economy crisis // Current

Joe Davidson - Memo to New Agency Heads: Listen to Staff - washingtonpost.com

If you buy a new car, it comes with an owner's manual. If you buy a dresser from Ikea, instructions tell you how to put... more

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Colleges Unable to Access Funds due to Bank's Failure

Are you one og them?

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Hillary Clinton speaks about the "turning point" we in this election

Hillary has been crisscrossing the country campaigning for Senators Barack Obama, Joe Biden as well as Democrats up and down the... more

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Fed Orders Emergency Rate Cut to 1.5 Percent

The Federal Reserve and a consortium of European central banks today announced a half a point cut in a key interest rate, a... more

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Retirement Savings Lose $2 Trillion in 15 Months

The stock market's prolonged tumble has wiped out about $2 trillion in Americans' retirement savings in the past 15... more

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Car giants set to get $25bn loan

US car giants may be on course to get a $25bn (£13bn) government loan to help them build greener cars and ease them through... more

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Credit crunch hits small businesses - Sep. 15, 2008

Stephani Smith's Maui-based healthy meals delivery company had been thriving since 2004, but needed financial assistance to... more

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Fundamentals will help them bounce back

For many years, investors took it on faith that a portfolio of big blue-chip stocks - chockfull of familiar names like General... more

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Food inflation could slow down overall, except for meat - Aug. 13, 2008

'Unsustainable' prices for cereal and other foods could moderate soon, experts say, but get ready to pay more for meat

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More questions than answers about federal bailout plan - Sep. 19, 2008

Experts are cautiously optimistic that the massive federal bailout of the nation's financial sector will solve the credit crisis that hit Wall Street this week.

But questions remain about whether it will prevent more failures of banks and Wall Street firms and many doubt this will lead to a quick turnaround for the battered housing market.

The broad outlines of the plan call for the federal government to buy hundreds of billions of dollars' worth of mortgage assets held by banks, Wall Street firms and other financial institutions.

Those securities were backed by home loans, many made to buyers with bad credit or without proof of income. As housing values fell and foreclosures shot to record levels in the past two years, the value of those securities plunged. That in turn caused massive losses in the financial sector.

This week it reached a crisis situation. Banks and investment firms stopped making the loans to each other as they hoarded cash to protect against any sudden liquidity crunch as well from unknown problems on their partners' balance sheets.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke won support for the bailout plan from Congressional leaders in a meeting Thursday night.

Friday morning, Paulson said he'll be working through the weekend with those on Capitol Hill to hammer out legislation that could go for a vote as soon as next week.

"I am convinced that this bold approach will cost American families far less than the alternative -- a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion," Paulson said Friday. "I believe many members of Congress share my conviction."

Word of the plan first leaked Thursday afternoon, causing a massive rally in stocks at the end of the day that carried over into Friday. Several economists also praised the move.

"I'm confident this will work," said Mark Zandi, chief economist with Moody's Economy.com. "The federal government is committed to backstopping the nation's financial system and will do whatever is necessary to make sure the system does not unravel. The details are important but secondary."

The plan also won support from presidential candidates John McCain and Barack Obama. Zandi is an informal economic advisor to the McCain campaign.
Experts are cautiously optimistic that the massive federal bailout of the nation's financial sector will solve the credit... more