twin-pronged strategy of truculence and propaganda that sold Bush and his war could yet work for McCain. Even now his campaign has kept the “filter” from learning the very basics about his fitness to serve as president — his finances and his health. The McCain multihousehold’s multimillion-dollar mother lode is buried in Cindy McCain’s still-unreleased complete tax returns. John McCain’s full medical records, our sole index to the odds of an imminent Palin presidency, also remain locked away. The McCain campaign instead invited 20 chosen reporters to speed-read through 1,173 pages of medical history for a mere three hours on the Friday before Memorial Day weekend. No photocopying was permitted.
This is the same tactic of selective document release that the Bush White House used to bamboozle Congress and the press about Saddam’s nonexistent W.M.D. As truthiness repeats itself, so may history, and not as farce.
http://www.nytimes.com/2008/09/21/opinion/21rich.html?em&exprod=myyahoo
Copyright 2008 The New York Times Company
Friday, September 19, 2008
Obama backs recovery plan, says McCain "in a panic"
By John Whitesides, Political Correspondent
2 hours, 8 minutes ago
Barack Obama huddled with his economic advisers on Friday and backed government efforts to prop up a teetering financial system, but he said he would wait to release his own detailed plan to stem the turmoil on Wall Street.
The Democratic presidential candidate praised efforts by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to rescue endangered financial firms and keep credit markets solvent and said "even bolder and more decisive action" was necessary.
But the Illinois senator said he would not unveil his own specific proposals until government officials and Congress had concluded their work on a broad rescue plan that could cost hundreds of billions of dollars.
"You don't do it in a day. We've got to do it in an intelligent, systematic, thoughtful fashion," he told reporters after meeting his advisers outside Miami.
The tumult on Wall Street has dominated the campaign for the November 4 presidential election this week as Obama and Republican rival John McCain compete to prove their economic leadership and judgment.
Obama said the government must be given broad authority to stabilize the markets, but any rescue plan must also include new oversight and regulations of financial institutions while ensuring public money is replaced as quickly as possible with private assets.
He did not say what he thought the ultimate cost of a bailout would be, but said he did not think it would short-circuit his plans for a middle-class tax cut or other proposals aimed at easing the burden for workers.
ALL-STAR ECONOMIC TEAM
As he talked to reporters he was flanked by Robert Rubin and Larry Summers, former treasury secretaries under President Bill Clinton. Obama also met with former Federal Reserve Chairman Paul Volcker and Laura Tyson, former chairwoman of Clinton's Council of Economic Advisers.
Obama has been scathing in his criticism of his rival's response to the crisis, including McCain's statement earlier in the week that the fundamentals of the economy were strong and his call for a commission to investigate the financial collapse.
McCain said on Friday he would require the Treasury Department to have a specific blueprint for guaranteeing loans, although he did not specify the criteria, and he called for a Treasury group to work to strengthen weak financial institutions before they became insolvent.
Obama said McCain's proposal skimped on the details but he was glad to see they agreed that "at some point we are going to need some institutionalized structure to deal with the underlying problems of bad mortgages and the bad assets that some of these markets have."
"There's going to be a lot of time for us to be in a big argument about how some of these future plans should be structured," he said.
Obama told a cheering crowd in Florida, a key battleground in the November election campaign, that McCain was "in a panic" as he tried to deal with the growing economic crisis.
"At this point he seems to be willing to say anything or do anything," he said.
(Editing by Ross Colvin and Jackie Frank)
http://news.yahoo.com/s/nm/20080919/pl_nm/usa_politics_obama_dc
Copyright © 2008 Reuters Limited
2 hours, 8 minutes ago
Barack Obama huddled with his economic advisers on Friday and backed government efforts to prop up a teetering financial system, but he said he would wait to release his own detailed plan to stem the turmoil on Wall Street.
The Democratic presidential candidate praised efforts by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to rescue endangered financial firms and keep credit markets solvent and said "even bolder and more decisive action" was necessary.
But the Illinois senator said he would not unveil his own specific proposals until government officials and Congress had concluded their work on a broad rescue plan that could cost hundreds of billions of dollars.
"You don't do it in a day. We've got to do it in an intelligent, systematic, thoughtful fashion," he told reporters after meeting his advisers outside Miami.
The tumult on Wall Street has dominated the campaign for the November 4 presidential election this week as Obama and Republican rival John McCain compete to prove their economic leadership and judgment.
Obama said the government must be given broad authority to stabilize the markets, but any rescue plan must also include new oversight and regulations of financial institutions while ensuring public money is replaced as quickly as possible with private assets.
He did not say what he thought the ultimate cost of a bailout would be, but said he did not think it would short-circuit his plans for a middle-class tax cut or other proposals aimed at easing the burden for workers.
ALL-STAR ECONOMIC TEAM
As he talked to reporters he was flanked by Robert Rubin and Larry Summers, former treasury secretaries under President Bill Clinton. Obama also met with former Federal Reserve Chairman Paul Volcker and Laura Tyson, former chairwoman of Clinton's Council of Economic Advisers.
Obama has been scathing in his criticism of his rival's response to the crisis, including McCain's statement earlier in the week that the fundamentals of the economy were strong and his call for a commission to investigate the financial collapse.
McCain said on Friday he would require the Treasury Department to have a specific blueprint for guaranteeing loans, although he did not specify the criteria, and he called for a Treasury group to work to strengthen weak financial institutions before they became insolvent.
Obama said McCain's proposal skimped on the details but he was glad to see they agreed that "at some point we are going to need some institutionalized structure to deal with the underlying problems of bad mortgages and the bad assets that some of these markets have."
"There's going to be a lot of time for us to be in a big argument about how some of these future plans should be structured," he said.
Obama told a cheering crowd in Florida, a key battleground in the November election campaign, that McCain was "in a panic" as he tried to deal with the growing economic crisis.
"At this point he seems to be willing to say anything or do anything," he said.
(Editing by Ross Colvin and Jackie Frank)
http://news.yahoo.com/s/nm/20080919/pl_nm/usa_politics_obama_dc
Copyright © 2008 Reuters Limited
Biggest Bailout Ever: Did the Government Go Too Far?
Posted Sep 19, 2008 10:39am EDT by Henry Blodget in Newsmakers, Recession, Banking
After a few weeks of trying to stand tough in the face of demands for a wholesale rescue, Hank Paulson apparently couldn't take it anymore. So now we'll have the biggest bailout in history, including:
A huge RTC-like government garbage can that banks can throw all their toxic balance-sheet waste into. (This time, the transfer will be made before they go bankrupt, unlike the case with the first RTC -a.k.a. the Resolution Trust Corp., a government agency created in the late 1980s to liquidate the assets of failed Savings & Loans)
A temporary ban on shortselling. (With the unfortunate implication that shorts are the cause of all this)
A federal guarantee on money-market accounts. (Including non-recourse loans to banks to buy high-quality commercial paper and meet money-market obligations.)
Not surprisingly, the market's up huge on this news. The moves should head off a run on money-market funds, restore liquidity to the financial system, and, as bank analyst Tom Brown puts it in the accompanying video, create a general "time out" for the panic to recede.
So what are the costs? Almost certainly:
Higher taxes
Higher interest rates on government debt
Bigger government deficits
When the alternative is the entire financial system going bankrupt, we guess these costs are acceptable. But we're not convinced that that was the alternative. Also, numerous questions remain. The most pressing is "What price will the government buy the toxic waste for?" (This price will determine how much additional capital the banks have to raise to offset any losses.) Merrill Lynch shareholders are probably also wondering whether they can cancel the Bank of America deal. And Lehman would probably like to un-declare bankruptcy.
We also doubt that this move will prove the final bottom in the stock market. Unless the government makes a similar move on housing (which certainly seems more plausible, given this news), the housing problem won't up and go away. And until the housing problem works itself through the system, the consumer will still be under pressure. But the future certainly looks brighter than it did yesterday.
http://finance.yahoo.com/tech-ticker/article/63460/Biggest-Bailout-Ever-Did-the-Government-Go-Too-Far?tickers=mer,bac,fre,fnm,leh,aig
After a few weeks of trying to stand tough in the face of demands for a wholesale rescue, Hank Paulson apparently couldn't take it anymore. So now we'll have the biggest bailout in history, including:
A huge RTC-like government garbage can that banks can throw all their toxic balance-sheet waste into. (This time, the transfer will be made before they go bankrupt, unlike the case with the first RTC -a.k.a. the Resolution Trust Corp., a government agency created in the late 1980s to liquidate the assets of failed Savings & Loans)
A temporary ban on shortselling. (With the unfortunate implication that shorts are the cause of all this)
A federal guarantee on money-market accounts. (Including non-recourse loans to banks to buy high-quality commercial paper and meet money-market obligations.)
Not surprisingly, the market's up huge on this news. The moves should head off a run on money-market funds, restore liquidity to the financial system, and, as bank analyst Tom Brown puts it in the accompanying video, create a general "time out" for the panic to recede.
So what are the costs? Almost certainly:
Higher taxes
Higher interest rates on government debt
Bigger government deficits
When the alternative is the entire financial system going bankrupt, we guess these costs are acceptable. But we're not convinced that that was the alternative. Also, numerous questions remain. The most pressing is "What price will the government buy the toxic waste for?" (This price will determine how much additional capital the banks have to raise to offset any losses.) Merrill Lynch shareholders are probably also wondering whether they can cancel the Bank of America deal. And Lehman would probably like to un-declare bankruptcy.
We also doubt that this move will prove the final bottom in the stock market. Unless the government makes a similar move on housing (which certainly seems more plausible, given this news), the housing problem won't up and go away. And until the housing problem works itself through the system, the consumer will still be under pressure. But the future certainly looks brighter than it did yesterday.
http://finance.yahoo.com/tech-ticker/article/63460/Biggest-Bailout-Ever-Did-the-Government-Go-Too-Far?tickers=mer,bac,fre,fnm,leh,aig
Paulson urges Congress action on mortgage debt plan
By Mark Felsenthal and David Lawder
U.S. Treasury Secretary Henry Paulson, leading a push for a taxpayer-funded plan to contain the credit market crisis, said on Friday he would ask Congress to take action on this next week and that the Treasury was taking immediate steps in the meantime.
"We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system's stresses," Paulson told a news conference.
His remarks followed U.S. officials' rush to shore up ailing money markets after signs that this long-safe corner of financial markets, home to some $3.5 trillion of deposits, was at risk of falling victim to the year-old credit crunch and bring the crisis to Main Street.
The Treasury said it would use $50 billion to back money market mutual funds whose asset values fall below $1 a share. Separately, the U.S. Federal Reserve said it would lend even more money directly to financial institutions so they could purchase certain assets from money market funds.
On Thursday, Paulson told lawmakers in Congress that the Treasury was crafting a plan to mop up assets made illiquid by the mortgage debt crisis.
Saying Treasury will work with lawmakers through the weekend on a plan, Paulson said it needed to be in the hundreds of billions of dollars.
The latest government efforts come after the credit crisis, which had largely been seen as a problem for Wall Street risk takers, threatened to spill over into Main Street after some super-safe money market funds buckled.
"They are absolutely petrified of just a run on financial assets and they came very close to that on Thursday," said Boris Schlossberg, director of currency research at GFT Forex in New York.
"At this point they have just decided that fiscal responsibility goes out the door and anything and everything that needs to be shored up financially will be done so in order to alleviate the panic."
The surprise move comes as the Treasury and the Federal Reserve consider broad government intervention to prevent the collapse of the financial system, shaken in recent days by a crisis at insurer American International Group that required a $85 billion government rescue and the bankruptcy of investment bank Lehman Brothers Holdings Inc.
President George W. Bush said on Friday it was essential for officials to take action to prevent more damage to the economy, which he described as being at a "pivotal moment."
INSTANT IMPACT
The new initiatives show authorities are trying to get out in front of problems before another institution is pushed to the brink of failure, an analyst said.
"It is probably a testament to how bad things really are when you look beneath the hood," said Weston Boone, vice president of listed trade, Stifel Nicolaus Capital Markets, in Baltimore.
News of the backstop for money market funds had instant impact in financial markets.
U.S. stocks soared on the array of measures authorities are taking to contain the spiraling credit crisis. Major indexes were up more than two percent, adding to gains after their best day in six years on Thursday.
Rates on U.S. Treasury bills shot higher, too. They had fallen to near zero earlier in the week as investors panicked and rushed for the safety of government securities after the oldest U.S. money market fund "broke the buck," or fell below $1 net asset value.
The dollar, meanwhile, rose to a one-week high against the Japanese yen as investors regained an appetite for risk amid all the steps being taken to address the credit crunch.
The Treasury said concerns about the net asset value of money market funds falling below $1 have exacerbated global financial market turmoil and caused severe liquidity strains in world markets.
"Maintaining confidence in the money market fund industry is critical to protecting the integrity and stability of the global financial system," the Treasury Department said in a statement.
The panic in money markets began Tuesday, when the Reserve Primary Fund, a money-market mutual fund whose assets have tumbled 65 percent in recent weeks, fell below $1 a share in net asset value, because of its losses on debt issued by Lehman Brothers Holdings Inc.
In the industry, money funds whose net assets drop below $1 a share are said to have "broken the buck."
(Reporting by Mark Felsenthal and David Lawder; Additional reporting by Alister Bull and Emily Kaiser in Washington; Lucia Mutikani in New York; writing by Dan Burns and Burton Frierson, Editing by Chizu Nomiyama)
http://news.yahoo.com/s/nm/20080919/bs_nm/financial_bailout_dc&printer=1;_ylt=ApBklSRyjt5gT7r55Amf7Vub.HQA
Copyright © 2008 Reuters Limited
----------------------------------------------------------
Christopher Dodd: Key senator says rescue will be "costly"
By JULIE HIRSCHFELD DAVIS, Associated Press Writer
Fri Sep 19, 11:38 AM ET
The Senate Banking Committee chairman says the government's financial rescue plan will be costly, and is demanding more details about the program to confront the worst financial crisis in decades.
Sen. Chris Dodd told reporters, "We're anxious to hear the specifics. None of us have any idea what the details are. We understand the gravity of the moment."
Republicans and Democrats on Dodd's panel met at the Capitol and emerged vowing to put politics aside and develop a solution to the financial crisis. Dodd is a Democrat from Connecticut.
http://news.yahoo.com/s/ap/20080919/ap_on_bi_ge/financial_rescue_congress
Copyright © 2008 The Associated Press
U.S. Treasury Secretary Henry Paulson, leading a push for a taxpayer-funded plan to contain the credit market crisis, said on Friday he would ask Congress to take action on this next week and that the Treasury was taking immediate steps in the meantime.
"We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system's stresses," Paulson told a news conference.
His remarks followed U.S. officials' rush to shore up ailing money markets after signs that this long-safe corner of financial markets, home to some $3.5 trillion of deposits, was at risk of falling victim to the year-old credit crunch and bring the crisis to Main Street.
The Treasury said it would use $50 billion to back money market mutual funds whose asset values fall below $1 a share. Separately, the U.S. Federal Reserve said it would lend even more money directly to financial institutions so they could purchase certain assets from money market funds.
On Thursday, Paulson told lawmakers in Congress that the Treasury was crafting a plan to mop up assets made illiquid by the mortgage debt crisis.
Saying Treasury will work with lawmakers through the weekend on a plan, Paulson said it needed to be in the hundreds of billions of dollars.
The latest government efforts come after the credit crisis, which had largely been seen as a problem for Wall Street risk takers, threatened to spill over into Main Street after some super-safe money market funds buckled.
"They are absolutely petrified of just a run on financial assets and they came very close to that on Thursday," said Boris Schlossberg, director of currency research at GFT Forex in New York.
"At this point they have just decided that fiscal responsibility goes out the door and anything and everything that needs to be shored up financially will be done so in order to alleviate the panic."
The surprise move comes as the Treasury and the Federal Reserve consider broad government intervention to prevent the collapse of the financial system, shaken in recent days by a crisis at insurer American International Group that required a $85 billion government rescue and the bankruptcy of investment bank Lehman Brothers Holdings Inc.
President George W. Bush said on Friday it was essential for officials to take action to prevent more damage to the economy, which he described as being at a "pivotal moment."
INSTANT IMPACT
The new initiatives show authorities are trying to get out in front of problems before another institution is pushed to the brink of failure, an analyst said.
"It is probably a testament to how bad things really are when you look beneath the hood," said Weston Boone, vice president of listed trade, Stifel Nicolaus Capital Markets, in Baltimore.
News of the backstop for money market funds had instant impact in financial markets.
U.S. stocks soared on the array of measures authorities are taking to contain the spiraling credit crisis. Major indexes were up more than two percent, adding to gains after their best day in six years on Thursday.
Rates on U.S. Treasury bills shot higher, too. They had fallen to near zero earlier in the week as investors panicked and rushed for the safety of government securities after the oldest U.S. money market fund "broke the buck," or fell below $1 net asset value.
The dollar, meanwhile, rose to a one-week high against the Japanese yen as investors regained an appetite for risk amid all the steps being taken to address the credit crunch.
The Treasury said concerns about the net asset value of money market funds falling below $1 have exacerbated global financial market turmoil and caused severe liquidity strains in world markets.
"Maintaining confidence in the money market fund industry is critical to protecting the integrity and stability of the global financial system," the Treasury Department said in a statement.
The panic in money markets began Tuesday, when the Reserve Primary Fund, a money-market mutual fund whose assets have tumbled 65 percent in recent weeks, fell below $1 a share in net asset value, because of its losses on debt issued by Lehman Brothers Holdings Inc.
In the industry, money funds whose net assets drop below $1 a share are said to have "broken the buck."
(Reporting by Mark Felsenthal and David Lawder; Additional reporting by Alister Bull and Emily Kaiser in Washington; Lucia Mutikani in New York; writing by Dan Burns and Burton Frierson, Editing by Chizu Nomiyama)
http://news.yahoo.com/s/nm/20080919/bs_nm/financial_bailout_dc&printer=1;_ylt=ApBklSRyjt5gT7r55Amf7Vub.HQA
Copyright © 2008 Reuters Limited
----------------------------------------------------------
Christopher Dodd: Key senator says rescue will be "costly"
By JULIE HIRSCHFELD DAVIS, Associated Press Writer
Fri Sep 19, 11:38 AM ET
The Senate Banking Committee chairman says the government's financial rescue plan will be costly, and is demanding more details about the program to confront the worst financial crisis in decades.
Sen. Chris Dodd told reporters, "We're anxious to hear the specifics. None of us have any idea what the details are. We understand the gravity of the moment."
Republicans and Democrats on Dodd's panel met at the Capitol and emerged vowing to put politics aside and develop a solution to the financial crisis. Dodd is a Democrat from Connecticut.
http://news.yahoo.com/s/ap/20080919/ap_on_bi_ge/financial_rescue_congress
Copyright © 2008 The Associated Press
Stocks soar as investors look to gov't rescue plan
By TIM PARADIS, AP Business Writer
Wall Street extended a huge rally Friday as investors stormed back into the market, relieved that the government plans to rescue banks from billions of dollars in bad debt. The Dow Jones industrials rose more than 375 points, giving them a massive gain of more than 785 points over two days, and Treasurys fell as money flowed into equities.
A new ban on short selling, or placing bets that a stock will fall, was likely adding to the market's gains.
"A big chunk of this is scaring all the shorts to cover their bets," said Joe Battipaglia, market strategist at Stifel, Nicolaus & Co.
Treasury Secretary Henry Paulson, speaking about the rescue plan said a bold approach is needed to remove troubled assets from the books of financial firms. He offered few details, but said he would work on it through the weekend with congressional leaders.
A plan to help the banking industry could help alleviate the uncertainty that has been sending the markets into tumult over the past week. Lending has grinded to a virtual standstill in the wake of this week's bankruptcy of Lehman Brothers Holdings Inc. and the bailout of teetering insurer American International Group Inc.
The government took other steps Friday to restore stability to the financial system. The Federal Reserve said it will expand its emergency lending and let commercial banks finance purchases of asset-backed paper from money market funds. The Fed injected another $20 billion in temporary reserves into the U.S. financial system. The central bank also will buy short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
And to help calm investors' anxieties, the Treasury Department has decided to use a Depression-era fund to provide guarantees for U.S. money market mutual funds. Money market mutual funds are typically considered safe, but many investors have been fleeing them due to worries about the funds' exposure to souring corporate debt.
To help limit the freefall in financial stocks, the Securities and Exchange Commission on Friday enacted a temporary ban on the short-selling of nearly 800 financial stocks. Short-selling is the common practice of betting against a stock by borrowing shares and then selling them in the open market. A short-seller's hope is the stock will fall; if it does, the stock can be bought back at the lower price. Those cheaper shares can be returned to the lender, allowing the investor to pocket the profits. Traders can lose, however, if the stock rises.
Wall Street observers have disagreed over the extent to which pressure from all those bets that a stock will fall shaped investor sentiment and strangled some financial stocks, like those of Lehman Brothers last week. Some say the fundamental problems with the financial stocks warranted the pessimism while others say the short selling was a death knell for some financial names.
"The federal government has been petitioned by Wall Street to take evasive action in the money markets, the stock and bond markets, to avoid a complete meltdown of the credit system," said Battipaglia. "Once the credit system melts down, the economy falls. We can hand-ring about if this is the proper thing for the government to do, or if Wall Street pulled the panic button too soon, but that's something for the historians to sort out."
It's difficult to quantify how much of the market's gains reflect short sellers who are forced to step in and cover their bets by buying now rising stocks that had predicted would fall. While that played some role in the advances Thursday and Friday, the Nasdaq composite index — dominated by big technology stocks, not financials — showed big gains along with the Dow and the Standard & Poor's 500 index.
In early afternoon trading, the Dow rose 372.17, or 3.38 percent, to 11,391.86 after having been up as much as 463.36. Even with Friday's big gains, stocks are essentially flat for the week after whipsaw sessions. Wall Street saw a massive loss Monday, a rebound on Tuesday, another drop Wednesday, and the rally on Thursday. The Dow has logged moves of more than 400 points every day except Tuesday.
Broader stock indicators also surged. The S&P 500 index rose 44.78, or 3.71 percent, to 1,251.29, and the Nasdaq composite index rose 61.66, or 2.80 percent, to 2,260.76.
Treasury prices dropped as investors poured money back into stocks. The yield on the 3-month Treasury bill — a safe investment to which investors have rushed this week — rose to 1.04 percent from 0.07 percent late Thursday. Yields move opposite from price. The yield on the benchmark 10-year Treasury note shot up to 3.76 percent from 3.53 percent late Thursday.
"Everything they had done had been a Band-Aid approach, at the margins," said Jay Mueller, economist at Strong Capital Management. "Now we're dealing with the root problem."
The stock market's enormous moves for the week reveal how jittery investors have been about the tightness in the credit markets the possibility that other financial companies might succumb to the difficulties in the markets. Moves Thursday by the Fed and other major central banks to inject billion into global money markets perhaps helped forestall steeper selloffs but didn't diffuse the Sturm und Drang and overall loss of confidence hammering the markets.
The only lasting move in a week of intense volatility came late in Thursday's session when reports emerged that the government was considering a massive bailout. Wobbly stocks rocketed higher, giving the Dow a 402-point gain Thursday that continued into Friday.
"If a solid plan is put in place, it's definitely going to be a positive in easing the pain," said Stephen Carl, principal and head of equity trading at The Williams Capital Group. He added, though, that "it depends on how it's structured."
The dollar rose against most other major currencies in Friday trading. Gold prices fell. Light, sweet crude rose $1.44 to $99.32 a barrel on the New York Mercantile Exchange.
While stocks rose broadly, the financial sector was one of the strongest gainers as investors expressed their relief over the prospect of a government rescue. The two remaining independent investment banks logged big gains as fears dissipated that they would be felled by the same tight cash shortages that squeezed Bear Stearns Cos., Lehman Brothers, AIG and others.
Goldman Sachs Group Inc., jumped $22.30, or 21 percent, to $130.30, while Morgan Stanley jumped $5.89, or 26 percent, to $28.44.
Advancing issues outnumbered decliners by about 8 to 1 on the New York Stock Exchange, where volume came to an enormous 1.8 billion shares. Friday was a quarterly "quadruple witching" day, which marks the simultaneous expiration of options contracts, an event that often adds to volatility and heavy volume in early trading.
The Russell 2000 index of smaller companies rose 23.87, or 3.30 percent, to 747.56.
Overseas stock markets soared. Japan's Nikkei stock average jumped 3.8 percent, and Hong Kong's Hang Seng index surged 9.61 percent. In Europe, Britain's FTSE 100 jumped 8.84 percent, Germany's DAX index advanced 5.56 percent, and France's CAC-40 rose 9.27 percent.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
http://news.yahoo.com/s/ap/20080919/ap_on_bi_st_ma_re/wall_street
Copyright © 2008 The Associated Press
Wall Street extended a huge rally Friday as investors stormed back into the market, relieved that the government plans to rescue banks from billions of dollars in bad debt. The Dow Jones industrials rose more than 375 points, giving them a massive gain of more than 785 points over two days, and Treasurys fell as money flowed into equities.
A new ban on short selling, or placing bets that a stock will fall, was likely adding to the market's gains.
"A big chunk of this is scaring all the shorts to cover their bets," said Joe Battipaglia, market strategist at Stifel, Nicolaus & Co.
Treasury Secretary Henry Paulson, speaking about the rescue plan said a bold approach is needed to remove troubled assets from the books of financial firms. He offered few details, but said he would work on it through the weekend with congressional leaders.
A plan to help the banking industry could help alleviate the uncertainty that has been sending the markets into tumult over the past week. Lending has grinded to a virtual standstill in the wake of this week's bankruptcy of Lehman Brothers Holdings Inc. and the bailout of teetering insurer American International Group Inc.
The government took other steps Friday to restore stability to the financial system. The Federal Reserve said it will expand its emergency lending and let commercial banks finance purchases of asset-backed paper from money market funds. The Fed injected another $20 billion in temporary reserves into the U.S. financial system. The central bank also will buy short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
And to help calm investors' anxieties, the Treasury Department has decided to use a Depression-era fund to provide guarantees for U.S. money market mutual funds. Money market mutual funds are typically considered safe, but many investors have been fleeing them due to worries about the funds' exposure to souring corporate debt.
To help limit the freefall in financial stocks, the Securities and Exchange Commission on Friday enacted a temporary ban on the short-selling of nearly 800 financial stocks. Short-selling is the common practice of betting against a stock by borrowing shares and then selling them in the open market. A short-seller's hope is the stock will fall; if it does, the stock can be bought back at the lower price. Those cheaper shares can be returned to the lender, allowing the investor to pocket the profits. Traders can lose, however, if the stock rises.
Wall Street observers have disagreed over the extent to which pressure from all those bets that a stock will fall shaped investor sentiment and strangled some financial stocks, like those of Lehman Brothers last week. Some say the fundamental problems with the financial stocks warranted the pessimism while others say the short selling was a death knell for some financial names.
"The federal government has been petitioned by Wall Street to take evasive action in the money markets, the stock and bond markets, to avoid a complete meltdown of the credit system," said Battipaglia. "Once the credit system melts down, the economy falls. We can hand-ring about if this is the proper thing for the government to do, or if Wall Street pulled the panic button too soon, but that's something for the historians to sort out."
It's difficult to quantify how much of the market's gains reflect short sellers who are forced to step in and cover their bets by buying now rising stocks that had predicted would fall. While that played some role in the advances Thursday and Friday, the Nasdaq composite index — dominated by big technology stocks, not financials — showed big gains along with the Dow and the Standard & Poor's 500 index.
In early afternoon trading, the Dow rose 372.17, or 3.38 percent, to 11,391.86 after having been up as much as 463.36. Even with Friday's big gains, stocks are essentially flat for the week after whipsaw sessions. Wall Street saw a massive loss Monday, a rebound on Tuesday, another drop Wednesday, and the rally on Thursday. The Dow has logged moves of more than 400 points every day except Tuesday.
Broader stock indicators also surged. The S&P 500 index rose 44.78, or 3.71 percent, to 1,251.29, and the Nasdaq composite index rose 61.66, or 2.80 percent, to 2,260.76.
Treasury prices dropped as investors poured money back into stocks. The yield on the 3-month Treasury bill — a safe investment to which investors have rushed this week — rose to 1.04 percent from 0.07 percent late Thursday. Yields move opposite from price. The yield on the benchmark 10-year Treasury note shot up to 3.76 percent from 3.53 percent late Thursday.
"Everything they had done had been a Band-Aid approach, at the margins," said Jay Mueller, economist at Strong Capital Management. "Now we're dealing with the root problem."
The stock market's enormous moves for the week reveal how jittery investors have been about the tightness in the credit markets the possibility that other financial companies might succumb to the difficulties in the markets. Moves Thursday by the Fed and other major central banks to inject billion into global money markets perhaps helped forestall steeper selloffs but didn't diffuse the Sturm und Drang and overall loss of confidence hammering the markets.
The only lasting move in a week of intense volatility came late in Thursday's session when reports emerged that the government was considering a massive bailout. Wobbly stocks rocketed higher, giving the Dow a 402-point gain Thursday that continued into Friday.
"If a solid plan is put in place, it's definitely going to be a positive in easing the pain," said Stephen Carl, principal and head of equity trading at The Williams Capital Group. He added, though, that "it depends on how it's structured."
The dollar rose against most other major currencies in Friday trading. Gold prices fell. Light, sweet crude rose $1.44 to $99.32 a barrel on the New York Mercantile Exchange.
While stocks rose broadly, the financial sector was one of the strongest gainers as investors expressed their relief over the prospect of a government rescue. The two remaining independent investment banks logged big gains as fears dissipated that they would be felled by the same tight cash shortages that squeezed Bear Stearns Cos., Lehman Brothers, AIG and others.
Goldman Sachs Group Inc., jumped $22.30, or 21 percent, to $130.30, while Morgan Stanley jumped $5.89, or 26 percent, to $28.44.
Advancing issues outnumbered decliners by about 8 to 1 on the New York Stock Exchange, where volume came to an enormous 1.8 billion shares. Friday was a quarterly "quadruple witching" day, which marks the simultaneous expiration of options contracts, an event that often adds to volatility and heavy volume in early trading.
The Russell 2000 index of smaller companies rose 23.87, or 3.30 percent, to 747.56.
Overseas stock markets soared. Japan's Nikkei stock average jumped 3.8 percent, and Hong Kong's Hang Seng index surged 9.61 percent. In Europe, Britain's FTSE 100 jumped 8.84 percent, Germany's DAX index advanced 5.56 percent, and France's CAC-40 rose 9.27 percent.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
http://news.yahoo.com/s/ap/20080919/ap_on_bi_st_ma_re/wall_street
Copyright © 2008 The Associated Press
Crony Capitalism by Timothy Egan
People should stop picking on vice-presidential nominee Sarah Palin because she hired a high school classmate to oversee the state agriculture division, a woman who said she was qualified for the job because she liked cows when she was a kid. And they should lay off the governor for choosing another childhood friend to oversee a failing state-run dairy, allowing the Soviet-style business to ding taxpayers for $800,000 in additional losses.
What these critics don’t understand is that crony capitalism is how things are done in Alaska. They reward failure in the Last Frontier state. In that sense, it’s not unlike like Wall Street’s treatment of C.E.O.’s who run companies into the ground.
Look at Carly Fiorina, John McCain’s top economic surrogate — if you can find her this week, after the news and her narrative fused in a negative way. Dismissed as head of Hewlett-Packard after the company’s stock plunged and nearly 20,000 workers were let go, she was rewarded with $44 million in compensation. Sweet!
Thank God McCain wants to appoint a commission to study the practice that enriched his chief economic adviser. On the campaign trail this week, McCain and Palin pledged to “stop multimillion dollar payouts to C.E.O.’s” of failed companies. Good. Go talk to Fiorina at your next strategy session.
Palin’s Alaska is a cultural cousin to this kind of capitalism. The state may seem like a rugged arena for risky free-marketers. In truth, it’s a strange mix of socialized projects and who-you-know hiring practices.
Let’s start with those cows. A few years ago, I met Harvey Baskin, one of the last of Alaska’s taxpayer-subsidized dairy farmers, at his farm outside Anchorage. The state had spent more than $120 million to create farms where none existed before. The epic project was a miserable failure.
“You want to know how to lose money in a hurry?” Harvey told me, while kicking rock-hard clumps of frozen manure. “Become a farmer with the state of Alaska as your partner. This is what you call negative farming.”
That lesson was lost on Palin. As the Wall Street Journal reported this week, Governor Palin overturned a decision to shutter a money-losing, state-run creamery — Matanuska Maid — when her friends in Wasilla complained about losing their subsidies. She fired the board that recommended closure, and replaced it with one run by a childhood friend. After six months, and nearly $1 million in fresh losses, the board came to the same conclusion as the earlier one: Matanuska Maid could not operate without being a perpetual burden on the taxpayers.
This is Heckuva-Job-Brownie government, Far North version.
On a larger scale, consider the proposal to build a 1,715-mile natural gas pipeline, which Palin touts as one of her most significant achievements. Private companies complained they couldn’t build it without government help. That’s where Palin came to the rescue, ensuring that the state would back the project to the tune of $500 million.
And let’s not talk about voodoo infrastructure without one more mention of the bridge that Palin has yet to tell the truth about. The plan was to get American taxpayers to pay for a span that would be 80 feet higher than the Brooklyn Bridge, and about 20 feet short of the Golden Gate — all to serve a tiny airport with a half-dozen or so flights a day and a perfectly good five-minute ferry. Until it was laughed out of Congress, Palin backed it — big time, as the current vice president would say.
Why build it? Because it’s Alaska, where people are used to paying no state taxes and getting the rest of us to buck up for things they can’t afford. Alaska, where the first thing a visitor sees upon landing in Anchorage is the sign welcoming you to Ted Stevens International Airport. Stevens, of course, is the 84-year-old Republican senator indicted on multiple felony charges. He may still win re-election thanks to Palin’s popularity at the top of the ballot.
Alaskans will get $231 per person in federal earmarks — 10 times more than people in Barack Obama’s home state. That’s this year, with Palin as governor.
If Palin were a true reformer, she would tell Congress thanks, but no thanks to that other bridge to nowhere.
Yes, there is another one — a proposal to connect Anchorage to an empty peninsula, speeding the commute to Palin’s hometown by a few minutes. It could cost up to $2 billion. The official name is Don Young’s Way, after the congressman who got the federal bridge earmarks. Of late, he’s spent more $1 million in legal fees fending off corruption investigations. Oh, and Young’s son-in-law has a stake in the property at one end of the bridge.
Some of these projects might be fully explained should Palin ever open herself up to questions. This week she sat down for her second interview — with Sean Hannity of Fox, who has shown sufficient “deference” to Palin, as the campaign requested.
One question: When Palin says “government has got to get out of the way” of the private sector, as she proclaimed this week, does that apply to dairy farms, bridges and gas pipelines in her.
http://egan.blogs.nytimes.com/
What these critics don’t understand is that crony capitalism is how things are done in Alaska. They reward failure in the Last Frontier state. In that sense, it’s not unlike like Wall Street’s treatment of C.E.O.’s who run companies into the ground.
Look at Carly Fiorina, John McCain’s top economic surrogate — if you can find her this week, after the news and her narrative fused in a negative way. Dismissed as head of Hewlett-Packard after the company’s stock plunged and nearly 20,000 workers were let go, she was rewarded with $44 million in compensation. Sweet!
Thank God McCain wants to appoint a commission to study the practice that enriched his chief economic adviser. On the campaign trail this week, McCain and Palin pledged to “stop multimillion dollar payouts to C.E.O.’s” of failed companies. Good. Go talk to Fiorina at your next strategy session.
Palin’s Alaska is a cultural cousin to this kind of capitalism. The state may seem like a rugged arena for risky free-marketers. In truth, it’s a strange mix of socialized projects and who-you-know hiring practices.
Let’s start with those cows. A few years ago, I met Harvey Baskin, one of the last of Alaska’s taxpayer-subsidized dairy farmers, at his farm outside Anchorage. The state had spent more than $120 million to create farms where none existed before. The epic project was a miserable failure.
“You want to know how to lose money in a hurry?” Harvey told me, while kicking rock-hard clumps of frozen manure. “Become a farmer with the state of Alaska as your partner. This is what you call negative farming.”
That lesson was lost on Palin. As the Wall Street Journal reported this week, Governor Palin overturned a decision to shutter a money-losing, state-run creamery — Matanuska Maid — when her friends in Wasilla complained about losing their subsidies. She fired the board that recommended closure, and replaced it with one run by a childhood friend. After six months, and nearly $1 million in fresh losses, the board came to the same conclusion as the earlier one: Matanuska Maid could not operate without being a perpetual burden on the taxpayers.
This is Heckuva-Job-Brownie government, Far North version.
On a larger scale, consider the proposal to build a 1,715-mile natural gas pipeline, which Palin touts as one of her most significant achievements. Private companies complained they couldn’t build it without government help. That’s where Palin came to the rescue, ensuring that the state would back the project to the tune of $500 million.
And let’s not talk about voodoo infrastructure without one more mention of the bridge that Palin has yet to tell the truth about. The plan was to get American taxpayers to pay for a span that would be 80 feet higher than the Brooklyn Bridge, and about 20 feet short of the Golden Gate — all to serve a tiny airport with a half-dozen or so flights a day and a perfectly good five-minute ferry. Until it was laughed out of Congress, Palin backed it — big time, as the current vice president would say.
Why build it? Because it’s Alaska, where people are used to paying no state taxes and getting the rest of us to buck up for things they can’t afford. Alaska, where the first thing a visitor sees upon landing in Anchorage is the sign welcoming you to Ted Stevens International Airport. Stevens, of course, is the 84-year-old Republican senator indicted on multiple felony charges. He may still win re-election thanks to Palin’s popularity at the top of the ballot.
Alaskans will get $231 per person in federal earmarks — 10 times more than people in Barack Obama’s home state. That’s this year, with Palin as governor.
If Palin were a true reformer, she would tell Congress thanks, but no thanks to that other bridge to nowhere.
Yes, there is another one — a proposal to connect Anchorage to an empty peninsula, speeding the commute to Palin’s hometown by a few minutes. It could cost up to $2 billion. The official name is Don Young’s Way, after the congressman who got the federal bridge earmarks. Of late, he’s spent more $1 million in legal fees fending off corruption investigations. Oh, and Young’s son-in-law has a stake in the property at one end of the bridge.
Some of these projects might be fully explained should Palin ever open herself up to questions. This week she sat down for her second interview — with Sean Hannity of Fox, who has shown sufficient “deference” to Palin, as the campaign requested.
One question: When Palin says “government has got to get out of the way” of the private sector, as she proclaimed this week, does that apply to dairy farms, bridges and gas pipelines in her.
http://egan.blogs.nytimes.com/
Subscribe to:
Posts (Atom)