The intensifying American banking crisis threatens the stability of its economy and the world’s. Global financial stability has been shaken and America is facing a growing economic crisis that could make the 1930s look like “good times.” The U.S. banking system is on the verge of disaster,
as banks have recorded over $100 billion in losses, with hundreds of billions more forecasted.
US BANKING CRISIS?
The new banking crisis, though, is political interference.
The state now owns large chunks, even majority chunks, in some of our biggest high-street banks.
The politicians who arranged this initially said they had no desire to interfere in how
the banks ran their business.
I said at the time they wouldn't be able to resist. I was right.
European banks face an entirely new wave of losses in coming months not yet calculated in any
government bank rescue aid to date. Unlike the losses of US banks which derive initially from their
exposures to low-quality sub-prime real estate and other securitized lending,
the problems of western European banks, most especially in Austria, Sweden and perhaps
Switzerland arise from the massive volumes of loans they made during the 2002-2007 period of
extreme low international interest rates to clients in eastern European countries.
Obama's Banking Crisis Plan
Obama On Banking Crisis: We Can't "Prolong The Agony"
PRESIDENT OBAMA:
Well, you know, Wall Street I think is hoping for an easy out on this thing and there is no easy out. Essentially what you've got are a set a banks that have not been as transparent as we need to be in terms of what their books look like.
And we're gonna have to hold out the bandaid a little bit and go ahead and just be clear about some of the losses that have been made because until we do that, we're not going to be able to attract private capital into the marketplace. And so, you know, I think that you have two choices in this situation: you can prolong the agony and shareholders will be happy until they're not happy and that could be a year from now or two years from now or in the case of Japan, eight years later.
Or you can just go ahead and acknowledge that yeah, there's, there's a lot of work that has to be done to put these banks back on a firmer footing.
The Raleigh speech kicked off a planned two-week push by the Obama campaign on the economy — most of it
taking place in battleground states that went for Bush in 2004. This week he's talking mainly about
short-term fixes "to help working families who are struggling to keep up"; next week, his aides say,
the focus will be on the long run.
The latter plays to Obama's strengths, as he can wax eloquent about
the nation's need for investment in education, infrastructure and clean energy. For now,
he and his advisers are reciting the details of his three big short-term priorities:
a new $50 billion stimulus program, much of it routed into extending unemployment insurance
beyond the current 26-week limit and helping struggling state governments; a more aggressive
foreclosure-prevention effort, with $10 billion in funding; and a tax cut for Americans making
less than $150,000 a year — to be financed with tax increases on those making more than $150,000 a year.
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The federal government offered $30 billion more in taxpayer money to help A.I.G.,
which is preparing to report a $62 billion loss on Monday.
March - 2009
President Obama on Saturday described his expansive budget proposal as "a threat to the status
quo in Washington", and cast himself as a populist crusader willing to do battle with special interests.
Feb. - 2009
The economy is spiraling down at an accelerating pace, threatening to undermine the Obama
administration’s spending plans, which project growth in years to come.
Feb. - 2009
The economy shrank at an annual rate of 6.2 percent last quarter, the government reported Friday,
suggesting a deeper recession.
Feb. - 2009
Questions began to swirl after the Treasury Department announced on Friday that it
would increase its ownership in Citigroup.
Feb. - 2009
