The mounting crisis in the USA which affects the whole world gets
attention throughout the press today. To reproduce all of it here
would be to over-burden readers! (I’ve read most of it!) .
But I find that The Times has the most comprehensive ‘take’ on the
crisis (certainly the Telegraph and the FT, while good, add little)
so I restrict this morning’s summary to that paper.
One thing is clear, and Newsnight’s American contacts agreed, is that
a clear polikcy must emerge rapidly (“before the weekend”) or “a
failure to produce legislation within days could have violent
financial consequences”
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THE TIMES 25.9.08
1. McCain and Obama to meet Bush for crisis talks on economy
Tom Baldwin, Alexi Mostrous and Tim Reid, Washington
John McCain sought to seize back the initiative in the presidential
race by asking Barack Obama to postpone tomorrow's televised debate,
suspend campaigning and return to Washington for crisis talks on the
economy.
His dramatic announcement came just hours before President Bush
delivered a sombre TV address to the nation warning that "our entire
economy is in danger" unless Congress agreed swiftly to his $700
billion rescue package for stricken financial institutions.
The White House last night said that Mr Bush would meet both of the
candidates vying to succeed him today, along with Congressional leaders.
Mr Obama and Mr McCain also issued a joint statement, saying: "The
plan that has been submitted to Congress by the Bush Administration
is flawed, but the effort to protect the American economy must not
fail. This is a time to rise above politics for the good of the
country,” it said. “We cannot risk an economic catastrophe.”
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2. Congress delay on Paulson rescue plan hits money markets
Gary Duncan, Economics Editor and Suzy Jagger in New York
Global money markets were racked by fresh convulsions yesterday as
Henry Paulson, the US Treasury Secretary, and Ben Bernanke, Chairman
of the Federal Reserve, struggled to persuade America’s sceptical
lawmakers to pass their $700 billion (£378 billion) bailout plan for
Wall Street.
Severe strains in the markets for short-term lending between banks
were reignited by mounting anxieties over the fate of the rescue
scheme as it ran into resistance in Congress.
Growing market alarm over the repercussions should the scheme be
rebuffed also sparked a renewed flight by investors for the sanctuary
of short-term US Treasury bills.
Shares succumbed to another sell-off. In London, the FTSE 100 index
closed down 40 points at 5,095.6. The Dow Jones industrial average
closed down 29 points at 10,825.20.
Mr Paulson and Mr Bernanke implored lawmakers to approve the plan
swiftly. In his latest plea, the Fed chief said: “Action by Congress
is urgently required to stabilise the situation and avert what could
be very serious consequences for our financial markets and economy.
Choking of credit is taking the lifeblood away from the economy.”
Mr Paulson urged Congress to support his rescue package “I understand
that this is an extraordinary ask, but these are extraordinary
times,” he said. It emerged last night that he was willing to accept
limits on executive pay at banks using the proposed bailout fund in
an attempt to push the Bill through.
The rescue plan won backing from Jack Welch, the respected former
chairman of General Electric: “Thank God we have Bernanke [and]
Paulson. We have to act. I now believe we are in for one hell of a
deep downturn.”
There was also reassurance for fearful investors from Warren Buffett,
the billionaire investor, as he sank $5 billion of investment into a
stake in Goldman Sachs in what was widely interpreted as a vote of
confidence in the new landscape on Wall Street.
However, Mr Buffett sounded a warning that markets remained in a
“dangerous situation”. “I am, to some extent, betting on the fact
that the Government will do the rational thing and act properly,” he
said.
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3. Nagging questions remain over bailout plan
Gerard Baker
The debate in Washington over the $700 billion bail-out plan for the
US financial system is starting to resemble a plot from the
television show 24.
Hank Paulson, the Treasury Secretary, yesterday stepped up his
efforts to persuade an increasingly reluctant Congress to pass the
legislation needed for the scheme. But members of Congress from both
parties are angry at what they regard as moral blackmail by the
Administration and the banks that will benefit from the plan.
“Wall Street’s like a suicide bomber in a movie theatre,” said one
adviser involved in the deliberations.
“They’re standing there with 200lb of explosives stuck to their chest
and saying ‘If you don’t do exactly as we say, we’re going to pull
the cord’.”
After the initial relief that greeted news of the proposal last week,
there is rising uncertainty; not only about whether it is right to
funnel all that taxpayers’ money into Wall Street but about whether
the plan is even going to be effective in stopping the rot. But
there’s an understanding, too, that a failure to produce legislation
within days could have violent financial consequences
( - - - - - - - - - - - - - - - - -)
Yet with Wall Street’s clock ticking, the plan’s critics probably
don’t have enough time to fashion a much better alternative. And even
those critics acknowledge that failure to pass a bailout could have
apocalyptic results.
In short, there may be only one thing worse than the Paulson Plan: No
Paulson Plan.
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