The US treasury secretary has warned some banks will still fail despite the $700bn government rescue package to shore up the financial system.
Henry Paulson called for the plan's swift implementation, but said the financial crisis would not end soon.
Seven central banks on Wednesday cut interest rates in an effort to steady the faltering global economy.
But the moves failed to cheer world stock markets, and Thursday saw sluggish sales on Asia's main indexes.
Japan's benchmark Nikkei index recovered slightly on Thursday, having suffered its biggest one-day drop in 21 years the previous day shedding nearly 10% of its value.
The Bank of Japan announced it had injected two trillion yen ($20.1bn) into the money markets in an effort to calm fears.
In Sydney, Australia's financial market lost ground in early trading.
In his bleak assessment, Mr Paulson warned the ongoing financial chaos had "seriously impacted" the economy.
"Even with the new treasury authorities, some financial institutions will fail," he added.
There was an equally stark warning from the International Monetary fund, which said global financial markets were facing their most dangerous shock since the 1930s.
Global action
In an unprecedented co-ordinated move on Wednesday, rates were cut by the Bank of England (to 4.5%), the US Federal Reserve (to 1.5%), and the European Central Bank (ECB) (to 3.75%), with similar cuts from the central banks of Canada, Sweden and Switzerland.
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I think it's the time for all the government to cooperate together to solve the crisis.
What do you think?
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Paulson, Bush, and Bernanke need to keep their fat traps closed. We all know it's bad, however each time they open their mouths and cry out the sky is falling they just exacerbate things by spreading fear in the markets.
| Liu wrote: |
| Paulson, Bush, and Bernanke need to keep their fat traps closed. We all know it's bad, however each time they open their mouths and cry out the sky is falling they just exacerbate things by spreading fear in the markets. |
Though having warning beforehand will help reduce panic when the sky actually does fall.That's the problem with modern economic theory things can't go up forever. Things will always fall at some point in the game. Finding the stability and staying at the point is the tough part, but people can never be happy with stability and middle ground. Even those that have billions of dollars always want more and that is the problem. Of course more things in the economy are going to fail, its only a matter of time.
And if the 700 million bail out is not approaved then what. How US government is going to arrange this money. Is it this arrangement that is forcing congress to reject the bill ?
Congress approved the bill the second time, after a lot more pork was added by non-serious Congressfolk.
The big thing is that there are too many banks so yes, more have to fail -- but nobody knows which are the ones that will fail.
If some $1-6 trillion in paper value wealth has disappeared, there is no need for the financial services that that paper wealth was supporting. There are too many banks, and far too many overpaid financial bankers, like those fired from Fannie Mae and Freddie Mac. Incompetents who got $15 mil. golden parachutes, with taxpayer money, and mostly Democratic Party support.
| harismushtaq wrote: |
| And if the 700 million bail out is not approaved then what. How US government is going to arrange this money. Is it this arrangement that is forcing congress to reject the bill ? |
Slight correction: 700 billion not 700 million 
| coolclay wrote: |
| That's the problem with modern economic theory things can't go up forever. Things will always fall at some point in the game. Finding the stability and staying at the point is the tough part, but people can never be happy with stability and middle ground. Even those that have billions of dollars always want more and that is the problem. Of course more things in the economy are going to fail, its only a matter of time. |
This means that the economic systems being followed are faulty.
In history:
In his works on politics and ethics, the ancient Greek philosopher Aristotle grappled with the "art" of wealth acquisition and the question of whether property is best left in private or public hands.
Following Adam Smith's Wealth of Nations, classical economists such as David Ricardo and John Stuart Mill examined the ways the landed, capitalist and labouring classes produced and distributed national riches.
In London, Karl Marx castigated the capitalist system he saw around him which he thought was exploitative and alienating.
After the wars of the early twentieth century, John Maynard Keynes led a reaction advocating interventionist fiscal policy to stimulate economic demand, growth and prosperity.
Men like Milton Friedman and Friedrich von Hayek caught the imagination of some western leaders, warning of The Road to Serfdom and socialism, focused their theory on what could be achieved through better monetary policy and deregulation.
However, the reaction of governments through the 1980s has been challenged, and development economists like Amartya Sen and information economists like Joseph Stiglitz are bringing new ideas to economic thought in the twenty first century.
But the poor are getting poorer....
Anybody who says "the poor are getting poorer" is closing their eyes to the real economic development of poor people.
Not just in the USA, where 'the poor' have color TVs, cars, and are obese because of so much food, but especially in India and China.
Over the last 30 years, perhaps 2 billion people have risen from subsistence level poverty to working class, with much less fear of starvation.
Not rich, but far richer than their own parents.
The financial crises is why? Because 'too many houses' -- which means the prices of houses are dropping. And the rich, who invested so much in housing, have lost quite a bit.
Err..no, the financial crisis is caused by aggressive selling of mortgage products to those who had no hope of being able to pay them back. These dodgy loans were then bundled with more secure loans into various credit instruments which were then corruptly labelled as triple A securities (ie very safe). A whole host of other financial instruments were then designed to give the illusion that bad debts can be made into good debts by financial witchcraft. The entire sector then lost track of which debts were bad and which were good, with the result that nobody knows and nobody can afford to lend to anyone.
| TomGrey wrote: |
Anybody who says "the poor are getting poorer" is closing their eyes to the real economic development of poor people.
Not just in the USA, where 'the poor' have color TVs, cars, and are obese because of so much food, but especially in India and China.
Over the last 30 years, perhaps 2 billion people have risen from subsistence level poverty to working class, with much less fear of starvation.
Not rich, but far richer than their own parents.
The financial crises is why? Because 'too many houses' -- which means the prices of houses are dropping. And the rich, who invested so much in housing, have lost quite a bit. |
True the middle class has and is becoming richer in India.
But the real masses over 60% of the population which include backward classes, tribals and many small farmers are getting poorer. These people are invisible not having any voice. And these people cannot afford to become poorer.
In many districts the real nutrient consumption is far below living standard.
That means people are slowly starving to death.
What you see in government figures are groth rates not growth amongst the people.
I quote from a FAO report:- A recent report of the Food and Agricultural Organisation (FAO), the State of Food Insecurity in the World 2003, indicates that over a fifth of India's population still suffers from chronic hunger. Far removed from the rhetoric of a "shining India" where the "feel-good factor" is pervasive, India figures in the FAO's categorisation a little worse off than Honduras and a little better off than Mali. Indeed, India is one among 17 countries where the number of the undernourished decreased in the first half of the 1990s, before increasing in the second half to almost completely offset the gains of the earlier part of the decade. Tracking the incidence of hunger in India over three reference periods - 1990-92, 1995-97 and 1999-2001 - the FAO plots an initial decline from 214.5 million to 194.7 million, before a near total reversal of all gains pushed up the number of the undernourished to 213.7 million.
Everything which glitters is not gold.
