EU to press for reform, Asia joins bailout

NF Reporter · 10-15-2008, 08:04 AM

Reuters - European leaders pressed on Wednesday for an overhaul of global financial structures after Asia joined western bastions of capitalism in bailing out banks to avert financial meltdown and tackle looming recession.

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waltky · 10-19-2008, 04:57 PM

British economy in the tank...

UK economy 'already in recession'
Sunday, 19 October 2008 - The UK economy has "deteriorated dramatically" in the last three months, and is already in a recession, top forecasters suggest.

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The Ernst & Young Item Club predicts that economic growth will decline by 1% next year before recovering in 2010, when it will see 1% growth. As the economy contracts, investment will fall and unemployment will rise. But one "bright spot" is that inflation is likely to fall, enabling the UK to cut interest rates further, it said. While recent actions taken by the government to shore up the banking system are welcome, the credit crunch will hit the economy "very hard", warned Ernst & Young.

Peter Spencer, chief economist for the Ernst & Young Item Club said: "Even if the equity markets stabilise and we begin to see capital flowing around the international financial system again we are still looking at a domestic and global economy that will be recession for the next 12 months." But "with plunging interest rates, falling inflation, a fundamentally strong economy and some sort of stability in the banking system it should be a relatively short and shallow downturn," he added. It is not alone in thinking the UK has entered a recession - which is typically defined as two quarters of negative growth. A recent quarterly survey of 5,000 businesses by the British Chambers of Commerce (BCC) also said the UK was in a recession.

Business investment

Companies are likely to see their profitability squeezed further, prompting firms to invest 5% less in 2009, said the Item Club. As a result of the slowdown, widespread cuts in investment and employment are "inevitable". While the largest job cuts so far have been in finance and housing - the sectors most closely linked to the recent turmoil - the effect will spread further. "We desperately need a global solution given the heavy dependence of our banks and borrowers on cross-border banking flows" - Peter Spencer, chief economist, Ernst & Young Item Club

More BBC NEWS | Business | UK economy 'already in recession'

waltky · 11-12-2008, 05:42 AM

Bailout short on oversight...

Who's Minding the Bailout?
November 10, 2008 - As Billions Flow to Banks, Few Checks and Balances in Place

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Want to hear crickets chirping? Ask Washington who's keeping an eye on its $700 billion economic bailout. Lawmakers and the Bush administration frantically hammered out a gargantuan package to save the nation's economy earlier this fall. But their efforts to recruit watchdogs for their creation have lacked the same urgency. Take the White House: it was supposed to name a special inspector general to eyeball the bailout, according to the emergency legislation President Bush signed into law Oct. 3. To date, though, no one has been named. Bush spokesman Tony Fratto said he "would expect" the president to pick someone before he leaves office next January. But, he said, "I can't give you a sense on timing of any personnel decisions."

Since last month, the bailout effort has churned out over $170 billion to dozens of banks, signed contracts with voided conflict-of-interest clauses – and generally operated with many of the normal rules of government hiring and spending largely sidelined. That doesn't appear to be causing concern among those who pushed the bailout through Congress with sky-is-falling urgency. Party leaders on Capitol Hill were supposed to name a special oversight commission to check how the bailout was using its legal authorities, according to the law. But over a month has passed without a single name put forward.

"There have been some beginnings of internal discussions," a spokesman for House Minority Leader John Boehner, R-Ohio, said late last week. "Still working on names," said a spokesman for Senate Majority Leader Harry Reid, D-Nev. "No," said a spokeswoman for House Majority Leader Steny Hoyer, D-Md., when asked if her office had been talking with others about the panel. Senate Minority Leader Mitch McConnell, R-Ky., did not respond to requests for comment. They might want to pick up the pace: the panel has its first report due Jan. 20, 2009, according to their legislation.

More ABC News: Who's Minding the Bailout?

See also:

Government Rescue Spending: Clear or Cloudy?
Nov. 11, 2008 - Critics Question Transparency of the Treasury Dept., Federal Reserve on Rescue Effort Spending

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How much will the AIG bailout ultimately cost? What are the banks applying for the government's $250 billion capital purchase plan? Who is the Federal Reserve lending to and how can taxpayers be assured they'll get their money back? After weeks of sometimes frenzied efforts by the federal government to rescue the financial system, and on the heels of the government's latest move -- the announcement of a new $40 billion infusion to the ailing insurance giant American International Group -- critics say there are many questions but few answers about the work performed by the Treasury Department and the Federal Reserve.

"The bailout, the Treasury, the Federal Reserve -- it's like a three-card monte game, you don't know where the money's coming from, you don't know who it's going to, and I think the public has every right to be outraged by this," said Bill Allison, a senior fellow at the Sunlight Foundation, a government transparency watchdog group. Gerald O'Driscoll, a former vice president at the Federal Reserve Bank of Dallas and a senior fellow at the Cato Institute, a libertarian think tank, said he worried that the failure of the government to provide more information about its rescue spending could signal corruption. "Nontransparency in government programs is always associated with corruption in other countries, so I don't see why it wouldn't be here," he said.

Federal officials, however, have touted their commitment to transparency. "We want to inform the public as much as possible about our operations, so we have posted an abundance of information on the Treasury Web site to allow everyone to have insight into our actions," interim Assistant Treasury Secretary Neel Kashkari, the official in charge of the government's $700 billion rescue package, said in remarks delivered at a securities summit Monday. "Transparency will not only give the American people comfort in our execution, it will give the markets confidence in what form our action will take," he said. Federal Reserve Chairman Ben Bernanke last month noted the importance of transparency with respect to mortgage-backed securities, investment instruments that have played a key role in the country's financial crisis.

More ABC News: Government Rescue Spending: Clear or Cloudy?