Beginning with bankruptcy of Lehman Brothers at midnight Monday, September 15, 2008, the financial crisis entered an acute phase marked by failures of prominent American and European banks and efforts by the American and European governments to rescue distressed financial institutions, in the United States by passage of the Emergency Economic Stabilization Act of 2008 and in European countries by infusion of capital into major banks. Afterwards, Iceland almost claimed to go bankrupt as the country's three largest banks, and in effect financial system, collapsed.[6] Many financial institutions in Europe also faced the liquidity problem that they needed to raise their capital adequacy ratio. As the crisis developed, stock markets fell worldwide, and global financial regulators attempted to coordinate efforts to contain the crisis. The US government composed a $700 billion plan to purchase unperforming collaterals and assets. However, the plan failed to pass because some members of the US Congress rejected the idea of using taxpayers' money to bail out Wall Street investment bankers. After the stock market plunged, Congress amended the $700 billion bail out plan and passed the legislation. The market sentiment continued to deteriorate, however, and the global financial system almost collapsed. While the market turned extremely pessimistic, the British government launched a 500 billion pound bail out plan aimed at injecting capital into the financial system. The British government nationalized most of the financial institutions in trouble. Many European governments followed suit, as well as the US government. Stock markets appeared to have stabilized as October ended. In addition, the falling prices due to reduced demand for oil, coupled with projections of a global recession, brought the 2000s energy crisis to temporary resolution.[7][8] In the Eastern European economies of Poland, Hungary, Romania, and Ukraine the economic crisis was characterized by difficulties with loans made in hard currencies such as the Swiss franc. As local currencies in those countries lost value, making payment on such loans became progressively more difficult.[9]
The U.S. bailout plan, now named the Emergency Economic Stabilization Act of 2008 and expanded to 110 pages was slated for consideration in the House of Representatives on Monday, September 29 as HR 3997 and in the Senate later in the week.[60][61] The plan failed after the vote being held open for 40 minutes in the House of Representatives, 205 for the plan, 228 against.[62][63] Meanwhile, the Federal Reserve announced it will inject $630 billion into the global financial system to increase the liquidity of dollars worldwide as US stock markets suffered steep declines, the Dow losing 300 points in a matter of minutes, ending down 777.68 (6.98%), the Nasdaq losing 199.61 (9.14%), falling below the 2,000 point mark, and the S&P 500 off 106.62 (8.79%) for the day.[64][65] By the end of the day, the Dow suffered the largest drop in the history of the index.[66] The S&P 500 Banking Index fell 14% on September 29 with drops in the stock value of a number of US banks generally considered sound, including Bank of New York Mellon, State Street and Northern Trust; three Ohio banks, National City, Fifth Third, and KeyBank were down dramatically.[67][68]
NYT Urges Obama To “Bail Out” Third World Too
NARRATOR: They engineered massive bailouts when American banks were threatened by financial turmoil overseas. Working with the International Monetary Fund, they loaned hundreds of billions in countries like Mexico, Thailand and South Korea. Rubin and Summers, along with Federal Reserve chairman Alan Greenspan, became superstars of the financial world.
Regarding the economic crisis and the bail out packages, these money-spending policies will not work. This is not a Roosevelt New Deal. The times are very different although the present situation resembles that of the 1930's. This is the end of the Age, and order (or disorder) it is not a passing storm. There is a better, more just and fair way to live. It will help people to see sharing as the only way to restructure the world economy.
I would like to see President Obama address both the issues of climate change and the economy by building a 21st century high speed rail system comparable to the one Europe has had for over 40 years. Our over reliance on the private gas car has been a disaster, not just because of wars for oil and high gas prices sucking the income and life blood from suburban workers, but mainly because 500 million cars worldwide have contributed almost a third of the greenhouse gases now responsible for climate change, and the destruction of the environment. Will Obama insist on electric cars and hybrids that Detroit could have built over 30 years ago? Will he start working not only on connecting up the energy grid, but also our weakest link, our incredibly weak public transportation network? Thomas Frank was indeed on to something also-- Obama has been very cautious, may not be willing to really use his power, may be too conciliatory in choosing Clinton retreads. If you want to look at why, in other words his personal psychology--Obama may be too obsessed with pleasing everyone, an identity that appears strong, but deep down wants to please a father that he never really had. Everyone who never really had a father knows this about him--it may indeed be difficult for him to ever really take charge without trying first to please others--get all of those 80 votes instead of just the 60 he needs, for example, or to ever stop reaching for the approval of the other side across the aisle, a dream of pleasing an invisible father...
BILL MOYERS: As you speak, the Irish government is nationalizing the third largest bank in that country. And governments all over the world, including Britain have nationalization on the table. Are you wishing that Obama would at least put nationalization on the table? 2ff7e9595c
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