US government draws up list of banks on the brink

US government draws up list of banks on the brink

Have Funs in White house and IMF

Don’t worry, be happy - stay the course...
:eek:
Bloomberg Warns Of “Next Wave” Crisis
WASHINGTON, Sept. 17, 2008 - More Financial Pain Possible If Foreign Entities Stop Buying U.S. Debt, Says NYC Mayor

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New York Mayor Michael Bloomberg warned Wednesday a “next wave” of financial pain may come from overseas if foreign entities stop buying U.S. debt. The billionaire mayor spoke before an audience at Georgetown University, telling them it’s not clear who is going to continue buying U.S. debt as financial firms try to cope with a crisis of confidence on Wall Street.

The financial markets have undergone a tumultuous last week: Investment bank Lehman Brothers filed for bankruptcy and later sold off its North American trading division to British bank Barclays PLC; Insurance giant AIG needed an $85 billion bailout from the U.S. government in order to stay afloat; and investment firm Merrill Lynch sold itself to Bank of America. The mayor is scheduled to meet Thursday morning with Treasury Secretary Hank Paulson and Securities and Exchange Commission Chairman Chris Cox.

Before becoming mayor, Bloomberg made a fortune by launching a financial information company that bears his name, and he has more credibility than most politicians on economic matters. Bloomberg said he was concerned that the credit crisis in the United States may scare off foreign investors that, until now, have been willing to buy debt that the U.S. uses to maintain a deficit. “It’s not clear who’s going to be buying our debt," said Bloomberg. “It may very well be that the next wave is going to come back and bite us."

The mayor, a Democrat-turned-Republican-turned independent, regularly criticizes both parties, the Congress, and the White House for what he says is their lack of foresight. He said the current economic crisis is the latest example of the same problem. “We have on both sides of the aisle, on both ends of Pennsylvania Avenue, thrown caution to the wind. We pay lip service to responsibility," he said, as he sat onstage in an armchair, fielding questions from Georgetown President Jack DeGioia. Bloomberg had originally planned to give a speech about the economy, but amid the fast-moving events on Wall Street, he scrapped the speech and went with a question-and-answer session instead.

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Who’ll Bail Out Uncle Sam?
WASHINGTON, Sept. 17, 2008 - The National Debt, And Who Picks Up the Tab

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The federal government may seem like a financial knight on a white steed riding to the rescue of big companies in trouble. The irony is that Uncle Samâ��s got enormous money problems of his own. The government is far deeper in debt than any of the companies itâ��s bailing out. As of this morning, the national debt stands at over $9.634 trillion. Thatâ��s trillion - with a “T." And thatâ��s nearly $4 trillion more than it was on the day President Bush took office. This year alone, itâ��s costing taxpayers more than $230 billion just to pay the interest on the national debt.

And it�s getting bigger every day thanks to the relentless rush of the government spending money it has to borrow. The federal deficit for the fiscal year ending September 30 is expected in the range of $400 billion - close to the all-time high. In fact, the government doesn�t have the $85 billion needed to bailout insurance giant American International Group. The treasury department announced this morning it would auction new debt to raise funds for the Federal Reserve�s rescue plan for AIG. The Fed didn�t need President Bush�s permission for the bailout, but he supports the action.

�The president�s economic advisors had determined that some of these companies were so big - that to allow them to fail would have caused even greater harm and damage to the economy,� explained Press Secretary Dana Perino at today�s White House briefing. And despite the government�s intervention to keep a distressed company from failing, Perino insists �the free market is alive and well.�

�We have systems in place here in our country to be able to deal with shocks to the system like this,� she said. The rescue plan means taxpayer funds are being put at risk, but Perino said �taxpayers might be harmed even worse� if the collapse of a major company caused broader economic damage. She declined to repeat President Bush�s oft-stated assurance that the �fundamentals� of the economy are strong. But she said the economy has the strength to deal with the strains it�s now facing. �We�ll weather the storm and be better for it,� she asserted. But where does the federal government go when it needs a bailout? Taxpayers need only look in the mirror.

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http://www.cbsnews.com/stories/2008/09/17/notebook/main4455247.shtml[/url]

But will it stop foreclosures??...
:confused:
Paulson urges 'clean and quick' OK
September 21, 2008: Treasury Secretary calls on Congress to move fast to approve bill that would let Treasury spend as much as $700 billion to buy troubled mortgage-related assets.

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Treasury Secretary Henry Paulson on Sunday called on Congress to move swiftly on the Bush administration’s $700 billion proposal to bail out the financial system “We need this to be clean and quick," Paulson said on ABC’s “This Week." President Bush asked Congress on Saturday for the authority to spend as much as $700 billion to purchase troubled mortgage assets and contain the financial crisis. The legislative proposal is the centerpiece of what would be the most sweeping economic intervention by the government since the Great Depression.

Paulson, Federal Reserve Chairman Ben Bernanke and other officials have said in recent days that the lack of easy credit between banks and other financial institutions threatens to inflict serious damage on the economy if not addressed immediately. The plan would allow the Treasury to buy up mortgage-related assets from American based companies and foreign firms with a big exposure to these illiquid assets. The aim is for the government to buy the securities at a discount, hold onto them and then sell them for a profit. “What we’re doing is first stabilizing the market," Paulson said. “Once we stabilize the market, we need to ask ourselves how did we get here and how do we avoid getting here again."

“We need a lot of reforms, and this is going to be something Congress and the next administration are going to be working on for some time," Paulson added. Paulson also stressed that the administration has begun discussions with foreign governments to push them to institute similar action, though he stressed that none have made any commitments to do so yet. Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, agreed with Paulson that speedy passage of the bill was necessary. “We need to do it quickly," Dodd said on “This Week." “We need to give the Secretary the authority to work."

[url=http://money.cnn.com/2008/09/21/news/economy/bailout_proposal_Sunday/index.htm:
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Wall Street: The dark theory
September 19, 2008: `Pollyanna Creep' theorists blame Washington’s economic statistics.

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No shortage of villains stand accused of igniting the brushfire raging across Wall Street: greedy lenders, gullible home buyers, negligent regulators, numbskull credit ratings agencies, and vicious short-sellers, for starters. Maybe they share the blame. But what if the underlying problem goes deeper? What if the reality is that the US economy has been a lot worse than was thought for a long time, and now the chickens are finally coming home to roost?

That’s the dark thinking beyond what is known as “Pollyanna creep," a phrase coined by an economist named John Williams and supported by a cadre of other macroeconomic dissidents. Williams, who lives in California, runs a Web site called Shadowstats.com that trades in the idea that key government statistics have become so optimistically misleading as to become essentially useless. Yes, this sounds a bit like the thinking of the black helicopter crowd, or the plotline of a Matrix movie. But given what’s gone on in the financial sector of late, it doesn’t sound quite so fringe.

Indeed, over the past few years some of Williams' views on economic indicators - the Consumer Price Index in particular - have been echoed by well-known, if generally pessimistic, investment gurus like bond investor Bill Gross, strategist Stephen Roach and newsletter writer James Grant. “The numbers are misleading, and Wall Street uses the numbers to help sell their products," says Williams. “Recently, I’d contend that what we’ve been getting is absolutely junk on the GDP," he adds. The official stats say gross domestic product grew 3.3% in the second quarter, after a small increase the previous quarter.

“There’s no question that we’re in a recession," says Williams, “and probably have been in one since the last quarter of 2006. It didn’t start with the housing mortgage crisis." (Williams, one guesses, is not on John McCain’s speed dial.) According to Williams, all the big measures have had their methodologies revised repeatedly over decades to paint the U.S. economy in the best possible light - and this has gone on regardless of which party controlled the White House. Modifications were always spelled out at the time - with rationales for doing so. Thus it’s not as though this has gone on in the dark of night.

[url=http://money.cnn.com/2008/09/19/news/economy/siklos_shadowstats.fortune/index.htm:
Bullnomics[/url]