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An economy and nation in crisis

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November 23, 2008

A global economy in free fall, banking giants like Citigroup tetering on the precipice of collapse, auto giants like General Motors facing insolvency, faltering wars on two fronts: No President-elect in modern times has faced so much crisis as he approached inauguration day.

The question of whether or not Barack Obama is up to the job is no longer relevant. He has the job and the question now is what he will, or can, do with it. Obama says his top priority is the economy but he will face equally daunting problems on almost every front.

His promises of hope, his message of change and his perceived ability to rally a nation drowning in pathos will be challenged and he must move quickly to establish his leadership and prove his competence.

Reports The Associated Press:

With the economy in free fall, President-elect Barack Obama is stepping up efforts to let Americans know what he has planned to stabilize the nation’s financial system and calm the markets.

He announced a plan this weekend to save or create 2.5 million jobs by January 2011 and his transition team confirmed he will announce the leaders of his economic team Monday, naming Timothy Geithner as treasury secretary and Lawrence Summers to direct the National Economic Council.

The word Friday that Geithner was the likely choice to head treasury sent the stock market soaring almost 500 points.

So much bad news is dragging down the markets these days in the way of weak earning reports and looming bankruptcies for major companies like automakers, that traders — and the public — are desperate for any reassurance that the problems will be dealt with at some point.

While Obama’s choice as Treasury Secretary appears to have spurred the market, the problems continue. Reports The New York Times:

Citigroup, once the nation’s largest and mightiest financial institution, has been brought to its knees by more than $65 billion in losses, write-downs for troubled assets and charges to account for future losses. More than half of that amount stems from mortgage-related securities created by Mr. Maheras’s team — the same products Mr. Prince was briefed on during that 2007 meeting.

Citigroup’s stock has plummeted to its lowest price in more than a decade, closing Friday at $3.77. At that price the company is worth just $20.5 billion, down from $244 billion two years ago. Waves of layoffs have accompanied that slide, with about 75,000 jobs already gone or set to disappear from a work force that numbered about 375,000 a year ago.

Burdened by the losses and a crisis of confidence, Citigroup’s future is so uncertain that regulators in New York and Washington held a series of emergency meetings late last week to discuss ways to help the bank right itself.

And as the credit crisis appears to be entering another treacherous phase despite a $700 billion federal bailout, Citigroup’s woes are emblematic of the haphazard management and rush to riches that enveloped all of Wall Street. All across the banking business, easy profits and a booming housing market led many prominent financiers to overlook the dangers they courted.

11 Responses to An economy and nation in crisis

  1. gazelle1929

    November 24, 2008 at 9:51 am

    Let’s say there are 200 million taxpayers in the US. If you wrote a check to each one for $100,000 that comes out to $20 TRILLION dollars. Let’s put that in perspective: in one fell swoop you want to increase our national debt from somewhere around $10 trillion to $30 trillion. It’s either borrow the money from someone or just print the money and put it in circulation. Talk about massive inflation.

  2. carpetbagger

    November 23, 2008 at 4:11 pm

    carpetbagger
    Cut from http://www.whorldnetdaily.com “ask the president” forum:
    this is whqt the middle Americans think of the bailouts.
    Oddly this would ACTUALLY WORK,and COST LESS as most would immediately come back in excise taxes.!

    Leave a Legacy
    Posted by Po Boy on Nov 20, 2008 00:18

    Mr President,
    Bank failures, automaker failing,$100 Billion in handouts to what effect? Think about the Immediate and historic impact of the simplest and Cheapest solution-send EVERY individual taxpayer a one time $100,000 check and let them buy them selves out of debt. This payment would be exempt from Federal Income tax, but not from State.
    Immediate effect on credit institutions, car sales, consumer confidence,plus it would buy the state s breathing room as welfare, food stamps,medicare, and social security demands diminished at the same time sales and income tax receipts increased.
    This could be implemented by Executive Order as there is no reasonable doubt we are facing an Economic National Emergency.
    Such a courage step could ONLY be done by a Republican.
    Leave a Legacy,Sir.and save our Republic.

  3. Malibu

    November 23, 2008 at 12:02 pm

    This is a true Crisis!

    I woke early this morning and turned on CSPAN hoping for a discussion on the above subject. The two guests (whose names I missed) were equally interested in trying to understand the problem. They both declared that this was indeed a serious crisis.

    When the phones opened up to the public is when the real Republican agenda was exposed. There is no change in the GOP plans to force a pro-life agenda on everyone and I got the impression this candidate for the RNC did not realize that the GOP lost in November. He spoke the words of President Bush 43 as if he would continue his plans to ban abortions, gay marriages and a religious platform for all of us.

    My own emails are saying the same thing. The Republicans are terrified of President Elect Obama’s Marxism and his hidden desire to sell America out and become a fascist dictatorship. Where does this extremism come from?

    I’m hearing over and over that corruption is part of the game in D.C. I read a lot of current books and nearly every book blames both sides of the aisle for the destruction of our national pride and economy. Not a single plan for rebuilding anything is mentioned.

    This brings back the days of Ike and our war against Communism. The federal government wanted to kill off communism with Christianity imposed in our schools and even in our pledge to the flag. This is not a solution to anything but a threat to all Americans who are not religious and came to America to get away from federal plans for God.

    Every time our nation faces a problem, we are told that God can fix it. I heard a political group blame God for Katrina. If this is the new America, I want out of political discussions. I am not anti-God but pro-fixes to our problems.

    What is the next step? Animal sacrifices?

    Malcolm

  4. Carl Nemo

    November 23, 2008 at 2:46 pm

    “What is the next step? Animal sacrifices?”

    You aren’t that far from the truth Malcolm. The U.S. is going down and going down hard this time and the so-called emerging market world with it. This is a “blackhole” event with the USS America dragging everything within its “misery horizon” including China along with it to the bottom.

    As world stock and real estate markets collapse around our collective ears along with a flight to ‘quality'(not) in the FOREX (currency) markets to the USD it seems the end is near. Little do they realise they are fleeing to the confines of a burning barn only to have the door slammed shut on them by the shadowy NWO banking cabal that has created this “perfect financial storm” for their benefit.

    There’s now a massive second wave of foreclosures occurring in the housing market and even commerical real estate is beginning to topple. Major manufacturers along with thousands of smaller OEM suppliers et al. are tanking. Insurance companies with less gravitas than AIG are ready to file bankruptcy along with state and local
    governments too. Soon bank failures are going to rise at an alarming rate. Many cities throughout the US are cutting back on police and fire protection, building department personnel while real estate assessments are cratering with the end result being less tax revenues to continue their ever wasteful ways.

    As you drive through America’s suburban strip malls including major malls there’s vacancy signs growing at an alarming rate.

    So your prediction of animal sacrifices just might become part and parcel to the hordes of people living in tarpaper shacks living by the RR tracks spearing rats with fire-hardened sticks. Their sacrifices will be linked to their need for food and possibly to invoke the “elder gods” to their aid.

    Things are not well in Gotham City and no “crimpol” or their advisers have the ability to put things back as they were or even close to it again.

    It’s time for savvy Americans to batten down the hatches and prepare for the heavy blow ahead.

    Trust in yourselves first, then guns, gold and well-planned provisioning. : |

    Carl Nemo **==

  5. Harve3

    November 23, 2008 at 2:36 pm

    “Crises” indeed; you and your ilk don’t know the meaning! Remember Pearl Harbor was true crisis! Meanwhile:

    Every time our nation faces a problem, we are told that God can fix it. I heard a political group blame God for Katrina. If this is the new America, I want out of political discussions. I am not anti-God but pro-fixes to our problems.

    What’s this about God being responsible for Katrina? All right-thinking folks know the Chimpy Bush*tlerburton/Cheney/Rove cabal caused Katrina, allowed NO to drown and retarded FEMA aid afterward! OBTW, ought we all not bow worshipfully to “The One” whom we eagerly await to deliver us from our hardships?

    Hill Country Weisenheimer

  6. JudyB

    November 24, 2008 at 9:24 pm

    Malcolm I watched CSPAN with the same idea as you and instead, heard exactly what you did. As I have stated on CHB several times, I am a believer, but one who believes religion and politics should never mix nor be used to influence voters. In fact, I think any praying person should be praying that those in charge receive the gift of wisdom so as to find a way out of this financial fiasco, instead of just thinking if they pray enough, the damned TRILLIONS will simply fall out of the sky.

    Although these bail outs make me sick to think of, I believe they are the only way out, thanks to the unmittigated corruption that has taken place, esspecially in the last 6 yrs. Any bank or auto company CEO that has been in charge while the bottom of their company fell out should be replaced with no golden handshakes, and their replacements salaries should be drastically cut from what current CEOs have been making. I read in USA Today that the USA’s top 50 CEO’s earn an average of 17 million a year, while it is extremely rare for any Asian CEO to be paid a million dollar annual salary.

    This entire financial situation is truely mind boggling and to know it occured by greeed being allowed to run rampant due to there being NO oversight is unthinkable. and more than my mind can comprehend…ENUFF!!!!

  7. Ladywolf55

    November 23, 2008 at 12:54 pm

    Malcolm, I couldn’t agree more. I’m so sick of God being interjected into politics and forced on the American people who do not wish to be forced into religion. God should be abolished from the Government, period.

    A person’s religion, or lack thereof, is a personal matter and should not be publicly legislated at ANY time. Bush needs to just GO, get the hell out, and disappear from public life. He’s a failure and a bully.

  8. Klaus Hergeschimmer

    November 23, 2008 at 4:26 pm

    Fire & Brimstone, Dogs & Cats, Living Together and Mass Hysteria is all the Republikaners can focus on with Obama being annointed by them as the Anti-Christ-Marxist!!!

  9. Malibu

    November 23, 2008 at 6:09 pm

    Klaus, I just left a group of visitors to our neighborhood who gave me all the scandalous crap about Obama that many of us have read and rejected as pure lies and bullshit from Rush Limbaugh. I had no idea that white Christian Conservatives could carry around this much false information. I’ve check it all and it is all lies. The one thing they all had in common was their preacher and my stomach soured and I nearly vomitted on all of them.

    Are you treating this as a joke? I fear this will take Obama down during his inauguration. I’m beginning to fear that going to church is bad voodoo and causes terrorism and hatred. I really want to know what plans the Evangelicals have for America that would destroy our Constitution and voting rights and civil rights for all of us. It must be pretty damn good to stir them up like this.

    Klaus, I did not vote for Obama or McCain but damnit I am a loyal American and hate what I’ve seen develop these last 2 years of the campaign. The Conservatives will never accept anyone in the White House not of their choosing.

    Malcolm

  10. griff

    November 24, 2008 at 6:11 am

    So you’re saying that we should just trust Obama and not challenge or question anything he proposes? And apparently any opposition will be viewed as sacrilegious and anti-American. Hmmm, that sounds all too familiar. Didn’t we just have eight years of that?

    We have learned nothing but how to be obedient partisan sheep.

  11. JudyB

    November 24, 2008 at 9:46 pm

    All I have heard from the so called “Born again Christians”/ “Religious Right” are lies compounded by more lies, that serve no purpose other than to promote fear & hate. Its so rampant that I honestly fear for the life of our new president. There has never been more hate for or lies told about anyone in politics during my lifetime (70 yrs.) This must be stopped, but how??