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The Federal Reserve took dramatic action last night on multiple fronts to avert a crisis of the global financial system. On Sunday, the Fed helped JPMorgan purchase the investment bank Bear Stearns in an effort to save the nation’s fifth largest investment bank from collapse. The Fed also announced an emergency quarter-point cut in its discount rate. It has also agreed to become the lender of last resort for other investment banks in effort to prevent firms from going under. The Wall Street Journal reports this marks one of the broadest expansions of the Fed’s lending authority since the 1930s. The fall of Bear Stearns has shocked the business community. JPMorgan bought the company for just $270 million. A year ago Bear Stearns was valued at $20 billion. As part of the deal, the Federal Reserve agreed to lend JPMorgan $30 billion to secure some of Bear Stearns’s mortgage investments. If the assets decline in value, the US taxpayer will bear the cost. The government-led bailout is the first of its kind since the Great Depression. In response to the bailout of Bear Stearns, stock markets in Asia and Europe tumbled. Meanwhile, the price of oil has jumped to a new all-time high: nearly $112 a barrel.
While more than 70 percent of economists now believe the nation is in a recession, President Bush continues to insist the foundation of the economy is solid. He spoke on Friday at the Economic Club of New York.
President Bush: "I’m coming to you as an optimistic fellow. I’ve seen what happens when America deals with difficulty. I believe that we’re a resilient economy, and I believe that the ingenuity and resolve of the American people is what helps us deal with these issues, and it’s going to happen again."
Also on Friday, Treasury Secretary Henry Paulson defended the Federal Reserve’s efforts to bail out Bear Stearns.
Henry Paulson: "I think we made the right decision. I think the Federal Reserve made the right decision here. And again, I don’t know what to say other than what I’ve just said, is we’ve got strong financial institutions. Our markets are the envy of the world. They’re resilient, they’re innovative, they’re flexible. I think we move very quickly to address situations in this country."
In other economic developments, new government statistics confirm what many grocery store shoppers already know: food prices are soaring. In the past year, the price of milk has risen 17 percent. Rice, pasta and bread prices have jumped over 12 percent. And the price of eggs has risen by 25 percent. It is the highest grocery inflation since the early 1990s.
In world news, over eighty people are feared dead in Tibet following a wave of anti-government protests against Chinese rule. Tibet’s spiritual leader, the Dalai Lama, accused China of waging cultural genocide. Protests began a week ago, when Buddhist monks took to the streets of Lhasa to mark the anniversary of the 1959 uprising against Chinese rule. Protests then spread to other Chinese provinces with Tibetan populations. Hundreds of Chinese soldiers are now patrolling Lhasa following an outbreak of violence on Friday when Tibetan protesters set fire to Chinese-owned shops.
China has issued an ultimatum to protesters to surrender by midnight tonight or face harsh punishment. The Tibetan Center for Human Rights and Democracy reports hundreds of Tibetans have already been arrested. China has also barred foreign reporters from Tibet and blocked access to many websites, including YouTube, where video of the protests have been posted over the past week. The demonstrations come less than 200 days before the start of the summer Olympics in Beijing. Tibetans living in exile have been holding protests across the globe. In New York, several hundred Tibetans and supporters gathered outside the Chinese Consulate on Saturday.
Namgyal Hormitsang: "Struggling to get freedom and independence for our country for fifty years, with the peaceful means or nonviolence, and there is not much — no fruitful result for it. So, I think if this problem is not resolved soon, there will be a different approach from the youngsters. Youngsters are getting frustrated."
Another protester criticized China’s human rights record.
Ghamo Dongtotsang: "We don’t want the Chinese to get away with all the things that they are doing in their own country. I mean, it’s not only in Tibet; in China, their own people don’t have that freedom. And also they are influencing — in Darfur, they are talking about the Chinese influence there, too. I mean, they are affecting people all over the world and not in a good way. And that’s what we think of Olympics: we want it to go to a nation that appreciates basic human rights."
In news from Iraq, Senator John McCain and Vice President Dick Cheney have made separate unannounced visits to Iraq ahead of the fifth anniversary of the US invasion. McCain claimed his visit was a fact-finding venture, not a campaign photo opportunity. Cheney is on a ten-day visit to the Middle East, including Saudi Arabia, Israel, the West Bank and Turkey. Cheney started his trip on Sunday, exactly five years after he predicted the US will be greeted in Iraq as "liberators," a claim John McCain later supported.
Meanwhile, a new survey has found that more than two-thirds of Iraqis believe US-led coalition forces should leave. A quarter of those surveyed said they had lost a family member to murder since the war began.
President Bush told US troops in Afghanistan that he was "a little envious" of them. In a video conference last week, Bush said, "If I were slightly younger and not employed here, I think it would be a fantastic experience to be on the front lines of helping this young democracy succeed." Bush went on to say, "It must be exciting for you ... in some ways romantic, in some ways, you know, confronting danger. You’re really making history. And thanks."
In news from Capitol Hill, the House has voted to reject giving telecommunications companies immunity for participating in the government’s warrantless wiretapping program. By a 213-to-197 vote, the Democratic-led house passed the measure despite a threatened veto by President Bush.
US officials have admitted the CIA has been holding an Afghani man named Muhammad Rahim in a secret overseas prison. Last week, Rahim was transferred to the military prison at Guantanamo. The Bush administration has refused to say where they captured Rahim or where he has been held. He is accused of being a member of al-Qaeda and a translator for Osama bin Laden.
In Richmond, California, twenty-four activists were arrested Saturday at a demonstration outside a Chevron oil refinery. Protesters criticized Chevron’s plan to upgrade the refinery, as well as the war in Iraq. At the rally, Richmond Mayor Gayle McLaughlin told the crowd, "It is time to clear the air and say no more pollution, no more war and no more lies."
And Sunday marked the fifth anniversary of the death of Rachel Corrie. On March 16, 2003, an Israeli military bulldozer crushed Corrie to death as she tried to stop the demolition of the home of a Palestinian doctor in the Gaza town of Rafah. Eyewitnesses said Rachel was standing directly in the path of the bulldozer holding a megaphone and wearing a fluorescent jacket. She was twenty-three years old.
On Sunday, the play My Name Is Rachel Corrie was performed for the first time in Israel. The play was performed in Arabic in the Israeli city of Haifa. It is scheduled to tour Israel and the occupied West Bank.
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