Bush Goes Full Speed Ahead On Bailout

Lame Duck Administration Eager To Pump Money Into Struggling Financial System

(CBS/AP)  At a time when most administrations are slowing down, the Bush White House appears to be speeding up - at least when it comes to getting the $700 billion financial rescue program up and running.

Treasury Secretary Henry Paulson, President Bush's point man on the gigantic program, is pushing his staff to do everything possible to show markets that the government is getting the money out the door to bolster the financial system and get banks to resume more normal lending.

On Wednesday, one day after Sen. Barack Obama won the presidency, the Treasury Department detailed how it planned to borrow a record $550 billion before the end of this year to back the bailout. Treasury said it would sell $55 billion in bonds next week, including a reintroduction of the three-year note - all part of a massive borrowing effort required because of the cost of the bailout and a budget deficit that some believe could hit nearly $1 trillion next year.

The government's surging financing needs are a stark reminder of the challenges awaiting Obama even as the current administration moves to implement its rescue program and the Fed fine-tunes its approach to the crisis.

The financial turmoil flared anew Wednesday with the Dow Jones industrial average plunging 486.01 points, or more than 5 percent, as investors absorbed more bad economic news with a report on the manufacturing sector showing that the segment of the economy where most Americans work had dipped into recession territory in October.

The selling carried over to Asia, where Japan's Nikkei stock average retreated 5.7 percent and Hong Kong's Hang Seng Index lost 6.7 percent in early trading Thursday.

Investors were braced for more bad news Thursday with the number of newly laid-off workers filing claims for unemployment benefits expected to remain around 480,000, a level that usually signals a recession.

Economists expect a separate report will show productivity slowed to a weak 0.8 percent rate of gain in the third quarter, far below the 2.8 percent increase in the second quarter. And they were looking for the slowdown in productivity to be accompanied by a rise in labor pressures with unit labor costs climbing at a rate of 2.8 percent, compared with the 0.5 percent rate of decline turned in during the second quarter.

And those reports were coming one day before the government was scheduled to report on unemployment for October, a report expected to show that the jobless rate shot up to 6.3 percent last month as businesses cut 200,000 workers from their payrolls, the 10th straight month of joblessness since January.

The government said last week that the overall economy, as measured by the gross domestic product, fell at an annual rate of 0.3 percent in the July-September quarter, reflecting the biggest drop in consumer spending in 28 years. Analysts are forecasting that GDP will fall by an even larger amount of around 2 percent in the current quarter. That would meet the classic definition of a recession of two consecutive quarters of declining GDP.

Mark Zandi, chief economist at Moody's Economy.com, said he thinks GDP will keep shrinking through the first half of next year, pushing the unemployment rate up to 8 percent before a solid rebound can begin.

Zandi expects this downturn to produce the most severe unemployment since the 1981-82 recession, when the jobless rate jumped to 10.8 percent, the highest since the 1930s.

"I think we are through the worst of the financial panic, but I expect the recession will last through next summer," Zandi said.

On Wednesday, the Federal Reserve said it will slightly boost the interest rates it pays banks on their required reserves and the excess reserves they choose to deposit with the Fed. The rescue bill authorized the central bank to start paying interest rates to commercial banks on the reserves. Policymakers hope the move will further bolster the banks' reserves.

In other developments, the Bush administration is hopeful that world leaders, at a summit in Washington next week, will adopt an action plan singling out some short-term steps that could be taken to deal with the current financial crisis as well as prevent similar problems from happening again.

The plan could include measures aimed at promoting more openness - or transparency - in financial markets, improving "risk management," the procedures that financial institutions follow to detect and protect themselves against risky investment decisions, and bolstering accounting rules, administration officials said Wednesday while briefing reporters on the White House's Nov. 15 summit.

While the White House also believes leaders will be able to find some common ground for fighting the worst financial crisis to jolt the global economy in more than a half century, there is little appetite in the waning days of the administration for overhauling financial regulations.

Europeans - led by British Prime Minister Gordon Brown and French President Nicolas Sarkozy are seeking ambitious regulatory reforms coordinated among countries to prevent a repeat of similar housing, credit and financial debacles that are now imperiling the economies of the United States and the world.

Instead, the Bush administration predicts world leaders will come together on broad principles of reform to better protect against future financial crises, promote regulatory cooperation among countries and identify the root causes of the crises at hand.

"We are working in a cooperative spirit, trying to find the path forward together," White House press secretary Dana Perino said this week.

Leaders of the world's top 20 economic powers have been invited to the summit, which will include a dinner at the White House next Friday and talks next Saturday. Besides the United States, France and Britain, other member countries include Germany and Japan as well as major developing countries such as China, Brazil and India.

The administration has been in consultations with President-elect Barack Obama's team and is seeking their input regarding the summit, officials said. Before Tuesday's election, it was reported that neither Obama, nor his Republican rival at the time, John McCain, would attend the economic summit.

[txgrouch2007]

I can ask the same questions about the first 6 years of the Bush Adm.
Posted by kaviz at 05:51 PM : Nov 06, 2008

But YOU were saying how GREAT the Clinton years were.

I was just reminding you of THE TRUTH. But your #1 priority is EVADING THE TRUTH. Like a true Democrat.

[kaviz]

grouchy, I can ask the same questions about the first 6 years of the Bush Adm. with a Rep. congress. he was warned, but was told not to let the door hit him on the way out. priority #1 was war with Iraq, period!And I am out of here.

[txgrouch2007]

I would pay for one to the president and probably even convince you to preform it.
Posted by kaviz at 05:18 PM : Nov 06, 2008

So what DID Bill Clinton do to save Social Security from inevitable insolvency?

What DID Bill Clinton do to develop alternative energy sources?

What DID Bill Clinton do to stop the rampant accounting fraud that was occurring at Enron and Worldcomm?

What DID Bill Clinton do to stop the 9/11 pilots who were taking flying lessons here in the summer of 2000?

That''s easy: NOTHING!!!!!!!!!!!!!

[kaviz]

Grouchy, look at the financial figures of our debt at the end of Clintons term , compared to the end of any republican term. If a BJ is all it takes to get back to those days, I would pay for one to the president and probably even convince you to preform it.

[txgrouch2007]

Then, why didn''''t the 12 years of republican rule under Regan and Bush fix it ,instead of putting us further in debt?
Posted by kaviz at 05:03 PM : Nov 06, 2008

Seems like your god, Bill Clinton, had eight years and he didn''t do much either. I remember it was a topic in his debates with Dole.

But somehow the RESPONSIBILITIES of history skip a President when he''s a Democrat.

[kaviz]

grouchy, do you really think that a decision made that long ago is the root of the problem? Then, why didn''t the 12 years of republican rule under Regan and Bush fix it ,instead of putting us further in debt? GOP=borrow and spend like spoiled rich children. DEMS= tax and spend which is fiscally responsible as is the budget of most households.

[txgrouch2007]

How would you know, you were probably in diaper at that time or just a gleem in your dad''''s eyes.
Posted by kaviz at 04:53 PM : Nov 06, 2008

LOL! Is that the best you can do???

[kaviz]

How would you know, you were probably in diaper at that time or just a gleem in your dad''s eyes.

[txgrouch2007]

It will take time to fix the republican financial raping of this country.
Posted by kaviz at 04:09 PM : Nov 06, 2008

Guess what - the inevitable Social Security meltdown was originated by FDR, A DEMOCRAT.

[kaviz]

wardog, are you michael Vick? Because I would love to get your autograph.

[wardoglrs]

America is dead RIP. You can thank the dumb downed voter for another lame *** prez. Obama voted for the FISA and the bail out what more could you need to see this neo con pos just like bush. No hope & change for the worst

[kaviz]

grouchy, why dont you ask your beloved leader the same quesyion? It will take time to fix the republican financial raping of this country.

[txgrouch2007]

Bush promised wall street a trillion dollars to administrate our social security in the beginning of his first term. It looks like he is going to deliver on most of that promise without them having to do anything.
Posted by kaviz at 04:01 PM : Nov 06, 2008

Speaking of Social Security, is there ANY QUESTION now of how Congress plans to BAIL OUT THE SOCIAL SECURITY SYSTEM when it is in danger of going insolvent?

BORROW, BORROW, BORROW from future generations. It will make the Barney Frank Meltdown look puny.

[txgrouch2007]

Correction:

So Republicans proposed legislation to make stronger regulation of Fannie Mae and Freddie Mac. But EVERY DEMOCRAT on the Finance Committee, led by Barney "Meltdown" Frank, OPPOSED IT. Committe chair Chris Dodd, a Democrat, blocked the measure and it was never even brought to a vote.




--------------------------------------------------------------------------------

Posted by txgrouch2007 at 03:57 PM : Nov 06, 2008

[kaviz]

Bush promised wall street a trillion dollars to administrate our social security in the beginning of his first term. It looks like he is going to deliver on most of that promise without them having to do anything.

[txgrouch2007]

Fannie Mae and Freddie Mac ran amok along with the rest of the home lending industry, which was still careening along without regulation and still living in the Clinton era of rampant accounting fraud.

The SUDDENLY someone noticed that these subprime loans had gobbled up ALL CAPITAL available for lending. The credit markets ALL shut down and brought the entire economy to its knees. And for some reason, NOBODY SAW IT COMING.

Then I woke up and saw the stock market dropping through 10,000 feet. I grabbed the controls and struggled to regain control. I looked out the window and saw the whitecaps on the ocean. I pulled back on the control column and prayed....

No, wait, that was Charles Lindbergh. But it was pretty much the same thing.

[txgrouch2007]

Let''''s all remember how we got to this diaster,
Posted by pythoncharly at 11:17 AM : Nov 06, 2008

Oh, let''s see now. It was all happening so fast, it was like a blur. But this is what I remember:

Bill Clinton signed the 1999 banking deregulation act, which was passed OVERWHELMINGLY BY BOTH PARTIES in the House vote. Clinton could have vetoed it, and then if Congress overrode his veto he could be saying "It passed over my objections." But instead he SIGNED IT INTO LAW.

Then Barney "Meltdown" Frank pushed the "affordable housing" agenda to pander to poor voters by helping them get loans they never could have paid back, so they could buy houses they couldn''t possibly afford.

Then when Congress was investigating the rampant accounting fraud that occurred during the Clinton years in companies like Enron and Worldcomm, they discovered that Fannie Mae and Freddie Mac were engaging in THE SAME KIND OF ACCOUNTING FRAUD because it had become "normal, accepted practice" during the Clinton years.

So Republicans proposed legislation to make stronger regulation of Fannie Mae and Freddie Mac. But EVERY DEMOCRAT on the Finance Committee, led by Barney "Meltdown" Frank. Committe chair Chris Dodd, a Democrat, blocked the measure and it was never even brought to a vote.

[windmaster12]

Bush to VP Cheney

"Call Our pals -- tell them The Checks in the mail --

We did our job -- Time to get the heck out of town --

Leave this mess for someone else to clean up""

[txgrouch2007]

txgrouch2007 - Stay tuned to all the incriminating documents and bestselling books that will be published detailing so much more cr@p the Bush administration pulled.
Posted by hotpaulie at 11:42 AM : Nov 06, 2008


LOL! Who''s going to write them - YOU????? LOL!

[kashmirbaby]

I guess I just feel that if you''re goal is to attack the intelligence of someone, you should pay attention to your grammar. Besides, Bush is almost out and we''ll have a new president to complain about! (Not that I don''t like Obama, I do! The American people have a long history of complaining about the policies and decisions of their President...no one person can please the mass.)