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Shock Forced Paulson's Hand - <i>A Black Wednesday on Credit Markets; 'Heaven Help Us All'</i>
Wall Street Journal ^ | 9/19/2008 | Deborah Solomon, Liz Rappaport, Damian Paletta and Jon Hilsenrath

Posted on 09/19/2008 5:52:08 PM PDT by politicket

When government officials surveyed the flailing American financial system this week, they didn't see only a collapsed investment bank or the surrender of a giant insurance firm. They saw the circulatory system of the U.S. economy -- credit markets -- starting to fail.

Huddled in his office Wednesday with top advisers, Treasury Secretary Henry Paulson watched his financial-data terminal with alarm as one market after another began go haywire. Investors were fleeing money-market mutual funds, long considered ultra-safe. The market froze for the short-term loans that banks rely on to fund their day-to-day business. Without such mechanisms, the economy would grind to a halt. Companies would be unable to fund their daily operations. Soon, consumers would panic.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Front Page News; Government; News/Current Events
KEYWORDS: banks; economicpolicy; economy; govwatch; housingbubble; paulson; stockmarket; treasury; wallstreet
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To: politicket
WITHOUT the Fed action people could very well be talking about rescuing their savings from on banks this weekend. Yes, Thursday was that serious.

If you want banks to fail and 10-12% unemployment for years, then you are correct to hope the Gov't does nothing to save financial institutions.

81 posted on 09/19/2008 9:04:35 PM PDT by what's up
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To: All

bm for later


82 posted on 09/19/2008 9:05:15 PM PDT by downwdims
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To: org.whodat

You got that right. Wall Street whore.


83 posted on 09/19/2008 9:05:41 PM PDT by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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To: what's up
Illegal short selling is what should be targeted. With all this up and downs in the market guess who is making a killing? Wall Street brokers.
84 posted on 09/19/2008 9:08:30 PM PDT by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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To: Cringing Negativism Network
How did we get to this point??

Let's look at fairly recent history:

In 1980, the U.S. was the largest creditor nation on the planet - by far. We also had a tremendous manufacturing base and very healthy exports. We provided things of "value" to the rest of the world.

In 2008, the U.S. is the largest debtor nation on the planet - by far. Our manufacturing base that produces things of "value" has largely been sent overseas. We have turned into a consumer nation that mainly employs "service-based" industries. Therefore, our exports have become worthless for the most part and our imports have skyrocketed as we consume more and more trinkets produced by areas of the world with extremely cheap labor.

In return, we send other countries our Treasury Bills as IOU's for the junk that they send to us. They (China for instance) have used this money to build their infrastructure and to slowly increase the standard of living for their population.

Now, here's where it gets really bad. What happens when China discovers that its population has a high enough standard of living to buy the things that China produces for us?

America will go into economical meltdown.

85 posted on 09/19/2008 9:09:45 PM PDT by politicket (Palin-tology: (n) - The science of kicking Barack Obambi's butt!)
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To: politicket
It's simply speculators

No. Not "simply".

Along with speculators (which there always are and always will be...this is still America, isn't it?) there were many who like the plan and see it as the only answer other than a severe downturn. Is anyone else proposing anything to avoid a downturn? There's nothing else out there. Including here on Free Republic.

Many of those buyers you saw the last couple days now have hope that the plan might be the instrument to help the economy get back on its feet.

86 posted on 09/19/2008 9:11:55 PM PDT by what's up
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To: politicket

I say, it’s time to take a stand.

We need to become b*stards about American trade policy.

Immediately.

No more Mr. Nice Guy. No more putz.

Open your markets 100% immediately. Or you’re shut out of the American market, completely.

There can be no middle ground. We must take a stand.


87 posted on 09/19/2008 9:13:42 PM PDT by Cringing Negativism Network (CHEVY VOLT COUNTDOWN: V minus 93 Weeks. Waiting...)
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To: Sam Gamgee
Illegal short selling is what should be targeted.

And it is being targeted now.

It will interesting to say the least to see what the NY AG investigation turns up regarding the short selling lately.

88 posted on 09/19/2008 9:13:50 PM PDT by what's up
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To: what's up
If you want banks to fail and 10-12% unemployment for years, then you are correct to hope the Gov't does nothing to save financial institutions.

I understand how serious Thursday was. I've been watching it for many, many months. If you cared to look at my posts from 4 months ago you would see that I warned about Lehman going bankrupt. It's not that hard to piece this puzzle together if you quit looking at it from just the mortgage perspective.

I don't want bank failures, and I don't want 10-12% unemployment. But, that is what this country is going to experience before it can get healthy again. Do we do it now? Or do we sit on our hands whistling Dixie and face it later in an even worse way?

89 posted on 09/19/2008 9:13:50 PM PDT by politicket (Palin-tology: (n) - The science of kicking Barack Obambi's butt!)
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To: politicket

You’re absolutely right. The Fed is blowing a trillion dollars of paper “money” into circulation, but where is the corresponding trillion dollars’ worth of real-world value? Did we capture an asteroid made out of rhodium or something?

I’m with you. Re-inflating the bubble with worthless “money” only delays the inevitable. We need to reconcile ourselves to reality and let the chips fall where they may.


90 posted on 09/19/2008 9:15:32 PM PDT by B-Chan (Catholic. Monarchist. Texan. Any questions?)
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To: Sam Gamgee
With all this up and downs in the market guess who is making a killing? Wall Street brokers.

The same ones that made a killing in the five years preceeding 1929 - while convincing the American public that to not invest their savings into the market was foolish.

91 posted on 09/19/2008 9:15:32 PM PDT by politicket (Palin-tology: (n) - The science of kicking Barack Obambi's butt!)
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To: what's up
Many of those buyers you saw the last couple days now have hope that the plan might be the instrument to help the economy get back on its feet.

Not to be mean...but if this is the case then those buyers were fools. The plan hasn't even been presented to Congress yet.

92 posted on 09/19/2008 9:17:05 PM PDT by politicket (Palin-tology: (n) - The science of kicking Barack Obambi's butt!)
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To: politicket
I don't want bank failures, and I don't want 10-12% unemployment. But, that is what this country is going to experience before it can get healthy again

I disagree that this is inevitable.

93 posted on 09/19/2008 9:17:23 PM PDT by what's up
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To: what's up
About time. Funny that it went on for so long, as did short raids and inter-brokerage collusion, for years, but NOW the SEC will actually take action because darling bankers are the victims. Yet the AG put Martha Stewart and Conrad Black in jail for minor pseudo crimes.
94 posted on 09/19/2008 9:18:12 PM PDT by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
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To: what's up
It will interesting to say the least to see what the NY AG investigation turns up regarding the short selling lately.

Oh...that should be good! It's not like he's a political hack...</sarcasm>

95 posted on 09/19/2008 9:18:59 PM PDT by politicket (Palin-tology: (n) - The science of kicking Barack Obambi's butt!)
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To: B-Chan
The Fed is blowing a trillion dollars of paper “money” into circulation, but where is the corresponding trillion dollars’ worth of real-world value?

Excellent point - and needs to be repeated.

96 posted on 09/19/2008 9:20:09 PM PDT by politicket (Palin-tology: (n) - The science of kicking Barack Obambi's butt!)
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To: what's up
I disagree that this is inevitable.

Then we agree to disagree. My sincerest good luck to your financial health.

97 posted on 09/19/2008 9:21:11 PM PDT by politicket (Palin-tology: (n) - The science of kicking Barack Obambi's butt!)
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To: politicket
Not to be mean...but if this is the case then those buyers were fools. The plan hasn't even been presented to Congress yet.

You've heard the term "buy on rumor". Well, the people who bought the last 2 days trust all the reports that say there is fairly good bi-partisan support behind the plan.

They may not be fools. If the plan is announced it may then be too late to get into stocks at such a low price.

98 posted on 09/19/2008 9:23:20 PM PDT by what's up
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To: AndyJackson

FYI: In Marxian terms, the working class (aka the proletariat) is that class that owns no property and has no means of support other than trading their labor-power for wages. The bourgeoisie is the property-owning middle class — those who own their own businesses (shopkeepers, family businesses, etc.) and live off the investments they have made in them rather than wages. The capitalist class is the class that obtains wealth by exploiting the labor-power of the proletariat acting upon the productive capital (aka the “means of production”) that they own rather than by their own productive activity.


99 posted on 09/19/2008 9:23:44 PM PDT by B-Chan (Catholic. Monarchist. Texan. Any questions?)
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To: AndyJackson
this is what happened in Russia.....the absolute enrichment of a tiny number of ultra, ultra rich people with the depression of the middle classes to the peasant class....

you work all you life?....you're no better off than Johnny the lazy arse drunk down the street financially...

I guess the govt workers will keep their rewards....

but crime is going to increase eventually, as 99%of us become one huddled mass of humanity....its not going to be pretty....

but keep saying to yourselves....the Demoncrats are for the "little" people...the ultimate deceit....

100 posted on 09/19/2008 9:24:02 PM PDT by cherry
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