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NewsJunk.com
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[World Bank]: World Bank Predicts Sharply Slower Growth
The new Global Economic Prospects update notes that global growth is expected to contract by 1.7 percent this year. This would be the first decline in world output since World War II. GDP is projected to decline by 3 percent in OECD countries and by 2 percent in other high-income economies.
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[Atlantic]: The Quiet Coup
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government -- a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we're running out of time.
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[CNBC]: Geithner Plan Will Rob US Taxpayers: Stiglitz
The U.S. government plan to rid banks of toxic assets will rob American taxpayers by exposing them to too much risk and is unlikely to work as long as the economy remains weak, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday.
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[FT]: China calls for new reserve currency
"This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money," said Qu Hongbin, chief China economist for HSBC.
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[NYT]: Cuomo Says Most Huge A.I.G. Bonuses Were Returned
Attorney General Andrew M. Cuomo of New York announced late Monday afternoon that 9 of the top 10 bonus recipients at the American International Group had given back their bonuses.
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[Bloomberg]: Bank of America's Bernstein Says Sell Bank Stocks After Rally
Removing devalued loans and securities from banks' balance sheets is a short-term solution that will delay the problem's ultimate solution, which is bank takeovers, Bernstein said. The government won't be able to inflate the prices banks receive for selling bad assets indefinitely, he added.
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[Max Hastings]: Seize their Porsches and throw them in jail!
How can the real world get through to these people that they are not success stories, winners, masters of the universe but failures, losers, impresarios of misery? Why should banking be singled out, to be rewarded differently from every other form of human endeavour?
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[Felix Salmon]: Revolution in the Air
Might we might be seeing the first real rumblings of class warfare -- the genuine article, not the Republican talking-point -- in this country?
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[NYT]: Sweden Says No to Saving Saab
The Swedish government has responded to Saab's desperate financial situation by saying, essentially, tough luck. Or, as the enterprise minister, Maud Olofsson, put it recently, "The Swedish state is not prepared to own car factories."
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[WSJ]: Geithner: My Plan for Bad Bank Assets
The financial system as a whole is still working against recovery. Many banks, still burdened by bad lending decisions, are holding back on providing credit. Market prices for many assets held by financial institutions -- so-called legacy assets -- are either uncertain or depressed. With these pressures at work on bank balance sheets, credit remains a scarce commodity, and credit that is available carries a high cost for borrowers.
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[Reuters]: Obama says risks still haunt U.S. financial system
The U.S. financial system still faces risks requiring government intervention to avoid a more destructive recession, President Barack Obama said, before a critical week of fleshing out and selling his recovery plan.
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[Politico]: Kroft to Obama: Are you punch-drunk?
The interview is Obama's most detailed explanation yet of his view of the world economic crisis, and he makes clear that he's afraid the nation hasnt seen the worst of it -- even invoking the possibility of a 'depression' if a series of financial institutions collapse all at once.
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[Brad DeLong]: The Geithner Plan FAQ
The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world's largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off--in either case at an immense profit.
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[Frank Rich]: Has a 'Katrina Moment' Arrived?
It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: "President Obama may not realize it yet, but his Katrina moment has arrived."
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[Paul Krugman]: More on the bank plan
Early on in this crisis, it was possible to argue that it was mainly a panic. But at this point, that's an indefensible position. Banks and other highly leveraged institutions collectively made a huge bet that the normal rules for house prices and sustainable levels of consumer debt no longer applied; they were wrong. Time for a Swedish solution.
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[ Paul Krugman]: Despair over financial policy
The Obama administration is now completely wedded to the idea that there's nothing fundamentally wrong with the financial system -- that what we're facing is the equivalent of a run on an essentially sound bank.
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[Paul Krugman]: The Great Recession versus the Great Depression
At first, the current recession didn't hit industrial production all that hard. But the pace accelerated dramatically last fall, so that at this point we're sort of experiencing half a Great Depression. That's pretty bad.
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[NYT]: Off With the Bankers
The argument that A.I.G.'s traders are the people that we must depend on to save the United States economy is as weak and self-serving as it was in Thailand, Korea or Indonesia. A.I.G. is essentially advocating survival of the weakest. Thankfully, the American people are not buying it.
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[Maverecon]: It's the turn of the unsecured creditors now
Why are the unsecured creditors of banks and quasi-banks like AIG deemed too precious to take a hit or a haircut since Lehman Brothers went down? From the point of view of fairness they ought to have their heads on the block. It was they who funded the excessive leverage and risk-taking of banks and shadow banks.
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[Political Wire]: Dodd Admits to Loophole
Senate Banking Committe Chairman Chris Dodd admitted to CNN that he was responsible for the loophole in the economic stimulus package that allowed firms like AIG receiving bailout funds to pay bonuses.
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