Items of Interest:
Fed Pledges Top $7.4 Trillion to Ease Frozen Credit — The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago...
ANATOMY OF A MELTDOWN -- Bernanke says that he was “mistaken early on in saying that the subprime crisis would be contained.” ...
discussion: Open Left and Corrente
Bernanke Tells New Yorker He Underestimated Housing Meltdown -- Federal Reserve Chairman Ben S. Bernanke said he underestimated the impact subprime mortgages would have on the economy, according to an interview to appear in the New Yorker magazine’s Dec. 1 edition.
“I and others were mistaken early on in saying that the subprime crisis would be contained,” Bernanke said. “The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.” ...
Citigroup Gets $306 Billion Loan Guarantee, $20 Billion of Government Cash -- Citigroup Inc. will have more than $300 billion of troubled mortgages and other assets guaranteed by the U.S. government under a federal plan to stabilize the lender after its stock fell 60 percent last week.
Citigroup also will get a $20 billion cash infusion from the Treasury Department, adding to the $25 billion the bank received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend.
The Treasury, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement that the move aims to bolster financial-market stability and restore economic growth...
discussion:New York Times:
A New Kind of Bailout (This is the Fifth Variation for Those of You Who Are Counting) -- They are getting clever in their desperation and it's going to take some time to untangle the newest mess devised by Citigroup, Treasury, the FDIC, and the Fed ....
Wall Street Journal:
U.S. Agrees to Rescue Struggling Citigroup -- Plan Injects $20 Billion in Fresh Capital, Guarantees $306 Billion in Toxic Assets...
naked capitalism, Grasping Reality …, News Hounds, clusterstock.alleyinsider.com, Obsidian Wings and New York Times
U.S. Approves Plan to Help Citigroup Weather Losses -- Federal regulators approved a radical plan to stabilize Citigroup in an arrangement in which the government could soak up tens of billions of dollars in losses at the struggling bank, the government announced late Sunday night...
Plan Begins to Emerge to Rescue Citigroup — Federal regulators were considering a new rescue for Citigroup on Sunday, a step that could mark a third leg of the government's broader efforts to bolster the nation's financial industry, according to people briefed on the plan...
Pandit Needs to Move His Assets -- Superstar stock analyst Meredith Whitney believes Citigroup is such a basket case that Stephen Hawking, the renowned physicist, lacks the brainpower to fix the stricken banking giant.
Whitney, in an exclusive interview with The Post, called Citigroup Chief Executive Vikram Pandit and his minions "naive" for their continued belief that the bank can shrug off recent massive share-price declines...
Randall Mikkelsen / Reuters:
Official: Richardson to be commerce secretary
Change Is Landing in Old Hands
Obama Aides Suggest Rollback of Bush Tax Cuts Could Be Delayed
Existing home sales tumble -- October decline is worse than expected as economic conditions keep buyers out of the market.
Sales of existing homes fell in October and prices continued to decline as potential buyers remain sidelined by the weak economy, according to a real estate group's report issued Monday.
The National Association of Realtors reported that sales by homeowners slid in October to an annual pace of 4.98 million. That was down 3.1% from September's revised reading of 5.14 million...
comment: You'd be screaming too, if you'd lost millions in this market crash like Mr. Stein.
Ben Stein / Yahoo:
How to Ruin Your Morning -- A few nights ago I did one of the most sensible things I could think of to do. I went to bed very early. The result was that I woke up feeling great and ready for a nice day. The weather was gorgeous at my home in Malibu and I could smell a tang of fall in the air coming off the ocean.
Then I decided to ruin it all by filing the past few months of stock transaction receipts. I get them online as well in the form of confirmations from my broker, but I like to review them in paper. Or, I should say I once upon a time liked to review them.
Now, they're a catastrophe.
My losses are staggering even in the most plain vanilla index funds. In the emerging markets and developed markets, investments that had once provided immense gains, the losses are worse...
Instead of just jumping off my balcony, which wouldn't get me more than a broken leg, I am going to try to make some sense of what has happened...
Housing is bad enough, but wait — it'll get worse -- If you think the housing slump can't get much worse, Martin Feldstein thinks that both home prices and the broader economy can — and very likely will — get a whole lot worse.
The Harvard University professor and former chief economic adviser to Ronald Reagan isn't part of the crowd that continually forecasts doom. For two decades, he's headed the National Bureau of Economic Research, which officially determines when U.S. recessions begin and end.
So when he spoke on Monday night at the annual dinner of the National Economists Club, a gathering of like-minded wonks, Feldstein's grim calculations were noteworthy...
Anatomy of the Morgan Stanley Panic -- Trading Records Tell Tale of How Rivals' Bearish Bets Pounded Stock in September . . .
Trading records reviewed by The Wall Street Journal now provide a partial answer. It turns out that some of the biggest names on Wall Street -- Merrill Lynch & Co., Citigroup Inc., Deutsche Bank and UBS AG -- were placing large bets against Morgan Stanley, the records indicate. They did so using complicated financial instruments called credit-default swaps, a form of insurance against losses on loans and bonds...
Will Morgan Stanley Forgive and Forget? -- Don't Count On It! -- Wall Street is definitely a dog eat dog world...
GOLDMAN TRADERS STILL EYEING '08 BONUSES -- While the top management of Wall Street banks are being pressured to forego bonuses in light of the companies' acceptance of billions of dollars in TARP money, traders are being told they will still be getting millions in bonuses - albeit less than they got last year...
"5th Grade" Winner Goes Belly Up -- Kathy Cox may be smarter than a 5th grader, but she's now just as broke as one.
Kathy won $1 million on "Are You Smarter Than a Fifth Grader" in September. But here's the deal. She donated her winnings to charity, banking on her husband's construction biz which apparently had been running just fine. But his construction company tanked with the economy, and now they've declared bankruptcy...
- Don't Get Depressed, It's Not 1929 - Daniel Gross, Newsweek
- Is This Really a Great Depression? - Steve Hanke, Globe Asia
- A Memo to Mr. Geithner - Roy Smith, Forbes
- A Robert Rubin Constellation Is Taking Shape - Jackie Calmes, NY Times
- It's Time to Reward Virtue - Lawrence Lindsey, Weekly Standard
- The Redemption of Barney Frank - Michelle Cottle, New Republic
- What's Ahead for General Motors? - Alex Taylor, Fortune
- Let Detroit Face the Music - Terence Corcoran, National Post
- Citigroup's Overambition Haunts Bank - Philip Aldrick, Daily Telegraph
- A Tale of Two Paulsons - Nicole Gelinas, City Journal
- Bring Back the Gold/Dollar Link - Richard Duncan, Financial Times
- The Fed Is Out of Ammunition - Christopher Wood, Wall Street Journal
- Towards a Health-Care Fed - David Warsh, Economic Principals
- Finance Has Lost Sight of Its Role - Yves Smith, Naked Capitalism
- Did Bob Rubin Kill Citigroup? - Felix Salmon, Market Movers
- Every Stock Mutual Fund Has Lost Money This Year, Except One - BizWk
- A Lost Decade--But Not For Everyone - Fred Wilson, A VC Blog
- The Frightening Week that Was - Prieur du Plessis, Postcards from Cape T.
- The Long Road Ahead for General Motors - Joe Nocera, New York Times
- Not Everything Can Be Too Big To Fail - Peter Wallison, Wall Street Journal
- Allowing Detroit To Go Bankrupt Would Be Irresponsible - Editorial, NYT
- Tim Geithner: A Reassuring Figure at Treasury - The Economist
- A Man with No Shortage of Critics: Vikram Pandit - F. Guerrera, FT
- In Ethnic Enclaves, The U.S. Economy Thrives - Joel Kotkin, Forbes
- The Meddlers Can't Tame the Market - Bill Fleckenstein, MSN Money
- A Worldwide Vision of Sustainable Recovery - J. Sachs, Project Syndicate
- How Europe Dealt with the Financial Crisis - Tony Barber, Financial Times
- Leverage Is an 8 Letter Word - John Mauldin, Thoughts from the Frontline