Filipino workers struggle amid economic downturn

Al Jazeera English

Transcript

58-year-old benedicta T is preparing for the worst on a tight budget she takes care of the family home and her many relatives with money sent to her by a sister in Hong Kong now she's worried the global financial crisis could leave her sister unemployed we live on what she sends us she says it built the house puts food on the table and pays the bills it would be a big problem if she loses her job it's all we have benedicta says her sister solidad left for Hong Kong 22 years ago to support the family she's been working there as a domestic helper ever since they get around $200 from her every month it's barely enough to survive there are 8 million overseas Filipino workers or ofws that's 10% of the country's population now last year they sent home some 15 billion US doar remittances from the ofws are what kept the Philippine economy afloat for ofws returning home if even for a short visit is a cause for celebration their remittances this year are expected to reach some $8 billion us but there are growing concerns that the global financial crisis will cause problems here in the months ahead because their money is already our protection but next year will be a different story especially when you r when you renew contracts and uh people will not have the same secur job security as you're having right now president aroyo has said the government is working on a contingency plan to make sure the economy doesn't weaken no details have yet been revealed but there are those who say the government isn't handling the matter correctly the government is also uh is hent in implementing also the the uh the neoliberal policies of the regulation privatization and liberalization where there there are more and more Filipinos who will be out of jobs and that uh more and more migrants will be you know will be forced to to migrate for benedicta it's an unending cycle two of her brothers tried their luck abroad and came home defeated now anise has also left to seek employment elsewhere philipin Filipinos blindly leave the country for the sake of our families she says but so many lives are broken homes are ripped apart just to put food on the table three times a day financial crisis or not for benedicta and millions of other Filipinos reliant on OFW remittances they believe it's time the government found a way to keep their relatives home the hope is if the focus can shift to searching for long-term solutions to poverty and unemployment Filipinos might eventually be able to support their own economy from Within

Inside Story - Arab Stock Markets in Crisis - Oct 9 - Part 1

Al Jazeera English

Transcript

Arab stock markets recover slightly after recording their steepest losses in one day. Despite official assurances, investors are panicking and markets are still shaky. How vulnerable are Arab financial markets and do they suffer from the same problems as Western markets despite fundamental differences? This is Inside Story. Hello, I'm Nick Clark. The Middle East markets are slowly recovering after taking a hit as the global financial crisis unravels. On Tuesday, the major indices in the region fell for a straight third day. But some analysts are still worried even after government intervention. Shireen Tadros reports from the Doha Stock Exchange in Kata. For a while, it seemed as though Gulf states were immune to the financial crisis. Not anymore. In the last three days, the seven Arab stock markets in the Gulf have shed around $150 billion dollars of their capitalization. Abu Sultan has been trading at the Doha security market here in Qatar for over 10 years. He says the market has never been worse. We didn't expect this. Even as we watch what's happening to the US economy, it still came as a shock how badly it hit us here. Most stock markets in the oil richch Gulf states suffered heavy losses this week. A round of interest rate cuts by central banks, leading to a temporary rise on Thursday. Traders here at the Doha Stock Exchange say investors are quickly losing confidence in Gulf stock markets. The smaller and more volatile the market, the riskier it's seemed to be. That's why foreigners are essentially withdrawing their funds, making citizens here even more jittery. As the global credit crunch deepens, investors in the Gulf and across the Arab world are panicking, causing stock exchanges in Dubai, Riyad, Doha, and Cairo to plunge amid falling oil prices and fears of a real estate bust in the Gulf. Amongst traders, there are mixed opinions about how serious the crisis is. fear gripped investors are selling their shares. That's the reason why the market tumbles. You just need to spread rumors to see small investors selling all they got. We have one of the best uh uh shares with a super yield with an excellent dividend. There is no reason whatsoever for me as a as an investor to be out of the market. Are we at risk? The answer is not long-term risk. The degree of risk is minimal. As far as the GCC economies are concerned, conceptually the macroeconomic fundamentals are strong. The oil prices stable and functional. Arab governments meanwhile are reassuring investors, not just foreigners, but also Gulf citizens who have billions of dollars worth of investment in US Treasury bonds. The Arab countries are immune from the property credit crunch and the derivatives that caused this problem in the Western world. But the problem may also be psychological. Even if Gulf states are not directly affected by falling prices in the US, the perception that there's a global recession is affecting confidence. Gulf markets in recent years have climbed substantially. Analysts fear that may also mean they have a long way to fall. Shireen Tadros Al Jazzer at the Doha Stock Exchange for inside story. Well, joining us today to examine this are our guests in Cairo, Muhammad Tamour, chairman of the Egyptian Capital Market Association and also chairman of Ferris Holding for Financial Investments. And in Beirut, Jad Jaman, a former economist at the World Bank and acting president of the Lebanese Economic Forum. Welcome to both of you. Now, first I'd like to get a picture of who's potentially at risk in this region, who's buying and who's selling, who's investing. Uh Dr. entertain and Cairo. Is it just big wealthy investors in companies or are other small investors exposed too? Well, I think everybody's at risk. Maybe small investors more than big ones. Be uh small investors in Egypt have been uh beginning for the last three or four years to invest more and more into the uh stock exchange. And uh you know since May the Egyptian stock exchange have been drifting lower and lower and of course in the last two days or 3 days it plunged about maybe 25% although it can recover today about 3%. But many of the people who are really hurting now are small investors. Just a demonstration of the wild fluctuations of the market at the moment. I understand that there's some plenty of money coming back into Cairo despite everything that's going on. Yeah. Yeah, I we we are seeing a strange phenomena now. Uh many of the big investors or the rich people who have funds in Switzerland or London or what have you uh are now transferring money back into Egyptian banks uh something that we have not seen for quite some time. Frankly, they feel that Egyptian banks are safer and and frankly Egyptian banks have uh strong uh uh financial positions all of them because of various reasons that we can discuss if you want but the phenomena of money coming back from Switzerland to to Cairo is something new so it would suggest that there is some confidence in the region. Judge Shabban in Beirut. Yeah. Yeah. It's a sort of demonstration of a flight to safety. I mean uh many people of course now are buying US treasury bills. Uh but some Egyptian may feel, you know, if they bring their money home next to them, they will feel safer, particularly when they hear about, you know, big banks in Europe and the US uh going bankrupt. And Jabban in Beirut, that confidence echoed by the Saudi Arabian monetary agency who says the country is not exposed to the global financial crisis. But earlier we watched um the Saudi Arabia lose what 10% of its market value in one day. Doha securities down 20% something like that over over the course of the week. It would suggest that the region is very exposed. Well, you know, I think investor uh confidence overall in in all markets is uh is disappearing and many investors are thinking that stock exchanges and buying stocks is not anymore safe investment and um I think there's a big move especially from big players to reallocate their portfolios and make them into better positions and this is reflecting itself on the Arab markets. Um although we we thought before that there's a lot of liquidity in the region and that the Arab markets might be immune to all these problems, it is apparent that Arab markets are not immune to confidence. There's a rush to sell and we're seeing this everywhere. But why is there this panic? I mean to to an outsider this region is a wash with cash, isn't it? It's assetbased. There's uh petro dollars practically erupting through the floorboards. Well, you know, uh there's a lot of theories in economics and finance that try to explain investor behavior and u there is not really a single explanation why people panic and it's really psychology at this time that's driving a collective decision to move away from stock market investments and go to safer maybe real estate maybe other types of safer investments. um you can have a very good economy with good fundamentals like the states and uh one trigger caused many investors to u run away from markets. I think this is an indicator that uh our Arab markets are still not really transparent and that information about investments in is not flowing in the proper way. There are many governance issues where companies are not filing their proper fundamentals and stock exchanges. We see some companies that are doing very well but the whole portfolios are not really organized in a way that inspire confidence and that's why at every blink or every small shock everyone panics and tries to withdraw their money or maybe you know like you heard in regions try to shut down the stock exchange altogether. Uh Dr. Tamar, Mr. Shabban mentioned there getting into real estate. If you want to get into real estate, Dubai is not the place to be right now. But why is that? I mean, why is Dubai not the place or why do people go into real estate? Why is Dubai not the place to be right now? Well, frankly, I'm I I don't follow very much the real estate market in Dubai, but we all know that maybe there have been some exuberance in in the pricing and uh the amount of uh supply that's coming to the market and at one time things have to to let go and uh I don't know whether I have reached that point or not yet. Would you say that generally Middle Eastern markets are more sheltered than than western ones? I think I mean if you want to be rational about it, yes. Uh I mean most of the economies in the in the area of the Middle East are doing well. Uh Egypt for example, we are growing now at above 7% per year. Uh and we have been consistently doing this year after year something that we have not seen for many years. uh but again I mean once you have this global systemic failure uh the the degree of uncertainty of about about the future becomes so overwhelming that even if you you if you think rationally about your situation now you really cannot predict what will happen three or six months from now and as such you try to go to to much safer uh investments and certainly equities is a is a more risky asset than uh and many other investments. Judge Jaban, there is pretty big Arab investment in the United States. Something like $2 trillion dollar, I think half of it in Treasury bonds. It's got to hit someone pretty hard, isn't it? Uh well, you know, the Treasury bonds are kind of a safe investment. uh what is really worrying is uh financial instruments and derivatives that are indexed on the stock market and that were managed by the big financial institutions and the big uh investment banks in the states. There were many products that uh you know multiplied in the last few years selling almost anything from uh options on the carbon dioxide to um stock shares in companies that are in emerging markets to ind to even buying uh financial assets based on indices. um and Arab wealth funds and sovereign wealth funds were investing a lot in in many different portfolios and I think because of the excess liquidity in the region they were searching for profitable investment and that's that was the right thing to do however they were caught by what we call now moral hazard there's a lot of non-transparency along the chain of financial analysis of financial information Marcus we're not reflecting the offbalance sheet items of many banking and insurance institution and you know if one block fell everything followed and the problem is that the markets were not factoring this in and especially not Arab investors they they and other investors were not having enough information about the real risks behind their investments all right gents we'll leave it there just just for a moment we're going to take a very short break and when we come back we're going to examine what the possible solutions are to the crisis in the Middle East and how do they differ from the west. We'll be back in just a moment.

Inside Story - Arab Stock Markets in Crisis - Oct 9 - Part 2

Al Jazeera English

Transcript

hello again and welcome back now Central Bankers in the Arab and Gulf countries have tried to reassure investors promising to inject liquidity into the markets they've already lowered interest rates in Q8 by one and a quarter percentage points and pump 14 billion dollars into local markets in the UAE going Beyond conventional wisdom some Gulf investors are finding Creative Solutions for example in Q a stock broker filed a suit to compel the government to temporarily close the exchange to curb losses other suggestions include widening the application of Islamic banking to minimize losses and eliminate secondary trading in bad debts and finally diversifying investment into less vulnerable Regional and other Arab markets instead of the traditional Western countries well we're joined by our guests in Cairo Muhammad tamore in Beirut Jud Jaan and joining us now from Dubai am hammed who's a professor of economics and president of El gazer research and development Mr hammed if we could start with you let's just examine the uh potential of these alternative ways forward first of all shutting down the Q8 Stock Exchange it's happened in Russia briefly in various places is this something that you would Advocate that would work yeah well uh the measures that have been taken so far uh we cannot consider them as a long-term measures what we need in the long term is more or less some kind of uh structure structural adjustment for the different Arab economies and restructuring of the economies to establish solid grounds to avoid uh any problems in the past however what we have seen today that the measures that have been taken including lowering the interest rate by the Central Bank of Kuwait for instance they have uh positively affected most of the markets we have seen the markets in Dubai in Egypt in Kuwait and in Qatar going up uh today with maybe the exception of Saudi Arabia which went down by 1.5% which I would say is not that bad actually in light of what happened the last uh two week the last week judge Shan what about this concept that the method of Islamic banking could be the way forward as a means of kind of ensuring against the fluctuations wild fluctuations that we've been seeing in Western markets uh the you know the method of uh Islamic banking is just based on risk sharing agreement between the depositors and the banks or the investors and the banks it's based on a non-interest agreement but also a kind of a cost sharing and risk sharing agreement which in uh these circumstances may not really work because uh we're beyond the point where few Corrections in the short term can work it's a time to reflect you know I kind of tend to look at these problems as a signal that something is going wrong and that um Arab stock markets and those managing them need to really think why are these markets not reflecting strong fundamentals and fluctuating in a way that makes them look completely dependent and um this is strange this is a a situation that requires uh thinking a bit uh in an Innovative way and trying to uh maybe reconsider companies that are listing themselves on the stock markets and seeing who are the companies that really qualify with you know strong dividends strong growth prospects and allowing them to continue to be indexed I think a rethinking of the index is something that should be envisioned instead of relying on shortterm fixes if you want Dr tore no artificial trading in bad debts would be a good thing for Western markets to to get stuck into wouldn't it yes it would but it doesn't apply much to our I mean region uh here we speaking about equities and uh dealing with fluct huge fluctuations in equity I think in in the Middle Eastern Market will not settle down unless you regain confidence again and unfortunately we will have to get the queue from the Western uh stock exchanges I don't think we will see a settl down to Basics in the in the stock exchange in our area until we see Wall Street and London and Paris and and [Music] markets but for example the Pension funds in Egypt they have very minor amounts of their money in the stock market I think two or 3% uh if they're allowed to move and and take advantage of the fact that now the prices are very attractive uh maybe they will help stabilize the market and we would see begin to see more rational thinking coming back mamed here in in Kata we're surrounded by half-built buildings and skyscrapers a huge amount of investment into Doha the capital city here if foreign investment is pulled out of countries like Kata uh as the crisis continues what kind of effect will that have on the region very interesting question last night uh I was visiting a cityscape exhibition in Dubai and I was I have to admit that I was surprised by uh the hundreds of projects coming up uh real estate projects is coming up not only in Qatar but in Dubai in Abu Dhabi even in Oman and people are buying in spite of the fact that we have all these bad news or negative news uh spreading all over the world but people are still buying in the Gulf mainly in Dubai uh well we have to admit that if we look at uh it's very important I agree with Dr tamur first that uh markets in the in the Middle East are a sponge of what's happening in the rest in the big markets of the world like America and Europe and Japan and so on but it's very important for a theoretical and analytical standpoint to separate uh between what's happening in the world and what's happening in the Arab uh markets uh the Middle East Arab markets because if we take the exam I will go back now to the real estate in qar but if we take an example of Egypt for instance the problems of Egypt did not start last week they did not start with the full in Wall Street uh the problems in the stock exchange in Egypt in Egypt started on 55 May 5 with some internal or local govern economic government regulations that were taken in a hurry and affected the market which dropped in one day from 12,000 points to about 9,000 points and then later on the other things came so this is Egypt if we talk about Dubai and maybe cutter at the same let let me just bring in Dr tamore at that point I can see you're not in agreement with this no no no I'm I'm not saying no actually I do agree that what happened on the 5th of May was uh some of the particularly the the removal of the tax incentives for offshore companies uh I mean was not at all a smart thing to do by the government but the index did not drop from 12 to 9,000 in in one day it took uh quite some time to for this to happen that's the only thing I wanted to uh to to refer to okay it did not go down by 25% in one one day it took it actually it's now 50% below what it was in May but this happened gradually except of course of the beginning of this week when we we had a drop of about 20% or a little bit more okay well let me pose this question to you uh we've got big problems all over the world right now if you've got money to spend and you don't want to put it on the stock market in this region in the Middle East where would you put that money am hammed first of all where would I put that money that's a very difficult question I would go to uh a heaven Center like maybe uh Switzerland or uh Japan or something like that actually yeah this is more or less like some of the stable economies but if I want to invest in the Middle East I would go into stable uh buying stable agricultural land for instance or something like that J stable agricultural land is that is that good for you well you know for stability now judge please continue no I agree with u Dr I think tyur um you know when investors are facing troubled times this is like ancient as from ancient history they buy land and real estate seems a good option now but also I would think that you know keeping your money in local currencies in local bank accounts is also a good idea like you know uh term deposits in local currency because these uh you know they're always backed by local government and local central banks so you avoid exchange rate risk so this could be also another option so do Dr Tamar in about 20 seconds uh what's your view would you keep it local no I I would uh I I don't like to put all my money in in in the same basket I would put some money in deposits in the local banks certainly I would put some money in treasury US Treasury builds which is uh certainly safe and then I would enter the market now the stock market and actually that's uh that's already happening I think the the prices now are quite attractive and unless you assume a doomsday scenario for the whole world uh you should get in now and not all your money but put 20% there all right Dr Tavor sounds like you're a pretty canny fellow thanks very much indeed and thank you all for your time gentlemen and thank you for watching this edition of Inside Story we'd love to hear from you email us at insidestory al.net bye for now

US consumers lose faith in financial system

Al Jazeera English

Transcript

[Music] in Seattle in 1999 anti- globalizers thought they could bring down the worldwide capitalist economy by demonstrating in September 2008 Wall Street proved banking to be far more destructive AS Global money froze up Bankers had to beg the US government for a gargantuan bailout anti-globalization activist Samir danani is trying not to gloat now he accuses the World Bank and interational monetary fund of abetting the United States in what he calls Reckless capitalism there's an element of uh I Told You So about the whole thing uh at the same time we realize that for marginalized constituencies for folks who are earning a dollar a day $2 a day uh this is disaster David rotho is a former American Trade official he writes about the US role in the Global Financial system and says tough choices lie ahead if you're a historian and you're 50 years or 100 years in the future and you're looking back at this period you will see 9/11 as an important moment but you will see the Meltdown of September 2008 uh as far more significant we're going to have to fundamentally rethink that kind of conception of American exceptionalism that has enabled us essentially certainly in the Bush Administration but but but for most of of recent American history to operate as we want to when we want to and how we want to there's an added challenge the head of the World Bank says developing nations need American and Western assistance now more than ever the scope of this problem is much larger than what we can uh deal with so we're well positioned to be of help but what we also have to try to do is continue to get the developed world to follow through on their Promises at least one of the presidential candidates says things need to change and that International coordination might be the new American catchphrase the problem is we still have a archaic 20th century uh regulatory system for 21st century financial markets we're going to have to coordinate with other countries to make sure that whatever actions we take work the next US president faces a challenge fewer and fewer countries seem ready to look to the us as an economic model but more and more Nations expect the United States to take the lead in cleaning up the current Global Financial mess next by Sir Al jazer Washington

A Plan to Combat Global Credit Crisis

Associated Press

Transcript

at today's meeting of the G7 Finance ministers and Central Bank Governors we finalized an aggressive action plan to address the turmoil in the global financial markets and the stresses on our financial institutions this action plan provides a coh coherent framework that will direct our individual and Collective policy steps to provide liquidity to markets strengthen financial institutions protect Savers and enforce investor protections the G7 is compelled to robust International partnership and cooperation never has it been more important to find Collective solutions to ensure stable and efficient financial markets and restore the health of the world economy Global Financial market conditions are severely strained in the United States our economy has been facing a prolonged period of uncertainty and our financial markets are experiencing unprecedented and and extraordinary challenges a root cause of this situation is a housing correction and a lack of confidence in mortgage assets as well as a lack of confidence in many of the financial institutions that hold these assets we are squarely focused on the immediate need to stabilize our financial markets and recognize that investor confidence is critical to restore liquidity and enhance the stability of our financial system as recent developments have demonstrated ated the market turmoil is a global event governments around the world have taken actions to address Financial Market developments and international cooperation and coordination has been robust it is critical for government governments to continue to take individual and Collective actions to provide much-needed liquidity strengthen financial institutions enhance Market stability and develop a comprehensive regulatory response we must continue to closely coordinate our actions and work within a common framework so that the action of one country does not come at the expense of others or the stability of the system as a whole central banks from around the world have acted together to provide additional liquidity for financial institutions taking the necessary steps to support the global economy the Federal Reserve has established swap lines with nine central banks to reduce pressures in global short-term US dollar markets Additionally the US Treasury implemented a temporary guarantee program for the US money market mutual fund industry

Asian Markets Tumble During Friday Trading

Associated Press

Transcript

what started as a massive sell-off on Wall Street on Thursday led to huge losses throughout Asia Friday no matter what the market stocks were way down in Japan the Nik tumbled more than 9% falling to its lowest level since May of 2003 it also included the collapse of insurance giant Yamato life which was more than $100 million in debt stocks in Australia also fell more than 9% Australia is still sitting on about a$2 billion uh fiscal Surplus so Australia really is in Fairly good shape but we're clearly getting caught up with what's happening on a global scale Australia and Japan were not alone stocks in Hong Kong Singapore and the Philippines were all down about 8% trading in Indonesia was halted entirely stocks opened way down in Europe as well it's a complete loss of confidence I think the market is still searching for bottom for support and uh the the bottom won't come until the investors are convinced that stability has returned to the financial markets right now the uh in Europe and the US the financial markets are still in turmoil so I think uh the market will still continue to search for bottom uh I think the market still has some downside the Dow Jones Industrials fell nearly 700 points on Thursday they'll start Friday below 9,000 for the first time in years there have been declines in each of the past seven Trading days as the Dow has lost nearly 21% of its value in hopes of calming investor fears the president will address the nation at 10: in the morning but no new policy initiatives are insed only one good sign for consumers the price of oil which hadit a one-year low of $83 a barrel on Friday that's down more than 40% from its all-time high Brian Thomas the Associated Press

Bush Pained by Economic Anxiety

Associated Press

Transcript

after yet another nose dive on Wall Street the Dow losing nearly 700 points in its opening minutes President Bush came to the Rose Garden to say he feels the pain of Americans anxious at seeing their nest eggs vanish that anxiety can feed anxiety and that can make it hard to see all that is being done to solve the problem and that he says is a lot starting with a $700 billion mortgage bailout plan passed by Congress it is the right plan it will take time to have its full impact it is flexible enough to adapt as the situation changes and it is big enough to work meantime Bush says the fed's aggressive lending and rate cutting at other steps should give renewed confidence fellow citizens we can solve this crisis and we will this is the 20th time in the past 23 days that the president has either announced actions to shore off the markets or voiced words of confidence but increas recing L those words are falling on deaf ears and in the meantime the crisis has gone Global with staggering sell-offs from the trading floors of Tokyo to the borses of Europe to World Financial Chiefs in Washington for their annual meeting the need for a Global Response is clear there is a need for members of the G7 and the G20 to come up with some sort of a plan or at least start to uh come up with a plan that can be coordinated globally that can help um unfree uh this lending environment but the question is what plan and whether another package built in Washington can free up a global credit Market that's effectively ground to a halt Mark Smith the Associated Press the White House

First Person: Stock Slides, GM Workers Worry

Associated Press

Transcript

uh I've worked 30 30 years at GM well run assembly and Warren powertrain it's it's a thing that uh every American should be concerned with because our great auto companies like GM and 4 they uh they're the backbone the driving engine that that created the middle class in America they helped us win two world wars and we kind of ignored them until it's almost too late I get a pension from G uh I worked 30 years for and they give me a nice pension check and they pay me and my wife's health insurance and um right now uh if they would happen to go bankrupt I would that government agency would take over my pension and I'd probably have to take a 35% cut in pay like a lot of people are right now in the job Banks and they don't know when they're coming back and so it's a little scary right now for everybody I think we're still okay just one of those things Cycles well honestly I I'm I'm kind of surprised that the stock is down as low as it is um uh disappointed really we due to get a statement um this month so I really haven't seen my statement I haven't called I don't want to call but I'm hoping for the best

Get the 101 on 401K, Retirement

Associated Press

Transcript

you should have a long-term strategy for your retirement uh portfolio in any case and generally speaking that's going to mean for example somebody nearing retirement um should be about 60% or so uh equities and right now presumably their portfolio is down considerably and is no longer has an allocation of 60% we feel you have to to stay the course um the problem with getting out of of stocks is that you don't know when to get back in and inevitably we are going to see this Market turnaround and at that point in time you need to be there so that you capitalize on that rebound otherwise what's probably going to happen is you going to wait this out in bonds and then lo and behold once the market is back up you'll be buying high so um selling low and buying High is not the way to go anyone approaching retirement would probably be well served to have some additional emergency funds we certainly recognize that if you haven't retired yet you're probably looking at delaying retirement quite frankly that's what's going to be one of the results um if you can't stay the course then we understand and and uh you get out of the market but you have to understand this uh important significance of doing that it's not an advisable strategy for most people yes I think uh if you have retired um that you're in a de even different situation and there the key is to cut back as much as you can if you have not retired yet nearing retirement one of the things that we think could be very beneficial to you is anticipate delaying taking your R your Social Security until at least uh you reach full retirement age and maybe wait all the way to 70

Londoners Protest British Economic Rescue Plan

Associated Press

Transcript

who's Crisis crisis who's money our money who's Crisis crisis who's money our money in London crowds converged on the steps of the bank of England to protest a bailout plan to rescue European markets from a Global Financial meltdown while in Washington President Bush tried to calm investor and public anxiety about the American economic rescue plan the bank of England is offering 10 billion dollars to flood a strained Financial system with cash the European Central Bank and the Swiss National Bank of also contributed to a total of $120 billion the European plan is similar in many ways to the $700 billion Wall Street rescue plan in the United States around the world the financial sector is wary of lending to anyone including other Banks and credit is becoming scarce European central banks have been offering cash to financial institutions on almost a daily basis for several weeks but stocks continue to fall some experts fear a recession that's not St stopping angry British protesters from facing off with police the bank of England says it will continue to make itself available to needy financial institutions officials hope that these and other features of the European economic rescue plan will help stop a Global Financial meltdown Diane kepley the Associated Press

Money Minute: GM, GE, Oil

Associated Press

Transcript

aap money minute general motors is likely to announce further production cuts and possible plant closings as early as next week an ap source says the cuts likely will hit engine transmission and stamping operations and correspond with truck and suv plant closings that were announced in june oil prices plunged to a 13-month low friday crude for november delivery fell eight dollars and a penny to close at 78.61 a barrel in new york crude has now lost about 47 percent since hitting a record of 147.27 on july 11th tumbling as a deepening credit crunch wreaks havoc around the globe general electric spared investors any nasty new surprises as it reported a 22 drop in third quarter earnings meeting its own lowered forecast and blaming the decline on its struggling financial arm looking ahead ge said it remained on track to meet its 2008 earnings forecast which it lowered by about 10 percent last month i'm james limbach with ap money minute

US Stocks Extend Huge Losses

Associated Press

Transcript

the day on Wall Street began right where it left off stocks tumbled more than 689 points within the first half hour of trading the Blue Chip index plunged 678 points Thursday and is heading to its worst weekly Point drop and one of its biggest weekly percentage drops since it was created 112 years ago Frozen credit markets and a loss of confidence in the world's Financial system have caused the Dow to drop 21% in just 10 trade in days that fear is causing many people to worry about their own Financial stability it is looking pretty bad right now as far as the 401ks and everything and for retired people and all that stuff it's looking real bad right now I'm very nervous because I work for the United States Postal Service and they told us we was in the red we're in a $6 billion deficit and they're not aware of if we're going to make our payroll for the next month Friday's gations were likely worsened by the computer-driven buy programs that kicked in when prices fall far enough to make some stocks look like attractive bets I think also that what put additional pressure on the market was uh the concern about the rating agencies uh reducing their um their ratings for uh General Motors and uh also additional concerns for some of the major Banks and whether they're going to see additional pressure on their prices Etc at the start of Friday's session losses for the year total a staggering $8.3 trillion the Dow's low in wall Street's last bare Market was 7286 reached on October 9th 2002 Blue Chip sank as low as 7882 early Friday before recovering some of those losses James limbach the Associated Press

Wild Swings Drive Morning Trading

Associated Press

Transcript

investors are seeing a domino effect today as stocks crumble across the globe in Wake of yesterday's massive selloff in the Dow Asian markets reported huge losses Japan's nay closed almost 10% down hitting their worst single day loss ever European stocks are also taking a beating London Paris Frankfurt all seeing 7 89% drops in Russia trading has halted altogether indefinitely right now the markets everywhere are ripe with fear fear that everything we're seeing right now indicates that we're plunging head first into a global recession interest rate Cuts bailout packages nothing seems to be working to bring confidence back into these markets investors now turn their focus to the group of seven meeting today amongst the Global Financial authorities to see if they can coordinate an international effort to stop the economic turmoil yesterday the Dow had its second worst single day point loss ever 678 points wiped off the board all in the time span of 1 hour and unfortunately the Outlook doesn't look any better today yesterday we already hit below the 9,000 level and investors are wondering whether or not it's time to throw in the towel or hang in a little bit longer now if the Dow takes an 1100 Point hit in a day then trading would halt altogether investors are not expecting that to happen but given these volatile markets they're not counting anything out in New York Bonnie go the Associated Press

As Economy Sinks, Panic Rises

CBS

Transcript

yesterday was another typical day as far as this week was concerned with plenty of losses on Wall Street it got to be about three o'clock in the afternoon and the bottom fell out we're all well aware of that but then what happened next what happened in Asia what happened in Europe well the news has not been good the dow dropped a staggering 679 points yesterday closing below 9000 for the first time in five years over the past seven sessions the dow is plummeted more than twenty percent nearly forty percent from its all time high of above 14,000 exactly one year ago the slide and Wall Street is also brought down some of the biggest blue chips GE Boeing an American Express have all seen their stock values cut by more than half general motor stock fell below five dollars a share a level not seen since the 1950s I lost twenty four thousand dollars the tailspin on Wall Street has hit many retirees hard like Diane and Frank mayor who rely on their 401k retirement savings have any pension check all we have is our 401ks and savings and it keeps shrinking down like this and the cost of everything keeps going up the Federal Reserve and the Treasury Department have promised to pump more than a trillion dollars into the financial system but that hasn't put to rest fears that the credit markets would remain frozen CBS News correspondent Sheila MacVicar is in London and she's been keeping an eye on the European markets Sheila good morning good morning Harry well the question for many traders here this morning is how many ways can you say tanked in London as across Europe markets open sharply down in London the footsie index the leading 100 largest stocks opened nearly ten percent down and below 4000 points for the first time since 2003 now there's been some studying in recent recent hours of training not down quite so much still hovering around 4,000 but what traders and analysts are saying this morning is that the situation is very close to and the word they're using is panic that the markets are drowning in a sea of red number and that the fundamentals have been dispensed with now in spite of the bailouts in spite of the injections of billions of dollars of cash we are still seeing no confidence in the markets they say and that there is no confidence especially between the banks the banks are still not lending to one another and as long as that's not happening the system remains stuck and imperiled Harry all right Sheila MacVicar in London this morning thanks we now want to check in with CBS News correspondent Barry Peterson in Tokyo with the latest on the Asian markets very good morning good morning Harry well you know by rights I shouldn't be standing here because the Japanese economy is really in pretty good shape the banks are solid so I think what we're talking about out here is more about emotion than economics like today investors were spooked when a small Japanese life insurance company and a real estate investment company went belly-up they were the first victims of the global economic meltdown add that to bad news from Wall Street and you had a record bad day on the tokyo exchange but look at what's happened in the last two weeks to Tokyo market has lost almost a third of its value now Japan's biggest fear right now is that Americans will stop buying this country depends on exports to live and if Americans close their wallets factories and companies here won't just feel the pain Harry they will be howling in agony all right thanks very much Barry Peterson in Tokyo we're joined here on the floor the stock exchange by stock exchange by Andy Sherrell who is the editor of Forbes magazine thank you so much for taking the time to speak with us now just listen to these two reports Sheila MacVicar used the word panic right Barry Peterson in Tokyo talked about emotion not economics is this what this isn't really about fear fear is at the core of it Harry I mean but what you have to understand is all the subprime all those derivatives all those terrible investments that we've made all the borrowing that we made as Americans both as individuals and as a nation are now coming back to haunt us it's a perfect storm of problems and here it is roosting and really the fear is curing us for nothing to end it at this point nothing to end it no good sign there's a big meeting a big g7 g8 whatever you want to call it over the weekend in Washington all these world leaders hopefully working together in concert is there any sense that maybe they'll come out with an answer well we really hope so of course so far federal regulators have been unable to stem the tide you know we've had a bailout we've had the saving the commercial market a truly a commercial paper market that's right we've had interest rate cuts we've had jawboning by the feds and everything has not helped at this point maybe a coordinated global effort is what we need it's certainly worth the trial will tell you that here's the here's the question everybody talks about credit markets credit markets credit markets what all of this infusion of money people are still not lending to up to one another the banks are not letting the interest rate that the banks used to lend one other is still at relatively speaking astronomical how does that get cut loose you know that is a psychological thing people just don't trust each other if I'm the Andy bank and you're the Harry bank i'm still looking at you saying you know what I just don't know whether he's going to pay me back next week I'm just not sure because i don't know about his business I don't trust him the way I used to you know it's like someone who kind of ripped you off when you were buying borrowing five bucks room you're going to lend them five bucks again well maybe not you know when its simplest terms its human interaction and trust and it's very hard to get that going you know back in the 1930s FDR shut banks down will it come to that we think we have to fear is fear itself that's the line in the server thank you so much to appreciate

Eye To Eye: Economic Crisis

CBS

Transcript

what does the government need to do here well there's two problems there's a credit crisis a freezing of the credit markets and there's a uh a recession uh and both of the the combination of these two is uh causing a financial Panic which we're seeing uh acted out on our screens the government can really do something they can take some uh strong action on the credit freezing uh because fundamentally this is about uh the faith uh and and the trust uh between these institutions between big Banks uh and and what not you could put the full faith and credit of the government of the United of the United States Behind These institutions how do how do you do that well you there's a number of ways you could do it one way is you can buy a big piece of the banks uh the Brits have done this uh they have essentially purchased about a third of their four largest banks uh you can guarantee interbank loans uh they've also proposed doing this and I think these are the things that are being discussed over the weekend quite frankly among all of the major uh Nations uh of the world because we're all in this together at this point does there need to be a coordinated Global Response here I think there does because we are in a uh coordinated Global recession at this point uh if it was contained to one or two economies you could let those governments deal with it this is global you can see it in the major uh developed economies and in the emerging economies and that's where it's infecting very quickly right now so this is spreading very fast I think it's even bigger than the G7 at this moment you need a full global coordinated response and if we don't get one if you don't get one you're taking a a very bad recession a global recession and you're going to make it uh much more severe how much time do we have we don't have very much time this is uh I think it's a you know it's a matter of uh days weeks you have to unfreeze the credit markets here right now and it's going to have to be a coordinated effort otherwise you're going into a very severe recession which will be more severe than what we've experienced in the post-war period uh so in the early ' 80s we had a bad recession in the mid '70s we had a very bad recession uh this will end up uh being worse than that if we don't act soon MH time is of the essence I mean this is the the lesson of everything that's been going on in 2008 is that uh while there have been policy mistakes many years ago that led to this problem uh the actions taken this year have essentially been uh just a step behind a step too late

Frozen Credit: The Real Scare?

CBS

Transcript

the stock market meltdown may have everyone transfixed but experts say that's just a sideshow compared to the real crisis we're seeing a freezing of the credit market credit markets have to start functioning again but just what are the credit markets unlike stock markets they aren't tied to trading floors instead credit markets are driven by the world's largest banks they borrow billions from each other then turn around and loan it to smaller institutions and industry but in the past month they've nearly doubled the interest rate they charge each other spooked as a parade of once solid business partners go under get bought or beg for rescue right now hoarding cash is the game that's being played cash is king and i'm not going to give up my cash and give it to you and find out that your coins or your stamp collection is valueless and you'll never pay me back even the government's promise to buy 700 billion in bad assets has increased the wheels the problem we have is that the fear is rising faster than the policy responses are keeping up the option the fed is now considering buying up stocks and big banks follows a similar move by great britain two days ago this is not a time for conventional thinking but market expert michael greenberger says that approach has its own risks you might just go and buy stock at a certain price only to find that the markets get worse and the capital infusion doesn't work and the value of the stock collapses and the american taxpayers left holding the bag that's why some refer to it as the nuclear option but faced with the prospect of a severe recession the white house and the federal reserve may conclude it's the only option to unfreeze the credit markets and stop the stock market slide nancy cordes cbs news washington

Has The Market Bottomed?

CBS

Transcript

we're here with Alexis Glick from fox business news vice president over there does the morning show over there dode knows everything there is to know about the financial markets you're just showing me a piece of paper what's on there yeah i was just saying i have a piece of paper here for harry and basically it shows you the price swings historically that have occurred on the sp500 dating back all the way to the depression on average the markets correct forty percent that is precisely where we are right now for the sp500 and the dow so you know look so that being true a bottom we are very close to a place of capitulation and and the reason we want to see that here is we want to see volume behind a move yesterday was really the first day where we saw substantial volume behind the decline now believe me there are guys here who told me yesterday in the last hour of trading that it resembled the crash of 1987 it was that challenging last we could you sell fast enough they really couldn't end and so look today will be challenging particularly because of Asia and what is happening in Europe most of the European diseases a second day this week the Nikkei went down what more than nine percent exactly and Europe right now across support is down seven eight percent right the key here is this weekend the weekends are usually when the FDIC if they need to do something with a universal bank to take them over I just want you to remind you though we've had 13 banks this year either fail over into assisted mergers not one person has lost FDIC insurance right talking to one of the most well-known banking analyst before and he said Alexis the commercial banks fine do not panic in fact commercial banks right now are gaining more asset right because people are selling things like their stocks and sticking him and regular regular deposit accounts but here's the problem though panic breeds panic there was nothing but panic yesterday there's been panic all week there's panic in Europe this panic in Japan what happens today does anybody really know nobody really knows listen this is going to be a challenging day I've worked in this business for a long time and people are scared but the weekend is important because you have a three-day weekend the bond market is closed on Monday it is a bank holiday here in the United States it is a bank holiday in Japan now the equity markets are expected to be open on Monday but this gives the Fed the time the Fed the Treasury they need to come up with a plan this weekend to shore of these financial institutions and this could give them the kind of time so when we walk back here next week perhaps we put that of course I remember so this big g7 g8 meeting this weekend down in Washington and maybe I lexically thank you so much we'll get through what I promise was scared i'm scared thank you very very much

Part Analyst, Part Therapist

CBS

Transcript

I'm Michelle Miller in New York it's like rearranging chairs on the Titanic 30 years on the street and Mike Sawyer doesn't know what to think 12 more days like this the stock market will be at zero he's only half joking Sawyer hears the fear in the voices of his investors he was a client who just said I'm really nervous I'm getting ready to jump I need to talk to you just to make sure you kind of can talk me off the ledge that's a challenge even at one of America's most prestigious firms remember that old commercial they make money the oldfashioned way they earn it today it's less about money- making than old-fashioned handholding we need to be the calm one we need to be the stable one so we talk a lot about that investors everywhere are on edge most people are frighten out of there which are you part analyst part therapist that's a great way to put it so when the closing bell sounded the therapists still had work to do Michelle Miller CBS News New York you

Wall Street's Weeklong Wipeout

CBS

Transcript

it was the end of an exhausting week and this was the market's eighth straight losing day as wall street just couldn't put the brakes on this wild ride call it red october the only business in the world that when they have a fire sale nobody comes in the eight trading sessions this month the dow and the s p have both fallen 22 percent a kind of slow motion crash the fear has gotten to irrational proportions we're now assuming i think that when this is over none of us are going to be living in houses anymore as this week-long wipeout ended treasury secretary henry paulson and fed chairman ben bernanke began a series of meetings with the finance ministers of the g7 the leading industrialized nations does there need to be a coordinated global response here i think there does because we are in a coordinated global recession at this point economist lakshman achathan and if we don't get one if you don't get one you're taking a very bad recession a global recession and you're going to make it much more severe the u.s government reportedly is considering taking ownership stakes in major banks and guaranteeing loans between banks when the government steps in and says we'll make good on these loans if the if the bank cannot that greatly increases investor confidence that they will get repaid president bush again tried to reassure the nation today just as fdr repeatedly did in his fireside radio chats during the great depression it is the right plan it will take time to have its full impact in other words we are moving as fast as the mechanics of the situation will allow we're in this together and we'll come through this together together we cannot fail as nervous investors have been pulling billions out of the markets one business has been profiting sales of home safes are up 75 percent according to america's biggest safe maker yeah we'll check on sales of mattresses next week some traders are hoping the steep sell-off late yesterday and early today it was a thousand points in just a couple of hours finally signal to bottom they're also hoping the g7 will come to the rescue this weekend maggie that'll be quite a show of force all those leaders together anthony do you think they need to come out of those meetings with a concrete plan for a solution or just reassurance that they're working on this together i think they'd like to see a plan and in fact we've just heard from secretary paulson that the u.s government intends to move ahead and take ownership stakes in some major banks that's big news the g7 also just issued a statement saying they intend to take decisive action and use all available tools these are the kind of hopeful signs the market is looking for exactly right anthony mason thank you

Asian markets tank

CNN

Transcript

Well, in Tokyo, the first bankruptcy filing of this crisis was filed this morning in Japan. Yamato Life Insurance has filed for protection from creditors. It says falling securities investments have left it with $2.7 billion in debt. You just can't find any good news right now out of Asia. Let's get some more perspective on the turmoil here in Asia. We're joined here in the studio by my side by Stephen Golop, CEO of Taish Group, also from Tokyo, Patrick Moore, an equity strategist with Nikko City Group. If we can start with you, Patrick, you're watching it happen there again today. After Wednesday, you might have thought you'd never have another day like this, like that. It is happening again. What do you make of it? What's causing it? Well, yeah, in that sense, it certainly is a deja vu. It's just absolute panic selling. We're down about 10% today. That makes us about 25% down over the last five days for the Nikkei. Okay. I've never seen anything like that. I've never seen anything like it. It's absolute panic selling. So how do you explain it? Well, it's certainly a reaction of the markets to the turmoil that we're seeing in the United States and Europe. Credit markets are just simply not functioning. And we're seeing a very confused response from Europe with the monetary authorities and how they're reacting to some of the banks there. And we're seeing a very confused response from Europe with the monetary authorities and Europe. We need to see resolution. We need to see tarp in action. And it's going to take a bit more time. You know, there's been a problem with the Japanese stock market for a long time that foreign investors really control the market and set the tone for the market. And so, you know, we're seeing redemptions. We're seeing, you know, people pulling money out of international funds. And that supply and demand is really hitting the market hard at the moment. Patrick, I'll get you to hang on there a minute. We're going to bring in Stephen Golop now here in the studio in Hong Kong. Stephen, you're watching this as is everyone else involved across Asia. Some analysts are saying there needs to be more from policymakers, deep, unprecedented as the actions have been. They're not enough to put spine into the markets. Yeah, I agree. I mean, we've seen stimulus and a number of them, but nothing's actually had a real effect. We've seen it. You know, everything has been announced so far and it hasn't been dealt with terribly efficiently either, which hasn't helped the matter. And it's a problem. At the end of the day, it's all about confidence. And you've got to get the confidence of the investors back. And it's so far removed from investing at the moment. That is because there's just simply a lag effect, an inevitable lag effect between what policymakers say they're going to do, for example, the bailout in the United States. And when it starts to actually get money going through it, is it just that or is something a whole lot bigger needed? It is much deeper than that because we've had a decreasing amount of confidence going right throughout the year, basically. And we've seen very good stocks dumped at very good values and they've carried on going down. They get better value, get dumped again. No, nobody is looking down. They're buying just at the moment. And there's no confidence in the turnaround. And you can say that the measures are going to take time to come through, but the market is not seeing the point when they are coming through in the future. They're not reacting to it. Now, you talk about value. Of course, people have to make an assessment not about the value of a company as it was, but the value of a company as it will be in a new environment about which people really are still making their own assessments. What is the overall view that you hold of where the world economy is going to in 2018? What are you hoping to see in 2019? Put it this way, I wouldn't be investing into US or European stocks, not Western markets primarily. I'd be away from for a very long time indeed, I think now. I still think emerging markets. I still think Asia has value and is looking much better to come out of this. China has just come through with IMF looking at 9.3% growth next year, which is stunning. And there's great companies very cheap there. So I wouldn't be selling and I'd be looking to buy soon, I hope. Well, let's put that idea to Patrick Moore there in Tokyo. Are you seeing value? Are you seeing bargain? Yes. Are you seeing bargains or are you seeing just a race for the exits? Absolutely. We are telling clients take advantage of this volatility at the moment to go in and find some great companies. And the first factor in your screen should be balance sheet quality. Make sure the company has cash on its balance sheet. And you'll find some stocks there that have been kind of the baby thrown out with the bathwater, that have just been caught in the wave undeservedly. And make sure they've got price to free cash flow as well. So that even if the crisis intensifies, they'll be able to see through the storm, so to speak. So I do see values at these levels. Well, we'll see how many others join you in that view and see if we can get some life back in these markets. Patrick Moore from Nikko Citigroup and Stephen Golub from Taish here in Hong Kong. Thank you, both of you. Thank you, everyone.

Bush: Anxiety worsening crisis

CNN

Transcript

We have witnessed a startling drop in the stock market, much of it driven by uncertainty and fear. This has been a deeply unsettling period for the American people. Many of our citizens have serious concerns about their retirement accounts, their investments, and their economic well-being. Here's what the American people need to know. That the United States government is acting, we will continue to act, to resolve this crisis and restore stability to our markets. We're a prosperous nation with immense resources and a wide range of tools at our disposal. We're using these tools aggressively. Fundamental problem is this. As the housing market has declined, banks holding assets related to home mortgages have suffered serious losses. As a result of these losses, many banks lack the capital or the confidence in each other to make new loans. In turn, our system of credit is frozen, which is keeping American businesses from financing their daily transactions and creating uncertainty throughout our economy. This uncertainty has led to anxiety among our people. And that is understandable. But anxiety can feed anxiety. And that can make it hard to see all that is being done to solve the problem. The federal government has a comprehensive strategy and the tools necessary to address the challenges in our economy. Fellow citizens, we can solve this crisis. And we will. Here are the problems we face and the steps we're taking. First, key markets are not functioning because there's a lack of liquidity. The grease necessary to keep the gears of our financial system turning. So the Federal Reserve has injected hundreds of billions of dollars into the system. The Fed has joined with central banks around the world to coordinate a cut in interest rates. This rate cut will allow banks to be able to make more money. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. We will not be able to do this without the help of the federal government. 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Financial market mayhem

CNN

Transcript

Obviously, we have huge problems right now in the financial markets. There is a complete breakdown of confidence, and I think people are looking intently to that G7 meeting, hoping that they come up with some sort of solution that will give people a sense that they have their grip on what's going on. Listen, you had this massive bailout plan by the Fed. You had the plan here in Britain to rescue banks, which is one plaudits all around the world. The British government has done pretty well here. We had those coordinated rate cuts from central banks. Why hasn't it had any impact on confidence? Because people are so fearful right now. What they fear is that the central banks and that governments can't fix what's going on. What they're fearing is that we are having a crisis. We are having a complete breakdown of the system and that we are heading for a global recession. Some people even fear a depression. Now, I think that's a bit extreme, you know, if you compare it to the 1930s, but there's no doubt about it that we are in the mother of all financial meltdowns for anyone who is a post-generation depression person. To this generation, it would feel like a depression. Absolutely, because we really haven't experienced anything like this. And this comes at a time when house prices are falling, all right? People are worried about their jobs. We saw how much money we had. We saw how much the markets are down in the last 12 months, and that's ripping a hole through people's pensions and through their ability to go out and spend. It's very serious. So what's it going to take? What will fix this? Well, that's a great question. That's what I think a lot of government officials are also asking themselves. I think, first of all, you're going to have to have a global coordinated effort. Right now, it's been piecemeal. I think the UK came out with a great plan earlier this week, even though the market continues to fall. Basically, what has to happen, you have to have on a global scale, you have to have a global scale that all interbank lending is guaranteed. That would be one thing. You have to have the massive effort on a global scale to recapitalize the banks. And at the same time, I think you're also going to have to have fiscal stimulation because the interest rate cuts that the central banks are doing isn't enough. And while this will all cost a lot of money, it's going to cost a lot more if we don't do more. Listen, I want to ask you something. You and I, we talked on a daily basis on CNN for a good couple of years. And you've been bearish for a long time. I mean, hence the nickname, Bearish Benjamin. You saw it coming. Why didn't the rest of the world? Why have we got this action by governments now? Why wasn't it taken six months, a year ago? Well, first of all, you know, we're all brilliant in hindsight, all right? But having said that, I think the problem was they should have acted a lot sooner. Yeah. And what they should have done, as soon as they saw how the impact of the subprime crisis was starting to rip through the markets, they should have at that point, because the losses were mounting, the write-offs were mounting, what they should have done at that point, they should have come up with a plan to, you know, recapitalize the banks. Even when Congress, you know, announced recently their bailout package, which they passed, that $700 billion bailout package, Hank Paulson, Treasury Secretary, was emphasizing basically buying up the toxic debt. He had it wrong. It wasn't a liquidity crisis. It's a solvency crisis. Now the Treasury is thinking, oh, we're going to start emphasizing basically renationalizing the banks. It could happen within weeks. And now they're getting on track. But hey, he may have been great at Goldman Sachs, but he hasn't done a great job as Treasury Secretary.

Poland's economic outlook

CNN

Transcript

How well is Poland positioned against the global economic downturn? We have completely rebuilt Poland after the famous 1989 Solidarity Revolution. And you were a former Prime Minister immediately after the war. It happened, yes indeed. And we rebuilt it like this castle, I may say. Because this castle looks nice, but it was rebuilt 30 years ago. And Poland was completely rebuilt 20 years ago. And what is important during this process? To really establish a sound foundation. And this castle looks nice, and Poland indeed is based on such a solid foundation, macroeconomic solid foundations. And we never exaggerated, even though we had more prime ministers than football players, even though we never exaggerated, we never exaggerated. We never exaggerated. We never exaggerated with macroeconomic policy, with imbalances, these famous mistakes. Nonetheless, the finance minister yesterday was asked by certain politicians to try and adjust the budget, which is coming out at the end of the year, because of what's happening around the world. But the finance minister practically last night did not exclude the possibility of adjustment of the budget. But what he said very clearly to the opposition was, listen, today the situation is extremely dynamic. Today it's difficult to say what could happen by June next year. Let's approve what we have, let's stick to our strong beliefs, and then be flexible next year when the situation is changed. But we heard the head of the IMF yesterday, Dominic Strauss-Kahn, speaking in Washington, saying that the world is on the brink of a global recession and may not begin to pull out until the end of 2009. That could be the case. Nevertheless, let me clearly emphasize that the IMF is not always right. I remember in December 1976 I wrote a piece for the Polish newspaper when I suggested that the world could face some problems, contrary to the opinion of the chief economist of the IMF, Rogoff, who said that the future is bright. So today they are maybe a bit pessimistic too much. I think that we observe over the last couple of days really acceleration of the process. And I can't believe that we could last for many, many, many months to come without a breakthrough. Firstly, in the financial sector, and secondly in real economy, even though the price could be a slowdown or even recession. Do you think that it's possible that the global economy will recover by the end of next year? I think that the financial sector will start its recovery rather even sooner. And then, of course, this flu will affect also the real economy and they will also have to adjust. But first, this financial sector has to adjust. There were some excesses and mistakes, fundamental mistakes, and other optimistic monetary expansions. So there's a lot of mistakes to be corrected. But then, following the financial sector, which is always six, seven, eight months ahead of the real economy, the real economy will recover. And then, in the financial sector, we will start to adjust. And then, in the real economy, we start adjustment. A final question. An emerging market, Poland, and it was Dominik Strauss-Kahn yesterday who said that it would be emerging markets who would help keep the world economy afloat. How well protected is Poland, do you believe, from this economic downturn? It's a good point because you distinguish Poland from emerging markets. And this is important because in the past we used to say Eastern Europe, Central Europe, or wherever. But now we say, really, that Eastern Europe is differentiation, that some countries are doing better than others. And Poland is really resilient. How much we be resilient is a good question, of course. Well, as you have been many times throughout history. We'll have to leave it there. We do have this defiant spirit. That's really a pretty good expression used by Prince of Kent many, many years ago during the Second World War.

Stressed out stockbrokers

CNN

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The faces tell the story. A week of unforgiving trade across Asia's stock markets has ratcheted up the pressure here in Hong Kong as day after day stockbrokers deliver more bad news to more clients. When I saw my clients losing money, I just felt really sad. It's like no future at all, which makes me feel really depressed. In the full glare of the press, some seem exhilarated, others exhausted. There's a little more than one hour left in the trading week here in Hong Kong, and what a week it's been. One for the record books for all the wrong reasons. Traders here won't forget this week in a hurry. Brokers from Hong Kong to Tokyo say these are the worst market conditions they've ever seen, surpassing the... Asian financial crisis that sends stocks tumbling across the region. I've been trading stocks since 1971. I can't remember such a dramatic drop in stock prices in such a short period. It's actually quite unbelievable. It's just a situation of panic selling. At this point, we're saying it's gone beyond credit crunch. This is crisis. The long, tough days take a psychological toll. I would have been in a hurry. I would have been in a hurry. I would have been in a hurry. I would call my clients after work and tell them to stay calm and wait. I won't tell them to sell all at this moment, because the market may go up again the next day. So normally I just tell them to keep watching, and maybe there's still another drop off. With the clock ticking towards the 4pm close, the traders begin thinking about life outside the brokerage, making plans for a massage, karaoke or dancing. At least I can step away from the market. I'm not going to be a marketer. I'm going to be a marketer. I'm not going to be a marketer.

The psychology of economics

CNN

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The American Pronunciation Guide Presents ''How to Pronounce Lemming'' MILES O' Feel a little like a lemming these days? Well, you're not alone. Listen up, fellow lemmings. The free fall isn't over yet. JOHN LEMMING, People are running on a motion, and there's a tendency just to basically throw the baby out with the bathwater. MILES O' But the stampede down Wall Street began rumbling years ago on Main Street. We might have seen it if we bothered to look. Our houses became ATMs, and we use them to fill our McMansions with mixed stuff. That's risky, and it can be fun while it lasts, but it's a pretty hard fall. MILES O' No kidding. That's behavioral economist Richard Thaler, who spends a lot of time trying to get inside our heads. His latest book is called Nudge, Improving Decisions About Health, Wealth, and Happiness. We have that tendency to follow what other people say. We have that tendency to follow what other people are doing, and we apply it even when the herd we're following is jumping off a cliff. But the herd mentality isn't always bad. Let's say you're in a strange city. You're hungry for lunch. You don't know where to go. What do you do? You find a restaurant like this one with a big long line. Surely these locals know something about this place. It's a good meal, right? Right. Really what I should be ordering is the chicken Caesar salad. I'm trying to watch the calories. I'm trying to watch the calorie intake a little bit. Economists call that a cold state decision. Cold and calculated. But when you get in here, I wish you could take a whiff. It smells great. Take a look at those fries. Temptation takes root. This has become a more tempting society. Easy credit, you know, when you get a new credit card solicitation every week. So while this is the meal of my cold state intentions, inevitably this is what happens to me. I take one whiff, one look, and I get the cheese fries and the milkshake. Economists say decisions like that are made in a hot state. And if you're making financial decisions that way, you're in for trouble. Everybody knows that we don't make great decisions when we're aroused. And people can get financially aroused. And suddenly we're running toward the cliff. But here's something you may not know. Lemmings don't really do this. It's a myth made popular by this Disney documentary. Too bad we can't say the same about us. Miles O'Brien, CNN, San Francisco.

What next for investors?

CNN

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The way you do it, instead of giving money to the incompetents, you let the incompetents fail, then the people who are competent take the assets and start over. I mean, this is insane. It has never worked propping up failing institutions. The Japanese tried it in the 90s, the Americans tried it in the 70s, it's never worked. But don't you think it's a case of if you don't do that, you're going to lose a lot of good institutions as well? Because the psychology is that this is not picking out the winners and the losers, the laggards and the well-managed ones. It's everything's being thrown out here. Of course everything's being thrown out. We're in a liquidation phase. But after you throw everything out, the competent and the solvent will recover, and then they'll start over. Look, South Korea went through this in the late 90s. They had a horrible two years. They've been one of the most rapidly growing economies in the world for the last eight years. Russia went through. They went through it in the end of the 90s. They had a big boom after two years of pain and horror. This is the way things work. Propping people up has never worked. Okay, so you... Especially with incompetence like Paulson and Bernanke. Oh my goodness. You let it go. You let the market take care of itself. Let the losers disappear and perhaps some winners as well. But isn't that left with this, you know, a rebuilding stage which could be a recession in the U.S. for years. You talk about Korea bouncing back after three or four years and Russia and so on and so on. But can the U.S., being such a big economy, being such a widespread hit there, could it bounce back that quickly? Or you're looking basically at global recession, perhaps depression, for a few years, aren't you, with that plan? Japan still hasn't come back. It's 18 years later, and their stock market is 75% below where it was in 1990. They still talk about the 90s as the lost decade. Look. We had a horrible, horrible decade of excess. You have to clean that out. You think we just say, well, we had all this excess. Okay, now we're going to start over this afternoon, and nobody's going to have to suffer some pain? Oh, please. What about all the people who saved their money, paid their mortgages, didn't get overextended, and now they have to get ruined to take care of some people who are incompetent or perhaps in dishonest? Okay, Jim, just hold it there for a moment. That's not even good morality, and it's certainly not good economics. Okay, I'm hearing you. My colleague in London, Richard Quest, has a question for you as well, Jim. Richard. Well, Jim, I mean, the good old-fashioned free marketeer, Jim Rogers, is always good to hear this idea of sweep it all on, you know, let the market will take care, get rid of the bad boys. But, Jim, that ignores one very simple point, and that is governments are responsible to their electorates, and therefore policymakers have to have a response. It is not up to government. It is up to the government just to sit on their hands and say, guys, take care of it yourself. Richard, so you're suggesting that Ben Bernanke, who doesn't understand markets, doesn't understand economics, doesn't understand currencies, is supposed to tell us what to do? Oh, my goodness. Why don't we get the tooth fairy in this, too? No, no, no, no, Jim. You can't have it both ways. You cannot have it both ways. You can't have this, which is exactly the way your argument is developing. You are basically saying the market is going to be a good place. The market will sort itself out. Let these institutions go to the ball. And, oh, and by the way, the very same people who are running these institutions may be fired, but other people within them will take over. I'm sorry, Jim, it doesn't work that way. Government has to step in at some point. Well, in your world, yes, governments have to do it. And that's what the Japanese have been doing for 18 years. And they still are suffering. It still hasn't worked. Jim. It's never worked, Richard. You know that, if you've looked at your history. Yeah, OK, Jim, if I just just, obviously, there's two fairly diametrically opposed views there. But, Jim, what you're basically saying here is get used to it. We are looking at perhaps a decade-long global recession. That is the only answer to this. Surely, there must be a better way than this. There must be maybe a compromise way, maybe that the government can do something to guarantee something. But you just can't at this stage let the whole thing go, can you? The way we're going now, you're right. It's going to be a decade or longer, just as the Japanese have taught us, just as America taught us in the 1970s. We're going to have to take some pain no matter what. I'd rather be sharp and sharp and deep now and have instead of having to go through 15 or 20 years of this. OK, let me ask you this question. How does the world come back? What sort of shape is it going to look like? How do you stop it happening again? You leave it alone. I promise you. If Morgan's there. If firms go bankrupt. They're not going to be doing this again. None of their peers, none of their competitors are going to be doing it either.

US Stocks Plummet 7%, Dropping to Lowest Point in 5 Years

VOA News

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[Applause] the day began with the US stocks on the rise investors cheered by the coordinated action of central banks which had cut interest rates worldwide by the end of the day investors had lost confidence the move would restart stalled credit markets and the Dow Jones Industrial Average fell more than 7% dipping below the 9,000 Mark for the first time in 5 years meanwhile White House spokeswoman Dana Pino confirmed Thursday the government may buy shares in some of the nation's Banks to calm Global Market turmoil the US bailout package adopted last week gives the administration that power this is a dynamic situation we still have a volatile uh stock market and secretary Paulson is looking at all the different tools to figure out which one should be used at what time and how robustly and how much money to put into each meanwhile as the world's economic leaders gathered at the international monetary Fund in Washington the IMF Chief said the world is on the brink of a global recession the crisis is serious the crisis is protracted but nevertheless we see that the end of 2009 will be the beginning of the recovery Dominique Stan says Nations must work together to avert a global recession stasan says the IMF also activated an emergency program allowing the fund to provide loans more easily to emerging countries in economic distress also in Washington World Bank president Robert zelich said those countries must not be forgotten especially as food and fuel costs rise the poorest cannot be asked to pay the biggest price for the poor the cost of Crisis can be lifelong in New York Thursday's sharp drop was the seventh consecutive day of losses meanwhile in Europe where stocks had posted gains earlier in the day the continent's markets declined by as much as 2.5% Robert Rafel VA news