'The World Shouldn't Have to Bear the Burden for America's Lapses'

[Macs.]

GERMAN ECONOMICS EXPERTS

'The World Shouldn't Have to Bear the Burden for America's Lapses'

By Corinna Kreiler (corinna_kreiler@spiegel.de) in Hamburg

The US government is buying bad debt for $700 billion. Now Washington is asking other countries to jump in and help, too, but the Germans are bowing out. Believing that the rescue package sends the wrong signal, experts from the country's leading economics think tanks argue it's the right call.

It's not a call for assistance; it's a scream for help. US Treasury Secretary Henry Paulson is asking other countries to help buy up bad US debt. The US government is putting up $700 billion in taxpayer money in the hopes that the measure might restore stability in the financial system. Some countries are planning to help. But the German government has answered this call quickly and clearly: no.

Economics experts think that's the right response. As they see it, in the long run, those responsible for the crisis -- who have been cashed out with high salaries and bonuses for years -- will not be penalized for billions "but will be let off the hook like everyone else," says Carsten Meier of the Kiel Institute for the World Economy (IfW). According to Meier, by injecting capital into the market, the US government is putting everyone who speculated and lost back on their feet and thereby standing in the way of a market cleanup.

Paulson has stated that the US government will pay a fair price for the bad debt, which Meier sees as sending "precisely the wrong signal," adding that "people shouldn't be rewarded for taking such high risks." Meier also finds Germany's decision to sit out any bailout operation to be the right move.

"The financial crisis is primarily a problem in America," Meier says. As he sees it, the fact that Germany and Europe are far less affected that the US justifies European reluctance. "The stability of the German banking system is not in danger," Meier points out as he explains why he believes Europe shouldn't provide any funds. "The world shouldn't have to bear the burden for America's lapses."

Germany Shouldn't Have to Bear More Burdens

Still, the financial crisis has already reached German shores, and banks here have had to announce write-downs of nearly €40 billion ($58.5 billion). "German banks are already sufficiently involved in the calamity," says Stefan Kooths of the German Institute for Economic Research (DIW) in Berlin. Either way, experts estimate that half of America's bad loans were sold abroad -- and a large part of that was assumed by Germans. And now the money is gone. "There's no reason why German should have to bear even more burdens," says Kooths.

Experts have also criticized the American rescue package for a number of other reasons. Diemo Dietrich from the Halle Institute for Economic Research (IWH) doesn't think the plan is well-balanced: "The government is only buying bad risks and, in doing so, nationalizing the losses." Dietrich adds that taxpayers won't share in any of the profits that the government hopes the stabilized market will bring about in the long run.

According to Kooths, instead of buying those responsible for the crisis out of it and calling on other countries to provide funds, the US should create political regulations that will prevent a situation like this from happening again in the future. "They shouldn't allow people to finance a home with 100 percent credit anymore," Kooths says. (In Germany, banks generally require home buyers to put up as much as 20 percent of the total cost of the house or flat as a down payment.) He also believes that credit should no longer be allocated solely on the basis of a home's rise in value. As Kooths sees it, at the moment we are all still in a state of shock that makes us cautious, but "in 10 years, the crisis will be forgotten and the situation could repeat itself."

Instead of standing in the way of a market shakeout with a cash injection worth billions, Dierich argues the Americans should find another way for the banks to get ahold of some fresh capital -- by putting up new shares for sale to secure new funding, for example. In the current crisis climate, though, no bank is going to voluntarily issue new shares because that would signal to the market that the institution if facing difficulties.

Accordingly, IWH's Dietrich suggests that the US government require all banks to issue stocks and that they be required to back up the issuance with a set amount of capital. Under these circumstances, Dietrich believes that investors would buy shares of the banks that they consider healthy and that the market would make it crystal clear which banks these were. And the institutions that are having a rough time because they can't find investors will go broke. "That step would send the right signal to the market," Dietrich says, adding that those who were performing the worst wouldn't be rewarded in such as situation -- as they are being now.
http://www.spiegel.de/international/business/0,1518,579880,00.html

[Col.O'neill]

More like America shouldn't have to bear the burdens of the world.

[maoddd]

More like America shouldn't have to bear the burdens of the world.
such as?

123456

[California Joe]

Suck it German.

There's already several foreign owned banks asking for bailouts on their sh*tty mortgage lending practices too. Course Phil Gramm is on the Board of at least one of them. Go figure.

[Macs.]

"THE AMERICANS SAID, 'WE WON'T'"

Merkel Says Washington Helped Drag Europe into the Credit Crisis

Response to Washington's multibillion-dollar Wall Street bailout has involved a lot of skeptical grumbling in Germany and the UK. German Chancellor Angela Merkel says the Bush administration has mishandled Wall Street, and that its refusal to adopt stricter rules led to the current crisis.

The United States government is campaigning around the world for support for its multibillion-dollar Wall Street rescue package. The reaction has been skeptical at best -- and in Europe the plan has been met with bareknuckled criticism.

German Chancellor Angela Merkel has accused the US government of serious failures which she believes contributed to the current credit crisis. In particular she blamed Washington for resisting stricter regulation.
On Monday she also said the crisis could hurt the German economy. "The whole thing is going to set the pace for the economy in the coming months and perhaps years," Merkel said at a meeting of her party, the conservative Christian Democrats.

Over the weekend the US said it would provide $700 billion to cover bad debt on Wall Street and ensure the survival of some financial institutions. On Sunday US Treasury Secretary Henry Paulson then called on foreign governments to launch similar bailouts for their own banks. "We are talking very aggressively with other countries around the world and encouraging them to do similar things and I believe a number of them will," Paulson told ABC News.

But the governments of Germany and Great Britain have shaken their heads.
While her finance minister said German banks would not need a similar bailout, Merkel said the world community should react by forging international agreements that could be voluntary rather than anchored in law. "The crisis on the international financial markets shows us that you can do some things on the national level, but the overwhelming majority must be agreed to on the international level." Instead of codifying these deals in law, Merkel suggested binding agreements between major economic players. "This is about greater transparency," she said.

A day earlier, during a visit to Austria, the German chancellor had even firmer words. "I'm criticizing the self-image of the financial markets -- which have unfortunately resisted voluntary rules for too long with the support of the governments of Great Britain and the United States."

'This Cannot Be Allowed'

At a political rally in Linz, Merkel indirectly attacked US President George W. Bush. She suggested that American obstinacy had dragged other industrial nations into the credit crisis. Many European countries, she said, had already imposed stringent conditions on their banking sectors. "We dutifully adopted a nice EU directive into national law, and we had to deal with numerous complaints from small- and medium-sized companies in doing so. When the day came, the Americans said, 'We won't'," Merkel said. "That cannot be allowed in the international sphere." Merkel complained that taxpayers would be forced to foot the bill in countries far beyond the US and Britain.

She was referring to the "Basel II" agreement, a set of international standards which tightened capital requirements for credit institutions. Much of the EU has signed up to Basel II, and Germany codified it in 2007. But Washington still hasn't set a date for working its principles into American law.

Europe, she said, "must now push to get greater transparency on the financial markets and to get clearer regulations so that a crisis like the current one cannot be repeated."

German Finance Minister Peer Steinbrück of the left-leaning Social Democrats is also calling for tighter rules. In an interview with German television he said he wouldn't rule out the idea of an international authority to hammer out regulations -- as opposed to the international agreements favored by his boss, Chancellor Merkel.

The European Commission in Brussels said it would announce its own plan for improved financial market regulation. EU Internal Market Commissioner Charlie McCreevy is planning to consider the first measure on Wednesday, according to a report in the Financial Times Deutschland. On the agenda is a proposal that would require banks to disclose whether they are retaining a stake in loans they sell to other banks.

The requirement could serve as an incentive for banks to pay closer attention to the quality of the credit risks they pass on to others.

The $700 Billion Bailout

But Finance Minister Steinbrück said Monday there was no need for Germany to fall in line with the Americans in bailing out its banks. After a telephone consultation with the finance ministers and heads of the central banks of the G-7 states, he said no other member planned to follow the US example. He described Washington's program as "remarkable," but said the situation wasn't as grave in the other six G-7 countries as in the US.
The German government has officially greeted the US program, saying Washington "takes its special responsibility seriously" in the crisis unleashed by the American subprime mortgage problem. A government spokesman said the measures would help to defuse the crisis.

Others were less certain.

"I have doubts about whether this is the smartest way to deal with the issue," Michael Meister, the deputy head floor whip of Merkel's Christian Democrats (CDU) told Handelsblatt, a business daily. Meister said the US could be laying a foundation for the next crisis with its multibillion dollar bailout -- mirroring the decision after the Sept. 11, 2001, terrorist attacks to massively lower interest rates, a move which he said triggered the current turbulence on the financial markets.

Joachim Poss, deputy parliamentary whip for the center-left Social Democrats, also rejected calls from Washington to participate in the bailout. "The Americans can't make Germany liable for their own failure and arrogance. A similar action is neither planned nor necessary in Germany," he said. However, he wouldn't comment on whether he thought the US bailout was necessary. "That's an issue for the Americans," he said.

In Britain, Prime Minister Gordon Brown told the BBC: "People were taking risks that were excessive -- and that was mainly in my view in America and we are paying a price for what has come out of America."

"We're not working toward implementing a US-style resolution regime,” said a spokesman for Chancellor of the Exchequer Alistair Darling, Britain's finance minister. "But the prime minister and the chancellor have made clear that we will take whatever action is necessary in the interest of financial stability."

As a result of the crisis, European countries including Germany, Britain and the Netherlands have announced temporary bans on short sales (http://www.nrc.nl/international/News/article1992673.ece/Naked_short_selling_banned_in_the_Netherlands), which many experts say helped bring Wall Street's powerful investment banks to their knees.

The global financial crisis could also have a stronger and lengthier impact on the German economy than previously believed. According to information obtained by SPIEGEL, the German government plans to reduce its forecast for economic growth in 2009 from 1.2 percent to 0.5 percent.
dsl -- with wire reports
http://www.spiegel.de/international/germany/0,1518,579707,00.html

[Vorian]

More like America shouldn't have to bear the burdens of the world.

Did you even read the article? This isn't about external policies but about the recent economic crisis.

[delio]

Of the five largest EU economies, the German one is the only one that is doing relatively OK - at least for now. ( Though, somewhat like Japan, the German economy did go through its protracted doldrums recently) In fact, the overall economies of the UK (#2), France(#3), Italy (#4), and Spain (#5) are arguably in a deeper hole than that of the United States.

[epictetus]

Did you even read the article? This isn't about external policies but about the recent economic crisis.
And as such foreign banks should be helped by their respective gov. Otherwise Merkel should shut her mouth.

[Macs.]

And as such foreign banks should be helped by their respective gov. Otherwise Merkel should shut her mouth.

NO, they should not be helped. Merkel said nothing wrong.

[epictetus]

NO, they should not be helped.
I agree with you there. They took a risk and should take the fall. But to blame America when everyone in the world market was in on it is hypocritical.

[Albatross]

Whatever, you can pony up now or suffer later. The option is yours.

[Macs.]

Whatever, you can pony up now or suffer later. The option is yours.

Bollocks, those are not the only 2 options... Already we are gonna suffer from this to some extend now anyway.

[Albatross]

Bollocks, those are not the only 2 options... Already we are gonna suffer from this to some extend now anyway.

This is a global financial market, the entire world is going to suffer right along with us. This is just the front edge of the storm, its going to get worse.

[Herman the II]

I agree with you there. They took a risk and should take the fall. But to blame America when everyone in the world market was in on it is hypocritical.

One of the key factors in the excess of the current crisis are the US investment banks, such as Merrill Lynch, Lehman Brothers, etc. .
Those banks profited through a lack of control based on their legal status as an "Investment Bank", such an institution is almost unique worldwide.
Nearly without supervision of the state (USA) those "Investment Banks" speculated and gambled for profit. They had tremendous success in the past and now they lost everything and even more.
Unfortunately the ordinary US taxpayer will have to pay for their failure.
The US legislation enabled those institutions and therefore it is indirectly to blame for their downfall.
No wonder that the last "Investment Bank" of the Wall Street was transformed into an ordinary bank just yesterday. Its the end of an era.

[2Sheds_Jackson]

No wonder that the last "Investment Bank" of the Wall Street was transformed into an ordinary bank just yesterday. Its the end of an era.

That's no lie. And with the end of those risk takers comes the end of the outrageous rewards they produced. Speaking of which, I didn't see many people complaining when they were making boatloads of money, and all those expensive European goods were selling like crazy over here. These markets are a mass-delusion that we all share for good or for bad.

[jack72]

To Macs and other who believe that the US should face the full force of the market melt down.....

Althoug the current situation may have been brought on by bad government regulation not stopping the financial institutions devising a scheme that lends money to high risk loans. One must look at other countries financial history and what it is today....

Many countries have benefited from the U.S treasury bailing out your country in dire times. Example,,When Russia switch from Communisum to a more democratic open market, the financial mess in Russia was terrible. There government went to the U.S for money and they provided it.

Many third world countries take money from the U.S. to make sure thier country does not destablize during economic catastrophies casued by markets or natural disastors. This includes countries like Germany, Brazil, Russia, France, and Asia. Many countries in the world would not have the wealth today if it were not for the U.S generosity during their times of pearl.

In fact, if you look at who lobbied the U.S government to bail out AIG, it was the finance ministers from Europe, China and South America that was worried the effect to their countries economies if AIG failed. Since they were so tied in, why don't they put up some of the cash.

[tbk107]

I could care less if my(Canada) central bank assists in injecting liquidity into the markets. It's a whole different matter and hell better freeze over before they give one dime to the U.S. subsidiaries of our banks by buying up their sup-prime exposure. The shareholders can take the hit if they have to close up their U.S. operations.

100%+LTV's, no employment or income required, 40 year terms, etc..

:bash:

[Breakfast in Vegas]

That's no lie. And with the end of those risk takers comes the end of the outrageous rewards they produced. Speaking of which, I didn't see many people complaining when they were making boatloads of money, and all those expensive European goods were selling like crazy over here. These markets are a mass-delusion that we all share for good or for bad.Think of the poor callgirls and tag-a-long party girls who won't be able to spend the healthy portion of Goldberg and Swanson's year end bonus. Oh the humanity...

[Col.O'neill]

such as?

123456

Such as the United States gives so much of their money away to the rest of world in every way. ie, disaster relief, military aid, economic aid, aids aid and the list goes on. Other nations supply funds to these things as well but not on the level that the America does. America could keep all its money for itself and not be in the economic situation that it finds itself in now, but America is too selfless and generous.

[toki]

I agree with you there. They took a risk and should take the fall. But to blame America when everyone in the world market was in on it is hypocritical.


Many European countries, she said, had already imposed stringent conditions on their banking sectors. "We dutifully adopted a nice EU directive into national law, and we had to deal with numerous complaints from small- and medium-sized companies in doing so. When the day came, the Americans said, 'We won't'," Merkel said. "That cannot be allowed in the international sphere." Merkel complained that taxpayers would be forced to foot the bill in countries far beyond the US and Britain.
That happened before the crisis. now that they ask to join the bail out she said, "NO, we told you before." Nothing wrong here.
The way American institiutes hand out credits is indeed different and less regulated.



Many third world countries take money from the U.S. to make sure thier country does not destablize during economic catastrophies casued by markets or natural disastors. This includes countries like Germany, Brazil, Russia, France, and Asia. Many countries in the world would not have the wealth today if it were not for the U.S generosity during their times of pearl.

Why this "backstabbing" tone i notice here?
Point is Merkel said NO because she thinks bailing out a rotten system is sending the wrong signals.
This deadly spiral only works in a high risk, zero regulated system. Before the worst of the crisis the Americans were told to better apply some security measures and regulate. They said no and profited from their refusal. Not anymore.

[Gulag]

More like America shouldn't have to bear the burdens of the world.

now that was really stupid... :cantbeli:

[toki]

Such as the United States gives so much of their money away to the rest of world in every way. ie, disaster relief, military aid, economic aid, aids aid and the list goes on. Other nations supply funds to these things as well but not on the level that the America does. America could keep all its money for itself and not be in the economic situation that it finds itself in now, but America is too selfless and generous.
Numbers please. What do you know how much money EU countries hand out in economic aid, disaster relief etc. And don‘t confuse tax money with private capital.

You missed the point here. Some EU leaders including Merkel asked the Americans a while ago to better regulate some elements of the financial market. They happily refused, because in better times you really get somethig out of it, knowing that the risks are very high. Now that the **** really hits the fan they ask other countries who already adopted more stringent regulations to bail out the American high risk financial businesses.


„America could keep all its money for itself“.
„but America is too selfless and generous.“
Damn we have a financial expert here.
What is „American money“? The american taxpayer now has to bail out the shortcomings of private AMERICAN ventures and a very 'giving' unregulated credit system. Those investment banks are never selfless or generous. NEVER, that contradicts every logic.


I agree with you there. They took a risk and should take the fall. But to blame America when everyone in the world market was in on it is hypocritical.
Other countries applied laws that brought more transparency into their financial markets.

[wildcat]

if we let the them fail, what effect will it have on the rest of the world? I all for no bail out, I don't want to see bad management rewarded.

[toki]

if we let the them fail, what effect will it have on the rest of the world? I all for no bail out, I don't want to see bad management rewarded.

The effect is already massive and to an extend impossible to fix, by bailing them out you just stick to a system where indefinite risk taking is rewarded and lay the foundation for an even worse collapse. All Merkel said, is that they should adapt to tougher regulations to avoid the next crash. If everything stays the same it will happen again, only even worse. This time the money is burned anyway. If you patch them together or not.


This is a global financial market, the entire world is going to suffer right along with us. This is just the front edge of the storm, its going to get worse.
It will only get worse, when your markets stay this unregulated. Why bailing out when the real problem isn't fixed?

[Col.O'neill]

Numbers please. What do you know how much money EU countries hand out in economic aid, disaster relief etc. And don‘t confuse tax money with private capital.

You missed the point here. Some EU leaders including Merkel asked the Americans a while ago to better regulate some elements of the financial market. They happily refused, because in better times you really get somethig out of it, knowing that the risks are very high. Now that the **** really hits the fan they ask other countries who already adopted more stringent regulations to bail out the American high risk financial businesses.


Damn we have a financial expert here.
What is „American money“? The american taxpayer now has to bail out the shortcomings of private AMERICAN ventures and a very 'giving' unregulated credit system. Those investment banks are never selfless or generous. NEVER, that contradicts every logic.


Other countries applied laws that brought more transparency into their financial markets.

Thats right! Im a 21 year old police officer financial expert lol!

[Atlantic Friend]

Many third world countries take money from the U.S. to make sure thier country does not destablize during economic catastrophies casued by markets or natural disastors. This includes countries like Germany, Brazil, Russia, France, and Asia.

Germany, Brazil, Russia and France are third-world countries ? And the US gives them money out of sheer geneoristy so these countries does not get destabilized by natural disasters and market disasters ?

[Macs.]

Thats right! Im a 21 year old police officer financial expert lol!

lol.

(sarcasm)


Germany, Brazil, Russia and France are third-world countries ? And the US gives them money out of sheer geneoristy so these countries does not get destabilized by natural disasters and market disasters ?

Hey, you forgot the country of Asia !

[Atlantic Friend]

lol.

(sarcasm)



Hey, you forgot the country of Asia !

But, but....I couldn't find it on a map ! They keep talking about Asians, but the borders of the nation of Asia is nowhere to find !

[MichaelF]

So, they're saying that Germany was......stabbed in the back?

[Lusitania]

It will only get worse, when your markets stay this unregulated. Why bailing out when the real problem isn't fixed?

It is highly unlikely the US markets will continue to stay so unregulated; the tremendous fallout almost ensures that further regulation will ensue. The bailout was necessary because the alternative was quite simply, unthinkable. Paulson's reasoning was that the government had to bail out companies such as AIG, because by not doing so, the United States economy may have seen something close to a collapse. That said, I must emphasize, it's an almost unfathomable, if not a ridiculous, folly in thought to assume that regulations will stay the same (we are already seeing several temporary regulations for the short term until we can get some solid ones in; such as the ban on short selling). The United States government was not "rewarding" anyone, they were simply attempting to ensure a crash did not occur.


The problem was not that regulation was particularly reduced, or "laxed," but more so in the fact that it was not emphasized by the United States government. In good times, funding was cut and there were simply less regulators to handle such a tremendous task. Thus, we see an overall decline in continued regulation, and newer regulatory laws. We can all rest assured however, that the regulatory offices in the United States will undoubtedly double, as a direct result of this travesty.

[Mastermind]

The world should not have to bear our lapses? Why not? All the world has done since and even before WWII was criticise the hated "Yanquee"...but, boy are they ever there to take all them wonderful "Yanquee" dollars...you bet. I think it would be good for the world to do without the USA for a while. We are now in trouble...yep..Unckle Sammy is not doing well. Oh, of course, we will recover...we always do and we will this time. But, for a while, we will have to take care of our own country and our own citizens. You folks out there in the world who despise us and all we have tried to to to save your ungratefull butts from despots and hitlers and tojos and communist dictators...you guys go on and get after your own fixes your own way and we'll do all we can to leave you totally alone.

Get after it. We'll stay out of your hair for the next ten or twenty years. Check in on us from time to time...let us know how that all works out for ya.

Good luck and good riddance. Us poor old American tax payers sure do need the break.

[caleb]

^

Yeeeehaaaw, you tell dem stoopid yorpeans!11!!

[Revolveri]

Well, it's good the world has a sacrificial lamb.

[loganinkosovo]

OK....no more Marshal Plan for you Guys.....ever again!


:)

[Bia]

Bollocks, those are not the only 2 options... Already we are gonna suffer from this to some extend now anyway.Lower income and poor worldwide will yes.

The rich stay rich... working stiffs keeps on barely chugging.

+Rep to the workers of the world.

[BlackFlag]

Sh*t, I live in Michigan, the rest of the US and the world for that matter are just getting a taste of what my state has been going through since Premir Granholm took to office.

literally almost half the people I know are planning on or already have moved out of state.

[ßå$tĮТHÏ¿ð]

I am hoping for hyper inflation, I could start spending my weekends in Seattle!

In all seriousness, its either bail them out, or risk a possible global wide recession. This "global economy" term isn't a f*cking catch phrase, and we all seriously got screwed. 700b bailout, and that is not including the rest of the companies they have already had to bail out so far.

With New Orleans to be rebuilt, frequently occuring wildfires / hurricanes and two on going wars and a financial crisis (possible credit card crisis up coming when interest rates rocket) I fail to see even how the United States can remotely afford to fix any of this without a serious tax raise and interest rate raise.

I hope you all get out fine, but I am not exactly betting my money on you guys at the same time either especially when your bailing out the idiots that got you into this situation in the first place. AIG yes, the rest f*ck 'em.

[ßå$tĮТHÏ¿ð]

Sh*t, I live in Michigan, the rest of the US and the world for that matter are just getting a taste of what my state has been going through since Premir Granholm took to office.

literally almost half the people I know are planning on or already have moved out of state.

When you can buy a house for $5000 in Detroit, that says it all....

[BlackFlag]

When you can buy a house for $5000 in Detroit, that says it all....

No kidding, property value was higher in Stalingrad during 1943. Detroit is the armpit of the midwest. Drop the bomb already.

[Macs.]

Lower income and poor worldwide will yes.

The rich stay rich... working stiffs keeps on barely chugging.

+Rep to the workers of the world.

Actually, the rich are getting even richer if you can believe the latest stastistics. :)

Think about the latest crisis, how Billions or even over a Trillion got turned around. This money/loans/derivats does not simply disapper, it wanders into the pockets of other people, coperations/banks.

[Big Lebowski]

Good luck and good riddance. Us poor old American tax payers sure do need the break.
Denmark - Individual Income Tax: 38-59%

Sorry if im not impressed by your ranitng...

[Kletterbuxe]

Alot of Economists don´t agree with the bailout concept and german banks already lost about 50 billion in the crisis, so why participating ?

But this is also a chance to enter US financial markets. Alot of german Banks and Inssurance Companys are watching pretty closely. You won´t get US companys cheaper than now....

[Kaplanr]

Just received in my e-mail.


Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

[Bitogno]

Alot of Economists don´t agree with the bailout concept and german banks already lost about 50 billion in the crisis, so why participating ?

But this is also a chance to enter US financial markets. Alot of german Banks and Inssurance Companys are watching pretty closely. You won´t get US companys cheaper than now....
They should hurry before China's CIC buys every thing.

[Kaplanr]

Such as the United States gives so much of their money away to the rest of world in every way. ie, disaster relief, military aid, economic aid, aids aid and the list goes on. Other nations supply funds to these things as well but not on the level that the America does. America could keep all its money for itself and not be in the economic situation that it finds itself in now, but America is too selfless and generous.

Granted from Wikipedia, but not inaccurate that I can tell.


The United States is the world's largest contributor of ODA (official development assistance) in absolute terms ($15.7 billion, 2003), but the smallest among developed countries as a percentage of its GDP (0.14% in 2003). The UN target for development aid is 0.7% of GDP; currently only five countries (with Norway in the lead with 0.92%) achieve this.

Saudi Arabia’s ODA volume is second only to the USA. As percentage of GDP, Arab states of the Persian Gulf are the most generous, with Kuwait contributing 8.2% of its gross national product and Saudi Arabia 4% in 2002.

Private contributions also make a significant, albeit harder to track, contribution to development aid. Private donations in the US are estimated to be at least $34 billion a year, broken down as such:

* International giving by US foundations: $1.5 billion per year
* Charitable giving by US businesses: $2.8 billion annually
* American NGOs: $6.6 billion in grants, goods and volunteers.
* Religious overseas ministries: $3.4 billion, including health care, literacy training, relief and development.
* US colleges scholarships to foreign students: $1.3 billion
* Personal remittances from the US to developing countries: $18 billion in 2000.

[BugHunt]

700 BN psssf - small change.

How much will Irak cost? One Two or THREE $TRILLION? How much of that spending was unregulated and of dubious nature?



If you wanted to bleat about money 2003 might have been the time...

[Breakfast in Vegas]

Granted from Wikipedia, but not inaccurate that I can tell.Not to mention private donations, in which US citizens are very giving. Warren Buffet (who just bought Goldman Sachs with some pocket change) will donate most of his 62 billion dollar estate to charity. Somehow I don't expect any Russian oligarchs or Chinese billionaires to do that. There are more yachts, diamonds and castles to buy.

None of that however means that Europe or anywhere else should be expected to help bail us out for our financial clumsiness.

[toki]

Not to mention private donations, in which US citizens are very giving. Warren Buffet (who just bought Goldman Sachs with some pocket change) will donate most of his 62 billion dollar estate to charity. Somehow I don't expect any Russian oligarchs or Chinese billionaires to do that. There are more yachts, diamonds and castles to buy.

None of that however means that Europe or anywhere else should be expected to help bail us out for our financial clumsiness.


The United States is the world's largest contributor of ODA (official development assistance) in absolute terms ($15.7 billion, 2003), but the smallest among developed countries as a percentage of its GDP (0.14% in 2003).
I think that was the important point.
And further proof that Col.O'neill the "financial expert" was talking out of his ass.

[SBL]

I think that was the important point.
And further proof that Col.O'neill the "financial expert" was talking out of his ass.
Not a round-enough figure for you?

[Kletterbuxe]

"The 15 DAC countries that are members of the European Union (EU) increased their combined ODA (official development assistance) by 2.9% in real terms to USD 42.9 billion"

Not bad compared to the US...

[toki]

Not a round-enough figure for you?

I'm not taking away anything from the US here, just saying that this guy only posted nonsense and claimed to be an expert.

[ColinP]

Oh please, if the world does not want to rescue US banks then don't. No one put a gun to the world's head and told them to invest in the US. As for this meltdown, people have been predicating it for years, if the bankers of the world get burnt for being greedy I won't be crying for them.

Herman the German


One of the key factors in the excess of the current crisis are the US investment banks, such as Merrill Lynch, Lehman Brothers, etc. .
Those banks profited through a lack of control based on their legal status as an "Investment Bank", such an institution is almost unique worldwide.
Nearly without supervision of the state (USA) those "Investment Banks" speculated and gambled for profit. They had tremendous success in the past and now they lost everything and even more.
Unfortunately the ordinary US taxpayer will have to pay for their failure.
The US legislation enabled those institutions and therefore it is indirectly to blame for their downfall.
No wonder that the last "Investment Bank" of the Wall Street was transformed into an ordinary bank just yesterday. Its the end of an era.


If the big banks of Europe were not aware of the risks and the lack of oversight, then they have only themselves to blame, they are big kids who can read and do math.

I agree that the era for this type of bank is at an end. I also feel the taxpayer should not get involved unless there is a plan to repay the debt, clawback bonus/payouts for senior staff.

[deagle]

well, it just goes to show that they can help themselves by helping us. they've got a stake in this as well.

[cmoor]

Economics experts think that's the right response. As they see it, in the long run, those responsible for the crisis -- who have been cashed out with high salaries and bonuses for years -- will not be penalized for billions "but will be let off the hook like everyone else," says Carsten Meier of the Kiel Institute for the World Economy (IfW).Like injecting ~5 billion Euros of taxpayer money to safe the german high risk gambling (38% state run) IKB by the state run KfW, while the private run banks were relcutant to help.
The CEO of the IKB got his 400k anual pension, and could keep his 1M bonus for good corporate governance. Legal charges were considered, but nothing happend and will happen.

A meltdown of more american banks will put a huge burden on german banks. Right now the bank depot security fund holds about 4.5 billion Euros. The damage that the bankrupcy of the german branch of Lehman alone will do is estimated to 6 Billion Euros.

Saying this is an american problem and the wrong way is imho deceitful.
On the other hand rewarding the high risk players with taxpayers money, and socializing losses but letting them keep their profits is sickening.

[Kaplanr]

Not to mention private donations, in which US citizens are very giving. Warren Buffet (who just bought Goldman Sachs with some pocket change) will donate most of his 62 billion dollar estate to charity. Somehow I don't expect any Russian oligarchs or Chinese billionaires to do that. There are more yachts, diamonds and castles to buy.

None of that however means that Europe or anywhere else should be expected to help bail us out for our financial clumsiness.

Actually private donations are included in the * Personal remittances from the US to developing countries: $18 billion in 2000. section.

The % of GDP is an interesting number. I think the US will weather this but the reality is, more and more of the US's budget obligations aren't discretionary, they're mandated and include significant debt service. Even growing the economy at a healthy rate doesn't generate enough for truly discretionary and innovative spending. Would the US be able to Public Works itself out of a depression today?