Despite a coordinated move by central banks across the planet to cut interest rates, stock markets continued their downward spiral yesterday. Media reports are casting the global rate cuts as unprecedented, and reporting the market's response in ominous language with some analysts now suggesting the crisis could be even more severe than previously believed. ABC World News, for example, said last night in its lead story, "Like a wildfire that cannot be stopped, the global financial crisis is spreading," and NBC Nightly News reported, "If you look at the recessions in this country going back to the '40s, the stock market falls an average 34% before bottoming," and "we are just past that point now. The only question: Will this be average or something worse?"
The Washington Post reports, "So stark are conditions that the International Monetary Fund and other economists now expect the United States to enter a recession this year, with surging unemployment." Another Washington Post piece says "the global situation continues to unravel," and "authorities are most concerned that financial institutions are starved for cash. Even banks that have enough capital to cover their projected losses are increasingly unable to borrow the money they need to fund daily operations."
Reporting on yesterday's rate cuts, the Financial Times says this "historic piece of international co-ordination marks an effort to curb the risk that the intensification of the credit crisis could lead to a severe global recession." The Christian Science Monitor reports "volatile stock prices and frozen credit markets have now pushed the world economy to the brink, and central bankers may have felt they needed to do something dramatic to stop rising panic and fear."
The Wall Street Journal also notes the "emergency" action, and calls it "a sign that fears that the financial crisis could cripple the global economy are spreading rapidly." McClatchy says traders ignored "the very rate cut they'd been clamoring for." The AP adds the markets "in the end...settled on a familiar feeling -- fear -- and plunged again." The Dow Jones industrial average "lost another 189 points, or 2 percent, to close at 9,258." The Washington Post, meanwhile, reports "the broad based Standard & Poor's 500-stock index lost about 1 percent with a decline of 11 points, and the Nasdaq composite index dropped 0.8 percent with a 15-point loss."
The AP reports, "Investors had been hankering for a rate cut, and they were clearly happy with the central banks' actions. However, they were also aware that in the near term, the credit markets remain tied up because banks are reluctant to lend." USA Today notes "the Dow has now fallen about 35% from the closing high of 14,164.53, reached a year ago Thursday. This week, the Dow has lost 1,067 points, or 10.3%." The Wall Street Journal, Washington Post, New York Times and Financial Times run additional stories on the market slide.
More optimistic is the Los Angeles Times, which reports on its front page, "There are signs that conditions are in place for a sharp reversal of sentiment, some analysts say." For evidence, "they cite rock-bottom interest rates, tumbling prices of oil and other commodities, and not least, concerted efforts by central bankers to get the global economy back in gear."
The New York Times says the rate cuts "failed to calm gyrating markets," due to "the growing realization that a serious and prolonged recession may be difficult to avoid." The Los Angeles Times notes "Federal Reserve Chairman Ben Bernanke had hinted Tuesday that another rate cut was on the way, saying that, with recession on the horizon, slowing economic growth would reduce demand and moderate price increases."
The Wall Street Journal reports Treasury Secretary Henry Paulson "urged governments around the world to continue working together to boost liquidity and strengthen financial institutions." He "expressed confidence that recent moves by the US Federal Reserve in conjunction with other major central banks could help stabilize the financial sector."
Meanwhile, the Wall Street Journal reports Treasury Secretary Paulson "played down the chances that the Group of Seven major economic powers would unveil any global plan to confront the widening financial crisis." Paulson "said the G-7 countries will likely go their own ways when it comes to using tax or spending policies to respond to the credit crunch." The Washington Post notes Paulson also said that "he planned to convene a meeting of the G20, a broader group that includes emerging economic powers such as Brazil, to discuss the challenges facing the world economy."
"Many Economists" Blame Greenspan In a front-page story headlined "Taking Hard New Look At A Greenspan Legacy," the New York Times reports, "If Mr. Greenspan had acted differently during his tenure as Federal Reserve chairman from 1987 to 2006, many economists say, the current crisis might have been averted or muted. Over the years, Mr. Greenspan helped enable an ambitious American experiment in letting market forces run free. Now, the nation is confronting the consequences."
The New York Times reports, "Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials." The Treasury plan is "still in preliminary stages," and "resembles one announced on Wednesday in Britain."
The AP notes Treasury Secretary Henry Paulson said yesterday that even with the rescue "program to buy bad assets from financial institutions, some banks will fail. He also called for patience saying 'the turmoil will not end quickly and significant challenges remain ahead.'" Fox News Special Report also noted the Secretary said "the $700 billion package passed by Congress does not exist...to save every financial institution." Paulson was shown saying, "Therefore, a second prong in our strategy is designed to mitigate financial market disruption when a bank fails." As part of their reports on the financial crisis, both the CBS Evening News and ABC World News showed footage of Paulson saying, "The turmoil will not end quickly, and significant challenges remain ahead."
Meanwhile, the Washington Post reports, "Many of the complicated securities at the center of the subprime mortgage crisis were designed by mathematicians and physicists, and now the US government has tapped an aerospace engineer who used to design NASA satellites to start unraveling them." Neel Kashkari was appointed this week to "launch a program for buying troubled housing assets." Before earning his MBA and becoming an aide to Treasury Secretary Henry Paulson, Kashkari worked engineering satellites at TRW, now part of Northrop Grumman.
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The CBS Evening News reported, "The Fed agreed today to lend more money to AIG, the struggling insurance giant. The new loan is for about $38 billion, bringing the total the Fed is lending AIG to nearly $123 billion." USA Today notes "the new loan program 'will allow AIG to replenish liquidity' used to settle earlier transactions with trading partners, while 'providing enhanced credit protection' to taxpayers by holding AIG securities."
The Wall Street Journal says "the move ratchets up the taxpayer role in the rescue of AIG, in which the government got an 80% stake, in exchange for agreeing last month to loan AIG up to $85 billion."
The New York Times says "the bailout of AIG has not gone smoothly. Shareholders were greatly diluted by the Fed's original move, and they have been asking why they were not allowed to vote on the terms of the bailout." And "then the company surprised analysts last week by disclosing that it had already drawn down $61 billion of the Fed loan." The Washington Post also reports the story this morning.
White House Blasts Post-Bailout AIG Retreat The Hill reports the White House "on Wednesday said a pricey retreat for American International Group (AIG) executives that took place after the company was bailed out by the federal government was 'despicable.'" White House press secretary Dana Perino said, "It's pretty despicable to realize how callous somebody might be as they go through this -- how some might be reacting to this crisis."
House Speaker Nancy Pelosi yesterday called for a new $150 billion economic stimulus package, despite White House opposition to a new plan. The AP reports Pelosi said the "plan is needed now because of the faltering economy and she may call the House into session after the election to pass it." Pelosi "told reporters that the stock market meltdown, which has caused an estimated $2 trillion loss from pension funds, was a factor in her recommendation for a second stimulus bill."
Fox News Special Report reported aides "say President Bush remains skeptical that the second stimulus package put forward by the Democrats would actually stimulate the economy. That said, they said he is open to talking about possibilities." The Washington Post notes a White House "spokesman yesterday declined to comment on Pelosi's latest proposal, saying 'it's a long time' until mid-November."
Retail Data Underscore Recession Fears The CBS Evening News reported, "Recession worries are growing. Three out of four major retailers reported disappointing September sales as more and more shoppers watch their wallets."
The Washington Post similarly reports, "Yesterday, as the clock ticked ominously down to the critical holiday season, department stores and clothing retailers reported a sharp drop in sales while Target said its shoppers are delinquent in their store credit card payments. Port traffic, meanwhile, has been plummeting as retailers cut back on inventory."
The Wall Street Journal reports, "Here's the latest trend that started in California and is spreading to the rest of the country: recession." The Journal adds "it's all but certain the US economy is in a recession," but "California got there first," and "the state provides a template of how a broad US downturn could look."
Poll Finds Widespread Pessimism McClatchy reports, "A new measure of consumer confidence released Wednesday finds that Americans are pessimistic about their economic futures." The RBC Cash Index, conducted by pollster Ipsos Public Affairs, "found that 64 percent of people think it's likely that they or someone they know will lose their job in the next six months. Only 35 percent said that wasn't likely. That's a big indicator that consumers will be spending less in the weeks ahead."
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The worsening economy continues to dominate the presidential campaign. The Politico said the candidates "remained focused on pocketbook issues, with McCain seeking distance from President Bush by pushing a plan to buy up bad mortgages, and with Obama hammering his rival as a successor to the incumbent Republican administration."
The AP reports that in Indianapolis, Obama said, "All we heard from Sen. McCain was more of the same Bush economics that led us into this mess. ... We're not going to be hoodwinked. We're not going to be bamboozled." In an interview with ABC World News, Obama credited his lead in the polls to his handling of economic issues, saying, "I think the people looked at my approach over the last three or four weeks during this economic crisis, which was consistent, which set out very clear principles from the first day." The CBS Evening News reported Obama has been "reassuring the voters with a message of optimism in the face of economic anxiety." Obama said, "There is no reason that we can't steer ourselves out of this crisis and make this century another American century."
The Washington Post reports McCain "campaigned Wednesday in Ohio, Pennsylvania and Wisconsin, and punctuated the day by telling an interviewer that his rival is not prepared to be president." NBC Nightly News adds McCain said on the campaign trail, "Whatever happened to the tax relief he promised them when he was a candidate for the Senate?" Bloomberg News reports that during an appearance in Bethlehem, Pennsylvania, McCain "again blamed the current financial crisis on subprime loans 'that were pushed on people who could not afford them,' resulting in a buildup of unsustainable debt. 'This corruption was encouraged by Democrats in Congress and abetted by Senator Obama,' he said."
Sen. John McCain's campaign on Wednesday sought to flesh out the candidate's $300 billion proposal to buy and refinance troubled mortgages, but the plan is not being well received by much of the media. The Wall Street Journal reports McCain's "plan to help homeowners struggling with mortgage debt carries big potential benefits for the troubled real-estate sector, but could reduce the funds available for rescuing banks." The proposal "also could make winners out of investors -- including predatory mortgage lenders -- that the Bush administration and Congress have tried to exclude from the government's largess." The New York Times reports McCain's plan "would allow millions of financially stretched Americans to refinance their mortgages with government help, but it would leave taxpayers to cover the losses, rather than the financial institutions that hold the original mortgages." The Washington Post reports, "Many details of the plan were unclear yesterday, but the few that emerged led some mortgage industry experts to criticize the plan as flawed and say that the $300 billion estimate is unrealistic given its scope and the magnitude of the housing crisis." The Hill adds that the Bush Administration "reacted cautiously to McCain's proposal, suggesting that some programs already exist to do what the Arizona senator wants accomplished." Treasury Secretary Henry Paulson "told reporters Wednesday afternoon that he needs to study McCain's proposal and stressed his department already plans steps to reduce the number of foreclosures." In a story headlined "RIGHT: IT'S LOAN-ACY," the New York Post reports, "Fiscal conservatives...blasted" McCain's proposal, and quotes Dan Mitchell of the Cato Institute as saying, "It's a spectacularly bad idea. It puts McCain to the left of Obama. It just rewards people who were speculative and irresponsible and punishes people who were prudent."
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The New York Times reports Sen. John McCain "devoted most of two campaign appearances on Wednesday to lusty attacks on" Sen. Barack Obama. The "core of his speech" was "a lengthy, full-throated and crowd-pleasing criticism of Mr. Obama's record, character and judgment." The Washington Times adds McCain "went for the jugular Wednesday, casting his Democratic presidential rival as untruthful, 'extreme' and unqualified the night after their debate offered no knockout punches." The Los Angeles Times reports, "Egged on by a surly crowd," McCain and Gov. Sarah Palin "delivered a stark condemnation of Barack Obama's policies and character Wednesday, casting him as an unreliable choice for president." The crowd "jeered when Obama's name was mentioned. People crowded into the gymnasium yelled out, 'He's a radical!' and, in a play on his name, 'Abomination!'" The AP reports that during his appearance in Bethlehem, Pennsylvania, McCain's "remarks about Obama were interrupted with shouts of 'socialist,' 'terrorist' and 'liar.'"
The Indianapolis Star reports that Sen. Barack Obama "is outspending" Sen. John McCain "on television advertising in battleground states, according to the University of Wisconsin Advertising Project. The Obama campaign spent nearly $17.5 million on TV advertising last week compared with nearly $11 million spent by the McCain campaign and the Republican National Committee." The AP adds, "The candidates spent nearly $4 million last week in Ohio alone, the most of any state. Obama spent more than $2 million there and in Pennsylvania, Virginia and Florida. McCain didn't break $2 million in any state." The Tampa Tribune reports that the report showed Obama "outspent" McCain "by more than 3-1 on TV advertisements in Florida last week." In addition, the Washington Times quotes the director of the study, saying, "Ten of the 15 states where both candidates are advertising were won by Bush in the 2004 election. The campaign is being played on the Republican side of the field this year."
While national polls of the presidential race continue to show Sen. Barack Obama in the lead, there's a wide disparity on the size of his lead. The Gallup daily presidential tracking poll of 2,747 registered voters taken October 5-7 shows Obama leading McCain 52%-41%, up from nine the day before. Reporting on the Gallup numbers, the Financial Times notes Obama "notched up his widest national opinion poll lead so far...as he continued to hammer out his message on the single issue that now looks certain to decide the US presidential campaign the economy."
The Rasmussen Reports automated daily presidential tracking poll for October 8 shows Obama leading McCain 51%-45%, down from 52%-44% on the previous day.
The Battleground tracking poll of 800 likely voters taken October 2 and October 5-7 shows Obama leading McCain 49%-45%, down from a 50%-43% lead yesterday.
The C-Span/Zogby daily presidential tracking poll of 1,203 likely voters taken October 6-8 shows Obama leading McCain by 48%-44%, up from a 48%-45% lead the previous day.
The Diageo /Hotline daily presidential tracking poll of 904 likely voters taken October 5-7 shows Obama leading McCain 45%-44%, down from a 46%-44% lead yesterday.
Obama Up 14 In Pennsylvania A Strategic Vision (R) poll of 1,200 likely Pennsylvania voters taken October 5-7 shows Obama leading McCain 54%-40%.
Obama Up 10 In Wisconsin A Rasmussen Reports automated poll of 700 likely Wisconsin voters taken October 6 shows Obama leading McCain 54%-44%.
Obama Up 7 In Minnesota A Rasmussen Reports automated poll of 500 likely Minnesota voters taken October 7 shows Obama leading McCain 52%-45%.
McCain Up In 2 Georgia Polls A Rasmussen Reports automated poll of 500 likely Georgia voters taken October 7 shows McCain leading Obama 54%-45% in Georgia. A Strategic Vision (R) poll of 800 likely Georgia voters taken October 5-7 shows McCain leading Obama 50%-43%.
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Jay Leno: "It was broadcast live from Nashville. You know, I don't want too say the debate was boring. But I never thought a political event in Tennessee could be that dull without the help of Al Gore."
Jay Leno: "The only really new proposal last night came from John McCain," who "proposed buying up bad homeowner mortgages. Not to save the middle class. You know, McCain, he just likes buying houses."
David Letterman: Top Ten Signs The Campaign Is Getting Ugly:
"10. Three times Straight Talk Express has 'accidentally' knocked over Obama's mailbox.
9. Next debate will be moderated by Jerry Springer.
8. McCain keeps referring to opponent as Senator Barack Hussein Obama bin Laden.
7. Sarah Palin says she can see Joe Biden's hair plugs from her house.
6. Desperate attempt to connect Obama to the last eight years of Regis.
5. No number 5 economy so bad, writer putting everything he owns up on eBay.
4. They have resorted to 'your Vice President's so dumb' jokes..
3. Obama claimed McCain's irresponsibility caused the 1929 stock market crash he's that old, people!
2. Even Dick Cheney thinks they're being cruel.
1. Obama's gloves are off, McCain's teeth are out."
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