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Treasury Secretary Henry Paulson cautioned on Sunday that countries that turn to protectionist policies to try to escape damage from the global financial crisis may make it worse. "Isolationism and protectionism will not offer a way out," Paulson said in a statement prepared for delivery to the World Bank's development committee.

Although oil prices have tumbled by almost half since approaching $150 a barrel in July, it looks like black gold still has further to fall... "...OPEC will need to revive demand. “We now know that the global economy couldn’t really handle prices above $100 and OPEC will have to figure out a price the economy can handle,” Lebow said."

World leaders are coming together to take decisive action to help a faltering world economy rocked by a credit crisis and unnerved by plunging global stock markets, accoring to President Bush. In a Rose Garden address shortly before 8 a.m., Bush pledged that the economy would emerge stronger as a result of the actions taken by G7 nations. “I'm confident the world's major economies can overcome the challenges we face,” said Bush, backed by Treasury Sectretary Henry Paulson and other G7 finance ministers. “We're in this together. We'll come through this together.” He said the G7 nations had agreed to...

The financial meltdown on Wall Street and elsewhere is not simply endangering investments, payrolls, consumer purchases, and business transactions in America. It is also triggering predictions—especially from overseas—that the era of American financial primacy is coming to a dramatic end. The unique role of the U.S. dollar as the world's broadly chosen reserve currency, along with the globe-straddling role of the U.S. financial sector, have long been a key source of power, prestige, and financing opportunities for American companies and the U.S. government. Eroding that stellar status endangers a central pillar of the mostly U.S.-inspired system that has basically defined...

LONDON: It may sound untrue, but it's now a fact — Britain's standing as a world-class destination for higher education is under threat. Leading British universities have lost ground to their richer foreign rivals in world rankings — both Cambridge and Oxford universities have slipped down the top 200 list to give way to popular US varsities like Harvard and Yale. In fact, according to the Times Higher Education — QS World University Rankings, Harvard is at the top followed by Yale, Cambridge and Oxford. Both these British varsities came joint second last year. However, four UK universities are in...

China's economy is strong enough to withstand the impact of the global financial crisis and may even help the world by maintaining fast growth, Premier Wen Jiabao was quoted as saying Sunday. "Our economic fundamentals haven't changed, and the economy is moving in the direction we expected," Wen was quoted as saying by the state-controlled Xinhua news agency. "The strength of our financial institutions has generally increased, and their ability to make money and withstand risk has risen. Market liquidity is ample and the financial system is stable and safe," he said. "This will help us withstand any negative external...

U.S. Tax on Business, 40% - In Europe, 23% Monday, October 06, 2008 By Chris Edwards Of late, U.S. economic policy has been dominated by responses to short-term crises — the Wall Street bailouts, the economic stimulus bill, and post-hurricane spending. Whether or not such interventions make sense, they divert attention from the urgent need to bolster America’s long-term competitiveness in the global marketplace. While U.S. fiscal policy has been directionless, many of our international competitors have initiated dramatic tax reforms that put them at a distinct advantage for attracting outside investment and attendant job growth. Consider that 12 of...

NEW YORK (Reuters) – Oil dropped more than 6 percent to below $88 a barrel on Monday as a global market rout churned concerns that faltering fuel demand could slow further. U.S. stocks tumbled 6 percent to the lowest level in nearly five years as part of an international sell-off on fears the global economy was heading into recession. U.S. crude settled down $6.07 at $87.81 a barrel after hitting an eight-month low of $87.56. London Brent crude fell $6.57 to settle at $83.68 a barrel. Crude prices have plummeted from a peak over $147 a barrel set on July...

Regulators shut down Russia's benchmark stock exchange, RTS, for an hour after shares plunged. Stocks had opened lower, after a torrid trading session on Thursday in the US amid fears over the success of a federal bailout plan to stave off a recession. The RTS index dropped 7.1% to 1,070.5 points before trading was halted. The MICEX exchange - where most of Russia's trading takes place - plunged by 6.9% to 916.7 points. Mining company Norilsk Nickel dived by 12.2%, state-owned oil major Rosneft by 7.1% and private oil company Lukoil by 6.1%. Stocks in the US plunged in the...

It took a weekend to shatter the complacency of German finance minister Peer Steinbrück. Last Thursday he told us that the financial crisis was an "American problem", the fruit of Anglo-Saxon greed and inept regulation that would cost the United States its "superpower status". Pleas from US Treasury Secretary Hank Paulson for a joint US-European rescue plan to halt the downward spiral were rebuffed as unnecessary. By Monday, Mr Steinbrück was having to orchestrate Germany's biggest bank bail-out, a €35 billion loan package to save Hypo Real Estate. By then Europe was "staring into the abyss," he admitted. Belgium had...

(CEP News) - Gold is currently the sole commodity selling off on Tuesday morning, in sharp contrast to Monday when it was rallying. Chicago Board of Trade (CBOT) gold is trading down $16.60 per ounce to $877.80 USD, as markets hope for a revised bailout plan that will eventually be passed by the U.S. House of Representatives following yesterday's surprise development. "Yesterday's turmoil in the financial markets was true testimony to gold's status as a safe-haven asset, with the surprise rejection by U.S. Congress of the proposed $700bn bailout plan inducing fear in risky assets but supporting a close back...

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Kristol: A Genuine and Immediate Crisis I've received phone calls in the last hour from two economists I respect, one of them Larry Lindsey, the other in a position where he'd prefer not to be named. Both have government experience, neither is alarmist by nature, and they say this: The huge European bank Fortis is apparently about to fail. The ripple effect on the American banking system could be disastrous, with bank runs, liquidity crises, and stock sell offs possible Monday. Wachovia may well fail next week. As Larry put it, this really will be 1933 soon if we don't...

It was a scene eerily reminiscent of the dark days of Asia's financial crisis in 1997. Long lines of panicked savers waited outside branches of Hong Kong's Bank of East Asia on Sept. 24 after rumors had started circulating the day before by cell-phone message that the bank was in peril because of its exposure to Wall Street's meltdown. Shares fell 6.9%. The run only lasted 24 hours, ending after the bank issued denials and threatened to take legal action against those spreading the rumors. BEA also won support from Hong Kong tycoons such as Li Ka-shing, who snapped up...

Top Chinese Bankers Show Support to US Bailout Plan September 28,2008 by CSC staff  As the world turns to China for the confidence of economic growth, China is hoping the US congress to pass the $700 billion bailout plan decisively since it has been anxious on the security of its hundreds of billions of dollar-dominated assets. As drastic disputes over the bailout plan were taking place in the US congress, on the summer session of Davos World Economic Forum held in Tianjin, a port city 100 miles east of Beijing, Chinese top bankers showed their support to the plan. “The rescue...

I've received phone calls in the last hour from two economists I respect, one of them Larry Lindsey, the other in a position where he'd prefer not to be named. Both have government experience, neither is alarmist by nature, and they say this: The huge European bank Fortis is apparently about to fail. The ripple effect on the American banking system could be disastrous, with bank runs, liquidity crises, and stock sell offs possible Monday. Wachovia may well fail next week. As Larry put it, this really will be 1933 soon if we don't move rapidly to stabilize the banking...

Comparing International Corporate Tax Rates: U.S. Corporate Tax Rate Increasingly Out of Line by Various Measures by Robert Carroll Fiscal Fact No.143 The U.S. has left the major features of its business tax system unchanged over the past fifteen years. Meanwhile, other countries have been changing theirs, potentially hurting the competitiveness of the United States. Perhaps most emblematic of the trend abroad is lower corporate tax rates in virtually all developed nations. As a result, the United States now has the second-highest statutory tax rate among OECD member nations. Figure 1 below tells this story: The U.S. became a low-tax...

BBC News world economy debate BBC News held a debate on the current global financial crisis: World economy on the brink? The discussion was chaired by Andrew Neil and featured leading members of the financial world including: George Magnus, senior economic adviser, UBS Ken Courtis, former vice chairman of Goldman Sachs, Asia Terry Smith, chairman Collins Stewart investment banking group Jim Chanos, founder and president of Kynikos Associates, a dedicated short-selling hedge fund and BBC business editor Robert Peston.

Even if Congress backs the Paulson bail-out, the $700 billion blast cannot save the US, Britain or the world from the deepest economic slump since the Thirties. If Congress balks, God help us. The credit system is suffering a heart attack. Inter-bank lending is paralysed. Funds are accepting zero interest on US Treasury notes for the first time since Pearl Harbour, because no bank account is safe. Wherever you look – dollar, euro, sterling Libor (the rate at which banks lend to each other), or spreads on credit derivatives – the stress has reached breaking point. If borrowers cannot roll...

AMERICAN political leaders last night agreed in principle an extraordinary $700 billion (£367 billion) deal that financiers hope will save the economies of the western world from collapse. Democrat and Republican chiefs accepted the general outline of an agreement on the controversial multi-billion-dollar bail-out of United States financial institutions – equivalent to $2,333 (£1,270) for every US taxpayer – although there is still work to be done on the detail. And doubts emerged late last night over the deal as a senior senator, Richard Shelby, emerged from a White House meeting that included President George Bush, both presidential candidates and...

The $700bn (€475bn) rescue package for US banks proposed by Treasury Secretary Henry Paulson does nothing to address the root causes of the financial crisis, and could end up costing the global economy dearly in the long run, according to a former World Bank economist who has overseen similar rescues in emerging markets. Professor Sweder van Wijnbergen, who spent 12 years at the World Bank and was most recently chief economist for central and eastern Europe, said that in his experience the cost of such rescue packages was not necessarily related to the size of the initial problem - in...

Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it would now have to accept greater market regulation and a loss of its financial superpower status.

Today, the whole world is being hit by a tremendous financial crisis, but Russia is facing a perfect storm. The Russian stock market is in free fall, plummeting by 60 percent since May 19, a loss of $900 billion. And the plunge is accelerating. As a result, Russia's economic growth is likely to fall sharply and suddenly. One problem is that, after a long period of fiscal prudence, Russia's government has shown extraordinary ineptitude. Russia has enjoyed average annual economic growth of 7 percent since 1999. With huge current-account and budget surpluses, it had accumulated international reserves of $600 billion...

UNITED NATIONS (AFP) - World leaders demanded urgent steps to contain the global financial crisis and a sweeping reform of multilateral institutions, including the Security Council, during the UN General Assembly's annual debate. A ministerial meeting of six major powers trying to scale down Iran's nuclear ambitions, scheduled for Thursday on the sidelines of the UN General Assembly, was meanwhile called off after Russia said it would not take part. But on the first day Tuesday of the 192-member Assembly's debate, the world's financial meltdown took center stage, with UN chief Ban Ki-moon stressing the need to "restore order to...

TOKYO - The Bank of Japan pumped another 1.5 trillion yen (US$14.2 billion) into money markets Wednesday, amid an effort among the world’s central banks to calm worries about a global financial crisis. The Bank of Japan during the past week has been injecting trillions of yen by the day to add liquidity into the system. The latest brings the bank’s infusion to a total of 14 trillion yen (US$132.6 billion). A widening credit crisis, which began last year in the U.S., is threatening the world’s economic health and stability. The collapse of Lehman Brothers last week is fuelling additional...

China banks told to halt lending to US banks-SCMP Wed Sep 24, 2008 9:52pm EDT Email | Print | Share| Reprints | Single Page | Recommend (36) [-] Text [+] Market News Oil rises $2 on U.S. bailout hopes Stocks rally on bailout plan Fannie, Freddie shares jump as shorts book profits More Business & Investing News... Featured Broker sponsored link BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday. The Hong Kong newspaper...

Gordon Brown will fly to Washington on Friday for talks with George Bush about the growing global financial crisis. The American president invited him to the White House to join the frantic negotiations to salvage the world money markets. The last-minute change of plans follows reports that the Prime Minister was 'snubbed' by American Treasury Secretary Hank Paulson. Mr Brown is in New York for two days of talks at the United Nations on promoting the Millennium Development Goals for ending world poverty.

The Irish Republic's economy has fallen into recession after shrinking for a second quarter in succession. The Central Statistics Office (CSO) said gross domestic product (GDP) had contracted by 0.5% in the three months to the end of June. The economy had shrunk by 0.3% in the first quarter of the year. Technically, a recession is defined as two or more successive quarters of negative growth.

Sharp falls in business confidence were reported across continental Europe on Wednesday as global economic storms drove the eurozone towards recession, adding pressure on the European Central Bank to consider interest rate cuts. Germany, France and Italy reported the business mood had darkened markedly this month, with Germany’s Ifo institute reporting that industry’s expectations for the next six months were the most pessimistic since early 1993. With business confidence surveys seen as a good guide to trends in activity, the deterioration provided fresh evidence that eurozone economic data for the last three months will show a second quarterly contraction –...

BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday. The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries. "The decree appears to be Beijing's first attempt to erect defences against the deepening U.S. financial meltdown after the mainland's major lenders reported billions of U.S. dollars in exposure...

"Is it a debate for now?" asked Nick Clegg, Lib Dem leader and ex-MEP, of British entry to the euro. "No. I think it's off the radar screen," he said at his party's annual conference this week. Like Gordon Brown, he gave the stock response to the decade-long question: "We'll join when the time is right." Even in this era of wild currency fluctuations and financial meltdown, there's no appetite in Britain for joining the single currency. But, in Nice last weekend for the informal meeting of EU finance ministers and a heavyweight conference on financial supervision organised by thinktank...

Kazakhstan’s government stepped in to help its banks on Wednesday by promising to buy up $6bn in bad loans to help them in the deteriorating financial climate. In a move similar to the US government’s $700bn rescue plan, the government will create a fund to mop up toxic assets that are destabilising the banking system. The liquidity squeeze has put Kazakhstan’s 36 banks under pressure as assets on their books have fallen in value and their ability to roll over bonds and loans has been curtailed by deteriorating credit conditions. The banks, many of them highly leveraged, have an estimated...

Daimler is preparing to sell its remaining minority stake in ailing US carmaker Chrysler to private equity group Cerberus, in a move that would mark the final act of a 10-year-long combination. The German premium car group on Wednesday confirmed it was in talks with Cerberus, which bought the majority of Chrysler more than a year ago, about a sale of Daimler’s 19.9 per cent stake in the US company. Daimler declined to comment on further details and did not give any explanation about the reasons for a possible sale. Cerberus said it approached Daimler about a deal, but said...

Australia and New Zealand issued recalls Thursday for an imported Chinese candy that was found to contain the industrial chemical melamine. New Zealand Food Safety Authority spokesman Geoff Allen said Thursday morning that he expected the White Rabbit Creamy Candies to be off shelves within 24 hours. "This product contains sufficiently high levels of melamine which may, in some individuals, cause health problems such as kidney stones," deputy chief executive Sandra Daly said in a statement posted Wednesday on the agency's Web site. "The levels we have found in these products are unacceptable."

Rumours trigger bank run in Hong Kong By Justine Lau and Tom Mitchell in Hong Kong Published: September 24 2008 15:36 | Last updated: September 24 2008 19:16 Thousands of panicked depositors queued outside Bank of East Asia’s branches across Hong Kong on Wednesday to withdraw their life-savings on rumours that the lender was in financial trouble. The territory has seen only one other bank run since its return to mainland China in 1997, when the International Bank of Asia saw large withdrawals in November of that year. David Li, BEA chairman and chief executive, said: “Some people are spreading...

Aloha, Doha. Begun in November 2001 in Qatar's capital, these trade negotiations came to be known as the Doha Developmental Agenda, with the intent to accomplish a 150-nation deal to aid developing nations.Planned to conclude in January 2005, Doha was in overtime longer than it was on time. There have been many excuses for its failure, but in the end it was undermined by its own overreach. As bleak as international trade's future now appears, Doha's failure actually offers the best chance to begin again and to begin aright. Doha's July 29 collapse punctuated the third consecutive summer in which...

By taking the colossal wreckage of the credit bubble onto its own books in a $700bn (£382bn) taxpayer sink, Washington has forestalled a run on the world banking system, and may hopefully have saved the viable core of modern capitalism. Hank Paulson's "Super Sink" is the "game changer" we have all been waiting for in this interminable crisis. It puts a floor under the toxic debt that is bleeding the banking system to death, and ends the downward spiral of CDOs, CLOs, HELOCs, and such instruments of leveraged excess that lie at root of the credit terror. No doubt the...

WASHINGTON (AP) -- The Federal Reserve, in coordinated action with foreign central banks, plowed $30 billion into money markets overseas Wednesday, part of an ongoing effort to fight a global credit crisis. The Fed's action -- taken at 1 a.m. EDT -- sets up temporary "swap" arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies.

At 10 minutes to one on Tuesday afternoon, South Africa’s new order discovered just how vulnerable its economy is. Already jittery over the upheaval of the recent days, investors were aghast to read the name of Trevor Manuel, the respected finance minister, on a list of 11 ministers and three deputy ministers resigning following the political coup that brought Thabo Mbeki’s nine-year rule as president to an end at the weekend. By five past two, a frantic sell-off had sent the rand plunging by more than 3 per cent against the dollar, its biggest fall for more than four years...

"The collapse of emerging market economies will shake investors to the core. The great unwind has only just begun," said Albert Edwards, the bank's global strategist. "The big surprise in store is what could happen in China. The potential for a deep recession in the US is already on the radar screen, but people will be stunned if China's economy contracts, as I believe it will. Investors could be massively caught out," he said. "The consensus has a touching belief that emerging markets will prove resilient despite a deep downturn in developed economies. My view is that an outright contraction...

European banking on borrowed time By Daniel Gros and Stefano Micossi Published: September 23 2008 19:49 | Last updated: September 23 2008 19:49 The US financial system is being nationalised. The piecemeal approach followed so far had clearly not been working. Hence the US political system is working overtime to reach a bipartisan agreement on a systemic solution. The centrepiece is already known: the US government is going to buy $700bn (€480bn, £380bn) of the so-called “toxic” assets. More measures are certain to follow as the banks will require recapitalisation to the extent that they make losses. As a result,...

The US government is buying bad debt for $700 billion. Now Washington is asking other countries to jump in and help, too, but the Germans are bowing out. Believing that the rescue package sends the wrong signal, experts from the country's leading economics think tanks argue it's the right call.It's not a call for assistance; it's a scream for help. US Treasury Secretary Henry Paulson is asking other countries to help buy up bad US debt. The US government is putting up $700 billion in taxpayer money in the hopes that the measure might restore stability in the financial system....

German economists endorse the government's refusal to buy up bad U.S. debt, saying it would reward reckless investment behavior --- SNIP Economics experts think that's the right response. As they see it, in the long run, those responsible for the crisis—who have been cashed out with high salaries and bonuses for years—will not be penalized for billions "but will be let off the hook like everyone else," says Carsten Meier of the Kiel Institute for the World Economy (IfW). According to Meier, by injecting capital into the market, the US government is putting everyone who speculated and lost back on...

America still dominates the business of managing the world's finances despite the wealth accumulation of emerging markets. The cataclysmic events on Wall Street have shelved, probably for some time to come, two fashionable topics of macroeconomic debate. The first has been over not merely whether, but how fast, economic power would shift from the United States to the “new wealth-creators” - China and, down the line, India, Brazil and even resource-rich Russia and aspiring financial market newcomers, such as Dubai. The second has been about “decoupling”, the theory that the leading emerging markets were becoming standalone success stories - meaning...

Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders. Like banks, most members of this system borrow very short-term and in liquid ways, are more highly leveraged than banks (the exception being money market funds) and lend and invest into more illiquid and long-term instruments. Like banks, they...

1. The U.S. reaction to the financial crisis: The focus this week will be the implementation of government solutions to the financial crisis. Essentially, the U.S. government has turned a short-term economic problem into a longer-term problem by using U.S. credit to underwrite failed and failing debt instruments. This relieves the short-term pressure, and it is quite possible that over the longer term, the underlying assets — the housing market — will recover, as will the value of the instruments, meaning that the loss will be minimal or that the government will turn a profit. There is nothing new about...

Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks. On Sunday, the Treasury secretary, Henry M. Paulson Jr., indicated in a series of appearances on morning talk shows that an original proposal introduced on Saturday had been widened. “It’s a distinction without a difference whether it’s a foreign or a U.S. one,” he said in an interview with Fox News. The prospect of being locked out of the bailout...

Special Report: Where to Put Your Money Now -- Experts are encouraged by the government's bailout plan, despite the cost. * * * THE GOVERNMENT'S FAR-REACHING PLAN to stem America's financial crisis sent stocks soaring on Friday, perhaps signaling a bottom in this year's vicious bear market. The Dow Jones Industrial Average shot up 368.75 points on Friday, or 3.4%, on top of a 3.9% jump Thursday, when the bailout surfaced. It was a welcome lift for an index that, earlier in the week, was down 20% for the year. The plan, which calls for the U.S. Treasury to buy...

During the crisis, Japan feels like an island of calm By Martin Fackler Sunday, September 21, 2008 TOKYO: Wall Street may be suffering the worst financial storm since the Great Depression, but Japan has felt like an island of Zen-like calm. The world's second-largest economy after the United States has often seemed to be marching to its own drummer, sometimes to disastrous effect. But rarely has the disconnect been as stark as during the current crisis. While European and American financial titans have teetered and collapsed, giant Japanese banking groups have stood relatively unscathed. The growing global credit crisis, which...

The backstory for this election year lacks the urgency of war or of defeating George W. Bush but focuses on a most fateful question: When will this hemorrhaging debtor nation be compelled to pull back from profligate consumption and resign its role as "buyer of last resort" for the global economy? The smart money assumes such a momentous reckoning probably won't occur in time to disrupt Bush's re-election campaign, but it may well become the dominating crisis in the next presidential term, whoever is elected. At that point, the United States will lose its aura of unilateral superiority, and globalization...