By EDMUND L. ANDREWS and JACKIE CALMES
NYTimes.com
WASHINGTON — President Obama and his top economic advisers scrambled to calm a nationwide furor on Monday over bonuses paid at the American International Group, even as administration officials acknowledged they had known about the issue for months.
One day after the economic advisers insisted that their hands had been tied by contracts requiring the payments, Mr. Obama ordered the Treasury Department to “pursue every single legal avenue to block these bonuses” and make the American taxpayers whole.
“In the last six months, A.I.G. has received substantial sums from the U.S. Treasury,” Mr. Obama said. “How do they justify this outrage to the taxpayers who are keeping the company afloat?”
But as anger from lawmakers escalated and criticism of the retention bonuses overshadowed other news for a second consecutive day, White House and Treasury officials offered only a general sense of how they would carry out Mr. Obama’s order and few explanations for why they had not acted earlier.
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photo: President Obama told Treasury Secretary Timothy F. Geithner to “pursue every single legal avenue to block these bonuses.” (Doug Mills/The New York Times)
By John Crawley and Richard Cowan
December 12, Reuters
WASHINGTON (Reuters) - A proposed bailout of U.S. automakers failed in the Senate on Thursday night, raising the specter of an industry collapse that sent Asian markets reeling and sparked fears it could deepen the recession.
"It's over with," Senate Majority Leader Harry Reid said of congressional efforts this year just before the Democratic proposal to extend up to $14 billion to the stricken industry fell short of the needed votes on a procedural motion.
Pressure immediately shifted to the White House, with calls for President George W. Bush to consider intervening with emergency financing.
General Motors Corp and Chrysler LLC have warned of near-term collapse if they did not receive a government bailout.
"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight," Reid said.
Markets across the Asia-Pacific region fell more than 3 percent on the development, with Japan's Nikkei average and Hong Kong's Hang Seng both down more than 5 percent.
U.S. crude prices fell by nearly $2 to $46.11 a barrel.
Because of their shared suppliers and vendors, industry observers fear the failure of one Detroit manufacturer could drag down the other two as well as other businesses.
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photo: Cars made by Chevrolet are seen at a dealership in Dallas December 3, 2008 (REUTERS/Jessica Rinaldi).
Dow jumps 936 points — biggest one-day gain — on news of bank help
AP
October 14, MSNBC
NEW YORK - Wall Street stormed back from last week's devastating losses Monday, sending the Dow Jones industrials soaring a nearly inconceivable 936 points after major governments' plans to support the global banking system reassured distraught investors. All the major indexes rose more than 11 percent.
The market was expected to rebound after eight days of precipitous losses that took the Dow down nearly 2,400 points, but few expected this kind of advance, which saw the Dow by far outstrip its previous record one-day point gain, 499.19, set during the waning days of the dot-com boom. The Standard & Poor's 500 index also set a record for a one-day point gains.
There were cheers and applause on the floor of the New York Stock Exchange at the closing bell, and trading was so active that prices were still being computed several minutes after the closing bell, longer than it would take on a quieter day.
Still, while the magnitude of Monday's gains stunned investors and analysts, few were ready to say Wall Street had reached a bottom. The market is likely to have back-and-forth trading in the coming days and weeks — and may well see a pullback when trading resumes Tuesday — as investors work through their concerns about the banking sector, the stagnant credit markets and the overall economy.
John Lynch, chief market analyst for Evergreen Investments in Charlotte, N.C., said Monday's rally was encouraging but he doubted it signaled the worst has passed.
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photo: Trader Thomas Riley, right, smiles as he works on the floor of the New York Stock Exchange on Monday. (Richard Drew / AP)
By Rachelle Younglai and Kim Dixon
October 7, Reuters
WASHINGTON (Reuters) - Richard Fuld, the disgraced head of Lehman Brothers, said he would wonder "until they put me in the ground" why the U.S. government did not rescue the 158-year-old Wall Street firm and claimed regulators knew the full scale of its condition far before its collapse.
Fuld said he took full responsibility for his actions ahead of the downfall of Lehman, but said U.S. regulators were aware of everything at the firm and knew how it was pricing its distressed assets in the months prior to its bankruptcy.
Despite his acceptance of his role before the collapse, U.S. lawmakers expressed outrage to Fuld about Lehman on Monday, saying that Fuld, board members, regulators and Congress all shared blame for its downfall.
"I want to be very clear. I take full responsibility for the decisions that I made and for the actions that I took based on the information that we had at the time," Fuld told a congressional panel. "I feel horrible about what has happened to the company and its effects on so many."
Fuld said he did not know why the U.S. government chose to help other financial companies, but not Lehman as it hurtled toward disaster.
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photo: Protestors hold signs behind Richard Fuld, Chairman and Chief Executive of Lehman Brothers Holdings, as he takes his seat to testify at a House Oversight and Government Reform Committee hearing on the causes and effects of the Lehman Brothers bankruptcy, on Capitol Hill in Washington, October 6, 2008. (REUTERS/Jonathan Ernst)
By Shigeru Sato and Yuji Okada
June 25, Bloomberg
June 25 (Bloomberg) -- The global economy would collapse if oil hit $200 a barrel, said the top energy analyst at Germany's largest bank.
``Two-hundred dollar oil would break the back of the global economy,'' Deutsche Bank AG's Chief Energy Economist Adam Sieminski said in an interview today in Tokyo. ``Next step after $200 would be global recession and bad news for everybody.''
Sieminski's comments come after Goldman Sachs Group Inc. forecast oil may rise to between $150 and $200 within two years as supply growth, especially from producers outside the Organization of Petroleum Exporting Countries, fails to keep pace with demand. Deutsche Bank is due to release its oil-price forecast on June 27.
Oil doubled in the past year, touching a record $139.89 a barrel on June 16. Crude oil for August delivery was at $136.84 a barrel, down 16 cents, at 7:08 p.m. Tokyo time in after-hours trading on the New York Mercantile Exchange.
Russia, a non-OPEC producer and the world's biggest oil exporter after Saudi Arabia, faces its first annual decline in production in a decade. Prime Minister Vladimir Putin pledged to reduce taxation on the industry to stimulate investment in aging fields and new regions. Output fell 0.9 percent to 9.76 million barrels a day in the first five months of the year.
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photo: Fuel drips from the nozzle of a petrol pump at a gas station in Ilford, Essex, U.K., on April 3, 2008. Photographer: Chris Ratcliffe/Bloomberg News
By JEANNINE AVERSA
AP Economics Writer
April 21, ABC News
Washington - The odds the country will fall into its first recession since 2001 are rising sharply.
Thirty percent of economists now believe the economy will shrink in the first half of this year, up from 10 percent who thought this in January, according to a survey being released Monday by the National Association for Business Economics, known by its acronym NABE.
"That's a striking difference," said Ken Simonson, chief economist for the Associated General Contractors of America and the NABE's point person on the survey. The tone of the overall survey, he said, was "extremely gloomy."
Under one rough rule, if the economy contracts for six straight months it would be considered in a recession. Many economist and the public believe we are in one. Even Federal Reserve Chairman Ben Bernanke recently acknowledged, for the first time, that a recession is possible.
Forecasters "were notably downbeat about their own companies and the overall economy," Simonson said.
The majority of forecasters polled — 51 percent — thought the economic growth during the first half of this year would clock in between zero and 1 percent, which would still mark a feeble showing. Sixteen percent pegged growth in the first half at between 1 and 2 percent, while only three percent put it at between 2 and 3 percent. No forecaster believed growth during this period would exceed 3 percent.
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photo: A worker welds a boom on a crane on the assembly line at the Terex Corporation plant, Friday, April 11, 2008, in Waverly, Iowa. Construction machinery makers like Terex Corp. are straining to keep up with foreign demand for equipment used on infrastructure development projects. (AP Photo/Charlie Neibergall)
By DAVID LEONHARDT
April 17, NY Times
In the aftermath of World War II, the Japanese economy went through one of the greatest booms the world has ever known. From 1950 to 1970, the economy’s output per person grew more than sevenfold. Japan, in just a few decades, remade itself from a war-torn country into one of the richest nations on earth.
Yet, strangely, Japanese citizens didn’t seem to become any more satisfied with their lives. According to one poll, the percentage of people who gave the most positive possible answer about their life satisfaction actually fell from the late 1950s to the early ’70s. They were richer but apparently no happier.
This contrast became the most famous example of a theory known as the Easterlin paradox. In 1974, Richard Easterlin, then an economist at the University of Pennsylvania, published a study in which he argued that economic growth didn’t necessarily lead to more satisfaction.
People in poor countries, not surprisingly, did become happier once they could afford basic necessities. But beyond that, further gains simply seemed to reset the bar. To put it in today’s terms, owning an iPod doesn’t make you happier, because you then want an iPod Touch. Relative income — how much you make compared with others around you — mattered far more than absolute income, Mr. Easterlin wrote.
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image by NY Times
April 11, Reuters
RICHMOND, Virginia - Overseers of the U.S. and international financial system need to quickly put reforms in place to restore confidence in markets disrupted by a global credit crisis, Federal Reserve Chairman Ben Bernanke said on Thursday.
The current market unrest complicates the process of making changes aimed at erecting a firewall against future crises, Bernanke told the World Affairs Council, but swift action could soothe jittery financial markets.
"We do not have the luxury of waiting for markets to stabilize before we think about the future," he said. "Indeed, many of the necessary changes that have been identified -- including increasing transparency, improving risk management, and attaining better coordination among regulators -- could provide important support to the process of normalizing our financial markets," he said.
Bernanke spoke as finance ministers and central bank heads of the Group of Seven rich nations gathered for a Friday meeting in Washington, where they are expected to endorse steps to respond to a global crisis that was spurred by rising U.S. mortgage defaults.
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photo: Federal Reserve Chairman Ben Bernanke testifies during a hearing on the response by federal financial regulators to ongoing turmoil in credit and mortgage markets and the near collapse of brokerage firm Bear Stearns, on Capitol Hill in Washington, April 3, 2008 (REUTERS/Jonathan Ernst)
By Daniel Kruger and Sandra Hernandez
April 7, Bloomberg
For the first time since December, the bond market is closing the credibility gap with Ben S. Bernanke and signaling its agreement with the Federal Reserve chairman that an economic collapse has been averted and that interest rates are bottoming.
Treasury yields rose 0.33 percentage point on average through April 4 from this year's low of 2.49 percent on March 17, according to Merrill Lynch & Co. indexes. The increase is the first since December, when the Fed cut its target rate for overnight loans between banks and said lower borrowing costs ``should help promote moderate growth.''
The Fed's unprecedented support for JPMorgan Chase & Co.'s takeover of New York-based Bear Stearns Cos. on March 16 is restoring confidence in Bernanke, who told Congress last week that ``monetary and fiscal policies are in train that should support a return to growth.'' Yields tumbled to the lowest levels since 2003 in the first quarter, when banks racked up $232 billion of losses and writedowns and the economy lost jobs.
``There is a sense of stability returning to the market,'' said John Hendricks, who helps oversee $137 billion at Hartford Investment Management Co. in Hartford, Connecticut. ``Bernanke's comments that there's a significant amount of monetary easing already in the system and you've got these other measures coming into play as well that should help the economy rebound in the second half.''
The turning point came when the Fed promised $30 billion to back New York-based JPMorgan's bailout of Bear Stearns, preventing the biggest collapse of an investment bank. The central bank lowered its pledge to $29 billion on March 24 after JPMorgan quadrupled the purchase price to about $2.4 billion.
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photo by Bloomberg
March 25, CNN
MEXICO CITY, Mexico -- If you're seeing your grocery bill go up, you're not alone.
From subsistence farmers eating rice in Ecuador to gourmets feasting on escargot in France, consumers worldwide face rising food prices in what analysts call a perfect storm of conditions. Freak weather is a factor. But so are dramatic changes in the global economy, including higher oil prices, lower food reserves and growing consumer demand in China and India.
The world's poorest nations still harbor the greatest hunger risk. Clashes over bread in Egypt killed at least two people last week, and similar food riots broke out in Burkina Faso and Cameroon this month.
But food protests now crop up even in Italy. And while the price of spaghetti has doubled in Haiti, the cost of miso is packing a hit in Japan.
"It's not likely that prices will go back to as low as we're used to," said Abdolreza Abbassian, economist and secretary of the Intergovernmental Group for Grains for the U.N. Food and Agriculture Organization. "Currently if you're in Haiti, unless the government is subsidizing consumers, consumers have no choice but to cut consumption. It's a very brutal scenario, but that's what it is."
No one knows that better than Eugene Thermilon, 30, a Haitian day laborer who can no longer afford pasta to feed his wife and four children since the price nearly doubled to $0.57 a bag. Their only meal on a recent day was two cans of corn grits.
"Their stomachs were not even full," Thermilon said, walking toward his pink concrete house on the precipice of a garbage-filled ravine. By noon the next day, he still had nothing to feed them for dinner.
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photo: Protesters share a loaf of bread in Cairo, Egypt, while demonstrating against high food prices (AP)
March 19, Bloomberg 
The Federal Reserve cut its main lending rate by three-quarters of a percentage point to 2.25 percent as officials try to prop up the faltering economy and restore faith in the U.S. financial system.
Chairman Ben S. Bernanke is struggling to cushion consumers and companies from the worst of the credit freeze that's made some of the world's biggest banks reluctant to lend to each other. Officials also showed renewed concern about inflation, making a smaller reduction than traders anticipated. Two policy makers dissented in favor of ``less aggressive action.''
``Recent information indicates that the outlook for economic activity has weakened further,'' the Federal Open Market Committee said in a statement today after meeting in Washington. At the same time, ``inflation has been elevated, and some indicators of inflation expectations have risen.''
Stocks extended their rally, pushing the Standard and Poor's 500 Index 4.2 percent higher to 1,330.74. The dollar rose the most in almost four years against the yen.
``The Fed made a very clear statement: We are on the side of the economy and the markets, and if we have to do more, we will,'' said Steven Einhorn, a partner at hedge fund Omega Advisors Inc. in New York.
The Fed Board of Governors also voted to lower the discount rate, the cost of direct loans from the central bank, to 2.5 percent.
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photo: Stephen Guilfoyle works on the floor of the New York Stock Exchange in New York, on March 18, 2008. Photographer: Daniel Acker/Bloomberg News
By Stanley White and Kosuke Goto
March 17, Bloomberg
The dollar slumped below 96 yen for the first time in 12 years after the Federal Reserve cut its discount interest rate and financed the bailout of Bear Stearns Cos. by JPMorgan Chase & Co.
The dollar also dropped to a record low against the euro and the Swiss franc as the Fed lowered the rate it charges commercial banks for loans by a quarter percentage point to 3.25 percent to ensure ``orderly market functioning.'' Traders increased bets the Fed will slash its benchmark target rate by 1 percentage point tomorrow, making fixed-income securities issued by the U.S. government less appealing to global investors.
``The dollar is facing a credibility crisis,'' said Koji Fukaya, a senior currency strategist at Deutsche Securities, the Tokyo unit of Deutsche Bank AG, the world's largest currency trader. ``All the markets are entering a vicious cycle.''
The dollar fell to as low as 95.76 yen, the weakest since Aug. 15, 1995, before trading at 95.97 yen at 11:29 a.m. in Tokyo from 99.09 yen late in New York on March 14. Against the euro, the dollar declined to $1.5903, the weakest since the creation of the single European currency in 1999. It slid to an all-time low of 0.9754 Swiss francs. The dollar may fall to 95 yen this week, Fukaya said.
The currency set record lows against the euro for five consecutive days as investor confidence tumbled, sending U.S. stocks lower for a third straight week and driving gold to a record high of $1,009 an ounce. The MSCI Asia-Pacific index of regional shares fell 2.3 percent, its third day of declines.
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photo: 1000 yen notes are arranged on top of U.S. one dollar notes in New York on March 7, 2008. Photographer: Andrew Harrer/Bloomberg News
Interest rates at near 12-year highs
Feb 5, News.com.au
Australia - THE central bank has raised official interest rates, as expected, following its board meeting today and signalled there may be further increases to come.
The Reserve Bank of Australia (RBA) hiked the cash rate to 7 per cent, from 6.75 per cent, in a bid to temper inflationary pressures in the economy.
Prime Minister Kevin Rudd has said that this rise will "really hurt" household budgets, blaming pressure on inflation inherited from the last government. Shadow Treasurer Malcolm Turnbull has said Mr Rudd and Treasurer Wayne Swan's loose lips on inflation were part of the problem.
The rise was widely expected with 17 out of 19 economists surveyed by AAP last week forecasting a quarter of a percentage point lift.
The cash rate is now at its highest level since November 1996.
"In future meetings, the board will continue to evaluate whether the stance of policy will be sufficiently restrictive to return inflation to the two to three per cent target," RBA governor Glenn Stevens said.
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photo by news.com.au
THE OUTLOOK
By PATRICK BARTA
Feb 4, The Wall Street Journal
As food prices soar, more nations are falling back on an old -- and potentially hazardous -- response: price controls.
Last month, China said it would require producers of pork, eggs and other farm goods to seek government permission before raising prices. When producers do seek permission, it is denied, market participants say. Thailand is taking similar steps on instant noodles and cooking oil, while Russia is trying to cap prices on certain types of bread, eggs and milk.
Elsewhere, Mexico is trying to control the price of tortillas, and Venezuela is capping prices on staples including milk and sugar. Malaysia is setting up a National Price Council to monitor food costs and is planning stockpiles of major foods, as well as a 24-hour hot line for consumers to vent about spiraling food costs.
These measures reflect the mounting pressure on developing economies as food costs rise sharply.
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image by Bank of America
By David Barboza
Feb 1, International Herald Tribune
SHANGHAI: China's latest export is inflation. After falling for years, prices of Chinese goods sold in the United States have risen for the last eight consecutive months.
Soaring energy and raw material costs, a falling dollar and new business regulations here are forcing Chinese factories to increase the prices of their exports, according to analysts and Western companies doing business here.
The rise was a modest 2.4 percent over the past year. But even that small amount, combined with higher energy and food costs that also reflect China's growing demands on global resources, contributed to a rise in overall inflation in the United States to a 4.1 percent rate in 2007, from 2.5 percent the year before.
Because of new cost pressures here, American consumers could see prices increase by as much as 10 percent this year on specific products — including toys, clothing, footwear, and other consumer goods — just as the United States faces a possible recession.
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image by bloomberg
PARIS: As panic swept European markets last Monday, word spread that a big hedge fund was in trouble and dumping stocks.
Someone was selling, all right - Société Générale. The French bank was frantically unwinding an estimated $75 billion of bad bets on European stocks that the bank said was placed by a rogue trader, Jérôme Kerviel.
As the bank struggled Friday to determine how someone could have run up $7.2 billion in losses before anyone caught on, the scope - and global effect - of the fraud began to emerge.
From his desk in the middle of the trading floor on the sixth floor of Société Générale's Alicante building in the La Defense business district outside Paris, Kerviel, 31, took huge bullish positions on the Dow Jones Euro Stoxx 50 index and the German DAX in particular, according to a fellow trader still working there who insisted on anonymity.
photo: Société Générale's efforts to stem losses last week may have exacerbated plunging stock markets (Benoit Tessier/Reuters)
By Jad Mouawad
Jan 23, International Herald Tribune
NEW YORK: As fears of a U.S. recession ripple across the globe this week, analysts and energy experts are wondering whether the great oil boom of the past five years is finally coming to an end - or whether it is merely taking a break.
While an economic slowdown might lead to lower oil demand, as consumers scale back their gasoline consumption and businesses cut down on air travel, economists say this might not necessarily lead to much lower energy prices.
Oil supplies are tight, geopolitical tensions remain high, and oil companies still need higher prices to bring badly needed and more costly oil to the market.
After briefly touching $100-a-barrel twice this year, oil prices have shed over 12 percent in a few days. Crude oil for March delivery on the New York Mercantile Exchange was down $2.44, or 2.7 percent, at $86.77 a barrel in late trading Wednesday.
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photo: Traders in the oil futures pit of the New York Mercantile Exchange on Tuesday. After briefly touching $100-a-barrel twice this year, oil prices have shed over 12 percent (Chip East /Reuters)
By Scott Lanman
Jan 22, Bloomberg
The Federal Reserve cut the benchmark interest rate by three quarters of a percentage point, its first emergency reduction since 2001, after stock markets tumbled from Hong Kong to London amid increasing signs of a U.S. recession.
The central bank cut the target overnight lending rate to 3.5 percent from 4.25 percent, the Federal Open Market Committee said in a statement in Washington. Policy makers weren't scheduled to gather until next week. It's the biggest single reduction since the Fed began using the rate as the principal tool of monetary policy around 1990.
``Broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households,'' the Fed said in a statement in Washington. The FOMC took the action ``in view of a weakening of the economic outlook and increasing downside risks to growth.''
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photo: White House (Brendan Smialowski/Bloomberg News)
By Daniel Bases
Jan 16, Reuters
NEW YORK - Rising fears of slowing economic growth in the United States and Europe led to weak stock markets across the globe on W
ednesday and punctured the rally in ballooning commodity prices also.
Bargain hunters bought the beaten-up financial sector stocks, which briefly helped lift benchmark U.S. indices into the plus column.
U.S. recession fears were stoked after the No. 3 U.S. bank, JP Morgan (JPM.N: Quote, Profile, Research) said its quarterly profit fell more than expected due to risky mortgages while No. 1 computer chip maker Intel Corp (INTC.O: Quote, Profile, Research) missed Wall Street estimates.
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photo: Elderly investors monitor share prices in front of a computer displaying the falling Hang Seng Index during afternoon trading inside a brokerage in Hong Kong, January 16, 2008 (REUTERS/Bobby Yip)
By Allen Wan
Jan 15 , Bloomberg
U.S. recession poses a bigger threat to the global economy than a slowdown in China, according to Burton Malkiel, the Princeton University economics professor who wrote ``A Random Walk Down Wall Street.''
``The U.S. is more important to the world,'' Malkiel, 75, said during an interview. ``The U.S. is slowing down dramatically and we're going to see little or no growth in the first half of 2008. I'm not worried about a slowdown in China because growth there will still be larger than anywhere else in the world.''
Stocks in the U.S. have fallen three straight weeks and posted their worst start to a year since 1991, amid concern the economy will contract. Goldman Sachs Group Inc. joined Morgan Stanley and Merrill Lynch & Co. last week in estimating that the nation may already be in a recession.
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photo: Traders work on the floor of the New York Stock Exchange in New York on Jan. 8, 2008. Photographer: Daniel Acker/Bloomberg News
