The United States is Now in a Recession

[Guest LAW_*]

Seventy percent of economists surveyed by the Wall Street Journal believe the country is currently in recession. In February, national foreclosure filings jumped 60%, with California alone experiencing a 131% jump from the previous year. Many Americans are finding that their largest investment (their home) has lost value; many are unable to sell if they need to move; and others are finding it difficult to borrow money for a new home.

 

http://www.ft.com/cms/s/0/edbdbcf6-f360-11...?nclick_check=1

 

The most credible explanation of why risk management based on state-of-the-art statistical models can perform so poorly is that the underlying data used to estimate a model’s structure are drawn generally from both periods of euphoria and periods of fear, that is, from regimes with importantly different dynamics. - Alan Greenspan, March 16 2008

[Guest Lyndon H. LaRouche, Jr.]

There are three essential measures which must be taken more or less immediately, before the situation in the U.S.A. and western Europe becomes hopeless. These are the three types of measures which I have presented earlier; those who continue to resist the adoption of these measures now fall promptly into the category of incompetence known as mental cases.

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My Housing and Bankers Protection Act of 2007 must be adopted and set into motion immediately. If not, the situation of the U.S. becomes quickly hopeless.

 

A two-tier credit system, in which a.) U.S. government credit for physical-economic recovery programs is provided at between 1-2%, and b.) other utterances of credit-injections float more or less freely.

The U.S. government must now immediately approach the governments of Russia, China, India, and others for the prompt establishment of an international, emergency fixed-exchange-rate system, ending the presently hopelessly bankrupt floating exchange-rate system.

 

Under that latter, proposed agreement, long-term treaty-agreements must be focused on intergovernmental development of capital-intensive types of essential basic economic infrastructure, as in: a.) new construction in power generation (with emphasis on nuclear), b.) fresh-water sources creation (relying largely on high-temperature nuclear reactors), c.) increasing reliance on synthetic fuels, such as high-temperature, nuclear-power-generated power, in place of petrochemical materials used as fuels; d.) high-density systems of globally integrated rail, maglev network developments must replace presently excessive reliance on highway transport; e.) de-emphasis on giant conglomerates and monopolistic practices, in favor of smaller, more closely held productive enterprises dispersed as essential elements of the economy of moderate-sized regions of combined private entrepreneurial industry and agriculture; f.) heavy, and increasing emphasis on development of high-energy-flux-density modes in technological progress of manufactures and other applications

[Guest Fed Up]

U.S. exports are a notable bright spot. Growth in exports, which had been supported by solid advances in foreign economies and by declines in the foreign exchange value of the dollar, had partially insulated the output and profits of U.S. companies, especially those in the manufacturing sector, from the effects of weakening domestic demand. Several participants voiced concern, however, that the pace of activity in the rest of the world could slow in coming quarters, suggesting that the impetus provided from net exports might well diminish.

[Guest Craig]

The government management as usual model is failing. Our leaders stalling has put our country in poor preparation for the coming period. On a more positive note, the challenging

transformation in prospect offers exciting opportunities for the United States to develop new competitive strengths.

[Guest August]

Thursday's 358 point drop in the Dow Jones Industrials is seen as the worst drop in nearly six years. In addition, this month the market seems to be enduring its worst June so far since 1930, and plunging to its lowest daily finish since Sept. 11, 2006, after getting slammed hard as crude soared to new highs and Goldman Sachs disparaged U.S. brokers and advised selling General Motors Corp.

[Guest Bob Chapman]

Trillions Lost in Recent Economic Failures

 

Fed claims economic problems are minor, expansion was overrated, we inherit the subprime debacle, leading financial institutions turn into insolvent zombies, labor stats highly questionable, the general public is deprived of the economic truth, we were told it wasn't so bad

 

Our politicians fit right into our new "smoke and mirrors" society, especially our presidents, who lead the pack with lies and false promises. Slick Willy told us first that he did not inhale, and finally that he did not have sex with that woman. Dubya once told us that Iraq had weapons of mass destruction, and now he tells us that our economy is strong. Perhaps these two pips have been lying so long and so often that they actually believe such things. If so, clearly they live in their own little dream world, totally divorced from the reality that the rest of us are forced to live with. Our Treasury Secretary tells us that he believes in a strong dollar policy while doing anything and everything to undermine the dollar, with his moral hazard bazooka at the ready to force bailout after hyperinflationary bailout. Our Fed Chairman continually tells us that we have some minor problems, but that there is nothing dire to worry about as everything will moderate over time, while all the while our economy falls down around our ears. Things will moderate over time alright - as in decades. The latest from Buck-Busting Ben is that "economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports." Wow, isn't that just great? Why, that's even good enough to justify a 331+ point increase in the Dow. Too bad it isn't true, but why let the truth get in the way of the latest stock market party so that the sheople all think it's safe to get back into the water with the myriad of crocodiles, alligators, piranhas, barracudas, sharks and killer whales (aka Wall Street banking and brokerage fraudsters). The so-called "expansion" was based purely on higher prices resulting from a 26-year high in consumer inflation (which also yielded negative growth in consumer spending and a negative GDP) together with a one-time stimulus package that has pretty much petered out without stimulating much of anything. But why spend time on such boring details when you can fantasize about wonderful, fairytale economic statistics in your Goldilocks matrix pod. This is the stuff that Monty Python skits are made of. If our current circumstances were not so tragic, we would be laughing hysterically at the daily inane comments spewed forth from the mouths of our various peerless leaders. The ongoing false scenarios painted by these reprobates and sociopaths is nothing short of surreal, and the willingness of the sheople to believe them is nothing short of phantasmagoric.

 

The Illuminists gave us the subprime debacle, where everyone, from the borrowers all the way up the daisy chain of fraud to the mortgage securitizers and rating agencies, lied through their teeth in order to throw mortgage money at anyone who could fog a mirror. The banks now hide their damage from this fraud off balance sheet, and through "creative accounting" methods blessed by corrupt government regulators, they continue to mark their assets to model, and not to market, which models are based on bogus black box computations and statistical pipe-dreams and fantasies. As this transpires, our leading financial institutions continue to wander around aimlessly as insolvent financial zombies in a remake of George Romero's "Night of the Living Dead," while claiming from their mouth to God's ears that their capital position is sufficient and that their financial condition is healthy. This real estate Ponzi-scheme followed the dot.com scandal, where anyone with a web site was worthy of a stock or bond securitization to raise capital, and never mind that they had no assets, income, profits, customers or business plan. The various fraudsters as usual unloaded all these brand new securitizations on the hapless, ignorant public, and left everyone else holding the bag. The sheople just stood by with their jaws hanging open as they watched their savings and retirement plans get vaporized. Because of the subprime debacle, which was implemented to prevent us from going into recession and depression in the aftermath of the dot.com bubble, we can now add our home equity to the smoldering pile of charred ruins, thus completing the total and utter destruction of the assets of our middle class in preparation for world government as we are brought to our knees by the malevolent destruction of our economy by the Illuminati. This was all accomplished with all those pathological, Illuminist lies.

 

Then, there is the Bureau of Lying (Labor) Statistics, from which we cannot recall getting a single, true, business statistic in decades. This is the principal lie-creating machine that spews forth false statistics to mislead the sheople, while the Illuminists, who know what the real statistics are, clean the clocks of non-insiders who are relying on the false and fraudulent data. Like sending sheep to the slaughter, this is how the Illuminati fleece the sheople year in and year out. Thus, economic truth that should be available to the general public perversely becomes insider trading information. To give but a few examples of the type of tripe emanating from the BLS, our beloved bastion of statistical truth has told us that GDP is positive when it is negative, that inflation is one third of the actual inflation that we experience, that the unemployment rate is one third of the actual rate of unemployment, that the non-farm payroll decreased by a number of jobs that is one third of actual job losses, etc., etc., etc., ad infinitum. While the public dines on the milk toast lies of the BLS concerning what is really our dying economy, the Illuminati will bail out of dollar-denominated paper assets using their dark pools of liquidity known as Project Turquoise and Baikal, and then roll the proceeds over into real, tangible assets such as real estate, infrastructure, plants and equipment, resource stocks, gold, silver, oil, agricultural products, base metals and other commodities. While this transpires, the foolish sheople will continue to think that our economy is on its way to a complete recovery right up to the moment when the stock, bond and derivative markets crash into hyper-stagflationary oblivion, leaving them holding all the "worthless paper." What will the BLS say then, that they made a few computational errors? We can only imagine.

 

We were told that the phony "War on Terror" in Iraq and Afghanistan would cost in the hundreds of billions, when it will in fact cost multiple trillions. We were told precisely the same thing about the magnitude of the toxic waste derivative losses that Wall Street's financial fraudsters would suffer. We were told that we needed a special President's Working Group on Financial Markets to prevent stock market crashes, when in fact this group was formed to justify 24/7 governmental manipulation of virtually any and all financial markets in order to line the pockets of Illuminist insider traders like good little fascists and to hide the destruction of our economy to pave the way for world government. We were told that we should get rid of the Glass-Steagall Act because it was outdated and it interfered with the proper function of modern financial markets, but the real reasons for the resulting Gramm, Leach, Bliley Act (signed by Slick Willy near the end of his term as a parting gift to the US public), which repealed the Glass-Steagall Act, was to allow Wall Street fraudsters to pawn off the toxic waste securitizations created by their investment banking subsidiaries on their own commercial banking clients, to allow acts of moral hazard and conflicts of interest to be legally perpetrated, to turn our financial markets into a gambling casino and to allow non-insurance companies with completely inadequate reserves to underwrite against potential bond principal and interest losses. Auction rate bond investors were told that their funds were being invested in AAA paper as good as cash, but they were really chasing a higher yield made possible through a market created by the fraudsters to pawn off their municipal toxic waste, and now that municipalities are in trouble due to waning tax revenues, the fraudsters don't want to make a market anymore and have left their clients holding the bag with unmarketable, junk securities. We were told that we needed the Federal Reserve System to smooth out the business cycle and to stabilize inflation, and all we have had for almost a century is a boom-bust economy and out-of-control inflation time and time again so that insiders can line their pockets with the mega-profits that only wild economic volatility can produce for insider traders who are told exactly where and when to invest, and so the middle class can be stealth-taxed into oblivion to pay for profligate Congressional spending on Illuminist projects without raising income taxes to absurd levels (yes, even more absurd than we have now) and to make way for a world government in the wake of the destruction of the US economy and middle class. We were even told that because of all the financial turmoil we are now experiencing, that the Fed should be given complete regulatory control over the entire financial community, and not just over commercial banks within the Federal Reserve System. And never mind that the Federal Reserve is the main culprit behind all this financial turmoil. Only in America. You just can't make this stuff up, unless, of course, you are one of the Illuminati. And on, and on, and on the lies go, ad nauseam.

 

The central banks are going bonkers to support the dollar, as we see wild spikes bringing the dollar back up every time it starts to go down after another dead cat bounce. This is collusion, plain and simple. And now oil is being hit, all to suppress the precious metals and to give the markets and the economy a boost before elections so scum-dog incumbents can have a shot at reelection. Lindsey Williams' scenario is good so far, but a drop to $50 a barrel for oil so quickly does not seem likely and may be disinformation, so don't let that scare you. Even if oil drops to $50, M3 is still running at 16% to 18%, so inflation is not going to moderate as much as some would think based on lower oil prices, no matter how low they go. Remember, high oil prices are not the root cause of inflation, they are the result of a weakening dollar, a profligate money supply by the Fed to save insolvent fraudsters and oil speculation by Wall Street pirates utilizing the Enron loophole to save balance sheets and income statements. Also, seasonal factors will soon be at play as the wedding and religious ceremonies in India and the Middle East add jewelry demand to what is already substantial investment demand. The credit-crunch is getting worse instead of better, as is the real estate-subprime debacle which will soon morph into the Option ARM debacle. Also, consumer spending is tanking, which will take down corporate earnings to new lows as 70 to 80 percent of our GDP goes down the tubes. Third quarter earnings are going to be the worst yet due to rapidly declining consumer spending and sky-high oil prices for a goodly portion of the quarter. Worldwide inflation is going to continue to put pressure on dollar pegs, and a continuing dollar decline will make the financing of US trade and current account deficits more and more difficult. Which nation will start the panic to unload treasuries, we wonder. Russia is a good candidate if the current Administration keeps up its Eastern European hi jinks.

 

Bank failures are about to become common place on the new, Friday night, after-market, Bank Failure News Hour, which is the latest rage for investors, television viewers and Internet surfers everywhere. Instead of getting Fireside Chats like the people during the Great Depression, we get the Bank Failure News Hour now every Friday night. Look out Tonight Show, this could mean trouble for your ratings every Friday night for years to come!

 

http://theinternationalforecaster.com/prin...onomic_Failures

[Guest Benson's Economic & Mark]

How Much Will Government Bailouts Actually Cost the American Taxpayer?

 

Over the last eight years, we have watched in horror as a two-term Republican Administration furthered programs that have effectively thrown lit sticks of dynamite into our American factories. These programs have dismantled entire industries in the United States and encouraged their growth in China and elsewhere in Asia because of cheap labor. Also, during this time the illusion of prosperity was maintained by a Greenspan Fed as interest rates were cut to record lows, and a disastrous housing bubble was created. Americans were so seduced by home ownership that they bought houses in a frenzy that they couldn’t afford, and then borrowed against them. In addition, under the Administration’s policies, the value of the dollar has been trashed, and commodity inflation has robbed workers lucky enough to still have jobs.

 

As the unprecedented credit crisis continues into its second year, it’s becoming crystal clear that the American economy is slipping into the worst post-WWII recession on record. It’s even beginning to dawn on third and fourth generation Wall Street Republicans that if the average American doesn't have a good job (much less any job), they won’t be able to pay their mortgage, auto loan or credit card.

 

For now, Fannie Mae and Freddie Mac have been essentially nationalized and the Federal Reserve has been turned into a dumping ground for toxic waste mortgage securities beginning with the Bear Stearns bailout.

 

What is this economic disaster going to cost the taxpayer? Let's try to add it up.

 

The Federal Reserve: The Fed swapped out Treasuries for tens of billions in mortgage securities it now holds on its books. It's highly likely that these securities will not hold their value. Of course, Bear Stearns was just the first major financial institution failure requiring a bailout, but there will be more. Let's say the Fed gets stiffed for $10 billion, a modest sum. That translates into $10 billion less in profits from the Fed to send the US Treasury, and $10 billion more for the taxpayer to pay.

 

Student Loans: With the capital market seizing up, if you need a loan to go to college or graduate school, the federal government has already become the lender of last resort. We estimate that several hundred billion of student loans are outstanding, and the average debt per student is $20,000. Education is in the national interest and very important, but with unemployment rising and jobs for new and old graduates vanishing, many student loans simply cannot be paid back at this time. One day the old loans may get paid, but for the next few years new loans will not be funded by repaying old loans. These loans will have to be funded directly by the US government borrowing the money. Conservatively, put the cost down at $20 billion.

 

Pension Benefit Guarantee Corporation: This government agency insures $2.5 trillion in Defined Benefit obligations. The PBGC covers 30,000 business plans and 44 million workers. The PBGC charges an insurance fee and has $55 billion in assets. Unfortunately, the Bush Administration wanted to give the stock market a boost and forced the PBGC to move from mostly safe bonds into 45 percent equity holdings, a move that occurred just before the stock market really headed down. The PBGC is already $14 billion under-funded, and that’s before the recession smashes the stock value of their portfolio. Many U.S. businesses will continue to fail, taking down with them thousands of insured but under-funded pension plans. When Wall Street gets bailed out, don't you think Congress will bail out workers’ pensions? Let's put the cost to the taxpayer at a conservative $30 billion.

 

Federal Housing Administration: Cynics thought that the FHA was a way to give the poor a house to live in that they didn't have to pay for. Well, it looks like the cynics were right! The FHA has given insured single-family mortgages to about five million people and 17 percent (or one in six) are delinquent. These catastrophic losses represent the worst of "cash for trash" lending that is crushing financial institutions in subprime. It also means that you, the taxpayer, are paying for about one million people in the FHA program to live rent free! Even with some of the loans swapped into Fannie & Freddie, now that those entities are backed by the taxpayer, you can't avoid the cost. Conservative cost is $20 billion.

 

Small Business Administration: Who can vote against socialism for small business? In the last few years, private credit was so easy to obtain that anyone who could sign their name to a piece of paper could get a loan from a bank or finance company. It's actually astounding that the SBA could continue to find borrowers that had been turned down by the private sector. At the end on 2007, the balance of these SBA loans totaled $235 billion, with cumulative losses of about six percent. But don’t let history of only 6 percent losses fool you. As the economy turns down, many of the businesses with SBA loans will fail. For now, let's put this bill at a $20 billion loss.

 

Federal Home Loan Banks: The FHLB's balance sheet is about the size of another Fannie Mae or Freddie Mac. The 12 banks of the FHL Bank system are owned by over 8,000 financial institutions and provide low-cost funding for home mortgage loans and small business. These are the loans that don't qualify for Fannie or Freddie lending programs, which means they’re really bad.

 

The FHLB has over $1 trillion in assets, but what are these assets really worth? Well, a lot of mortgages that went into the collateral are Alt-A loans (interest only, no income verification, principal deferred). Alt-A loans are already tracking a 12 percent delinquency. Some of the big name borrowers from the FHLB are Countrywide, WaMu, Downey, and other banks headed into FDIC receivership. With only four percent capital, the FHLB can be crushed by losses. The real challenge, though, will be between the FHLB and FDIC as they fight to determine who gets stuck with the losses when the banks, thrifts, and credit unions fail. Either way, we’ll foot the bill. Let's put this one down for $50 billion, which is only five percent of the assets of the FHLB.

 

Federal Deposit Insurance Corporation: The FDIC and Controller of the Currency are directly inside the US Treasury. The FDIC has already started mopping up bad banks and merging their deposit-gathering branches into the surviving banks. It’s estimated that just the Indy Mac failure alone will cost the FDIC at least $5 billon (or ten percent of its loss reserves of about $50 billion). Even if a large portion of the bad single-family mortgage debt can be pushed back into the FHLB or over to Fannie Freddie, total losses on construction, commercial properties and consumer loans will easily cost the FDIC, and therefore the US taxpayer, $100 billion.

 

What's really scary is that the head of the FDIC has told Indy Mac not to foreclose on delinquent homeowners until the loans are 300 days past due. If the government encourages people not to pay their mortgages and live rent free at our expense, we’ll need to increase the expected FDIC bill to the American taxpayer to $150 billion.

 

Fannie Mae and Freddie Mac: In 2007, there were over 2 million notices of foreclosure in the United States, and in 2008, foreclosures could reach 3 million. Fannie & Freddie account for 44 percent of the foreclosed loans! So, should it be any surprise that these two giants (that hold or insure over $5 trillion in mortgage loans) just announced they also will not even think of foreclosing on anyone for at least 300 days! Does the federal government really believe that by not foreclosing, the losses will be minimized?

 

Meanwhile, the new law pushed through by the US Treasury guarantees the debt of Fannie & Freddie. Fannie & Freddie each have about $1 trillion on their balance sheets, and they also insure about $3 trillion in GSE agency securities that pass-through mortgage interest and principal on a pool basis to owners of the securities. The new law puts an explicit government guarantee behind the GSE debt, including every pass-through security. This means all mortgage payments must be made on time to investors, even if any mortgages in the past-through security are delinquent.

 

With a record number of homeowners considering whether to live free for 300 days by skipping their mortgage payments, imagine the cash gap that will open up between the cash that comes into Fannie & Freddie from mortgage payments, and the cash that must go out to cover the GSE security payments. For the government, it is more important to spread the losses into the future than to minimize them. Losses on defaulted mortgage loans at the GSEs will be horrible. Put the bailout cost at $300 billion.

 

http://www.sfgroup.org/How%20Much%20will%2...%20Bailouts.htm

[Guest Monique Wise]

LEHMAN BROTHERS HOLDINGS INC. ANNOUNCES IT INTENDS TO FILE CHAPTER 11 BANKRUPTCY PETITION; NO OTHER LEHMAN BROTHERS’ U.S. SUBSIDIARIES OR AFFILIATES, INCLUDING ITS BROKER-DEALER AND INVESTMENT MANAGEMENT SUBSIDIARIES, ARE INCLUDED IN THE FILING

 

NEW YORK, September 15, 2008 – Lehman Brothers Holdings Inc. (“LBHI”) announced today that it intends to file a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. None of the broker-dealer subsidiaries or other subsidiaries of LBHI will be included in the Chapter 11 filing and all of the broker-dealers will continue to operate. Customers of Lehman Brothers, including customers of its wholly owned subsidiary, Neuberger Berman Holdings, LLC, may continue to trade or take other actions with respect to their accounts.

 

The Board of Directors of LBHI authorized the filing of the Chapter 11 petition in order to protect its assets and maximize value. In conjunction with the filing, LBHI intends to file a variety of first day motions that will allow it to continue to manage operations in the ordinary course. Those motions include requests to make wage and salary payments and continue other benefits to its employees.

 

LBHI is exploring the sale of its broker-dealer operations and, as previously announced, is in advanced discussions with a number of potential purchasers to sell its Investment Management Division (“IMD”). LBHI intends to pursue those discussions as well as a number of other strategic alternatives.

 

Neuberger Berman, LLC and Lehman Brothers Asset Management will continue to conduct business as usual and will not be subject to the bankruptcy case of its parent, and its portfolio management, research and operating functions remain intact. In addition, fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and are not subject to the claims of Lehman Brothers Holdings’ creditors.

 

Lehman Brothers (ticker symbol: LEH) is headquartered in New York, with regional headquarters in London and Tokyo, and operates in a network of offices around the world. For further information about Lehman Brothers, visit the Firm’s Web site at:

 

http://www.lehman.com

[Guest James P. Moran]

Our economy is facing perhaps the most severe crisis since the great Depression. When it will end isn’t clear. Deep-seated problems are impeding growth and accelerating business failures and job losses. Reckless disregard for prudent supervision of our banking and financial systems is the main cause.

 

The U.S. Treasury Department announced earlier this month it would take control of Fannie Mae and Freddie Mac in response to a housing crisis and credit crunch that has left the nation’s largest home mortgage owners and insurers in a financial position close to insolvency. The failure of these institutions would have set off a chain reaction likely crippling the U.S. economy and throwing world markets into major upheaval. Last night, the Federal Reserve stepped into the growing crisis again, injecting $85 billion into AIG, one of the largest insurance corporations in the world.

 

The foreclosure and credit crisis is indicative of the false premises and promises of Washington’s prevailing anti-regulatory ideology. It’s an attitude that has avoided accountability as a matter of principle. Our lack of a robust financial policy under the Bush Administration has left the Treasury struggling to determine which companies are too big to fail (AIG) and which are not; (Lehman Brothers, Merrill Lynch). Now that recklessness has put our economy and taxpayers at risk with hundreds of thousands of Americans having lost their homes, jobs, and retirement savings—the ones apparently too small to save.

 

Congress, working with the next President, must step-in and enact long overdue reform and transparency mechanisms for our financial system. That doesn’t mean we need to expand bureaucracy in Washington. Rather smarter, more transparent rules need to be put in place to manage our distressed markets. As columnist Tom Friedman wrote, we need to “police that fine line between the necessary risk-taking that drives an innovation economy and crazy gambling with other people’s savings in ways that threaten us all…We need to get back to investing in our future and not just betting on it.”

[Guest Nadeam Elshami]

Speaker Nancy Pelosi sent the following letter this evening to President Bush urging him to give a comprehensive and effective systemic response to ongoing turmoil in the financial markets and saying that the worsening economy demands that we have another economic recovery package.

 

Below is a text of the letter:

 

September 18, 2008

 

The Honorable George W. Bush

The President of the United States

The White House

1600 Pennsylvania Avenue, NW

Washington, D.C. 20500

 

 

Dear Mr. President:

 

The worsening crisis in our financial markets demands strong solutions and decisive leadership.

 

Already, House and Senate committees are investigating both the regulatory lapses and market oversight failures that resulted in this crisis, as well as possible solutions. This work will continue.

 

Accordingly, we stand ready beyond the targeted adjournment date of September 26 to permit Congress to consider legislative proposals and conduct necessary investigations.

 

Going forward, we need to understand how government failed to prevent this financial crisis, and how we can avoid future mismanagement and denial.

 

Thus far, we have seen a reactive, case-by-case approach to a severe crisis – a crisis attributable in part to a history of indifference to responsible regulation of the financial markets. We need to hear from you about a comprehensive and effective systemic response to ongoing market turmoil — one that will restore stability, grow our economy, create jobs, and insulate hardworking, middle-class Americans on Main Street from Wall Street’s crisis.

 

The worsening economy demands another bipartisan economic recovery effort. This effort must address:

 

investment in infrastructure for economic growth and job creation here at home,

home heating assistance at a time of record energy costs,

extended Unemployment Insurance for the growing number of Americans looking for work,

Food Stamps that will help ensure we feed hungry families in a time of crisis, and

assistance to maintain critical health care coverage jeopardized by state budget cuts.

We stand ready to work with you and your Administration to consider constructive solutions that stabilize our financial markets and balance accountability to the U.S. taxpayer with protecting American families from the crisis’s fallout.

 

Thank you for your attention to these matters of importance to every American family.

 

best regards,

 

 

 

NANCY PELOSI

 

Speaker of the House

[Guest THE WHITE HOUSE]

President George W. Bush delivers a statement on the economy Thursday, Sept. 18, 2008, in the Oval Colonnade of the White House.

 

The American people are concerned about the situation in our financial markets and our economy, and I share their concerns.

 

I've canceled my travel today to stay in Washington, where I will continue to closely monitor the situation in our financial markets and consult with my economic advisors. I spoke to Secretary Paulson this morning, and I will meet with him later on today.

 

In recent weeks, the federal government has taken extraordinary measures to address the challenges confronting our financial markets. We've taken control of Fannie Mae and Freddie Mac -- the home finance agencies -- to help promote market stability and to ensure they can continue to play a role in helping our housing market recover. This week, the Federal Reserve acted to prevent the disorderly failure of the insurance company AIG -- a development that could have caused a severe disruption in our financial markets and threatened other sectors of the economy. Yesterday, the Security and Exchange Commission took action to strengthen investor protections and step up its enforcement actions against illegal market manipulation. Last night, the Federal Reserve, in coordination with central banks around the world, took a substantial step to provide additional liquidity to the U.S. financial system.

 

These actions are necessary, and they're important. And the markets are adjusting to them. Our financial markets continue to deal with serious challenges. As our recent actions demonstrate, my administration is focused on meeting these challenges. The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence.

[Guest Secretary Henry M. Paulson, Jr.]

These are challenging times for our financial markets. We are working closely with the Federal Reserve, the SEC and other regulators to enhance the stability and orderliness of our financial markets and minimize the disruption to our economy. I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect the taxpayers.

[Guest FRB]

Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures.

 

Federal Reserve Actions

The Federal Open Market Committee has authorized a $180 billion expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks.

 

The FOMC has authorized increases in the existing swap lines with the ECB and the Swiss National Bank. These larger facilities will now support the provision of U.S. dollar liquidity in amounts of up to $110 billion by the ECB, an increase of $55 billion, and up to $27 billion by the Swiss National Bank, an increase of $15 billion.

 

In addition, new swap facilities have been authorized with the Bank of Japan, the Bank of England, and the Bank of Canada. These facilities will support the provision of U.S. dollar liquidity in amounts of up to $60 billion by the Bank of Japan, $40 billion by the Bank of England, and $10 billion by the Bank of Canada.

 

All of these reciprocal currency arrangements have been authorized through January 30, 2009.

[Guest Bank of Canada]

The Bank of Canada and the Federal Reserve have agreed on a US$10 billion swap facility (reciprocal currency arrangement) to be accessed, should the need arise, to provide U.S.-dollar liquidity in Canada. If drawn on by the Bank of Canada, the swap would provide liquidity facilities for use by financial institutions in Canada that are similar in nature to those being announced today by the other central banks. This swap facility expires on 30 January 2009.

 

This agreement provides the Bank of Canada with additional flexibility to address rapidly evolving developments in financial markets. The Bank judges that it is not necessary for it to draw on this swap facility at this time, but that it is prudent to have the agreement in place. Should the swap be drawn on, the details of the liquidity facilities provided would depend on the specific market circumstances at the time.

 

The Bank of Canada continues to closely monitor global market developments and remains committed to providing liquidity as required to support the stability of the Canadian financial system and the functioning of financial markets.

[Guest Bank of England]

The Bank of England will offer to lend each day US dollar funds overnight against eligible collateral. The first such operation will take place today. The amount offered in each repo operation will initially be $40bn. This amount will be reviewed on a regular basis, in consultation with the other central banks.

 

The US dollar repo operations will take the form of an auction. Eligible collateral will consist of securities routinely eligible in the Bank’s short-term repo Open Market Operations together with conventional US Treasuries.

 

The Bank of England has concluded a reciprocal swap agreement (swap line) with the Federal Reserve. Through this arrangement the Federal Reserve will provide the Bank of England with US dollar funding to facilitate these operations.

[Guest European Central Bank]

The Governing Council of the ECB has decided to reinforce its joint action with the Federal Reserve by adding an overnight maturity to its operations providing US dollar funding to Eurosystem counterparties and by increasing the amounts offered in the Term Auction Facility operations.

 

As regards the overnight US dollar funding, the Eurosystem shall conduct US dollar liquidity-providing operations with its counterparties against Eurosystem-eligible collateral, applying a variable rate tender procedure. It is intended to continue the provision of US dollar liquidity for as long as needed in view of the prevailing market conditions. The US dollars will be provided by the Federal Reserve to the ECB, up to USD 40 billion by means of a temporary reciprocal currency arrangement (swap line). The operational details can be obtained from the ECB's website (www.ecb.europa.eu).

 

As regards the Term Auction Facility operations, the Governing Council of the ECB has decided, in conjunction with the Federal Reserve, to increase the amount of US dollar liquidity provided to the counterparties of the Eurosystem to USD 25 billion for the 28-days maturity operations, and to USD 15 billion for the 84-days maturity operations.

 

Overall, the dollar funding operations conducted by the Eurosystem could reach an outstanding amount of USD 110 billion, compared to the current USD 50 billion.

[Guest Bank of Japan]

At the unscheduled Monetary Policy Meeting held today, the Bank of Japan concluded a U.S. dollar swap agreement with the Federal Reserve of up to USD 60 billion and decided to introduce U.S. dollar funds-supplying operations, with the funds provided under the agreement, to supply U.S. dollar funds to market participants in Japan, in conjunction with the Federal Reserve. The Bank will supply U.S. dollar funds appropriately in view of the prevailing market conditions.

 

The Bank will continue to strive to maintain market stability through money market operations.

[Guest Swiss National Bank]

In consultation with the Federal Reserve, the Swiss National Bank has decided to step up its US dollar repo auctions. The SNB will now hold US dollar repo auctions with a term of 1 day (overnight) on a daily basis and increase the volume of the previous auctions with a term of 28 and 84 days respectively. The US dollar repo auctions ease access to US dollar liquidity for SNB counterparties. Taking the market situation into account, the SNB plans to make US dollar liquidity available for as long as it considers this to be necessary.

 

Starting today, the SNB will hold US dollar auctions with a term of 1 day (overnight) on a daily basis, for an amount of up to USD 10 billion. The volume of the outstanding US dollar repo transactions with a term of 28 days will be increased from USD 6 billion to USD 8 billion and the volume of repo transactions with a term of 84 days from USD 6 billion to USD 9 billion. As before, these auctions will be held once every two weeks on an alternating basis. An auction schedule with the respective volumes is available at www.snb.ch. The maximum total amount outstanding for all terms is now USD 27 billion, as compared to the previous USD 12 billion.

 

Further information on the US dollar auction and the technical requirements will be posted on the SNB website (www.snb.ch, under Financial markets / US dollar auctions).

The Federal Reserve will offer US dollar liquidity up to USD 27 billion within the framework of a mutual swap agreement (swap line).

[Guest VOA]

U.S. presidential candidate John McCain, a Republican, has attributed the current U.S. economic strife to systematic corruption, and says he would fire the government official in charge of regulating financial markets.

 

At a rally in the midwestern state of Iowa Thursday, Senator McCain said the Securities and Exchange Commission kept rules in place that allowed investors to turn U.S. markets into "casinos." He pledged he would fire the chairman of the commission Christopher Cox, saying he betrayed the public's trust.

 

Democratic nominee Barack Obama has accused McCain of long-supporting economic policies that discourage effective regulation. In Nevada Wednesday, Senator Obama said the economic developments this week represent the final verdict on McCain's policies.

 

McCain and his vice presidential running mate, Governor Sarah Palin, Thursday criticized Obama's running mate, Senator Joe Biden, for suggesting that paying higher taxes is patriotic.

 

When Biden made the remark on ABC television's Good Morning America, he was referring to Obama's plan to raise taxes for anyone making more than $250,000 a year.

 

McCain also is campaigning in Wisconsin Thursday, while Obama is holding a rally in New Mexico.

 

A new opinion survey shows Obama has regained his lead over McCain.

 

A poll conducted jointly by The New York Times and CBS News shows Obama with a five-point lead over McCain (48 percent to 43 percent) among registered voters.

[Guest SEC]

Securities and Exchange Commission Chairman Christopher Cox today made the following statement:

 

"While I have great respect for Senator McCain, we have sometimes disagreed, and this is one such occasion. The SEC has made plain that we have zero tolerance for unclothed short selling. In this market crisis, the men and women of the SEC have responded valiantly as they always do—with the utmost dedication and professionalism. Addressing the extraordinary challenges facing our markets, the independent and bipartisan SEC has taken the following decisive actions:

 

We adopted a package of measures to strengthen investor protections against unclothed short selling, including rules requiring a hard T+3 close-out, eliminating the options market maker exception of Regulation SHO and expressly targeting fraud in short selling transactions.

We issued an emergency order to enhance protections against unclothed short selling in the securities of primary dealers, Fannie Mae, and Freddie Mac.

We announced emergency plans for a rule to ensure public disclosure of short selling positions of hedge funds and other institutional money managers.

We have undertaken sweeping enforcement measures against market manipulation.

We provided guidance to banks about how to account for credit support of money market funds.

We've written rules to strengthen the regulation of credit rating agencies, and performed examinations that have led to new rules to reduce rating agency conflicts-of-interest.

We brought a landmark enforcement action against a trader who spread false rumors designed to drive down the price of stock.

We have initiated exams of the effectiveness of broker-dealers' controls to prevent the spread of false information intended to manipulate securities prices.

Our Enforcement Division announced what will be the largest settlements in the history of the SEC for investors in auction rate securities who bought auction rate securities from Merrill Lynch, Wachovia, UBS and Citigroup.

We entered into a Memorandum of Understanding with the Federal Reserve, to make sure key federal financial regulators share information and coordinate regulatory activities in important areas of common interest.

 

There is much more work to be done, and the current crisis is presenting new challenges on an hourly basis. What America and the world needs now is steadiness and reduction of uncertainty. History will judge the quality of our response to this economic crisis, but now is not the time for those of us in the trenches to be distracted by the ebb and flow of the current election campaign. And it is precisely the wrong moment for a change in leadership that inevitably would disrupt the work of the SEC at just the wrong time. I have long made clear my intention to leave the SEC after the end of this Administration. The next President will have an opportunity to look at the major structural questions so important to the regulation and oversight of our financial markets.

 

I very much appreciate the strong and immediate support of the President. As someone who has been in public life for over 20 years, I know as well as anyone that occasionally this sort of thing can come with the territory. The best response to political jabs like this is simply to put your head down and not lose a step doing the best job you can possibly do on behalf of those you serve. For my part, I plan to do just that. I leave the political campaigns to pursue their own course.

[Guest OBAMA FOR AMERICA]

The economy hit a new low this week, and in every part of the country, people like you are feeling it.

 

The recent financial disasters -- from the collapse of Fannie Mae and Freddie Mac to the historic drop in the stock market -- are not just a string of bad luck. They are the result of years of bad decisions made in favor of big corporate special interests instead of America's working families.

 

More than 600,000 Americans have lost their jobs since January. Home foreclosures are skyrocketing, and home values are plunging. Gas prices are at an all-time high, and we're still spending more than $10 billion every month on a war in Iraq that should never have been waged.

 

John McCain's campaign is doing everything it can to focus attention on false personal attacks and distractions -- but there's too much at stake for that kind of politics.

 

I need your help to get the conversation back on track.

 

For eight years, Bush-McCain economic policies have favored reckless deregulation and huge tax loopholes for big corporations. Now, as these corporations crumble, American taxpayers are facing costly bailouts.

 

More of the same failed ideas are not going to solve our economic problems.

 

I'm calling for a $1,000 tax break for middle-class families -- not just because they need help dealing with the rising costs of gas, food, and health care, but also because our economy needs to be reinvigorated from the bottom up, not the top down.

 

I'm proposing a second stimulus package to save over one million jobs and provide immediate relief to struggling families.

 

And I'll end the "anything goes" culture on Wall Street with real regulation. We can see clearly that our economy is stronger when we protect investments and pensions, and avoid devastating bankruptcies and bailouts.

 

This is no ordinary time, and it shouldn't be an ordinary election. Help keep the discussion focused on the issues.

 

Please watch the video and share it with your friends today:

 

http://my.barackobama.com/economyvideo

 

Thanks for helping to bring the change this country needs,

[Guest LAW_*]

U.S. Treasury Secretary Henry Paulson is considering creating a new entity, similar to an RTC, to take on the debt that has weakened major banks.

 

The Resolution Trust Corporation (RTC) was a United States Government-owned asset-management company charged with liquidating assets (primarily real estate-related assets, including mortgage loans) that had been assets of savings and loan associations ("S&Ls") declared insolvent by the Office of Thrift Supervision, as a consequence of the Savings and Loan crisis of the 1980s. It also took over the insurance functions of the former Federal Home Loan Bank Board. It was created by the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), adopted in 1989. In 1995, its duties were transferred to the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation.

[Guest LAW_*]

House Majority Whip James E. Clyburn today commented on the recent dramatic activity of the financial markets and the current state of the economy.

 

“Americans woke up this morning to find that eight years of weakened regulation of the financial industry and failed economic policies of Republicans and the Bush administration are coming home to roost, but the architects of this catastrophe remain deaf to the economic struggles of the American people. Americans are struggling under record job loss, a housing foreclosure crisis, the high cost of health care, food and energy and Republicans remain out of touch— President Bush called the financial crisis on Wall Street an ‘adjustment’ and Senator McCain said this morning that ‘the fundamentals of our economy are strong.’ That’s just the kind of laissez faire attitude that got us into the predicament we’re in.

 

“The New Direction Democratic Congress has passed comprehensive housing reform and consumer protection legislation. We enacted a strong stimulus package earlier this year and we are crafting a recovery package to create jobs and stimulate the economy. I hope the Republican leadership will tune into the needs of the American people and join in our efforts to strengthen our economy.”

[Guest American for Progress]

On Tuesday evening, the Federal Reserve announced that it would lend troubled insurer AIG $85 billion in return for a 79.9 percent stake in the company. This move comes on the heels of the bailouts of Freddie Mac and Fannie Mae and just months after the bailout of Bear Stearns. CNBC has put the total tab for the recent government rescues by the Fed and the Treasury Department at $900 billion. The rescues, while necessary to prevent a wider financial meltdown, will cause the already near-record federal deficit of $407 billion to explode. Before the bailouts, the projected federal deficit for 2009 was $546 billion. When President George Bush came to office eight years ago, it was projected that America would have a budget surplus next year of $710 billion. So what happened? As an analysis by the Center on Budget and Policy Priorities shows, 42 percent of the "fiscal deterioration" was due to the Bush tax cuts enacted in 2001 and 2003. For FY2009, roughly $1 trillion of the $1.3 trillion deterioration in the nation's fiscal finances stems from policy actions. Tax cuts account for 42 percent of this $1 trillion deterioration.

[Guest ALWAYS RED]

Have faith in Republican leadership. They will get us out of this mess the Democrats have made for us.

 

House Republican Leader John Boehner (R-OH) and Republican Whip Roy Blunt (R-MO) issued the following joint statement after attending a bipartisan, bicameral meeting with Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and Securities & Exchange Commission Chairman Christopher Cox:

 

Our economy is facing unprecedented challenges. A collapse in our financial markets would be disastrous for families, seniors, and small businesses. Confidence in our markets and our economy is vital to American workers, their jobs, their bank accounts, and their retirement security.

 

Now is not the time to seek political leverage or a quid pro quo. Too much is at stake for our families, workers, small businesses, and our economy. Congress should work with the Administration in a bipartisan way to get our economy back on track.