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USA’S FINANCIAL CRISIS IN 2008
Management and Attempt of Resolution

Luc Rémy

December 25, 2008

Introduction

By watching closely how the current American Administration has been approaching the 2008 housing and finance crisis, observers could well argue that it has shown a lot of slowness and sectionalism. Of course, the officials have been conditioned by a set of indisputable braking factors such as interests, the system complexity and a political situation dominated by legislative and presidential electoral campaigns. But, among all of these factors, interests, ideological cleavage and system reflex may have prevented the main political actors from seeing rapidly the real gravity of the situation and acting immediately and appropriately. They have reacted late or routinely, by trial and error, favoring the traditional responses, focusing on rescuing banks or preventing their collapse. Meanwhile, the housing and finance crisis has turned into a global crisis requiring a quick, strong, coordinated and global treatment. Such lateness and such a sectional handling have done nothing but worsen and complicate the situation for the Obama Administration that will probably have to take the bull by the horns.

First Part: Weight of Ideology and System Reflexes

A. 2008: a Reform Crisis?

After a 2007 year already very economically hard in the USA, 2008 became early terrible. All the economic indicators started to launch a very clear SOS. Houses prices started to drastically fall. Home owners, especially those who have benefited from sub-primes conditions, became incapable of paying their mortgages. Foreclosures took incontrollable proportions and credits from banks got less and less accessible, partly because of a growing crisis of confidence and partly because a lot of those banks had been hard hit by their losses on mortgages. In January 2008, the barrel of crude oil reached $100 on the international market. In the USA, the price of a gallon of gasoline was on average 2.99 in the beginning of January and 3.27 in March1. According to the Department of Labor’s monthly report, February marked the biggest decline in 5 years with a peak of 63,000 job losses. In March, 80,000 jobs were lost and the unemployment rose to 5.1 percent against 4.8 percent for the previous month. “Since March 2007, the unemployment rate has been up 0.7 percent and the number of unemployed has grown by 1.1 million. March was the third month in a row the economy lost jobs.”2 Reporting a USDA economist, Rene Pastor wrote in a release for Reuters: “Americans who dug deeper into their pockets for groceries last year will face sticker shock again this year when shopping for food, experts said Thursday. Consumer food prices are expected to rise 3.0% to 4.0% this year after a 4.0% gain in 2007, said USDA Chief Economist Joseph Glauber at the U.S. Agriculture Department's annual outlook conference”.3

Bill Schneider, a CNN senior Analyst, interpreting a CNN/Opinion Research Corporation's poll conducted on November 2-4, asked the following question: “What’s the number one issue to voters right now?” In his response, he reminded: “the economy now tops the list of the issues voters now rate as most important in their vote for president, with 82 percent of those surveyed saying it was extremely or very important4.” Economy has been since labeled issue #1 by CNN.
 
In an article of March 2008, Richard Wolf wrote in the USA TODAY: “More than three in four Americans think the country is in a recession, a USA TODAY/Gallup Poll over the weekend shows, reflecting a crisis of confidence that economists say could make the economy worse.5

Another poll published by CNN around the same period reveals “About three-quarters of all Americans think the economy is now in a recession and the number who feels that way continues to grow, according to a CNN/Opinion Research Corporation poll released Monday.”6
This already intolerable situation took a panicking turn with the collapse of Bear Stearns, “once the country's fifth-largest investment bank”. John Waggoner and David J. Lynch enough significantly then titled their article “Red Flags in Bear Stearns” Collapse and wrote in the USA TODAY:  “If the U.S. economy were a car, all of its warning lights would be flashing red. The breathtaking collapse of investment bank Bear Stearns over the weekend is the latest — and perhaps the most alarming — indicator to flash on the economy's dashboard [...] (Indeed) Bear Stearns had a web of intertwined agreements with other banks, investment houses and corporations[...] Its demise could send ripples through the economy.7 It was evident that the USA economic security was threatened.  The Council On Foreign Relations reports as follows an excerpt from the Wall Street Journal:  “In an editorial on the dollar, the Journal says that in the credit market panic that began in August, we have now reached the point of maximum danger: A global run on the dollar that could become a rout8. Commenting the deal reached on Sunday March 16, 2008, when J.P. Morgan Chase agreed to buy Bear only $2 a share, which was worth 30 on Friday, and 60 on Tuesday, New Times reminded the historic and symbolic importance of the Bear in these terms: “The deal for Bear, done at the behest of the Fed and the Treasury Department, punctuates the stunning downfall of one of Wall Street’s biggest and most storied firms. Bear had weathered the vagaries of the markets for 85 years, surviving the Depression and a dozen recessions only to meet its end in the rapidly unfolding credit crisis now afflicting the American economy9.” So it was a kind of economic 9/11 that happened on  this Thursday, March 13,  when, according to the official of the Bear Stearns, its “available liquid funds fell from $12.4 billion to $2 billion, as customers pulled out money, and other financial institutions refused to provide short-term loans10.

Well-advised observers, as well as the officials, knew that the mortgage market complications were the Gordian knot of the financial crisis. The economy was paying the side effects of the housing bubble. Like the internet or technology bubble of the 1990s (characterized by an apparently unlimited demand of credit for investment or consumption), the housing bubble had been marked by a frenzy in both the supply and the use of credit lines. What happened can be outlined as follows: in 2001, tax cut by the Bush Administration and cuts in interest rates by the Fed, lowering of the lending requirements by financial organizations; consequences: more and more credit became available; more and more people became able to buy houses; and more and more houses prices kept skyrocketing. With all kinds of risky and misleading incentives (like sub-primes that qualify even the worst scores-earned candidates) to borrow and consume, people until then incapable of affording a house had acquired the owners status. The economist and Nobel laureate Joseph Stiglitz describes this housing rush in this way: “Some mortgages even had negative amortization: Payments didn't cover the interest due, so every month the debt grew more. Fixed mortgages, with interest rates at 6 percent, were replaced with variable-rate mortgages, whose interest payments were tied to the lower short-term T-bill rates. What were called ''teaser rates'' allowed even lower payments for the first few years: they were teasers, because they played off the fact that many borrowers were not financially sophisticated and didn't understand what they were getting into11.” So, more and more people took bigger and bigger loans and bought more and more costly houses, and house prices reached their apogee. But finally, the deflation move started: homeowners’ bills turned out to be too heavy for them and they stopped paying their mortgages; foreclosures list widened; credit suppliers showed growing suspicion; lending requirements got a little bit more difficult once again; houses prices plummeted; banks and brokerage firms lost billions of dollars; as a direct consequence of such a situation, banks and mortgage-related institutions started failing. A huge confidence crisis has developed in the finance world, credit has literally dried up and the whole economic system has been terribly hit.

The New York Times editorial of September 19, 2008, has summed up this crisis causes as it follows: “this crisis is the result of a willful and systematic failure by the government to regulate and monitor the activities of bankers, lenders, hedge funds, insurers and other market players. All were playing high-stakes poker with the financial system, but without adequate transparency, oversight or supervision.”

The regulatory failure, in turn, was grounded in the Bush Administration’s magical belief that the market, with its invisible hand, works best when it is left alone to self regulate and self correct. The country is now paying the price for that delusion.12

So, given the central dimension of the housing issue and given these practices in the housing and credit market, there was at least a double crisis to treat simultaneously: an economic crisis proper and a regulations crisis. But the deciders did not feel the need to address the crisis with a global emergency response. They had rather been conditioned by a set of braking factors such as, the system complexity and a political situation dominated by a legislative and presidential electoral campaign. But, ideology and system reflex seem to have had a much more decisive role in the decision-making process privileged to approach the crisis.
 

B. Brakes on a global action

1) The weight of ideology and bias

Unquestionably, ideology, understood as a world perception and vision, has played a key role in shaping the crisis management unfolded by the executive authorities. In principle, liberal or conservative, republican or democrat, they all agree that the State should not do business nor intervene to control the economic activities. Some of them find it even necessary to reaffirm and proclaim publicly, day by day, that they are capitalism and free market advocates. In the very heart of the crisis, President Bush has actually epitomized such an attitude through all his statements and speeches related to economy and finance. For instance, in a speech at Federal Hall National Memorial, Manhattan Institute, on Wall Street, where he went just before the Washington G20 summit to concert his agenda with the financial world, he asserted: "While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people.13." Such proclaimed conviction was reaffirmed at the G20 summit (14-15 November), and shortly after at the APEC summit held in Lima on November 22-23. Another sample of this anti-interventionist faith is found in a recent Senator Kit Bond’s November 24 statement regarding the bailout of the auto industry. This senior congressman of Missouri has thus justified his support to a bipartisan compromise: "The idea of the government getting involved in the free market is very troublesome and potentially dangerous to the health of our system, but we have to act in unique times of crisis when tens of thousands of Missouri workers are in danger of losing their jobs."14 The Senate Republican leader, Mitch McConnell, of Kentucky, showed a much more intransigent tone vis-à-vis the auto industry $14 billions bailout bill passed by the House of Representatives on Wednesday, December 10, in a vote of 237-170, and killed the next day on the Senate floor when the GOP filibustered to block the democrats who could thus muster only 52 votes out the 60 needed. The congressman has confessed: “"Government intervention in the marketplace, frankly, cuts against all my ordinary impulses.15 And it is also ideologically very meaningful that the issue of workers salary and benefit has been the stumbling-block against the auto industry bailout. A press release by the minority leader Senator Mitch McConnell himself has clarified: “The sticking point that we are left with is the question of whether the UAW is willing to agree to a parity pay structure with other manufacturers in this country by a date certain… It is upon that issue that we’ve reached an impasse.”16  The United Auto Workers (U.A.W.) president, Ron Gettelfinger, has also shed some light concerning the reasons that led to the failure of the bill before the Senate.  In an interview on CNBC, he blamed the GOP for its “attempt to make workers shoulder the lion’s share of the costs of any restructuring plan.”17 Anyway, despite their very detailed plans and the millions of jobs of their sector, the Detroit’s automakers have had the worst difficulty getting liquidity to survive. The following long excerpt from an article of Frank H. Pearl of The Brookings Institution shows how vital is the auto industry to the USA: “the U.S. automobile industry consists of three distinct but highly interconnected segments: (i) the Detroit Three, GM, Ford, and Chrysler; (ii) non U.S. companies that manufacture cars in the U.S.; and (iii) parts suppliers, contract engineers and like businesses which supply and service segments (i) and (ii) and one another (“parts suppliers”). There are also several non U.S. companies which manufacture cars in the U.S. and thousands of parts suppliers, dealerships, and other direct service providers to the auto industry in the U.S. It is indisputable that a complete failure and liquidation of even one of the Detroit Three will severely damage all the other members of the three industry segments[…] The consequences of such a disintegration of the U.S. auto industry will have a profound impact on the U.S. economy and, indeed, globally. According to the Center for Automotive Research (“CAR”), an independent nonprofit analyst of the automotive industry, the auto manufacturers and parts suppliers directly employ over 1,200,000 workers of whom about 240,000 are employed by the Detroit Three and about 115,000 are employed by non U.S. manufacturers. CAR has calculated that the total loss of jobs due to the multiplier effect of the failure of the U.S. auto industry will be about 3 million unemployed.18  But it was only after days of uncertainty, thousands of jobs cut and the temporary shutting down of many of their manufactures through the country that the automakers were finally given a conditional $17.4 billions loan on December 19.

Concerning the salary aspect of the crisis, let us mention that those auto workers, used to earn, on average, until last year, around $70 to $75 per hour, wages and benefits included; but, following the four-year labor contract concluded then with GM, Chrysler and Ford, and where the UAW consented substantial salary cuts to help face the auto sector financial crisis, the unionized workers will be earning rather on average $40 to $45 per hour19. “General Motors Corp. Chairman and CEO Rick Wagoner received compensation valued at $15.7 million for 2007, up 64 percent from the previous year, according to a federal regulatory filing the company made.”20  In the same register of salary and benefits, the USA today has reported:” Chrysler's new CEO, Bob Nardelli, became a symbol of corporate excess when he left Home Depot early this year with a $210 million severance package. Ford's new CEO, Alan Mulally, got $27.8 million in salary and bonus in his first few months on the job, including an $18.5 million signing bonus.”21 A Reuters release on March 27, 2007 reported some Wall Street CEOs salary and bonus that are reminded here: the Bear Stearns’s CEO, James Cayne, earned $33.85 million in 2007, trailing so Wall Street larger companies CEOs; Lloyd Blankfein of Goldman Sachs earned 54.3, Stanley O’Neal of Merrill Lynch & Co $49 millions, John Mack of Morgan Stanley 41.4 millions and Ricard Fuld of Lehmon Brothers Holding Inc. 40.5 millions22.

Confrontation and divergences between White House and Congress, republicans and democrats, or sometimes among members of the same party, over the best solutions to adopt for the country has often shown the real stakes, sociological preferences and practices behind the free market option of the decision-makers. In a piece published in the New York Times on December 6, David M. Herszenhorn has mentioned very interesting remarks made by congressmen themselves concerning the weight of bias or ideology in the decision-making process relatively to the financial crisis. Comparing the unconditional promptitude of the establishment to rescue the financial companies to its nonchalance and to the numerous and strict conditions imposed on the automakers for only a few billions of dollars, the republican representative Thaddeus McCotter of Michigan has underscored: “In the district, people feel that this is clearly Congress caring more about people who wear Guccis than people who wear Levi’s”. The chairman of the House Financial Services Committee, Barney Frank, democrat of Massachusetts, has shared this same feeling: “I do think there is, at the decision-making level, a blue-collar, white-collar bias.” Other congressmen have focused on revealing specific details such as the fact that the automakers companies have had to face the hostility of many sectors and to try to make themselves their case for financial aid in more than three meetings with the Congress members. On the other hand, they have pointed out that Treasury Secretary Henry Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke had personally defended before the Congress the $700 billion rescue package for Wall Street, with no strings attached. And the Bush Administration had decided itself what financial company to help and what company to let fall and fail. Senator Jack Reed, Democrat of Rhode Island, had reminded: “We authorized the program but the specific beneficiaries, the specific details were worked out by Treasury.23 Observers and congressmen have also underscored the fact that the issue of foreclosures constantly on the rise and fundamental source of the crisis has never been addressed by the Treasury Secretary. They expected that the government would take concrete measures to help borrowers who have been hopelessly struggling to save their house. They have also blamed the government for not taking any steps to make sure that the funds it provided to banks are actually used to lend to consumers and businesses and not to pay, for instance, bonuses to CEOs and board members.

    2) System Reflexes or a Traditional Treatment of the Crisis

Capitalism lives and works only by and in crises. Crises are known to be passing, surmountable and non destructive of capitalism. Recessions and banks collapse are current in the system and should not create too much panic. Traditional recipes exist that allow to successfully face them. From 1945 to last year, the NBER has recorded 11 recessions in the USA’s economy24. None of them had lasted 2 years; their average duration had been rather 10 months. Since the end of the World War II, Bank demise or failure has been relatively reasonable. If 2,300 banks suspended operation in 1931, less than 10 insured banks had failed each year between 1942 and 1974; 11 in 1980, 221 in 1988,127 failures were recorded in 1992, 41 in 1993, 13 in 1994, 6 in 1995, 5 in 1996, 1 1997, 3 in 1998, 7 in 199925. Only one dozen of banks have failed between October 2000 and 2007.  As to Depressions, they have never been current in the American economy, the last one being 1929-1939.  On his signing of the Economic Stimulus Act of 2008 (H.R. 5140), President Bush reaffirmed his faith in the system’s genius in the following terms: “Over the past seven years, this system has absorbed shocks -- recession, corporate scandals, terrorist attacks, global war. Yet the genius of our system is that it can absorb such shocks and emerge even stronger. In a dynamic market economy, there will always be times when we experience uncertainties and fluctuations. But so long as we pursue pro-growth policies that put our faith in the American people, our economy will prosper and it will continue to be the marvel of the world.26

With such a mindset, the main actors have normally meant to play by the system and, actually, they have. Having precisely in mind to boost the economy in the beginning of 2008, the Administration decided by this Act to inject some $168 billions in it, mostly through the check rebates for families and the tax breaks for small businesses.27

A second important reaction was made by the US Treasury Secretary, Henry Paulson, and the Federal Reserve Board Chairman, Ben S. Bernanke, to manage a smooth but swift takeover of Bear Stearns by JPMorgan Chase. The move was meant to be swift because essentially conditioned by the immediate global financial situation: the authorities had “to ensure that the future of Bear Stearns was certain by the times the Tokyo markets opened for business today (Monday)28. If the stock market reacted positively, the federal authorities thought, the domino effect could be avoided in the American bank system. Another decision adopted on March 18, 2008 to address the general market crisis and attempt to reopen the credit flow was to lower, for the second time of the year, the federal funds rate of .75 putting it so at 2-¼. The Federal Reserve Board justified such a decision in the two following of its six-paragraph press release:
“Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened.  Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.
Inflation has been elevated, and some indicators of inflation expectations have risen.  The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.  Still, uncertainty about the inflation outlook has increased.  It will be necessary to continue to monitor inflation developments carefully.29

The most spectacular reaction of the Bush Administration was the introduction of Paulson’s Plan. On March 31, the Treasury Secretary laid out before the congress an ambitious 218-page financial regulatory plan named Blueprint for a Modernized Financial Regulatory Reform. But this blueprint is rather a long-term goal meant to oversee the whole American financial system with the possible creation of a Commission to regulate the mortgages sector, re-activation and expansion of the President’s Working Group on Financial Markets, extension of the FED authority, merge of the different agencies regulating the financial market, creation of federal regulations or supervision for insurance companies (now regulated by states). To some observers, the plan has rather appeared as a way to dodge the difficulty of solving the immediate crisis. Secretary Paulson himself was very clear as to the value of his plan relatively to the current situation: “Some may view these recommendations as a response to the circumstances of the day”. That is not how they are intended.” Senator Chris Dodd of Connecticut, Chairman of the Senate Committee on Banking, Housing and Urban Affairs and Senator Harry Reid of Nevada, the majority leader, made it also clear to journalists that it was not their priority to work on the regulatory aspect of the crisis. “In time, we will hold hearings on reorganizing the regulatory structure,” Mr. Dodd said.30

On September 19, 2008, the Treasure Secretary sought the Congress authorization for the 700 billions rescue package named Troubled Asset Relief Program. This money was initially meant to purchase bad assets at higher prices than their current ones in order to raise their value and reestablish confidence in the credit market. Those assets, consisting of mortgage-backed securities31, were considered bad because they had drastically lost their value on the market or because they could not be sold. But the Treasury Secretary, once the Emergency Economic Stabilization Act passed by Congress after some modifications and signed by the president on October 3, decided rather, shortly after, instead of buying the bad assets, to use the first $250 billions installment allocated by Congress to invest in the financial institutions buying shares, or to provide liquidity to stronger banks so they could buy other banks on the brink of collapse. But, Mr. Paulson changed again his mind on November 12:  he decided to inject in the banks’ vaults capital that could help them, he thought, re-launch lending activities to consumers willing to buy houses and to home-owners who need credit to pay their mortgages and avoid foreclosures.

Obviously, there has not been a clear and global strategy defined by the government to handle the housing crisis, the financial crisis and the growing general crisis facing the nation. The bailout policy has been selective; for example, the investment bank Bear Stearns was pressed by federal authorities to quickly pass a deal with JPMorgan Chase to which they gave, for 28 days, a $29 billions loan to facilitate the bailout, given that Bear Stearns, (…) was not a depository institution, meaning it was not a member of the Federal Reserve system and, therefore, not part of the regulatory regime that accompanies membership. Lending to non-members requires emergency statutory authority that has not been used in more than 70 years. One of the original purposes of the Federal Reserve Act, enacted in 1913, was to prevent recurrence of financial panics32.”On September 8, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Mortgage Corporation (Freddie Mac) were nationalized through the Federal Housing Finance Agency (FHFA). Shortly after, on 16, the authorities rescued also the American International Group, a nonbank, with an $85-billion federal loan investment justified by the officials, like for Bears Stern, by the "unusual and exigent circumstances” defined in the Federal Reserve Act. With an 80% public stake, AIG was also nationalized. Lehmon & Brothers, a 158-year and “the smallest of the major Wall Street firms33, did not get the Administration help and had to file for bankruptcy on September 15. This event is particularly meaningful because that has been until now the biggest bankruptcy in USA history. On July 11, Independent National Mortgage Corporation (IndyMac) was placed under the conservatorship of the Federal Deposit Insurance Corporation (FDIC). On November, the giant Citi Group was faced with a very desperate situation; in three weeks, its share had lost 70% of its value dropping to $2 on November 23, 2008. The government intervened quickly to rescue Citi with a $306 billion in loans and securities and $20 billions in direct investment. By this intervention on behalf of Citi, the Treasury Secretary, once again, has changed his idea of not using from the remaining of the $700 billions package to buy bad assets. Citi Group, as the established formula says, was too big to fail; indeed, from January to December 12, 2008, more than 40 banks had not been able to receive the government help and had subsequently failed34.

Conclusion

By September 2008, the housing crisis seems to have taken an extraordinary and unstoppable turn. Because of its complex connection with the bank and insurance sector, among others, it has developed “viruses” that have spread all around and has turned into a global earthquake whose shockwaves are attacking the American system in its very basis. The situation is all the more serious that the housing crisis has been spreading its side effects worldwide. From the February Bush stimulus package to the $17.4 billions loan to the automakers, the current Administration has deeply invested itself in managing and trying to resolve the crisis. It has injected massive amount of money in the system, especially where it thought it was tactically and strategically more important to do so in order to trigger off, as quickly as possible, the most massive positive impact. The administration has done it with its faith, its conviction and its own culture and understanding of free market and capitalism. Despite all, the crisis keeps worsening and widening, hitting one by one each state, each city, each enterprise and each family. In its December 16 release announcing fed decision to decrease the funds rate to a range between 0 and .25, the Federal Open Market Committee underscored:” Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined.  Financial markets remain quite strained and credit conditions tight.  Overall, the outlook for economic activity has weakened further35.” That means that this recession may be well quite different from all of those we have known since after the Great Depression.

Anyway, the current situation requires a managerial rupture with the exclusively deregulating and monetary neo-liberalism where it actually has its root cause. The Administration has practically used now most of the monetary tools it had had at its disposal to govern since 2001 and to address the 2008 crisis. The neo-liberalism inherited from the 1980s and anchored in the Friedman Milton’s thought (exaggerated version of the economic liberalism) that the State should never intervene to regulate the economic activities is thus showing its limits, here also, in the USA. That is the fate of any ideologies. There is a time when they reach their peak and another when they have to decline. Like the economy they follow trends and cycles. After this wave of aspersions and discredit and aspersions that neo-liberalism has cast on the Sate and after its contribution to transform today some states into “ungovernable chaotic entities”36 or failed States (like Somalia, or Haiti that geo-strategically represents today a threat to the very USA), we need to comeback to an approach  much more adapted to the present’s needs. Today’s challenges impose on us to come back to John Maynard Keynes. Hopefully, the president-elect Barack has promised a Keynesian approach in his economic program. This rehabilitation of the State’s economic role is simply an exigency of the world post-miltonian, post-deregulation and post “End of History37. As the French writer Paul Valéry had put it so judiciously: “If the State is strong, it crushes us; if the State is weak, we perish.38

Luc Rémy
Luckyten1017@yahoo.com
USA

boule  boule  boule 

  1. http://www.afdc.energy.gov/afdc/pdfs/afpr_jan_08.pdf
    http://money.cnn.com/2008/03/13/news/economy/gas_gallon/index.htm
     
  2. http://govdocsblog.kentlaw.edu/wordpress/?cat=140
     
  3. http://www.usatoday.com/money/industries/food/2008-02-21-food-inflation_N.htm
     
  4. http://edition.cnn.com/2007/POLITICS/11/07/schneider.economy.poll/
     
  5. http://www.usatoday.com/news/washington/2008-03-17-economy-poll_N.htm
       
  6. http://www.cnn.com/2008/POLITICS/03/17/poll.national/index.html?eref=rss_topstories
     
  7. http://www.usatoday.com/money/industries/banking/2008-03-17-bear-stearns-bailout_N.htm
     
  8. http://www.cfr.org/publiction/15731/ 
     
  9. http://www.nytimes.com/2008/03/17/business/17bear.html
     
  10. From: http://www.csmonitor.com/2008/0404/p25s07-usec.htm
     
  11. http://www.realclearpolitics.com/articles/2007/08/how_the_bubble_started.html
     
  12. http://www.nytimes.com/2008/09/20/opinion/20sat1.html?_r=1
     
  13. http://www.whitehouse.gov/news/releases/2008/11/20081113-4.html
     
  14. http://www.usatoday.com/news/washington/2008-11-13-3752606941_x.htm
     
  15. http://www.mcclatchydc.com/227/story/57741.html
     
  16. http://mcconnell.senate.gov/record.cfm?id=305817&start=1
     
  17. http://www.nytimes.com/2008/12/13/business/13uaw.html
     
  18. www.brookings.edu/papers/2008/1205_automakers_pearl.aspx
     
  19. http://www.washingtontimes.com/news/2008/nov/24/us-auto-industry-closing-great-divide-in-quality-w/  
     
  20. http://www.newsvine.com/_news/2008/04/25/1453366-gm-ceos-2007-compensation-worth-157-million
     
  21. http://www.usatoday.com/money/autos/2007-10-09-auto-exec-pay_N.htm
     
  22. http://www.reuters.com/article/companyNewsAndPR/idUSN2716633620070327
     
  23. http://www.nytimes.com/2008/12/07/weekinreview/07herszenhorn.html
     
  24. http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States
     
  25. http://www.fdic.gov/bank/historical/brief/brhist.pdf - &  
    http://www.fdic.gov/news/news/speeches/archives/2000/sp08Feb00.html
     
  26. http://www.whitehouse.gov/news/releases/2008/02/20080213-3.html
     
  27. http://www.whitehouse.gov/news/releases/2008/02/20080213-3.html
     
  28. http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3564479.ece
     
  29. http://www.federalreserve.gov/newsevents/press/monetary/20080318a.htm
     
  30. http://www.nytimes.com/2008/04/01/business/01regulate.html
     
  31. The “Mortgage-backed securities (MBS) are defined by the US Securities and  Exchange Commission  as “debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property. Mortgage loans are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity. The entity then issues securities that represent claims on the principal and interest payments made by borrowers on the loans in the pool, a process known as securitization.”( http://www.sec.gov/answers/mortgagesecurities.htm)
     
  32. http://assets.opencrs.com/rpts/RL34427_20080328.pdf
     
  33. http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html
     
  34. http://www.fdic.gov/bank/individual/failed/banklist.html
     
  35. http://www.federalreserve.gov/newsevents/press/monetary/20081216b.htm
     
  36. Oswaldo de Rivero in The Myth of Development, Zed Books, London, 2001
     
  37. Francis Fukuyama: The End of History and Last Man, New York, Free Press, 1992
     
  38. http://classiques.uqac.ca/classiques/Valery_paul/regards_sur_le_monde_actuel/valery_regards.pdf

 

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