A worrying week on Wall Street

Al Jazeera English

Transcript

last Sunday the world's media focused its cameras here at the Manhattan headquarters of Leman Brothers through these doors staff were already beginning to remove personal items from their desks they'd seen the writing on the wall company that started as a country store in the 1800s and became the fourth largest US Investment Bank was out of time and out of money two miles away Trader Bob bruser was at home near Central Park watching his tvoc couldn't believe what he was seeing well the events of last weekend were pretty stunning you know these are days when things happen quickly and it's very clear from the way the FED is dealing with distressed firms you don't want to go there across town another famous institution was having its own meltdown 90-year-old Merill Lynch sold itself to the Bank of America to avoid bankruptcy what's happening is that Standalone Securities firms investment banks are just having a hard time surviving if they're not part of a deposit taking Bank come Monday morning the markets gave their verdict they saw red the Dow Jones Industrial Average plunged over 500 points in reaction not only to Leman Brothers bankruptcy and merals takeover but looming worries about the world's largest insurance company AIG you see was being asked to pay up billions of dollars in insurance policies related to the US subprime housing crisis for AIG it was as if it had to pay out on the damage of 10 hurricans coming ashore all at once in aig's case though the Federal auth ities stepped up with an $85 billion Lifeline allowing the company to restructure in an orderly fashion uh the FED did this because you know AIG was too big to fail it was too interconnected to fail and it was certainly too big of a mess to try to liquidate the New York markets barely reacted to the saving of AIG they had other worries on their minds Investment Bank Morgan Stanley was rumored to be crippled by excessive borrowing costs and by Weeks end the bank and many others had started taking steps just to survive Washington Mutual has asked Goldman Sachs to look into ways of selling it even the revered Goldman's itself based just near the New York Stock Exchange can't guarantee that it will still be independent when all this turmoil dies down the mortgage crisis and the credit crunch are changing the face of the global financial industry before our eyes John terret Al jazer New York

All Eyes on Morgan Stanley, Goldman Sachs

Associated Press

Transcript

right now All Eyes Are Fixed On the last two investment Giants Goldman Sachs and Morgan Stanley although these companies have given investors assurances that they have enough Capital to stay afloat unfortunately investor confidence has just crumbled in these last couple days in light of the fact that markets took a huge tumble a 450 Point loss in light of the 85 billion doll AIG bailout after Leman Brothers bankruptcy after maril Lynch and be STS had fire sales investors are just going on fear right now there are some talks that Morgan Stanley May merge with wacovia but we'll just have to see how all that plays out in New York Bonnie go the Associated Press

Asian Stocks Tumble

Associated Press

Transcript

Stocks in Asia took a dramatic hit on Thursday following another deep decline in the American stock market. Every single regional benchmark fell deeply in the red. As of 4 in the morning, Hong Kong's index fell nearly 4%, reaching its lowest level in two years. China's Shanghai index was down more than 2%. In Japan, the NIK also fell more than 2%. Stocks in Australia and South Korea both lost nearly 3% of their work. The losses in Asia are similar to the deep decline seen on Wall Street. The Dow Jones Industrials fell another 450 points on Wednesday, or 4% of its value. Investors are unsettled by the Federal Reserve's $85 billion bailout of insurance giant AIG. There is also word that the largest savings and loan bank in the US, Washington Mutual, could be the next financial giant to fall. While equity markets staggered, investors fled to gold. The price for an ounce of gold jumped $70, finishing at more than $850. Oil prices also jumped on Wednesday, but have since retreated in overseas trading on Thursday. or Larissia Associated Press.

Money Minute: Investment Banks, Gold, Autos

Associated Press

Transcript

NP money minute shares of Goldman Sachs and Morgan Stanley were battered Wednesday a sign that investors fear they can't survive in their present form as the last two major independent investment banks Morgan Stanley shares fell as much as forty four percent before recovering some of their losses Goldman shares shed more than 35 points before narrowing the losses here's a more credit market turmoil unnerved investors and triggered a flood of safe haven buying gold prices exploded Wednesday posting the biggest one-day gain ever in dollar terms gold for December delivery closed up seventy dollars an ounce to settle at eight hundred fifty dollars fifty cents an hour Detroit's auto industry is asking the government to fund a 25 billion dollar loan program to help modernize plants and build more fuel-efficient vehicles leaders of GM Ford and Chrysler say they're committed to building more fuel-efficient vehicles but stress the industry faces significant challenges because of the economic crisis I'm more cambric with AP money minute

Obama: AIG Takeover Must Protect the Insured

Associated Press

Transcript

now we are in the midst of the most serious financial crisis in Generations three of America's five largest investment banks have failed or been uh sold off in distress we just learned yesterday that AIG our biggest insure has now been taken over by the federal government our housing market is in a shambles and Monday brought the worst losses on Wall Street since the day after September 11th so Monday brought not only the worst losses since September 11th but we also learned that the FED had taken unprecedented action when it came to uh AIG uh and it took these actions to prevent an even larger crisis now we don't know all the details of the arrangement with AIG the Federal Reserve must ensure that plans protect the families that count on insurance and it should bolster our economy's ability to create good paying jobs and help working Americans pay their bills and save their money it must not bail out the shareholders or management of AIG that were making big profits when times were good they shouldn't be bailed out when times are bad

Tips for Surviving Wall Street's Trying Times

Associated Press

Transcript

people sometimes will panic and sell into these downturns and it's really a time to sit back look at your portfolio re-evaluate for maybe some tweaking that needs to be done but not necessarily just sell things because the Market's turning down what we tell people they should be Diversified uh which means large cap stock small cap uh foreign stock and fixed income if they're Diversified they will not lose as much as the overall market and they'll be somewhat protected on the downside and it may create buying opportunities if they have cash what they should be doing is a few things one looking at their portfolio as a whole uh their 401K their Ira their uh other accounts that are for retirement or whatever the goals are then looking at them individually to see what changes should be ma be made uh so it's not necessarily a specific order or checklist but it is a good time to kind of get your financial house in order look at your emergency fund make sure that you've got money set aside usually we recommend 3 to 6 months of expenses put in a bank account or CD or money market so you've got access to that money when you talk about 401K plans it's a good opportunity that to look at your company plan if you have a lot of company stock diversify people panic they sell and then what happens usually is the market starts to bounce back when do you jump back in after it's gone up 10 or 20% uh so it's really tough to to do that but you have to keep your emotion out of investing

Can Uncle Sam Save Markets?

CBS

Transcript

let's talk about the federal government's plan they're working to throw a lifeline to america's battered financial industry and the markets were overjoyed at the news what a rally yesterday early show national correspondent jeff glor is at the new york stock exchange jeff good morning maggie good morning to you this new bailout if it happens could be the government's biggest ever and it comes at the end of a frantic four days on wall street the largest one-day dow rise in six years erased the previous day's losses but not the whole subprime mortgage mess and definitely not the campaign blame game john mccain called for the firing of securities and exchange commissioner christopher cox barack obama said it's the entire administration that needs to go this is a bipartisan mess and all these charges are wholly unhelpful it's strictly campaign rhetoric to keep the financial system moving the federal reserve and the world's big central banks have pumped hundreds of billions into money markets not to mention bailing out companies like aig no one trusts anybody anymore they still do trust uncle sam and it looks like the feds are not done with word of this possible resolution trust basically letting the government buy up tons of toxic housing debt this bailout would be complicated and no doubt controversial but there are growing concerns that would only solve half the problem the other half bad business practices that allow this extreme risk taking to take place in the first place and we are just getting word this morning maggie that the securities and exchange commission for one part of this took the dramatic step today of temporarily at least banning short selling of financial stocks which is basically betting against a company's success maggie cbs is jeff glor at the new york stock exchange jeff thank you you

Feds Step In To Rescue Banks

CBS

Transcript

it was an extraordinary day no one's seen anything like this at the end of an extraordinary week this is a pivotal moment for America's economy in announcing a historic bailout for America's Banks President Bush admitted the financial system is in crisis we must act now to protect our nation's economic health from from serious risk in a series of emergency measures the government also moved to ensure money market mutual funds and imposed restrictions on Short Selling trades that bet a stock will go down with the banking system seizing up and Americans pulling billions out of money market funds treasury secretary pulson told Congress in a sobering meeting last night that a bailout is the only way to prevent a collapse without it fed chairman Bernan warned we could face a deep recession in historical terms how serious is this well this this may turn out to be the second biggest financial crisis in world history stre historian Richard Silla says only the Great Depression was bigger secretary pson says the price to fix it will be steep we're talking hundreds of billions this needs to be big enough to make a real difference and get at the heart of the problem add that to the taxpayers tab with the failure of Bear Sterns housing loans the government takeover of Fanny May Freddy Mack and AIG and Loans to troubled Banks the government has already put up more than $800 billion what essentially is the government doing here um it's taking bad debt off the hands of financial institutions the problem banks have stopped lending even to each other because they don't trust they'll be paid back by buying up the bank's bad mortgage loans the government hopes to restore confidence so the banks resume lending to each other and to us the government's challenge will then be defined buyers for these toxic mortgages this paper has such a bad reputation that giving it to the federal government is essentially asking the taxpayer to write off these losses I don't think these products are going to be easily resold by the government and by some estimates the amount of bad debt still out there could add up to another half a trillion dollars Katie Anthony obviously this has calmed some fears on Wall Street at least temporarily but how will we know if this will do the trick and really stabilize things in the long run you'll know if you start to see Banks actually lending to other again that's the question of trust the whole idea here is to restore confidence and Trust I mean basically what's happened the way Richard Sila described it it's like a car running with no oil in it it's you know ready to explode they're trying to put the oil back in hopefully you'll see the car moving again all right Anthony Mason thank you

Global Economy In Crisis

CBS

Transcript

former British Prime Minister Tony Blair has a new job teaching a course on faith and globalization at Yale University we also want to get his take in the credit crisis rattling financial markets around the world he joins us from New Haven Connecticut good morning sir good morning this has been a tumultuous week for World Markets what do you think needs to happen to stabilize the situation I think there are there are two things really there's first of all taking the immediate action necessary to restore confence and to stabilize and I think what um Hank pson and the Federal Reserve are doing are basically it's basically the right strategy to do that which is to say we're going to put the whole weight of the state and government behind making sure the situation has some confidence and stability restored in it but then secondly obviously we've got to look at the longer term lessons of this and what measures are necessary in order to make sure that this type of situation does not recur and that we provide that long-term stability that is going to be necessary to provide ordinary people with the confidence that their economy is sound do you think that longterm uh looking at long-term wise what needs to change is we as voters here in America need to make a change this November in our election and change the um the policies that this government has well I think if you don't mind Julie I think your elections a matter for you not not for me um but I think you know everyone around the world is trying to deal with this and there are no rules for policy makers in this situation you know there's no guide book that tells you what to do now I think the measures that um have been taken over these past couple of days are essentially the right measures they seem to me to be sensible um because what it's what is being said to the markets is is you can test the system as much as you like but the full power of government is going to stand behind the system and then of course as you say we've we've got to then work out what is the best way to to provide some hope and security for ordinary families and ordinary people who are affected by a crisis they had nothing uh to do with creating let's talk about your new job what you're beginning today you're teaching a course at Yale University on faith and globalization why because what's happening in our world today indeed as you can see from the turmoil in the financial markets is that globalization is pushing everyone together the world is is becoming one Global Community if in these circumstances religious Faith becomes a means of pulling people apart of dividing people then it will be a very dangerous thing on the other hand if faith can be part of shaping the Val Val of globalization and teaching us to exist peacefully alongside each other with different cultures and different faiths then faith can play a very important and Progressive part in the 21st century so we're exploring all these issues uh with the students here we'll be doing a whole lot of new research we'll be trying to to find out what people think about faith in different parts of the world and how people can get along and live together despite their differences former British Prime Minister Tony Blair thank you and good luck at your new job thank you

Keeping Your Savings Safe

CBS

Transcript

i don't know how much more of this i can take martha rodriguez was looking for reassurance from her financial planner today when the market tanked on monday she lost 50 thousand dollars 10 percent of her retirement account did i make a mistake investing my money this way wall street's woes are weighing on the minds of main street i feel really nervous about it so we asked two financial experts with a collective 40 years of experience to answer questions about your money where should my money be right now i don't know whether it's better to just put the money under the mattress or stick with it i would not uh stick my money on the mattress i would at least put it in a financially uh secure institution and earn some type of interest on it he says just make sure your bank is fdic insured so your money is backed up aggressive stock investors are hunting for bargains so what about your 401k please don't pull it out of the stock market or your 401k in the mutual funds leave it in there in fact what an opportunity to add more money to your portfolio right now are our retirement accounts going to be there for us when it's time to retire for those during retirement you definitely need to keep a large portion of your assets in cash if you're young and you have time just let it ride leave your assets alone who is going to be paying for this bailout so we've been hearing about lately the short answer to that one is taxpayers doesn't sound great but the experts say the financial meltdown that would happen without the bailouts would cost us all even more down the road the financial markets are resilient this economy is resilient and it will come back i can't tell you when but it will long term you're going to be fine martha rodriguez is willing to wait it out just sitting tight and letting it ride she just hopes the bumpy part of the ride is almost over ben tracy cbs news los angeles you

Dow soars 369 on historic bank bailout plan; short-selling banned

CBS

Transcript

stocks soared After The Government took historic Action to Bail out the crippled Banking system it was the biggest two-day Global Stock Market Rally in History The dow Shot up 369 points while The nasdaq climbed nearly 75 The Bush administration Wants To set up a Special Federal Fund that would absorb The bank's Massive debts President Bush also Called for a temporary Ban on short selling That's The common practice of betting that a Stock Price will Fall that Trading Strategy contributed to the market recently Rapid meltdown the president also Wants The Government to guarantee money Market Funds americans have been Moving their Money Out of those Funds amid Falling Stock prices the plan puts hundreds of billions of taxpayer money on the line and Congress would have to approve it lawmakers will spend The Weekend reviewing that plan recently beaten Down Bank stocks LED the way Higher some sort as much as 60 as traders finally See the Light at the End of the Tunnel for the Financial Crisis and That's your Money Watch cs.com forsin Wall al

Parties Unite To Rescue Banks

CBS

Transcript

this is no time for partisanship we must join the move urgently needed legislation as quickly as possible without adding controversial provisions that could delay action president bush pleaded with congress to keep a narrow focus a bill solely designed to get capital flowing again senate democrats signaled they're on board and won't use this crisis to press for the second stimulus package somewhat this will not be a christmas tree this is not going to be a piece of legislation that involves every idea that everyone's had that they want to attach to this gaining momentum is the idea to create an entity similar to the resolution trust corporation which took over 225 billion dollars in bad home loans from 750 failed savings and loans in the 80s and sold them for 140 billion dollars an 85 billion dollar loss for taxpayers there's a potential here to lose hundreds of billions of dollars but economist peter maurici cautions back then the rtc was able to resell in a housing market that was improving which isn't the case now essentially it's going to foreclose on homes that are worth much less than when the loans were made if the price of housing doesn't recover to its 2005 level the government's going to lose money secretary paulson has promised senators that they could have a proposal by sunday night at the latest house leaders say they could be voting on rescue legislation by early next week katie jim axelrod at the white house tonight thanks jim

Romney, Corzine On Economy

CBS

Transcript

joining us now is Mitt Romney former governor of Massachusetts and a McCain supporter good morning Governor good morning Maggie I'd like to take you back to an interview that you and I did in Florida back in January during the primaries you told me quote about John McCain as we think about pairing off against the Democrats having someone who has said time and again he doesn't understand the economy is someone who can't lead our party what has changed since then Governor well uh I I'm no longer the guy running for president that's one thing that's changed the only reason you said it no the other thing that's changed is that Barack Obama is a democratic nominee and Barack Obama has really no relevant experience at all in dealing with the economy John McCain of course has had 25 years in the Senate he was part of the Reagan Revolution he's seen our economy go up and down he's fought very hard for such things as regulating and reforming Fanny May and Freddy Mack at the same time Barack Obama was sitting on the sidelines not willing to regulate those guys reform those guys and that probably is the the reason why the uh those two entities employees of those entities have given more money to Barack Obama than anybody in the Senate but one Barack Obama and others are criticizing John McCain this morning for saying that he would fire the head of the SEC Chris Cox and I'd like to read you from this morning's Wall Street Journal Mr McCain is sounding like a candidate searching for a political foil rather than a genuine solution Governor why name one guy is he so desperate to distance himself from the Bush Administration that he's looking for a scapegoat I think everybody recognizes that John McCain is his own man and that any president has the right to choose their own team and of course John McCain would exercise that right but I do believe that there are Regulators who've been asleep with a switch my own favorite in this regard is a group called oo the office of federal Enterprise housing oversight they're responsible for looking at mortgages and how they're structuring and they just didn't get it right and and I think heads should roll in places where people should be held accountable but why single out one person and if so the Democrats would say why not the person who appointed Chris Cox which is the president well you do rely on the people that are working for you to manage the various aspects that are uh they're accountable for and if Senator McCain believes that he wants to see someone change that's his right if he becomes the president and uh and I think you'll see a lot of people change uh if John McCain is president look not all Republicans are created the same John McCain has been an Ardent uh advocate for reform reform in places like Fanny May and Freddy Mack for years and years and years and it's uh been the other side of the aisle that hasn't been willing to do that but let's get all the partisanship behind us let's look at what's necessary to strengthen our market and that's to get this very bad debt out of our system and allow the banks to continue to loan to people going to college continue to loan to small businesses and uh and let's put together an entity that can help solve that issue yeah the question is will this be a Band-Aid or a long-term solution what do you think really quick well you know changing the rules and the uh the way that risk-taking has been made over the these last several years that's going to have a long-term positive impact and getting some of these bad loans uh restructured in such a way that entities can can have an ongoing life and keep lending money in the future that's a good thing as well but we want to make sure the taxpayers don't get stuck with the bill to bail out investors and management instead we want to keep these institutions open but let's uh let's not take care of speculators and managers Governor Mitt Romney thank you for your time thanks Maggie now let's go over to Harry all right Maggie joining us now is Governor John Corine of New Jersey a supporter of Barack Obama also former chairman and of CEO of Goldman Sachs good morning thanks for being here let's start with what mid Romney said about Barack Obama here is the United States of America in the middle of this financial turmoil and the point that uh the governor makes is no relevant experience for Barack Obama who should be the head of the ship estate when we're in such choppy Waters well first of all I think he has relevant experience been in public life for better part of a 15 years uh I think he has shown wisdom and good choices about people he's surrounded himself with uh people that actually saw the economy grow and create 22 million jobs and have growth in the stock market I think he's meeting with uh Larry Summers and uh Bob ruin and a whole series of people and has for a very long period of time has coming up with an economic program that is about growing the real economy not spending time uh reinforcing speculators on Wall Street let's talk about this idea of this resolution trust likee entity that the government would put together it gave Wall Street a significant trampoline effect yesterday they met last night in Washington but this thing has to be done very quickly can Congress do this thing which it tends not to be able to do well there are two patterns in history one the uh RFC in the um in the 1930s in the resolution Trust Company in uh 1989 I think we need to be very care careful about how that's put together but this is a comprehensive approach as opposed to what's been going on for the last month which is we do one thing for Leman Brothers another thing for maril Lynch another thing there's no pattern to what has been happening right now I think they're on to the right format uh this is a kind of thing by the way that Barack Obama's advisers like Paul voker and Larry Summers have been advocating I believe this is a very strong step to try to stability and protect Savers Congress wants to join in a week can they do it I think that if it takes two weeks or 3 weeks they ought to take the time to get it done I think this is absolutely essential to Savers here's the thing people at home are sitting there watching this whole unraveling of this Wall Street mess and they're sitting there saying why should it be our responsibility why should the the the thrust of this responsibility end up on my back when these guys were just pigs at the TRU well I think that there's plenty of blame for Wall Street but there's also a lot of blame in Washington the fact is I agree with Mitt Romney there has been a failure to manage and supervise the marketplace and the housing market that's how we got here the real economy is weak as heck people out on Main Street know that their house prices are down they know that jobs are being lost and they know that there's weakness in the economy that then infected Wall Street and now it's going to come back and cost the taxpayer a trillion dollars probably to fix this problem and that I think somebody's going to have to be held accountable we do that on November 4th I think we need to change the economic policies of the country that's why I think Barack Obama is the one that can actually get hold of that Governor thanks so much for being with [Music] us

Wall St. Meltdown Changes Race

CBS

Transcript

Bob Schieffer is CBS News Chief Washington correspondent and the host of Face the Nation he is in Austin Texas tonight hi Bob hello Katie you know it seems to me that given this financial mess occurred during a republican Administration it must make things difficult for John McCain at this juncture in the campaign I think it's much harder for him now to argue that he can be the candidate of change it's not only his party Katie but he was the chairman of the Commerce Committee he led the effort to deregulate and now he's calling for more regulations so I think the momentum that John McCain had coming out of the Republican convention this is going to make it harder for him to continue that how does he turn things around Bob or how does he Focus the conversation on something that will benefit him and his candidacy well I think both candidates Katie are going to have to come up with some sort of specific plan it may well be that they're going to wait and see what the government comes up with and then comment on that but I think this issue is what the campaign is going to turn on now I just don't see how it can be any other way meanwhile I'm sure you're going to be talking all about this on Face the Nation on Sunday who will your guest be Bob we're going to have Hank Paulson the Secretary of the Treasury he's been pretty busy this week we'll get a report from him Sunday morning all right there should be a lot of news then on Face the Nation look forward to it Bob thank you thanks Katie

Roller coaster week for markets

CNN

Transcript

It's been a week that has rocked capitalism to its very core. Who could possibly have imagined that in a space of just a few days two Wall Street icons would effectively disappear, the US's biggest insurer would be rescued by the government, Britain's biggest home lender would be forced to merge for its own survival, and that central banks around the world would ride to the rescue of a basically frozen global financial system. Let's take a look now at how events unfolded, starting with a momentous Monday. 158 year old Wall Street icon Lehman Brothers filing for bankruptcy protection after failing to engineer a rescue deal. The bank was brought down by its exposure to subprime investments. At the same time, rival Merrill Lynch was also staring down the barrel of its own crisis. The bank was forced to close its accounts and to survive, sold itself to the Bank of America for $50 billion. Stock markets plummeted, banking and financial stocks took the brunt of the selling. Tuesday saw another crisis approaching critical mass. AIG, America's biggest insurance group, was heading to the wall. Its credit rating was cut, its stock price was in free fall, and it could no longer arrange emergency funding to keep it afloat. Markets in Europe and Asia plunged on the AIG factor. The stock price was down, and a growing crisis of confidence in Wall Street. Wednesday, and another jaw-dropping development. The Fed, which had earlier shunned AIG, came to its rescue with a $85 billion loan to the insurer. Why? It was too big to fail. More than a trillion dollars worth of assets across 130 countries. Meanwhile across the Atlantic, Britain's biggest home loan lender, HBOS, was also under enormous pressure as investors worried about its stability. Rumors of a merger. And Barclays Bank announced it was buying Lehman Brothers North American operations. Stock markets continued to gyrate wildly, so much so that Russian authorities halted trading in the stock market there. Thursday dawned with markets still falling, and the global credit market still in crisis. Fears of which financial institution could be next to fail meant banks were just not prepared to lend to each other. The money markets were effectively grinding down. The Fed's financial system was in a state of shock. The Fed's financial system was in a state of shock. The Fed's financial system was in a state of shock.

Will rescue plan work?

CNN

Transcript

Where do I start? I guess I start with, is this, in any shape or form, the silver bullet the financial market has been looking for? Is this the end to the problems? The markets seem to think so. It is not, unfortunately. It is a bullet that is needed in the fight, but there are a number of fronts that have to be fought. This is one. This is the credit crisis. They are trying to actually, what they're doing by announcing the formation of a plan that they hope to have hammered out in a very, very politically charged environment with a very short time to do it, with massive implications. They've set the bar very high. What they tried to achieve by announcing that is short-term market stability, and they actually got that. They wanted to stop the bloodletting. The panic is over for now, but what happens, and now what investors are likely to get caught up in, is really elation that is undue, and a rally that's really not going to be sustainable. Just looking at the details as we know it, the Fed could end up, or the government could end up, taking over tens, perhaps hundreds of billions of dollars worth of this toxic holdings, these instruments which are rapidly unwinding. That doesn't seem to be a particularly good solution for the U.S. taxpayer, obviously. Exactly. It's shifting the burden from the shareholders of these institutions to the taxpayer. And there's no actual guarantee that this would work. And again, if you're rallying, if you're going out and thinking it's time to buy the financials, think about the mechanics of how this is going to work. If the government's going to buy this toxic waste, they're going to buy it at very cheap prices. And write-downs are going to have to be realized. They're going to be brought to the forefront. For the financial institutions to get rid of these products and sell them to the government means realizing the losses that everyone's wondering about. And then the cost, again, the long-term implications and the cost of the tax cuts, the cost of the tax cuts, the cost of the taxpayer, and the potential loss of confidence in the U.S. government are quite astounding. You know, if the financial situation, sorry, the real systemic risk in the world is if there's a loss of confidence in the U.S. government's ability to fund itself. If the rest of the world doesn't want to keep paying, and with the rapidity with which the Fed is spending money, you know, that's not an impossibility in the future. Kirby, it's Adrian in London. As I understand it, what's being proposed here is something akin to the Resolution Trust Corps. Which came to the rescue back in the 1980s during the savings and loan debacle. I mean, it sends the wrong message, doesn't it, to the banks who've been accused of irresponsibility with these complex financial products that have got them into so much trouble. That, hey, you know, it's fine. We can take these dangerous risks. We'll always get bailed out. Exactly. I mean, which country is this? You know, is this the greatest bastion of free market capitalism in the world, or is this Venezuela, where we're nationalizing companies left and right? You know, at this point, we don't know. All I can say is this. It's been mishandled from the beginning, in my view. Paulson and Bernanke have been irresponsible all along in their calls for complacency in the market, their inaction in the very beginning, and every step along the way that got them to the point where they have to take this drastic and massive action in a very short period of time. It doesn't happen. It does send the wrong message. It tells, basically, the financial markets, you know, I think it's going to take a number of years before they're ever in a situation where they're going to be able to create a bubble, you know, that the Fed would have to rescue again because of regulation coming in. But it does send the wrong message. You know, we need to work through this pain. This stopgap, this measure, maybe it's necessary, maybe it's not. But the thing is, it's not going to take away the pain, and that's what investors have to realize. This is still going to be a painful and very long process. What we see now is, is the possibility of an end, of one portion of the credit crisis with the government coming in, but we don't see an end to the whole situation, to the housing downturn, to the decimation of the U.S. consumer that's going to drive global economic growth and global equity markets down substantially in the next year to two years. Now, Kip, I just want to pick you up on that because this was something the Fed had to do, though. I mean, you may not agree with how things have been managed, but this last week, what we've seen with AIG, $85 billion, what we've seen now with, with, this, this plan to take toxic debt, they didn't have a choice, did they? I, you know, that, that's a very difficult question. I would say, I was, as I was telling you earlier, I was in the U.S., I was watching this all day long taking place, and I was amazed. I've never seen anything like the targeted attacks that, that were happening. However, you know, maybe they were justified. Maybe these companies really do deserve to have their stocks hit. The problem was, yes, it was happening in a panic mentality. Systemic risk was perceived. Therefore, the Fed had tried everything. The Fed and the Treasury, had done so many things this week that were unprecedented. The amount of money, the, the, the, the global coordinated intervention into the money markets, pumping liquidity into the markets, did nothing. So, yes, in one sense, they had to do this. But what have they done? They've really announced that they intend to do something. And again, to get this done in a week, they've got a lot on their plate. And, and so just, what I want to say to investors is, be careful in this rally. I have a word that I've coined. It's a fallacy. That's a rally based on fallacy. And we just might be in that situation again. But, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but, but

Market Uncertainty Grows - NYTimes.com

The New York Times

Transcript

the Dow Jones Industrials and the overall Market had a very bad day again today the second one in a row together were down almost 10% on the Dow of the past two days investors are extremely fearful um we saw them rushing into treasury bills today at a rate haven't been seen since 1955 in fact the yields on treasuries were pushed close to zero it's an amazing um rush to safety that you often see during times like this um but what has happened today that was different from say yesterday or even last week when we were still in this very difficult period is that the uh wheels of Commerce um the things that really Drive uh Commerce in this country the bank lending the financing of mortgages the financing of company operations really ground to aaall today and this is very troubling to many people because what this means is we now have the chance of this financial mailstrom which up until now has been pretty much limited to the financial world you know Banks brokerage firms mortgage lending units this now has the potential to expand into the overall economy and really start translating into trouble there luckily up until now we have been um able we've been uh seeing a pretty strong economy in spite of these troubles and so now if it does start to have an impact there that's really going to take away some of the positives that we've had up until now

Morgenson on Fed's Holding Rates Pat - NYTimes.com

The New York Times

Transcript

the Federal Reserve board decided against lowering interest rates this afternoon in spite of the fact that Leman Brothers filed for bankruptcy yesterday and maril Lynch was forced into a shotgun wedding with Bank of America both of those events yesterday really rattled the stock market and today the market does not like the fed's decision at all however it really isn't going to have a great impact on such things as mortgage rates which consumers really care about the FED does not really have a lot of control over that and even though rates prevailing rates are low mortgage rates have not fallen so the decision to keep rates where they are is not necessarily going to have a bad impact on the consumer

The Importance of A.I.G. - NYTimes.com

The New York Times

Transcript

So today is Fed day, right? The day that uh the Fed decides whether to move interest uh rates down or hold them the same. There's a lot of talk about them uh going down. Guess what? Doesn't matter. That's not what the story is. What's really going on, what really matters for all the short-term blip and interest rate thing we'll have this afternoon is what's going to happen with AIG. Uh yesterday, AIG, which is teetering on the brink, um got an extraordinary permission from the New York State Insurance Commissioner to lend itself $20 billion from its own subsidiaries. Meanwhile, the Treasury Department is trying to get Goldman Sachs and JP Morgan to combine forces to help create a lending facility of, are you sitting down for this? $75 billion. Okay, that's number two. Number three, AIG and the Fed, the Federal Reserve is actually trying to work to with an insurance company to keep it from failing. Why is AIG so important? Um, believe it or not, it matters a lot more than Lehman Brothers, a lot more than Bear Sterns, and maybe even more than Fanny and Freddy because AIG has its fingers. It's the largest insurance company in in the world. It has its fingers in a million different things. It has all kinds of credit default swaps. Um uh the real explosion of derivatives that could deeply damage the financial system is AIG. So um you know you know keep your eye over the next few days on AIG. It matters a lot more than what the Fed does with interest rates today.

Economic Crisis Threatens Confidence

VOA News

Transcript

some of the tourists strolling around near the White House Thursday had other things on their mind besides sightseeing Reed CER who is 58 says he's already lost a lot of money he saved for retirement I probably lost 30 to 35% on most of my retirement accounts they're invest in various you know Market instruments so and like I said a little concerned it's very disheartening if you look at it every day so I just try not to do that at the White House there was an emergency meeting President Bush huddled with his financial advisers he reassured the public the American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence the world's major Banks led by the US Federal Reserve pump billions of dollars into the banking system in an urgent effort to stop further turmoil still as workers in New York's financial industry cleared out their workspaces after losing their jobs many expressed fear about the future uh I think it's very overwhelming I think that the climate is just extreme it's scary people are nervous about their finances um the end of the day I mean it's it's just very nerve-wracking many investors rush to buy Commodities like gold or super safe treasury bills which yielded their lowest return since World War II investors like Denise Rollins are worried about the future I think that it's going to get worse even worse before it gets better um I'm hoping I'm going to be optimistic that it's going to get better but at the way great things are going now no time soon Financial analysts say the United States has now entered a time of tight credit which could have a widespread impact on everything from college loans to retirement plans maredith bule vaa News Washington

World's Central Banks Join Forces

VOA News

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[Applause] The decision by the US and other central banks around the globe to pump 180 billion dollars into money markets sent key European and US stocks sharply higher on Thursday. But the massive cash influx came too late for some markets in Asia. Across the board, uncertainty over the stability of US investment banks sent key Asian stocks deeply in the red. Please proceed to the counter in Singapore. Hundreds of nervous customers still reeling from the bailout of the world's largest insurance company waited in line to check their insurance policies. One South Korean analyst said investors there are still worried that a second or third US investment bank could fail. The US government has invested hundreds of billions of dollars in recent weeks to rescue financial institutions battered by the crisis in housing and credit markets. On Thursday, President Bush canceled a fundraising trip to focus on the economic challenges facing Americans. 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. In London, British Prime Minister Gordon Brown said worldwide economic reforms are needed to maintain stability in world markets. This is global action that is needed to deal with a global problem and in our own country we will do whatever is necessary. But Russian President Dmitri Mediev was one global player absent from the team effort to stabilize world financial markets. Instead his government is focused on boosting the liquidity in domestic markets by pumping 500 billion rubles into the financial sector. There's no more important task for Russian authorities than stability of our financial system under the current circumstances. Right now, this is our Russian markets remain closed Thursday after Russian stocks fell to their lowest level in three years. Millar Sean, VA news.

Where Wall Street Went Wrong

CBS

Transcript

what could or should the SEC possibly have done to um either react sooner or avert the crisis altogether well again that's an extraordinary situation it's hard to say what they could have done um in hindsight it's relatively easy to say well now we know that part of the problem was the economy the brokerage firms got overleveraged the sec's along with other federal agencies had the right to control the amount of Leverage so they could have intervened earlier as the amount of Leverage we also see in hindsight that short trading has had a dilar effect on the marketplace again the SEC has the right to regulate that and they could have if it was the right thing to do inter intervened on a short selling activity earlier I think it's unfair to hold Mr Cox personally responsible can the SEC as an organization be criticized sure they should bear some of the criticism of what's happened in hindsight there are things they should have done that they could have done earlier again one of the problems for the SEC historically is they rely on being a reactive organization they use the division of enforcement to prosecute people after there's been a problem and here where you have a systemic problem that sort of mechanism of Prosecuting after the fact isn't the best way here it's not as important to find out who was responsible for the fire but maybe should have stopped there ever being a fire