Wednesday, September 17, 2008

Financial markets still melting down

Congratulations, taxpayers: you now own 80% of the nation's largest insurance company. Krugman: "(they) have made determination that risk -- an inherent tenet to the reward of capitalism -- is to be socialized." I prefer "Privatize the profits and socialize the losses". Seems to fit better with the fascism or corporatism or whatever they are refusing to call it that prevails today.

From here, let's just go with a few headlines and maybe an emphasized excerpt:

U.S. regulators try to find WaMu buyer

Federal bank insurance fund dwindling

"We've got a ... retail bank run forming in this country," said Christopher Whalen, senior vice president and managing director of Institutional Risk Analytics.

Bush suddenly scraps comments on financial markets

Stocks plunge over AIG bailout and financial system fears

White House defends AIG rescue and signals possibility of more

The White House gave a newly nuanced description Wednesday of the U.S. economy, calling it a mixed picture and saying it ultimately will weather the current turmoil. Press secretary Dana Perino, President Bush's chief spokeswoman, also defended the extraordinary federal takeover of sinking insurance giant American International Group Inc., while not ruling out further private-sector bailouts by Washington.

A bit more, just to highlight the differences:

Among those pleading for Washington's help, for instance, is the struggling U.S. auto industry, which has suffered massive losses but remains a backbone of the economy. A bill before Congress would give the companies $25 billion in federal loans, a program established but not funded under an energy bill passed last year. Perino said the White House would not comment on that prospect until Congress decides whether to go ahead with approving the money. ...

Perino refused to repeat the White House's standard line about the U.S. economy, often used by Bush, who has said that its "fundamentals are strong." Republican presidential candidates John McCain used that phrase Monday, earning him ridicule from Democratic opponent Barack Obama as being out of touch. McCain later clarified that he meant that the fundamental strength of the American worker remained strong.

With those accusations and counter-accusations swirling in an election campaign environment, Perino suggested Wednesday that this assessment no longer stands.

"It's not clear-cut," she said, because of a proliferation of both positive and negative economic indicators, sometimes coming on the same day.

"We are in a position of strength to be able to deal with this crisis," Perino said. "It will take us awhile."

As recently as July 31, Bush said: "I believe the foundations of this economy are strong." In an Aug. 2 radio address, Bush prodded Congress to expand the energy supply so that "our economy remains the strongest, most vibrant and most hopeful in the world."

And one more, echoing Mr. Whalen above:

FDIC's insurance fund: $45 billion. The assets of Washington Mutual, which is teetering on the brink of insolvency: $309 billion. A WaMu collapse would make it 10 times the size of the greatest bank failure in US history. The FDIC may have to borrow money from the Treasury to cover insured losses (remember that deposits are only insured up to $100,000, which limits taxpayer risk).

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