[versa]

Britain to Nationalize Bradford & Bingley: Report

Britain will nationalize troubled mortgage lender Bradford & Bingley, the BBC reported on Saturday, but the government said discussions on the bank's future were still going on.

It would be the second British bank to be nationalized this year after Britain, buffeted by the global financial crisis, was forced to take Northern Rock into public ownership in February....................

http://www.cnbc.com/id/26921982

[versa]

It is not funny anymore....


cnbc

The world's central banks redoubled their efforts on Monday to revive the paralyzed global financial system through massive injections of cash.

Global markets remained on edge, however, as a compromise financial bailout plan for US banks failed to stem worries that the credit crisis was spreading.

US stocks plunged following selloffs in Asia and Europe. The US dollar rose, while oil prices plunged.

To counteract a world financial crisis emanating from last year's mortgage meltdown in the United States, the Federal Reserve announced a $330 billion expansion of arrangements to boost U.S. dollar liquidity throughout the global financial system.

The action increases the reciprocal swap lines with the European Central Bank and eight other central banks to $620 billion from $290 billion previously, the Fed said in a statement.

The Fed announcement came after European and Asian central banks had already been busy pumping more money into sclerotic banking systems on Monday, in an effort to persuade financial firms to stop hoarding cash, which threatens to bring down global economy.

"They are throwing billions around, but things seem to be getting worse," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "There's a monster amount of fear out there. This is global contagion, it's no longer just the United States."

The efforts also show the heightened tensions in bank-to-bank lending markets as the approaching end of the financial quarter compounds the scramble for cash.

Meanwhile, the world's financial system appeared to be edging closer to collapse by the day, authorities in Europe and the United States struggling keep banks afloat with injections of cash, nationalizations and mergers of necessity.

The concern was heightened following the rescue of two major European banks and a takeover of Wachovia's [WB 10.00 --- UNCH (0)] bank operations by Citigroup [C 20.84 0.69 (+3.42%) ].

Investors also worried that troubles facing the bank sector might worsen the economy's outlook and constrain lending, a key pillar of business and consumer spending and vital for profits.

Congressional leaders in Washington said they had a tentative deal on a $700 billion U.S. bailout to mop up bad mortgage debts on the banks' books. The House began debating the measure and hopes to pass it later in the day.

"The U.S. rescue plan is basically done. The news out of Europe this morning is what's really taking a toll on the market. It's one more indication of how serious the situation has become," said Peter Cardillo, chief market economist at Avalon Partners in New York. "The fear is about contagion."

In economic news, hard-pressed U.S. consumers curbed their spending during August despite an unexpected jump in incomes, according to a government report Monday that implied worry about the economy's direction was deepening.

Meanwhile, the governments of Belgium, the Netherlands and Luxembourg moved to part-nationalize Belgian-Dutch group Fortis with an injection of over $16 billion.

Separately, German lender Hypo Real Estate secured a credit line from the German government and banks of up to 35 billion euros, and British mortgage lender Bradford & Bingley was brought under the government's wing.

Investors worldwide continued to show doubt about whether the bill would go through, much less go a long way toward curing the systemic problems that have unnerved financial markets across the globe for weeks.

"A rescue plan worth $700 billion is simply not enough to overcome the crisis for the foreseeable future. If anything, all the real economy problems will escalate as a result in the foreseeable future," said Carsten Klude, strategist at MM Warburg.


-The Associated Press and Reuters contributed to this report.

[RedForceRising]

There's no way the average investor is going to throw money into the market now. You simply don't know what's going to happen. WE've heard that the best time to buy is when there's blood in the streets, but surely you wait for the clean-up crew to start washing the blood before buying.

Imagine, if you had exposed yourself to LEM or Washington mutual, your stocks would be worthless than the paper it was printed on.

Maybe they will move to emerging markets, but the companies there are unknown and not as sexy.

Thankfully I have GST compensation coming

[SALFORD RED]

Originally Posted by versa

It is not funny anymore....



Congressional leaders in Washington said they had a tentative deal on a $700 billion U.S. bailout to mop up bad mortgage debts on the banks' books. The House began debating the measure and hopes to pass it later in the day.

"The U.S. rescue plan is basically done. [/b]

-The Associated Press and Reuters contributed to this report.

The House of Representatives have voted against the implementation of the Bail-out....
.

[haggler]

boom and bust . nowt new about it . granny knew best bung your brass under the mattress

[SALFORD RED]

House votes down bail-out package


The lower house of the US Congress has voted down a $700bn (£380bn) plan aimed at bailing out Wall Street.

The rescue plan, a result of tense talks between the government and lawmakers, was rejected by 228 to 205 votes in the House of Representatives.

About two-thirds of Republican lawmakers refused to back the rescue package, as well as 95 Democrats.

Shares on Wall Street plunged within seconds of the announcement, after earlier falls on global markets.

A White House spokesman said that President George W Bush was "very disappointed" by the result.


The vote came as banks failed in the US, Europe and the UK.

The fourth largest US bank, Wachovia, is being bought by Citigroup after becoming the latest to hit problems.

In Europe, Benelux giant Fortis was bailed out by three governments, while in the UK the Bradford & Bingley bank was nationalised.

http://news.bbc.co.uk/1/hi/business/7641733.stm

.

[RedForceRising]

Totally and completely ******!

This is going to effect a lot of things including football.

Bumpy times ahead.

[versa]

cnbc

Dow Falls 800 as Market Reels From House Vote

The House rejected the Wall Street bailout bill and the market screamed, selling off frantically until the Dow was left with its biggest one-day point drop ever.

"This is panic and ... fear run amok," Zachary Karabell, president of River Twice Research told CNBC. "Right now we are in a classic moment of a financial meltdown," he said.....

http://www.cnbc.com/id/26945972



Congress Vows New Effort To Approve Bailout Plan

Democratic and Republican leaders pledged to try and hammer out a revised financial bailout proposal, but it was unclear how much support any new plan would get.

Congressional staffers told CNBC that there wouldn't be any votes on a new bailout proposal until Thursday at the earliest.

After the House's surprise rejection of the $700 billion bailout bill on Monday, U.S. Treasury Secretary Henry Paulson said he was "very disappointed" but pledged to continue working with Congress to forge a rescue.

"I will continue to work with Congressional leaders to find a forward to pass a comprehensive plan to stabilize our financial system and protect the American people by limiting the prospects of further deterioration in our economy," Paulson said. "We've got much work to do, and this is much too important to simply let fail."

Citing recent bank failures in the United States and Europe, Paulson said regulators and legislators need to act "as soon as possible" to ensure the health of credit markets that U.S. businesses depend on to meet payrolls and purchase inventory.

House of Representatives Speaker Nancy Pelosi said she was prepared to work in a bipartisan way with Republicans to get financial bailout legislation approved.

Pelosi, a Democrat, also told reporters she spoke to Paulson soon after the $700 billion bill to jump-start stalled capital markets was rejected by the House in a vote of 228-205.

Stocks plunged on Wall Street even before the vote to reject the bill was announced on the House floor. The Dow Jones Industrial Average closed down 777 points.

The failure of the bailout bill—after more than a week of intensive closed-door negotiation intended to hammer out a compromise plan—brought new uncertainty about the response of the government to the worst financial crisis since the Great Depression.

President Bush was set to huddle with economic advisers to consider the administration's next move after the White House failed to win support for the bailout plan from Bush's fellow Republicans.

"There's no question the economy is facing a difficult crisis that needs to be addressed,'' White House spokesman Tony Fratto told reporters.

The bailout plan was announced by the Bush administration last week. In the end, Republican House members voted against it by a more than 2-to-1 margin. A majority of Democrats voted in favor.

Rep. Barney Frank, a Massachusetts Democrat who helped craft the bill in hours of negotiations with leading lawmakers, said the next step could hinge on the economic fallout from the bill's failure.

Capping three hours of debate, House Majority Leader Steny Hoyer of Maryland had warned lawmakers that the cost of inaction would be an economic calamity beyond Wall Street.

"A meltdown would begin, it is true, on a few square miles of Manhattan, but before it was over, all of us know, no city or town in America would be untouched,'' Hoyer said.

Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home.

The vote had been preceded by unusually aggressive White House lobbying, and spokesman Tony Fratto said that Bush had used a "call list" of people he wanted to persuade to vote yes as late as just a short time before the vote.

Lawmakers shouted news of the plummeting Dow Jones average as lawmakers crowded on the House floor during the drawn-out and tense call of the roll, which dragged on for roughly 40 minutes as leaders on both sides scrambled to corral enough of their rank-and-file members to support the deeply unpopular measure.

They found only two.

Bush and his economic advisers, as well as congressional leaders in both parties had argued the plan was vital to insulating ordinary Americans from the effects of Wall Street's bad bets.

The version that was up for vote Monday was the product of marathon closed-door negotiations on Capitol Hill over the weekend.

"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it—not me.' "

With their dire warnings of impending economic doom and their sweeping request for unprecedented sums of money and authority to bail out cash-starved financial firms, Bush and his economic chiefs have focused the attention of world markets on Congress, Ryan added.

"We're in this moment, and if we fail to do the right thing, Heaven help us," he said.

[SALFORD RED]

Asia stocks fall after US failure

Japan's benchmark Nikkei stock index has fallen almost 5% in early trading, hours after a US financial rescue plan failed to gain Congressional backing.

Asia is reacting to the shock, and in early trading on Tuesday, the Tokyo Stock Exchange's Nikkei-225 index fell almost 580 points to 11,163.74, a loss of 4.94% of its value in a matter of minutes.

Hong Kong's Hang Seng index dropped 5.47% in the first 10 minutes of trading.

Australia and New Zealand saw similar precipitous losses, with the S&P/ASX-200 index shedding 5.3% in Sydney and a 4.7% fall in Wellington.

World leaders expressed concern at the effect of the US vote.

Earlier, Brazilian President Luiz Inacio Lula da Silva accused the US and other wealthy nations of financial irresponsibility that could jeopardise the economic progress made in recent years by developing countries.

Brazil's Ibovespa stock index dropped 9.4% on Monday.



Reminds me of the old Status Quo song...

Down down deeper down !!!
.

[RedForceRising]

The global financial crisis will see the US falter in the same way the Soviet Union did when the Berlin Wall came down. The era of American dominance is over

Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. The era of American global leadership, reaching back to the Second World War, is over.

You can see it in the way America's dominion has slipped away in its own backyard, with Venezuelan President Hugo Chávez taunting and ridiculing the superpower with impunity. Yet the setback of America's standing at the global level is even more striking. With the nationalisation of crucial parts of the financial system, the American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.

Ever since the end of the Cold War, successive American administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the American orthodoxy. China in particular was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic yesterday that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.

Despite incessantly urging other countries to adopt its way of doing business, America has always had one economic policy for itself and another for the rest of the world. Throughout the years in which the US was punishing countries that departed from fiscal prudence, it was borrowing on a colossal scale to finance tax cuts and fund its over-stretched military commitments. Now, with federal finances critically dependent on continuing large inflows of foreign capital, it will be the countries that spurned the American model of capitalism that will shape America's economic future.

Which version of the bail out of American financial institutions cobbled up by Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke is finally adopted is less important than what the bail out means for America's position in the world. The populist rant about greedy banks that is being loudly ventilated in Congress is a distraction from the true causes of the crisis. The dire condition of America's financial markets is the result of American banks operating in a free-for-all environment that these same American legislators created. It is America's political class that, by embracing the dangerously simplistic ideology of deregulation, has responsibility for the present mess.

In present circumstances, an unprecedented expansion of government is the only means of averting a market catastrophe. The consequence, however, will be that America will be even more starkly dependent on the world's new rising powers. The federal government is racking up even larger borrowings, which its creditors may rightly fear will never be repaid. It may well be tempted to inflate these debts away in a surge of inflation that would leave foreign investors with hefty losses. In these circumstances, will the governments of countries that buy large quantities of American bonds, China, the Gulf States and Russia, for example, be ready to continue supporting the dollar's role as the world's reserve currency? Or will these countries see this as an opportunity to tilt the balance of economic power further in their favour? Either way, the control of events is no longer in American hands.

The fate of empires is very often sealed by the interaction of war and debt. That was true of the British Empire, whose finances deteriorated from the First World War onwards, and of the Soviet Union. Defeat in Afghanistan and the economic burden of trying to respond to Reagan's technically flawed but politically extremely effective Star Wars programme were vital factors in triggering the Soviet collapse. Despite its insistent exceptionalism, America is no different. The Iraq War and the credit bubble have fatally undermined America's economic primacy. The US will continue to be the world's largest economy for a while longer, but it will be the new rising powers that, once the crisis is over, buy up what remains intact in the wreckage of America's financial system.

There has been a good deal of talk in recent weeks about imminent economic armageddon. In fact, this is far from being the end of capitalism. The frantic scrambling that is going on in Washington marks the passing of only one type of capitalism - the peculiar and highly unstable variety that has existed in America over the last 20 years. This experiment in financial laissez-faire has imploded.While the impact of the collapse will be felt everywhere, the market economies that resisted American-style deregulation will best weather the storm. Britain, which has turned itself into a gigantic hedge fund, but of a kind that lacks the ability to profit from a downturn, is likely to be especially badly hit.

The irony of the post-Cold War period is that the fall of communism was followed by the rise of another utopian ideology. In American and Britain, and to a lesser extent other Western countries, a type of market fundamentalism became the guiding philosophy. The collapse of American power that is underway is the predictable upshot. Like the Soviet collapse, it will have large geopolitical repercussions. An enfeebled economy cannot support America's over-extended military commitments for much longer. Retrenchment is inevitable and it is unlikely to be gradual or well planned.

Meltdowns on the scale we are seeing are not slow-motion events. They are swift and chaotic, with rapidly spreading side-effects. Consider Iraq. The success of the surge, which has been achieved by bribing the Sunnis, while acquiescing in ongoing ethnic cleansing, has produced a condition of relative peace in parts of the country. How long will this last, given that America's current level of expenditure on the war can no longer be sustained?

An American retreat from Iraq will leave Iran the regional victor. How will Saudi Arabia respond? Will military action to forestall Iran acquiring nuclear weapons be less or more likely? China's rulers have so far been silent during the unfolding crisis. Will America's weakness embolden them to assert China's power or will China continue its cautious policy of 'peaceful rise'? At present, none of these questions can be answered with any confidence. What is evident is that power is leaking from the US at an accelerating rate. Georgia showed Russia redrawing the geopolitical map, with America an impotent spectator.

Outside the US, most people have long accepted that the development of new economies that goes with globalisation will undermine America's central position in the world. They imagined that this would be a change in America's comparative standing, taking place incrementally over several decades or generations. Today, that looks an increasingly unrealistic assumption.

Having created the conditions that produced history's biggest bubble, America's political leaders appear unable to grasp the magnitude of the dangers the country now faces. Mired in their rancorous culture wars and squabbling among themselves, they seem oblivious to the fact that American global leadership is fast ebbing away. A new world is coming into being almost unnoticed, where America is only one of several great powers, facing an uncertain future it can no longer shape.

• John Gray is the author of Black Mass: Apocalyptic Religion and the Death of Utopia (Allen Lane)


http://www.guardian.co.uk/commentisf...economicgrowth