In an effort to restore confidence in the financial system, the Treasury Department is considering partially nationalizing the US banking system by taking ownership stakes in certain banks. Treasury Secretary Henry Paulson said Wednesday the recently approved $700 billion financial bailout bill gives him wide authority to inject capital into the banking system. Earlier this week, Britain announced plans to partially nationalize its banks by spending $87 billion to buy major stakes in eight banks, including Royal Bank of Scotland, HSBC and Barclays. Iceland has already taken control of its three largest banks, bringing virtually the entire Icelandic banking sector under state control.
On Wednesday, the Federal Reserve took the unprecedented step of joining five other central banks to cut interest rates a half percentage point in an effort to contain the worst financial crisis since the 1930s.
Treasury Secretary Henry Paulson: “Governments have and must continue to take individual and collective actions to provide much-needed liquidity, strengthen financial institutions to the provisions of capital and the disposition of troubled assets, prevent market abuse and protect the savings of our citizens. We must also take care to ensure that our actions are closely coordinated and communicated, so that the action of one country does not come at the expense of others or the stability of the system as a whole.”
Despite the emergency action, stocks continued to fall around the globe. On Wednesday, the Dow Jones Industrial Average fell for a sixth consecutive day. BusinessWeek reports the Dow has lost about 30 percent of its value this year, making it the worst year for the Dow since 1937. The International Monetary Fund is predicting the US slowdown will last years and that the world economy will slow sharply.
Meanwhile, the Federal Reserve has announced it is lending the failing insurance giant AIG an additional $38 billion on top of the $85 billion the government already pledged as part of a federal bailout.
In Illinois, the Cook County Sheriff has announced he will no longer evict residents from foreclosed properties in Chicago. The department was on pace to conduct 4,700 foreclosures this year, nearly triple the number from two years ago. Sheriff Tom Dart said he took the measure because an increasing number of the residents being evicted were renters who might have been dutifully paying their rent. Under a new Chicago law, renters are entitled to a ninety-day grace period, starting at the time a foreclosure sale is confirmed, before they can be evicted. This comes as the Wall Street Journal reports the relentless slide in home prices has left nearly one in six US homeowners owing more on a mortgage than their home is worth.
In Mexico, President Felipe Calderon has vowed to increase spending to help the country combat the global financial crisis, which has seen the peso plunge to a sixteen-year low. On Wednesday, Calderon unveiled plans for $4.4 billion in emergency spending to invest in roads, railways, schools, hospitals and an oil refinery.
Felipe Calderon: “It’s true the world is going through a tough moment. However, the program to promote growth and jobs announced today will help our economy to confront adversity and to retake the route of prosperity and growth with stability.”
In a sign of the times, the National Debt Clock in New York City has run out of digits to record the growing figure. When the national debt topped the $10 trillion point last month, the sign could not display the full amount. A larger debt clock is scheduled to be installed next year. Meanwhile, the prominent political analyst Larry Sabato has criticized both the McCain and Obama campaigns for their handling of the economic crisis.
Larry Sabato: “On this, I’m going to be critical of both candidates. One lives in Disney World, and the other lives in Disneyland. They’re separated by a continent, but they’re united in proposing loads of new tax cuts and lots of new spending. You know, apparently, no one on their staff has told them that we’re bankrupt, that we have ten trillion in national debt, with trillions more being ladled on top.”
Protests are also continuing on Wall Street. Earlier this week, Dana Balicki and other members of the group Code Pink demonstrated outside the New York Stock Exchange.
Dana Balicki: “Over the past two weeks, in fact, protesting the bailout; protesting the billions more for Wall Street, for the friends of Henry Paulson and the Bush administration; and recognizing that with all of that money going for the bailout, there was going to be way less money to go for any of the social issues that we are — social programs that actually stabilize our society, that actually bring strength to the American economy.”
In news from Iraq, Robert Fisk of the Independent of London has revealed secret executions are being carried out in prisons run by Nouri al-Maliki’s government. Hangings are now carried out regularly in Saddam Hussein’s old intelligence headquarters at Kazimiyah. Fisk reports hundreds, including many insurgents, have been secretly executed at the death chamber.
In other Iraq news, the McClatchy Newspapers report a nearly completed high-level US intelligence analysis warns that unresolved ethnic and sectarian tensions in Iraq could unleash a new wave of violence, potentially reversing gains achieved over the last year.
The New York Times reports a draft report by US intelligence agencies concludes that Afghanistan is in a “downward spiral” and casts serious doubt on the ability of the Afghan government to stem the rise in the Taliban’s influence. The Times also reports the Bush administration is considering arming tribal militias in Afghanistan to fight the Taliban in places where Afghanistan’s army and police forces have been ineffective.
President Bush has signed legislation to lift a three-decade ban on nuclear trade with India. The deal will allow India to expand its nuclear power industry without requiring it to sign the Non-Proliferation Treaty as other nations must.
President Bush: “The bill I sign today approves the 123 Agreement I submitted to Congress and establishes the legal framework for that agreement to come into effect. The bill makes clear that our agreement with India is consistent with the Atomic Energy Act and other elements of US law. By passing this legislation, my administration and Congress demonstrate our common view that nuclear cooperation is in the interests of both the United States and India.”
Critics say say the agreement encourages nuclear production worldwide, because it effectively rewards India for developing nukes outside the treaty.
The Federal Communications Commission has launched a probe into what critics say was a Pentagon propaganda program ahead of the Iraq war. Beginning in 2002, the Pentagon recruited more than seventy-five retired military officers to appear on TV outlets as so-called military analysts to portray Iraq as an urgent threat. Congressional Quarterly reports the FCC is looking into whether TV networks and certain on-air analysts broke the law by failing to disclose to viewers that the apparently independent analysts were in fact part of a Pentagon-funded information campaign.
A federal appeals court has temporarily blocked a judge’s decision to immediately free seventeen Chinese Muslim prisoners at Guantanamo Bay into the United States. The judge’s initial ruling had marked the first time an American court has ordered the release of a Guantanamo prisoner. US District Judge Ricardo Urbina said the administration has failed to provide proof the prisoners were so-called enemy combatants or security risks.
Newly released military documents show a US Naval officer warned the Pentagon in 2002 that an American detainee was being driven nearly insane by months of punishing isolation and sensory deprivation in a US military brig. The detainee, Yaser Hamdi, was one of two US citizens held on a Navy brig in South Carolina for years without charge after the Sept. 11 attacks. The documents show that the US military exported the brutal interrogation techniques from Guantanamo prison to the US jail housing Hamdi and Jose Padilla. The techniques included sleep and sensory deprivation, prolonged isolation and death threats. Jonathan Hafetz of the ACLU said, “These documents are the first clear confirmation of what we’ve suspected all along, that the brig was run as a prison beyond the law. There was an effort to create a Gitmo inside the United States.”
In health news, a new San Francisco law has prohibited the sale of cigarettes in pharmacies. San Francisco Mayor Gavin Newsom said, “Pharmacies should be places where people go to get better, not where people go to get cancer.” Walgreens and Philip Morris have filed lawsuits against the ban.
President Bush has signed the Emmett Till Unsolved Civil Rights Crime Act. The law will give the Justice Department $10 million a year to examine unsolved murders from the civil rights era. The bill is named after Emmett Till, the fourteen-year-old African American teenager who was beaten and killed in 1955 in Mississippi after he reportedly “wolf-whistled” at a white woman.