Finance set the terms of corporate behavior over the past quarter-century, and not in ways that bolstered the economy. By its actions -- elevating shareholder value over the interests of other corporate stakeholders, focusing on short-term investments rather than patient capital, pressuring corporations to offshore jobs and cut wages and benefits -- Wall Street plainly preferred to fund production abroad and consumption at home. The internal investment strategy of 100 years ago was turned on its head. Where Morgan once funneled European capital into American production, for the past decade Morgan's successors have directed Asian capital into devices to enable Americans to take on more debt to buy Asian products.

Worse yet, as Wall Street turned its back on America, so did government. The Bush administration and congressional Republicans (John McCain among them) kept American incomes low by opposing hikes in the minimum wage; helping employers defeat unionization; and shunning policies to modernize infrastructure, make college more affordable, and boost spending on basic science and research.

Today, it's the Democrats who sound like Lincoln's Republicans. In recent months, the Obama campaign and liberal think tanks in particular have generated numerous proposals for heightened public commitment to infrastructure and education. Unlike tax cuts, which chiefly bolster our ability to consume imported goods and commodities, infrastructure investments make us more productive and have a multiplier effect that creates more jobs over and above those that the government funds directly. Congressional Democrats have included major infrastructure investments in their pending new stimulus bill, which Bush and GOP leaders oppose.

read more at the Washington Post

Central banks release more funds to fight credit crisis

The US Federal Reserve has thrown $US180 billion ($227 billion) into a global fight against the financial crisis, and leading central banks have joined in.

Central banks around the world launched a joint operation to stem panic in credit markets amid mounting political calls for "decisive" action to end the crisis.

The Federal Reserve said it had authorised a "$180-billion expansion of its temporary reciprocal currency arrangements" to provide short and medium term funding with other banks.

The European Central Bank, the Bank of Japan, Bank of England (BoE), Bank of Canada and the Swiss National Bank all joined what the BoE called "coordinated measures designed to address the continued elevated pressures in US dollar short-term funding markets".

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The Heidelbergs are working overtime around the globe... Inflation is nigh...

Wall Street shares have rebounded sharply after a proposed US government plan to buy billions of dollars of US banks' bad mortgage-related loans.

The key Dow Jones index jumped 2% in the opening minutes of trade, while UK's FTSE 100 index was up more than 9%. In Paris, the Cac was 7.8% higher.

Financial stocks have gained the most. In London, the Royal Bank of Scotland and HBOS rose as much as 50%.

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Excellent... All's 50% better in the best of the worlds...

from the Washington Post

MOSCOW, Sept. 20 -- For the past eight years, the political strength of Russia's leader, Vladimir Putin, has rested on what seemed an unbeatable combination -- a soaring economy that raised average incomes eightfold and a steady drive to consolidate control over government, media and business that stifled any meaningful opposition.

But the turmoil in the past week in the stock markets and banks here has suddenly taken some of the shine off the Russian economy and has raised questions about the continuing viability of the Putin formula.

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Gus: er... ahahahahahahah! Talk about the Bushit Formula!!!!! Now I get it... All the US financial turmoil was to achieve what Ms Rice could not... Shake the boots of the Ruskies...   Ahahahahahahahah.

Seriously though, it shows that "Capitalism" has flaws: one of these being greed on steroid, vitamins, coffee and smokescreens, another flaw being often careless about the defenseless poor. Another one is government being smug about filling the con-artists coffers while the con artists do their best to con people...

Sure Ruskies are not immune to the US bubbleplague disease, but at least they've got oil and gas by the Gazillions. The US has mostly paper dollars debt by the gazillions...

Thank goodness Rudd is going to investigate the damage first hand, to discover what's the deal for Australia...

A.I.G. May Get More in Bailout

The Bush administration was overhauling its rescue of the American International Group on Sunday night, according to people involved in the deal, amid signs that the interest on its current credit line of more than $100 billion was putting too much strain on the ailing insurer.

The Treasury Department and the Federal Reserve were near a deal to abandon the initial bailout plan and invest another $40 billion in the company, these people said. The government created an $85 billion emergency credit line in September to keep A.I.G. from toppling and added $38 billion more in early October when it became clear that the original amount was not enough.

When the restructured deal is complete, taxpayers will have invested and lent a total of $150 billion to A.I.G., the most the government has ever directed to a single private enterprise. It is a stark reversal of the government’s assurance that its earlier moves had stabilized A.I.G.

The revised deal, which may be announced as early as Monday morning, is likely to intensify the debate in Washington over why some companies should be saved by the government while others are left to wither.

The money would come from the $700 billion that Congress authorized the Treasury to use to shore up financial companies. Just this weekend, Democratic leaders in Congress called on the Bush administration to drop its opposition to using some of that money to rescue Detroit automakers.

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