Monday, March 16, 2009

The Information That Might Just Save Your Life

Dear Friends,

Attention!!! Please spread the word to as many people as possible.

I have come across some information that I find really disturbing. Please let me know your thoughts on it. I found the need to share it with you because many innocent lives will be lost if we don't expose it.

This email is specially for my friends in Medical Profession & Journalism. I hope you will take note of the content of the email and do your own investigation on the matter. Many of the mainstream press are intentionally blocking this news as you know who owns them. Please get the awareness out and wake the people up.

>>> SARS Virus Found In SARS Vaccine <<<

In case you're new to this, let me just advise you that the Aids Virus, Ebola Virus, Cancer Virus, SARS Virus were all created in the labs. Here is the earlier post to get you up to speed.


Here comes the main story. It is believed that a group of Evil Conspiracists are trying to launch a major Biological Warfare on innocent people all over the world. Let me give you a little insight of what SARS is all about. The H5N1 virus is not an airborne virus don't last for a long time.

In order to make SARs an epidemic, they are two ways of doing it.

Evil Strategy 1
Infect the SARs Vaccines with H5N1 viruses. Next, infect poultry and birds to cause panic. Those who take precautionary measures by taking the SARs vaccine are then infected with SARs. Since SARs does not survive long in the air, this is the best option. When infected with SARs, your blood will flood your lungs and you die of internal bleeding.

See this article on how homeless people in Poland died in Bird Flu Vaccine Trial.







I'm not kidding. Scared now? This is just the beginning.

Some more...


Evil Strategy 2

A little on history. In 1918 there was also a Flu Pandemic that killed 50 Million people worldwide. It's called the '1918 Flu' or more commonly called 'Spanish Flu'. Victims of the Spanish Flu were buried all the way at the Arctic. Guess what the Evil Perpetrators are doing all they can by digging up all the dead Spanish Flu victims with the aim of creating a more killer Flu virus, by mixing Spanish Flu and Airborne virus with H5N1.

Trust me my dearest friends, when I knew this, tears come falling from my eyes. I don't know why I'm feeling so emotionally drained. Everyday when I wake up and think of how sheepish people are believing all the B*S* the mainstream media has been brainwashing you, I really feel sad. Just like the Matrix, we are just being harnessed for our energy. We're just like mice on the Threadmill and playthings of the Elite that controls the world.

The fact is, everybody is so preoccupied with making ends meet that they don't even know their purpose on Earth. I'm kind of sad that Alan Ooi has decided to end his life so early when he could have probably contributed to my cause. Nevertheless, I respect his decision and hope he has found his peace.

See this article.




Let me bring you onto the journey of the Abyss as there's no turning back from now.

Vaccine Killing People (3 Videos)
==> (Part 1)
==> (Part 2)
==> (Part 3)

Horrors of Vaccinations Exposed! (4 Videos)
This video was deleted in YouTube. Thank God I'm one IT Expert and managed to still download it using some Stealth Technique. You can download it here now.


My friends, you could do a couple of things here. Delete this email and act as if nothing is happening. Forget about what is said here and continue living in your wonderland.

Or...Do humanity a favour and spread this information. Show your courage by emailing every friend in your mailing list and give the Evil Conspiracist your middle finger. It's time humanity hit back.

We're almost up to a point when nothing could be done to prevent the New World Order. I still have not given that hope yet.

If you do not receive any further emails from me again, just pray for me.

P.S. - I beg of you to spread the word. Have courage my friends.

P.P.S. - Do not dwell on stocks. The whole world will come to a standstill very soon. The people behind the New World Order is going to make a fake scenario of the recession coming to an end by artificially creating a mirage that the worst is over. You have been warned. The moment the investors swarm into the market is the time that SARS will start haunting nations. Many countries have stock up millions of vaccine doses and I plead the government & medical professionals of all nations to not assume the Vaccines as 'real vaccines' as there's a chance of them being intentionally infected.

P.P.P.S. - Go Google the following. "New World Order", "Illuminati", "End Game", "Bilderberg", "Council of Foreign Affairs", "Trilateral Commission", "Bohemian Grove", "Depleted Uranium", "Chem Trail", "911 Inside Job".

P.P.P.P.S. - People you can researched on are "Alex Jones", "David Icke". There are many people trying to bring them down with baseless accusations.

P.P.P.P.P.S. - I am asking you to believe anything I say. Please research it and judge the truth for yourself.

Final Movie ==>

P.P.P.P.P.P.S. ==> Be prepared when the world comes to a stand still and the only way to make your income will be via the Internet because there will no longer be good paying jobs.


Edmund Ng
CEO, President

Monday, February 09, 2009

Risk-taker Ho Ching has no regrets

SINGAPORE (Reuters) - Ho Ching, wife of Singapore Prime Minister Lee Hsien Loong, will step down as chief executive of Temasek, ending a 5-year term which saw the state investment agency expand aggressively beyond Singapore.

It was also involved in controversies around the region.

Ho, 55, joined Temasek as a director in January 2002 and became CEO two years later. She will be replaced by Chip Goodyear, former chief of global miner BHP Billiton, in October.

One of Ho's colleagues once said it was her willingness to take risks, not her family ties, that won her the top job at Temasek, with a mandate to shake up Singapore's state investor, which had assets under management of S$185 billion ($123 billion) at end-March 2008.

That penchant for risk-taking came to the fore in 2007 with Temasek's surprise 2.1 billion pound ($3.1 billion) investment in British bank Barclays Plc (BARC.L: Quote, Profile, Research), which was locked in a costly bidding war for Dutch rival ABN AMRO in what would be the world's biggest bank takeover.

Barclays' share price has sunk to a little over 1 pound from more than 7 pounds when Temasek bought its shares 18 months ago.

The investment was one of many big deals engineered by Ho, who keeps a low profile despite her prominence in financial circles and as a member by marriage of Singapore's first family.

Since taking the helm at Temasek, Ho has stepped up the fund's diversification beyond its small home market. Her goal: a portfolio split with about a third invested in Singapore, a third elsewhere in Asia, and the rest in developed economies.

But while Temasek is regarded as the Asian standard-bearer among increasingly prominent sovereign funds, its large size and government links have provoked opposition to its investments in nearby Thailand and Indonesia.

In 2006, a Temasek-led $3.8 billion investment in Thai telecoms firm Shin Corp SHIN.BK, then owned by the family of former Thai Prime Minister Thaksin Shinawatra, triggered a prolonged political crisis in Bangkok that led to Thaksin's ouster in a bloodless coup.

Shin has since lost about two-thirds of its market value.

Temasek's investment in Indonesia's PT Indosat (ISAT.JK: Quote, Profile, Research) has also come under attack, in part because Temasek-linked companies are big investors in the country's telecoms sector. Temasek says it is not involved in any anti-competitive business practices.

Temasek is nursing losses from high profile investments in Merrill Lynch and Barclays as it looked to expand outside Asia, but came up against a global financial crisis.

"These are turbulent times and I'm sure she must have had a stressful time this year," said David Cohen, economist at Action Economics.

Temasek's $5 billion plus investment in Merrill alone has resulted in a loss of more than $2 billion.

Temasek Chairman S. Dhanabalan said Ho's decision to step down was not linked to performance, and it was too early to determine if investments made in the last two years would lose out in the long-term.

Ho tends to avoid the media and has made few comments on Shin. When she addressed a Morgan Stanley conference in November 2006, with the Shin deal in the limelight, the bank told the media not to ask questions.

Ho began her career at Singapore's Ministry of Defense, where she met her husband, the eldest son of former Prime Minister Lee Kuan Yew.

While Lee took up a variety of cabinet positions, Ho moved to state-owned Singapore Technologies in 1987, running a mix of defense, technology, property and stockbroking firms which she restructured, divesting some units and listing others.

When Dhanabalan, a former cabinet minister, asked Ho to head Temasek, he told local media she was "the best person for the job," and the appointment had "nothing to do" with her being Lee's wife.

Asked on Friday if she had any regrets as her departure was announced, Ho replied: "No. I think if you want to run life with regret, you will end up doing very little."

Congress Is Divided Over Competing Stimulus Bills

WASHINGTON — The Senate agreement on a roughly $827 billion economic stimulus bill sets up tough negotiations with the House, primarily over tens of billions of dollars in aid to states and local governments, tax provisions, and education, health and renewable energy programs.

Congress is racing to try to finalize the legislation this week.

The price tag for the Senate plan is now only slightly more than the $820 billion cost of the measure adopted by the House. Both plans are intended to blunt the recession with a combination of tax cuts and government spending on public works and other programs to create more than three million jobs.

But the competing bills now reflect substantially different approaches. The House puts greater emphasis on helping states and localities avoid wide-scale cuts in services and layoffs of public employees. The Senate cut $40 billion of that aid from its bill, which is expected to be approved Tuesday.

The Senate plan, reached in an agreement late Friday between Democrats and three moderate Republicans, focuses somewhat more heavily on tax cuts, provides far less generous health care subsidies for the unemployed and lowers a proposed increase in food stamps.

To help allay Republican concerns about the cost, the Senate proposal even scales back President Obama’s signature middle-class tax cut. The Senate plan also creates new tax incentives to encourage Americans to buy homes and cars within the next year.

Republican opponents continued to rail against the stimulus plan on the Senate floor on Saturday, though it appeared they would not have the votes to stop it.

The negotiations in Congress will test whether Democrats, who say they won a mandate in November to pursue their goals, are willing to give up some favored long-term policy initiatives to win over more Republican votes.

The talks will also test whether any but the most moderate Republicans will be willing to support the Obama administration, or whether they will simply recoil in an opposition stance.

Speaker Nancy Pelosi, who was in Williamsburg, Va., on a retreat with her fellow House Democrats on Friday, called the emerging Senate cuts to the stimulus program “very damaging” and said she was “very much opposed to them.” But after the Senate reached a deal, Ms. Pelosi expressed resolve to complete the legislation in the days ahead.

Mr. Obama, who has made the economic recovery effort the centerpiece of his agenda, is expected to take a stronger hand in the negotiations and will embark on an aggressive public lobbying campaign.

He will hold a meeting in Indiana on Monday, followed by a formal White House news conference, the first of his term, in prime time on Monday night. He will pitch the plan again on Tuesday in Florida and on Wednesday in Virginia.

In his weekly radio and Internet address on Saturday, the president praised the Senate deal and urged quick passage of a final bill.

“The time for action is now,” Mr. Obama said. “If we don’t move swiftly to put this plan in motion, our economic crisis could become a national catastrophe.”

Also on Monday, Treasury Secretary Timothy F. Geithner is expected to announce the broad outlines of a rescue plan for the financial industry. The administration hopes that the announcement will quiet some critics in Congress who say not enough is being done for the housing sector.

After Senate Democrats reached their deal with moderate Republicans on Friday, Republicans who are more conservative refused to put the legislative process on a fast track.

Senator David Vitter, Republican of Louisiana, insisted that the deal required careful deliberation and said he would spend the weekend reviewing it, even though it was all but certain that he would not support the measure.

As a result, the Senate met for a rare Saturday session, and Republicans delivered some of their harshest criticism of Mr. Obama since he took office, suggesting that he was pressing Congress to act irresponsibly by warning of imminent catastrophe.

“In discussing with the American people his approach to the stimulus of our economy, he has first really used some dangerous words,” said Senator Jon Kyl of Arizona, the No. 2 Republican. Mr. Kyl added, “It seems to me that the president is rather casually throwing out some careless language.”

The majority leader, Senator Harry Reid of Nevada, said Congress would move quickly to get the bill into conference, in hopes of sending the bill to the White House by the week’s end.

‘Put This Plan in Motion,’ Obama Urges Lawmakers

WASHINGTON — President Obama urged Congress on Saturday to swiftly resolve its differences in the sweeping economic recovery measure and “put this plan in motion” to bring fiscal relief and new jobs to all corners of the country.

“Legislation of such magnitude deserves the scrutiny that it’s received over the last month, and it will receive more in the days to come,” Mr. Obama said. “But we can’t afford to make ‘perfect’ the enemy of the absolutely necessary.”

In his weekly radio and Internet address, Mr. Obama tempered the sharp criticism that he has aimed in recent days at Republicans who have criticized the legislation as riddled with spending that will not create jobs. He praised the agreement reached late Friday by a coalition of Senate Democrats and moderate Republicans.

“Democrats and Republicans came together in the Senate and responded appropriately to the urgency this moment demands,” Mr. Obama said. “In the midst of our greatest economic crisis since the Great Depression, the American people were hoping that Congress would begin to confront the great challenges we face. That was, after all, what last November’s election was all about.”

The president’s sales pitch, though, is far from over. Even as the Senate prepares to vote on the bill in the coming days, sharp differences remain with the House over the scope of the recovery package. The White House is already working to bridge the gap so the legislation can be ready for Mr. Obama’s signature in the next week to 10 days.

“Americans across this country are struggling, and they are watching to see if we’re equal to the task before us,” Mr. Obama said. “Let’s show them that we are. And let’s do whatever it takes to keep the promise of America alive in our time.”

As Mr. Obama and his family made their first weekend trip to the presidential retreat at Camp David, his advisers worked to build more support for the economic recovery plan. A handful of Republicans have already signed on, but aides said they hoped to attract more to create the image of a stronger bipartisan bill.

In the address, Mr. Obama pointed to specific states that would benefit from the economic plan, which his economists have projected would save or create more than 3 million jobs over the next two years. In Maine, he said, 16,000 jobs would be saved or created, and nearly 80,000 in Indiana, “almost all of them in the private sector.”

“That’s what is at stake with this plan: putting Americans back to work,” he said.

The reference to Maine, which he has been making throughout the week, is aimed at the state’s two Republican senators, Olympia J. Snowe and Susan Collins, whose votes are important. The president is traveling to Indiana on Monday to hold his first town-hall-style meeting as president, where he will try to build broader support for the program.

In Florida, where Mr. Obama is scheduled to visit on Tuesday, 485 schools would be upgraded, he said, which the administration says would create a cascade of new jobs. And in Ohio, he said, 4.5 million workers would receive tax relief of up to $1,000.

“The American people know that our challenges are great,” Mr. Obama said Saturday. “They don’t expect Democratic solutions or Republican solutions — they expect American solutions.”

In Florida, Despair and Foreclosures

LEHIGH ACRES, Fla. — Desperation has moved into this once-middle-class exurb of Fort Myers, where hammers used to pound.

Its straight-ahead stare was hidden amid the chatter of 221 families waiting for free bread at Faith Lutheran Church on a recent Friday morning; and it appeared a block away a few days earlier, as laid-off construction workers in flannel shirts scavenged through trash bags at a home foreclosure, grabbing wires, CDs, anything that could be sold.

“I knew it was coming,” said Gloria Chilson, 56, the former owner of the house, as she watched strangers pick through her belongings. “You take what you can; you try not to care.”

Welcome to the American dream in high reverse. Lehigh Acres is one of countless sprawling exurbs that the housing boom drastically reshaped, and now the bust is testing whether the experience of shared struggle will pull people together or tear them apart.

The changes in these mostly unincorporated areas outside cities like Charlotte, N.C., Las Vegas and Sacramento have been swift and vivid. Their best economic times have been immediately followed by their worst, as they have generally been the last to crest and the first to crash.

In Lehigh Acres, homes are selling at 80 percent off their peak prices. Only two years after there were more jobs than people to work them, fast-food restaurants are laying people off or closing. Crime is up, school enrollment is down, and one in four residents received food stamps in December, nearly a fourfold increase since 2006.

President Obama is scheduled to visit Fort Myers on Tuesday to promote his economic stimulus plan. But residents here tend to view it as the equivalent of an herbal remedy — it can’t hurt but it probably won’t heal. Instead, in church groups and offices, people call for “industry” and repeat one telling question: “What do we want to be when we grow up?”

“That’s one of the things we struggle with: What is our identity?” said Joseph Whalen, 37, president of the Lehigh Acres Chamber of Commerce. “We don’t want to be the bedroom community of southwest Florida; we don’t want to be the foreclosure capital.”

A Legacy of the ’50s

Lehigh Acres, like much of Florida and many suburbs nationwide, was born with speculation in its DNA.

The area got its start in the 1950s when a Chicago pest control baron, Lee Ratner, and several partners bought thousands of acres of farmland and plotted about 100,000 lots. With Fort Myers, 15 miles to the west, developers left little room for schools, parks or even businesses.

What they sold was sun and quiet living.

“They used to bring 20 busloads a day,” said Bob Elliott, a former salesman for Mr. Ratner’s company who struck out on his own in 1982. “We had 300 customers, seven days a week.”

By 2000, the lots had been sold, but most stayed empty. Only about 30,000 people were living in an area roughly four times the size of Manhattan. The builders really started to arrive in 2004, setting up model homes on Lee Boulevard next to Mr. Elliott’s office with the faded wooden sign that said “$50 lots.”

Bill Spikowski, a city planning consultant in Fort Myers, said that because Lehigh Acres had so many parcels and few restrictions on what could be built, smaller companies battled for customers. From 2004 to the end of 2006, developers completed 13,183 units in Lehigh Acres — nearly doubling the total stock of 15,216 that existed in 2000, according to Lee County figures.

Residents remember the boom for its noise, with dump trucks lining the streets and power tools heard in nearly every neighborhood. Housing prices doubled, then tripled, and jobs were plentiful, nearly all of them tied to real estate.

Signs of trouble were ignored. “Sometimes houses would sell three or four times in a few months, and no one would move in,” Mr. Elliott said.

Then in 2007, it all went quiet. Houses stopped selling. Foreclosures multiplied. The median home price in the Fort Myers area dropped to $215,200 in December 2007, from a peak of $322,300 in December 2005. It had fallen to $106,900 two months ago.

Work disappeared with the profits. According to the federal Bureau of Labor Statistics, Lee County lost a higher percentage of jobs (8.8 percent) from June 2007 to June 2008 than any other county in the nation. Unemployment in the county rose to 9.8 percent in November, from 3.5 percent in March 2007.

In Japan, New Jobless May Lack Safety Net

OITA, Japan — Koji Hirano said his “mind went blank” with disbelief when he and other workers at a Canon digital camera factory in this southern city were suddenly called into a cafeteria in late October and told they were being laid off.

The shock turned to fear when they were also ordered to vacate their employer-provided apartments, a common job benefit here. With no savings from his monthly take-home pay of as little as $700, he said, he faced certain homelessness.

“They were going to kick us out into the winter cold to die,” said Mr. Hirano, 47.

The current economic crisis has spread joblessness and distress across the world, and Japan has been no exception — with output plunging at historic rates, the unemployment rate leapt to 4.4 percent in December from 3.9 percent the month before. But what has proved more shocking has been the fact that so many of those laid off have been so vulnerable, with hundreds and perhaps thousands finding themselves cast into the streets.

Mr. Hirano and the others laid off by Canon are part of a new subclass of Japanese workers created during a decade of American-style deregulation. As short-term employees they have none of the rights of so-called salarymen or even the factory workers for Japan’s legions of small manufacturers.

To make matters worse, they can expect little in the way of unemployment or welfare benefits. In Japan, a country with little experience of widespread unemployment until recently, there is an inadequate safety net for laid-off workers.

According to the Labor Ministry, about 131,000 layoffs have been announced since October. Of those, only about 6,000 were culled from the majority of Japanese workers who hold traditional full-time jobs, which are still often held for life. The overwhelming majority — some 125,000, the ministry says — are so-called nonregular workers, who are sent by staffing agencies or hired on short-term contracts with lower pay, fewer benefits and none of the legal protections against layoffs of regular full-time employees.

Mr. Hirano and other former temporary workers at Canon were allowed to stay in their apartments for a few extra months after a public outcry reached all the way to the prime minister. But others have not been so lucky. Over the New Year holiday some 500 disgruntled former temporary workers made homeless by layoffs built an impromptu tent city in a Tokyo park adjacent to the Labor Ministry.

As never before, the global downturn has driven home how a decade of economic transformation has eroded Japan’s gentler version of capitalism, in which companies once laid off employees only as a last resort.

“This recession has opened the nation’s eyes to its growing social inequalities,” said Masahiro Abe, a professor at Dokkyo University who specializes in labor relations. “There is a whole population of workers who are outside the traditional support net.”

Until a decade ago, nonregular workers accounted for less than a quarter of Japan’s total work force, and included subcontractors and others outside the lifetime employment system as well as students or homemakers working part-time jobs at restaurants or convenience stores.

But the number of nonregular workers took off after an easing of labor laws in 1999 and again in 2004 allowed temporary workers to work on factory lines and in other jobs once largely restricted to full-time workers. During Japan’s economic recovery in this decade, companies added millions of less expensive temporary employees while continuing to reduce overall numbers of full-time staff.

Today, 34.5 percent of Japan’s 55.3 million workers are nonregular employees, including many primary breadwinners for households, according to the Internal Affairs Ministry.

Under the nation’s traditional company-centered social welfare system, created after World War II, companies were expected to look after employees until retirement and beyond, serving as the main conduit for pensions and other benefits, and keeping jobless rosters empty by not laying off workers.

From Bad to Worse, but Far From the Worst

BECAUSE Topic A in every newspaper and television show is the economy, may I offer a bit of analysis of what is happening, how bad it is and isn’t, and what a cure might be?

We have a major financial crisis. The banking system is in a state of peril not seen since the early 1930s. But by many other metrics, as bad as the economy may be, it’s not remotely like the Great Depression.

Unemployment now is 7.6 percent. In 1933, it was roughly 25 percent. That was more than double the rate in 1982, our worst recession since — which was still far worse, so far, than what we have now. Our current situation will probably become worse in terms of unemployment, but we are not back in the bad old days yet.

More painful in some of those past years, we also had high inflation — far higher than we have had recently. Inflation is now virtually nil. In 1980, the unemployment rate reached 7.8 percent, and the inflation rate gusted to almost 15 percent.

There was a period from the mid-1970s to the early ’80s when the “misery index” — inflation plus unemployment — was often above 15 percent and sometimes above 20 percent. Today, that misery index would hover at about 8 percent, depending on how one calculated inflation (as the core rate without food and oil products, or as the “headline rate” with them).

This is not to deny that real people are suffering now. The lot of the involuntarily unemployed is deeply grim.

But the main crisis now is not unemployment, at least not yet. It is about the lending institutions of this country. The financial entities of this great nation — both banks and less regulated or unregulated entities — took wild, spectacular, immoral risks with credit.

It turned out that shrewd speculators could take advantage of those mistakes when the credit bubble burst and make extraordinary sums of money, all the while terrifying markets and making the crisis worse. It also turned out that the blunder of blunders was made by allowing Lehman to fail, essentially causing a cerebral hemorrhage in the world’s financial brain.

That’s where we are now. Banks are in extremis from the bad credit decisions they made and mistakes the Treasury made. The effects have rippled out into the broader economy as businesses that were denied access to credit by panicked lenders have had to lay off workers. Some have been unable to stay in business anyway, and a full-blown recession is here. Now it’s been revealed that as bad as the credit losses of banks and other entities were first thought, they are actually worse.

Today, the lenders’ problem is that their losses have been so great as to impair their capital. They are in a state of fear that if they lend money again, those loans will go bad as well. They are too traumatized and wounded to lend. For some banks, to lend might be to die.

What is the solution? With the greatest respect to President Obama, it is not necessarily to hire men and women to build more wind-power windmills, or “21st-century classrooms.” These plans may have merit in and of themselves. But they do not get at the central problem: credit. The International Monetary Fund just issued an opinion to the same effect: that the United States economy and the world economy will not revive until the credit crisis is resolved.

The solution is to lend the banks more federal money. They have had huge losses and need huge amounts of help. Yes, they will do stupid, immoral, evil things with some of the money. They are humans and that’s what humans do. We’re sloppy and often dishonest.

We went through something a bit like this in the early 1990s, when the results of staggering mismanagement pulverized savings and loan institutions. The government acted swiftly and sensibly under Bush 41. The Resolution Trust Corporation assumed bad loans of the S.& L.’s and sold them to bidders, and we went on with the nation’s business. In the end, the government made money on many of the assets, then “toxic,” that it bought.

WHY not do the same thing now — buy the bad assets of the banks and take them off the banks’ books? That was the original plan of the Troubled Asset Relief Program, and it was a good plan. Yes, there will be colossal valuation issues. Yes, there will be fortunes made because government bought too high and sold too low. That’s what happens in life. Again, life is sloppy.

But if the crisis is really an economic Pearl Harbor, as Warren E. Buffett says, we have to behave as if it’s war. There is a lot of waste in fighting a war. But it is far better to waste money than to lose the war. We have to get money into the banks by buying their assets, taking them off the books and reliquefying the banks and other lending institutions. As I have been suggesting for a while now, we should also start making guarantees on bank loans, absent fraud, and make sure the banks have no excuse not to lend.

That will keep businesses going. That will use the power and money-creation magic of the Federal Reserve to thaw the frozen rivers of commerce, to paraphrase Franklin Roosevelt. That will put the private sector’s ingenuity to work. In the end, the government might even make money off some of those toxic loans, the way the R.T.C. did.

Again, I do not doubt that much of what Mr. Obama now proposes has merit for reasons having little to do with the economic situation. But right now, this minute, we are in a financial-monetary crisis. It is begging for a financial-monetary solution, not mammoth public works, which might be useful down the road. Let’s start on the credit issues yesterday.

Deal reached on $827bn US stimulus package

US President Barack Obama on Saturday called on senators to complete passage of the $827bn stimulus package that was struck behind close doors late on Friday. US Senate Democrats agreed to cut their hopes for a larger economic stimulus package and support a compromise that would give Mr Obama an important but narrow victory.

In his weekly radio and YouTube address to the nation, Mr Obama said he was pleased that the bipartisan compromise, which may only result in the switched votes of three Republican senators, out of a total of 41, ended a turbulent week on a ”positive note”.

But he urged the upper chamber to accelerate its vote. It now seems likely that Congress will be unable to finalise a bill before the White House’s deadline of February 13. “Americans across the country are struggling and they’re watching to see if we’re equal to the task before us,” said the US president. “Let’s do whatever it takes to keep the promise of America alive in our time.”

Democrats said a vote on passage of the measure – drafted by leaders of a group of moderate lawmakers from both parties – and closely watched overseas as a sign of US commitment to help revive the world economy, would be held on Tuesday.

”We are pleased the process is moving forward and we are closer to getting Americans a plan to create millions of jobs and get people back to work,” said White House spokesman Robert Gibbs.

The tentative agreement followed news that the US economy lost a half-million jobs for the third month running in January, bringing the unemployment rate to the highest level since in 1992 and increasing the pressure for government action to stimulate the economy.

Official figures released on Friday showed that non-farm payrolls dropped by 598,000 last month, while the unemployment rate – 4.4 per cent before the credit crisis – jumped to 7.6 per cent, its highest level since 1992.

The figures were somewhat worse even than the dire outcome that the markets had expected. Economists had predicted a 525,000 fall in employment and a rise in the unemployment rate from 7.2 per cent to 7.5 per cent.

A revised Senate package will need to be reconciled with the House plan and then be reconfirmed by each house of Congress before being sent to the White House for signing.

Mr Obama on Friday seized on the dire news about the American jobs news market to criticise foot-dragging in the Senate. “It is inexcusable and irresponsible to get bogged down in distraction and delay while millions of Americans are being put out of work,” he said.

The US economy has now shed 3.6m jobs since the recession began in December 2007, out of a total of some 135m, with half the decline occurring during the past three months, according to the labour statistics office.

Economists said the figures showed that the US economy was sinking at least as quickly as in the worst recessions since the second world war. “Even allowing for the bigger population now, the decline is now as severe as the worst of the decline in the mid-1970s,” said Paul Ashworth, senior US economist at Capital Economics.

“With initial jobless claims still edging higher, February could be even worse.”

The president spoke as he announced the staffing of an economic advisory panel, which will include top leaders from business and the labour movement as well as former top regulatory officials and financial experts.

Mr Obama has been struggling to regain the political initiative on combating the economic downturn, amid rising concern in the White House that the Republicans have scored important victories in the public relations war over the stimulus bill.

“The bill that has emerged from Congress is not perfect,” Mr Obama said. But “it is the right size, it has the right scope and it has the right priorities”, he said.

With investors having anticipated a dire jobs report, financial markets reacted calmly to the payrolls data, and stocks rallied in expectation of the stimulus bill being agreed. The S&P 500 advanced 2.7 per cent, led by financial stocks such as Bank of America, which rose nearly 27 per cent.

Goodyear to head Temasek

Temasek Holdings named Charles “Chip” Goodyear, the former head of mining group BHP Billiton, as its new chief executive to replace Ho Ching, the wife of Singapore’s prime minister, in a surprise transition at the high-profile sovereign wealth fund on Friday.

Mr Goodyear’s appointment heralds a possible change of investment emphasis for the S$185bn (US$124bn) fund towards natural resources rather than financial services, a sector in which Temasek has recently made massive paper losses in banks, such as Merrill Lynch.

The move underscores the internationalisation of Temasek’s senior ranks, about 40 per cent of whom are non-Singaporean.

According to Temasek’s most recent annual report, two-thirds of its portfolio is in the financial and telecoms sectors – with just 5 per cent in natural resources.

Asian dealmakers in regular contact with Temasek say it is studying a number of investment proposals in the belief that the current market turmoil provides an opportunity to buy undervalued assets.

Mr Goodyear said that, having only joined the Temasek board this week, it was premature to comment on any changes he might introduce. He had a background in mergers and acquisitions as an investment banker with Kidder Peabody before joining BHP in 1999.

S. Dhanabalan, Temasek chairman, insisted that Ms Ho’s departure was not due to Temasek’s troubled investment record over the past year.

Ms Ho told the Financial Times that Temasek had been discussing succession planning as early as 2005 and the board had agreed that she would step down when Mr Goodyear could assume the post.

She added that her appointment in 2002 was made on the condition that she would remain for at least 10 years to carry out necessary reforms to the once-sleepy state holding company.

Mr Dhanabalan said the decision to replace Ms Ho coincided with a review of Temasek’s “long-term plans under various scenarios prompted by the economic downturn”.

The board had decided that “if we are to bring in new leadership, it would be as good a time as any to involve a new leader in this review”.

Ms Ho oversaw Temasek’s rapid expansion from being a Singapore-focused investment group to one that aggressively bought assets across Asia and leading developed economies.

Only a third of its portfolio is now held in Singaporean companies, including majority stakes in the country’s dominant airline and telecoms companies.

Ms Ho’s departure could help deflect domestic criticism of the government as Singapore confronts its worst post-war recession, since her status as the premier’s wife closely identified Temasek with the city-state’s long-ruling People’s Action party.

Temasek, set up by the government in 1974, has always said its investment decisions were made without state involvement.

Mr Goodyear will succeed Ms Ho on October 1.

UBS to report historic loss

ZURICH - SWITZERLAND'S largest bank, UBS, is expected to announce the biggest loss in the country's history when it releases on Tuesday its results for 2008, a year that saw the national icon tarnished by the subprime crisis.

But if there is a silver lining for the bank, which has been the target of a huge state rescue package, it lies in the fact that analysts say UBS has now hit bottom after its stock price fell 82 per cent since the summer of 2007.

For that reason, the loss of nearly 20 billion Swiss francs (S$25 billion) the bank is expected to announce for 2008 on Tuesday should not surprise markets, analysts say.

'The bank has already publicised its problems to a large degree and the fall in the stock price should not be so large,' said a trader in Zurich.

Last November, UBS posted a net profit of 296 million Swiss francs for the third quarter following a year of losses, but warned that a renewed loss was looming for the following quarter.

The numbers expected to be unveiled Tuesday are staggering, reflecting the fact that UBS was one of the banks hardest hit by the US subprime loan crisis.

Its annual net loss is believed to be between 14.1 and 19.4 billion Swiss francs, according to estimates from Swiss financial news agency AWP.

The loss for the fourth quarter alone is expected to be between 5.9 billion and 7.5 billion Swiss francs for the bank, which has already written down about 46.9 billion dollars' worth of assets.

'The fourth quarter was clearly difficult for UBS,' a Deutsche Bank commentary said, adding however that removing 'toxic' non-liquid assets with help from the Swiss central bank along with restructuring efforts meant 'UBS has passed the worst'.

Customer confidence in the bank has in turn taken a hit, posing a major problem for UBS, which has hemorrhaged capital as a result. Customers pulled some 83.6 billion Swiss francs from the bank in the third quarter.

Under a rescue plan unveiled in October, the Swiss government injected 6.0 billion francs in new capital to UBS and lent US$54 billion (S$80 billion) to the bank to transfer its non-liquid assets into a separate fund.

The massive spread of so-called 'toxic' assets - mainly linked to financial instruments now worth very little because of the US home-loan crisis - throughout the global banking system is at the core of the crisis since it broke in August of 2007.

The bank also said in January that it would slash more jobs from its trading unit, adding to 9,000 job reductions already announced over the past year. -- AFP

Tuesday, February 03, 2009

The Big Fix

The economy will recover. It won’t recover anytime soon. It is likely to get significantly worse over the course of 2009, no matter what President Obama and Congress do. And resolving the financial crisis will require both aggressiveness and creativity. In fact, the main lesson from other crises of the past century is that governments tend to err on the side of too much caution — of taking the punch bowl away before the party has truly started up again. “The mistake the United States made during the Depression and the Japanese made during the ’90s was too much start-stop in their policies,” said Timothy Geithner, Obama’s choice for Treasury secretary, when I went to visit him in his transition office a few weeks ago. Japan announced stimulus measures even as it was cutting other government spending. Franklin Roosevelt flirted with fiscal discipline midway through the New Deal, and the country slipped back into decline.

Geithner arguably made a similar miscalculation himself last year as a top Federal Reserve official who was part of a team that allowed Lehman Brothers to fail. But he insisted that the Obama administration had learned history’s lesson. “We’re just not going to make that mistake,” Geithner said. “We’re not going to do that. We’ll keep at it until it’s done, whatever it takes.”

Once governments finally decide to use the enormous resources at their disposal, they have typically been able to shock an economy back to life. They can put to work the people, money and equipment sitting idle, until the private sector is willing to begin using them again. The prescription developed almost a century ago by John Maynard Keynes does appear to work.

But while Washington has been preoccupied with stimulus and bailouts, another, equally important issue has received far less attention — and the resolution of it is far more uncertain. What will happen once the paddles have been applied and the economy’s heart starts beating again? How should the new American economy be remade? Above all, how fast will it grow?

That last question may sound abstract, even technical, compared with the current crisis. Yet the consequences of a country’s growth rate are not abstract at all. Slow growth makes almost all problems worse. Fast growth helps solve them. As Paul Romer, an economist at Stanford University, has said, the choices that determine a country’s growth rate “dwarf all other economic-policy concerns.”

Growth is the only way for a government to pay off its debts in a relatively quick and painless fashion, allowing tax revenues to increase without tax rates having to rise. That is essentially what happened in the years after World War II. When the war ended, the federal government’s debt equaled 120 percent of the gross domestic product (more than twice as high as its likely level by the end of next year). The rapid economic growth of the 1950s and ’60s — more than 4 percent a year, compared with 2.5 percent in this decade — quickly whittled that debt away. Over the coming 25 years, if growth could be lifted by just one-tenth of a percentage point a year, the extra tax revenue would completely pay for an $800 billion stimulus package.

Yet there are real concerns that the United States’ economy won’t grow enough to pay off its debts easily and ensure rising living standards, as happened in the postwar decades. The fraternity of growth experts in the economics profession predicts that the economy, on its current path, will grow more slowly in the next couple of decades than over the past couple. They are concerned in part because two of the economy’s most powerful recent engines have been exposed as a mirage: the explosion in consumer debt and spending, which lifted short-term growth at the expense of future growth, and the great Wall Street boom, which depended partly on activities that had very little real value.

Richard Freeman, a Harvard economist, argues that our bubble economy had something in common with the old Soviet economy. The Soviet Union’s growth was artificially raised by massive industrial output that ended up having little use. Ours was artificially raised by mortgage-backed securities, collateralized debt obligations and even the occasional Ponzi scheme.

Where will new, real sources of growth come from? Wall Street is not likely to cure the nation’s economic problems. Neither, obviously, is Detroit. Nor is Silicon Valley, at least not by itself. Well before the housing bubble burst, the big productivity gains brought about by the 1990s technology boom seemed to be petering out, which suggests that the Internet may not be able to fuel decades of economic growth in the way that the industrial inventions of the early 20th century did. Annual economic growth in the current decade, even excluding the dismal contributions that 2008 and 2009 will make to the average, has been the slowest of any decade since the 1930s.

So for the first time in more than 70 years, the epicenter of the American economy can be placed outside of California or New York or the industrial Midwest. It can be placed in Washington. Washington won’t merely be given the task of pulling the economy out of the immediate crisis. It will also have to figure out how to put the American economy on a more sustainable path — to help it achieve fast, broadly shared growth and do so without the benefit of a bubble. Obama said as much in his inauguration speech when he pledged to overhaul Washington’s approach to education, health care, science and infrastructure, all in an effort to “lay a new foundation for growth.”

For centuries, people have worried that economic growth had limits — that the only way for one group to prosper was at the expense of another. The pessimists, from Malthus and the Luddites and on, have been proved wrong again and again. Growth is not finite. But it is also not inevitable. It requires a strategy.


TWO WEEKS AFTER THE ELECTION, Rahm Emanuel, Obama’s chief of staff, appeared before an audience of business executives and laid out an idea that Lawrence H. Summers, Obama’s top economic adviser, later described to me as Rahm’s Doctrine. “You never want a serious crisis to go to waste,” Emanuel said. “What I mean by that is that it’s an opportunity to do things you could not do before.”

In part, the idea is standard political maneuvering. Obama had an ambitious agenda — on health care, energy and taxes — before the economy took a turn for the worse in the fall, and he has an interest in connecting the financial crisis to his pre-existing plans. “Things we had postponed for too long, that were long term, are now immediate and must be dealt with,” Emanuel said in November. Of course, the existence of the crisis doesn’t force the Obama administration to deal with education or health care. But the fact that the economy appears to be mired in its worst recession in a generation may well allow the administration to confront problems that have festered for years. That’s the crux of the doctrine.

The counterargument is hardly trivial — namely, that the financial crisis is so serious that the administration shouldn’t distract itself with other matters. That is a risk, as is the additional piling on of debt for investments that might not bear fruit for a long while. But Obama may not have the luxury of trying to deal with the problems separately. This crisis may be his one chance to begin transforming the economy and avoid future crises.

In the early 1980s, an economist named Mancur Olson developed a theory that could fairly be called the academic version of Rahm’s Doctrine. Olson, a University of Maryland professor who died in 1998, is one of those academics little known to the public but famous among his peers. His seminal work, “The Rise and Decline of Nations,” published in 1982, helped explain how stable, affluent societies tend to get in trouble. The book turns out to be a surprisingly useful guide to the current crisis.

In Olson’s telling, successful countries give rise to interest groups that accumulate more and more influence over time. Eventually, the groups become powerful enough to win government favors, in the form of new laws or friendly regulators. These favors allow the groups to benefit at the expense of everyone else; not only do they end up with a larger piece of the economy’s pie, but they do so in a way that keeps the pie from growing as much as it otherwise would. Trade barriers and tariffs are the classic example. They help the domestic manufacturer of a product at the expense of millions of consumers, who must pay high prices and choose from a limited selection of goods.

Olson’s book was short but sprawling, touching on everything from the Great Depression to the caste system in India. His primary case study was Great Britain in the decades after World War II. As an economic and military giant for more than two centuries, it had accumulated one of history’s great collections of interest groups — miners, financial traders and farmers, among others. These interest groups had so shackled Great Britain’s economy by the 1970s that its high unemployment and slow growth came to be known as “British disease.”

Dumb and Dumber 2.0

In his recent book, “The Venturesome Economy,” the Columbia University business professor Amar Bhidé offers a perspective on American innovation and prosperity that is remarkably optimistic, given the temper of the times. Among his data-driven findings: American consumers have long shown an “exceptional willingness” to buy, for instance, technology products before their utility is clear. Such “venturesome consumers” help spur companies and entrepreneurs to take the risks that lead to innovation because they know there is a market willing to take a roughly analogous risk that the next new thing will turn out to have been worth buying. “It isn’t even just a few leading-edge users,” Bhidé told me. “The venturesomeness is much more broad-based.”

Consumers seem risk-averse and hunkered down at the moment, and spending on the nonutilitarian is getting a bad reputation. But before you consign the venturesome consumer to the remainder bin of history, consider the surprisingly vibrant market for iPhone applications — the downloadable mini-programs that can be added to Apple’s famous mobile device. Many are free, but plenty are not, costing a dollar or two. (Apple takes a 30 percent cut of paid-application sales.) Functionality varies greatly as well, and it’s curious to note that one of the breakout hits has been a 99-cent item called iFart Mobile, from InfoMedia Inc. As you can pretty much deduce from the name, it enables your $200 to $300 mobile device to emit a variety of noises simulating flatulence. This 21st-century whoopee cushion hit No. 1 on the paid-application chart shortly before Christmas, stayed there for three weeks and remained in the Top 10 until mid-January. It has been purchased more than 350,000 times.

The obvious question, which could forgivably take the form of a plaintive howl, is why? Joel Comm, InfoMedia’s founder and a self-styled social-media guru with a book called “Twitter Power,” due out this month, gives some credit to what he calls his “direct publicity” to blogs, particularly TechCrunch. “That set it off,” he deadpanned. But he also says that the application’s success wasn’t just about marketing. “I would beg to differ on it being useless,” he replied to a perhaps-dismissive question. After suggesting that iFart might be used to prevent someone from stealing your phone or even to thwart a terrorist, he conceded that it’s simply a novelty — and noted that flatulence humor has many precedents. (“A man may break a word with you, sir; and words are but wind; ay, and break it in your face, so he break it not behind.” William Shakespeare, “The Comedy of Errors.”) And for a mere 99 cents, he argued, what venturesome consumer wouldn’t give it a try? Especially an American one. While the application has been sold in 60 countries, Americans have been the main customers.

This brings us back to Bhidé — whom I probably owe a public apology for dragging his serious research into this particular context. But Apple’s application story is on some level an extraordinary illustration of the willingness of consumers to give new things a whirl. The iPhone itself made its debut in the United States, where people stood in line to buy a product purely on faith that it would prove to be cool, useful or both. The application store didn’t exist back then, but it has since become one of the iPhone’s great attractions: Apple recently announced that there have been more than 500 million downloads of the more than 15,000 applications that have been made available since last summer. Some ­— like applications that turn the phone into a voice recorder — clearly add functionality. Many are games. But more than a few seem utterly utility-free: Another big seller, Koi Pond, simply makes your screen look like a watery, fish-filled environment.

Of course, utility is ultimately determined by consumers. Bhidé says Americans have always displayed venturesomeness and, even in grim economic stretches — like the early 1980s, when personal computers took off — have been motivated both by potential productivity enhancers and by entertainment. Clearly applications offer both rationales. And the combination of low prices and easy accessibility makes them a logical outlet in a fearful economy. “Even in bad times, people are looking for something to improve their lives,” Bhidé said. “If it isn’t the $400,000 house, it’s going to be something else.” And if that something happens to seem pretty dubious, or even flat-out dumb — well, perhaps that’s venturesomeness for you.

The Political Suspicions of 9/11

A coming episode of the acclaimed FX drama “Rescue Me” will tackle what may sound like a far-fetched plot line: that the attacks of Sept. 11 were an “inside job.” The actor who espouses the theories on camera, it turns out, also subscribes to them in real life.

Claims that Al Qaeda terrorists were not solely responsible for the attacks have a lively following on the Internet, including on YouTube, but the second episode of “Rescue Me’s” fifth season, starting in April, may represent the first fictional presentation of 9/11 conspiracy theories by a mainstream media company (FX is operated by the News Corporation).

“They’re not discussed a lot in the press,” Daniel Sunjata, the actor who plays Franco Rivera on “Rescue Me,” told reporters at a television press tour last month. He predicted that the episode would be “socio-politically provocative.”

In the episode, Mr. Sunjata’s character delivers a two-minute monologue for a French journalist describing a “neoconservative government effort” to control the world’s oil, drastically increase military spending and “change the definition of pre-emptive attack.” To put it into action, he continues, “what you need is a new Pearl Harbor. That’s what they said they needed.”

Mr. Sunjata surprised some of the TV reporters when he said that he “absolutely, 100 percent” supports the assertion that “9/11 was an inside job.”

The alternative theories “seem to me to make a lot more sense than the ones that are popularly espoused,” he said, calling it admirable that the conversation was allowed within “Rescue Me.”

Peter Tolan, an executive producer, said Mr. Sunjata is “well read” and has “done a lot of research.”

“Look, obviously not all of us buy in,” he told reporters. “But we went: ‘Wow, that’s interesting, and he’s passionate about it. Let’s use that.’ ”

Sept. 11 has been a touchstone for the series, which is set in a New York City firehouse. Denis Leary, who plays the lead character, said Mr. Sunjata’s character creates a rift among the fictional firefighters. Similar scenes have played out in actual firehouses in New York, he said, “where some of the younger members don’t even have to completely buy into the theory of 9/11 being an inside job, but want to discuss it.” BRIAN STELTER

Joblessness Jumps Sharply Among China’s Migrants

BEIJING — China’s government offered a telling indicator Monday of the slowdown in its once-galloping economy, announcing that more than one in seven rural migrant workers had been laid off or are unable to find work, twice as many as estimated just five weeks ago.

The new statistics followed a hint on Sunday by Prime Minister Wen Jiabao that the government might have to expand a recently announced $585 billion stimulus plan to deal “preemptively” with growing economic problems.

About 20 million out of China’s total estimated 130 million migrant workers — whose cheap labor underpins China’s manufacturing sector — have been forced to return to rural areas because of lack of work, according to a survey conducted by the Agriculture Ministry that was cited at a briefing.

In late December, employment officials estimated that at least 10 million migrant workers had lost their jobs in the third quarter of 2008 as waves of factories and businesses shut their doors.

The specter of millions more unemployed clearly has the Chinese government worried. The government has not released annual figures on social unrest — what it terms “mass incidents” — for several years, but foreign media reports suggest growing protests as unemployment spreads. A January article in Outlook Weekly, a magazine published by the government news agency Xinhua, predicted a record year for mass protests. “It is fair to say that the Chinese government takes very seriously the issue of employment of migrant workers,” said Chen Xiwen, a senior rural planning official who released the joblessness estimate at Monday’s briefing. “Guaranteeing employment and livelihood is to guarantee social stability,” he said.

Mr. Chen advised government officials to actively intervene to head off protests, rather than “shy away from coming out and let public security departments and police go to the front lines.” The military called upon its forces Sunday to exercise strict obedience to command in the face of challenges to social stability.

In a joint report issued Sunday, China’s cabinet and the Communist Party’s Central Committee warned 2009 will be “possibly the toughest year” since the Asian economic bubble burst in the late 1990s for economic growth and rural development, according to Xinhua. The report promised increased government aid to rural areas, including expanded subsidies to farmers, greater access to loans and more funding from Beijing for rural development projects.

Mr. Wen told The Financial Times on Sunday that China might enhance its $585 billion stimulus plan, announced only three months ago. It aimed to pump up economic activity enough to ensure 8 percent overall growth this year. China has pegged 8 percent growth as the minimal level desired to absorb surplus labor and ensure social stability.

“We may take further new, timely and decisive measures. All these measures have to be taken preemptively before an economic retreat,” Mr. Wen said in the interview.

Statistics suggest the retreat is already well under way. Growth slumped to 6.8 percent in the last quarter of 2008. Its annual rate of 9 percent for all of 2008, while still rapid compared to that of more developed economies, was the lowest in seven years.

Big Risks for U.S. in Trying to Value Bad Bank Assets

As the Obama administration prepares its strategy to rescue the nation’s banks by buying or guaranteeing troubled assets on their books, it confronts one central problem: How should they be valued?

Not just billions, but hundreds of billions of taxpayer dollars are at stake.

The Treasury secretary, Timothy F. Geithner, is expected to announce details of the new plan within weeks. Administration and Congressional officials say it will give the government flexibility to buy some bad assets and guarantee others in an effort to have a broad impact but still tailor the aid for different institutions.

But getting this right will not be easy. The wild variations on the value of many bad bank assets can be seen by looking at one mortgage-backed bond recently analyzed by a division of Standard & Poor’s, the credit rating agency.

The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors.

The bond analyzed by S.& P. is just one of thousands that the government might buy or guarantee should it go forward with setting up a “bad bank” that would acquire $1 trillion or more of toxic assets from banks.

The idea is that, free from the burden of carrying these bad assets, banks would start lending again and bolster the faltering economy. The bad bank set up by the government would, over time, sell the assets and recover some or most of what it had paid.

While the government is considering several approaches to helping the banks, including more capital injections, buying or insuring toxic assets is likely to be a centerpiece. Determining the right price for these assets is crucial to success. Placing too low a value would force institutions selling and others holding similar investments to register crushing losses that could deplete their capital and make it harder for them to increase lending.

But inflated values would bail out the companies, their shareholders and executives at the expense of taxpayers, who would swallow the losses if the government could not recoup what it had paid.

Some critics of the plan warn that the government should not buy the assets, because banks will try to get too high a price and leave taxpayers holding the bag.

“To date, the banks have stuck their heads in the sand,” said Lynn E. Turner, a former chief accountant for the Securities and Exchange Commission, “and demanded that they be paid the price of good apples for bad apples.”

But many believe that, given the depth of the problem and the fact that it keeps getting worse, the government has little choice.

Finance experts from Wall Street and academia are advising the administration on other options. To sidestep the thorny valuation problem, some have suggested that the bad bank acquire only assets that have already been marked down significantly and guarantee other assets, but officials would have just as difficult a task in determining how much to charge for insuring risky assets.

Economists predict that the cost of the program will most likely exceed the $350 billion remaining in the $700 billion Troubled Assets Relief Program that Congress approved in October.

They say the Obama administration may need upwards of $1 trillion in additional aid for banks — on top of the more than $800 billion the administration is seeking in an economic stimulus measure moving through Congress.

Many in Washington question whether the rescue has achieved its goal of stabilizing the financial markets. A report by the General Accountability Office on Friday concluded that whether the bailout program had been effective might never be known.

“While the package helped avoid a financial collapse, many are frustrated by the results — and rightfully so,” President Obama said in his weekly address on Saturday. “Too often taxpayer dollars have been spent without transparency or accountability. Banks have been extended a hand, but homeowners, students, and small businesses that need loans have been left to fend on their own.”

Mr. Obama and many lawmakers have expressed anger that banks that received the first batch of aid money do not appear to have increased their lending significantly, even as some firms have spent billions on bonuses, corporate jets and other perks. In two weeks the House will hold a hearing to ask chief executives of the eight largest banks about their spending controls.

Friday, January 30, 2009

Putin Turns Down Michael Dell’s Aid Offer

Perhaps Vladimir Putin is more of a Mac man.

After a speech Wednesday at the World Economic Forum in Davos, Mr. Putin, Russia’s prime minister, took some questions from Davos attendees. Michael Dell, the founder and chief executive of Dell, posed the first query. He asked how technology companies could help Russia make the best use of its talent and technology. Mr. Putin appeared less than impressed with the question.

“You see, the trick is that we don’t need any help,” Mr. Putin said, according to a video of the event on YouTube. “We are not invalids. We do not have limited capacity.”

Reports from the event suggest that the audience was taken aback by Mr. Putin’s aggressive remarks. The version of the event on YouTube, however, seems to put things in a less caustic light. (The reports also have Mr. Putin saying Russia does not have “limited mental capacity” rather than just “limited capacity” in an infrastructure sense, as the translation seems to imply.)

Mr. Putin appeared set on defending Russia as an advanced nation and not a developing country in need of aid. He celebrated the broad use of computers and Internet access at Russian schools and boasted about Russian software developers.

“Our programmers are some of the best in the world,” Mr. Putin said. “No one would contest that here –- not even our Indian colleagues.”

To that point, companies such as Sun Microsystems and Intel have long tapped Russia for help on some of their most sophisticated software projects. Freelance criminal software programmers are also known worldwide for their ability building malware.

In the video clip floating about, Mr. Dell did not have a chance to follow up on his original question, and Dell’s corporate public relations staff declined to comment on the matter.

Mr. Dell may have set himself up for a spirited response by prefacing his question with a jab at Mr. Putin’s politics.

“Mister Prime Minister, you spoke of the dangers of excessive government involvement, and I found myself really struck by that comment and surprised to hear that comment,” Mr. Dell said. “Six months ago, I would have never imagined hearing that comment from yourself, but I have to say I completely agree with you.”

Net Income Fell in Quarter for AT&T

AT&T, the telecommunications giant, reported on Wednesday that its fourth-quarter profit fell from a year ago but the figures were clouded by changes to the way it accounts for sales of the iPhone.

The company said net income for the fourth quarter was $2.4 billion or 41 cents a share, compared to $3.1 billion, or 51 cents a share, in the period a year earlier.

However, about a nickel of that difference was the up-front fee that AT&T pays for each iPhone it sells, rather than spreading that cost over time. AT&T started to install that accounting change this summer with the release of Apple’s latest iPhone model.

More broadly, AT&T reported mixed financial results for the fourth quarter. The company benefited by continued growth in the wireless business, and faced declines in the landline business.

Revenue for the fourth quarter was $31.1 billion up slightly from $30.4 billion in the quarter a year ago.

Excluding one-time charges, the company had a profit of 64 cents a share. On that basis, a consensus of Wall Street analysts had projected the company would earn 65 cents a share.

For the year, the company earned $12.9 billion, or $2.16 a share, up from $11.95 billion, or $1.94 a share, for 2007. Revenue rose 4.3 percent to $124 billion.

In the wireless side of its business, AT&T said it added 2.1 million subscribers in the quarter, compared with 2.7 million in the quarter a year ago, a drop in part attributable to the fact that most Americans already have phones and service plans.

But AT&T saw the revenue that it earned from each subscriber grow to $59.59, up from $57.35 a year ago. The growth came largely from increasing use of data.

On the landline side of the business, the company lost 1.56 million access lines in the fourth quarter and 6 million overall in 2008. Those figures are consistent with long-term trends as consumers and business move away from landlines and toward wireless products and services.

AT&T continued to see increased growth of its U-verse television service, which gained 264,000 subscribers in the fourth quarter compared with an increase of 105,000 a year ago. The company gained 236,000 broadband customers in the fourth quarter, down from 396,000 a year ago — a fall that is in part attributable to the challenging economy.

Ed Snyder, an industry analyst with Charter Equity Research, said the performance was more-or-less inline with Wall Street’s expectations.

“The wireline business was weak but the wireless business was a little better than expected,” he said. “No big surprises.”

Hurt by Weak Film Sales, Kodak Trims Work Force

ROCHESTER (AP) — The Eastman Kodak Company said Thursday it was cutting 3,500 to 4,500 jobs, or 14 percent to 18 percent of its work force, as it posted a fourth-quarter loss of $137 million on plunging sales of both digital and film-based photography products. Its stock tumbled nearly 30 percent.

Kodak, a 129-year-old manufacturer, said it lost 51 cents a share in the fourth quarter. That compares with a year-ago profit of $215 million, or 75 cents a share.

Sales slumped 24 percent to $2.43 billion, from $3.22 billion a year ago. The company had a sharp slowdown in demand for digital cameras and inkjet printers, lower royalties from patents and unfavorable foreign exchange rates.

Revenue from digital products dropped 23 percent to $1.78 billion, and traditional film-based revenue fell 27 percent to $652 million.

Excluding revamping charges and one-time items the loss came to $21 million, or 8 cents a share. Analysts surveyed by Thomson Reuters expected, on average, a profit of 21 cents a share and sales of $2.81 billion.

“There was a point when Kodak had too many people. Now it’s going the other way,” said Ulysses Yannas, a broker for Buckman, Buckman & Reid in New York. “I don’t see that there’s any fat left, which says that when and if this thing turns around, you’re going to have a wild ride.”

The latest cuts that Kodak aims to complete in 2009 could trim its ranks to 19,900, a level not reached since the 1930s Depression era. Its payroll peaked at 145,300 in 1988.

“The second half of 2008 will go down in history as one of the most challenging periods we have seen in decades,” Kodak’s chief executive, Antonio M. Perez, said in a statement.

Kodak’s shares dropped $2.08, to close at $4.99 in Thursday trading.

In all of 2008, Kodak earned $339 million, or $1.20 a share, down 50 percent from $676 million, or $2.35 a share, in 2007. Sales fell 9 percent to $9.42 billion, from $10.3 billion.

At Reader’s Digest, Layoffs Are Part of ‘Recession Plan’

As publishers reel from the recession and a plunge in advertising, the Reader’s Digest Association said Thursday that it would lay off close to 300 people, about 8 percent of its work force, as well as put employees on unpaid furloughs and suspend contributions to their 401(k) plans.

The company said it was not closing any of its United States magazines or other businesses, but trimming all of its operations in 79 countries. In addition to publishing domestic magazines like the flagship Reader’s Digest and Every Day With Rachael Ray, it has dozens of magazines overseas and popular Web sites like, and produces dozens of books annually.

It recently started a new magazine and membership organization, Purpose Driven Connection, in partnership with the Rev. Rick Warren, the popular author and minister.

“We have announced a comprehensive ‘recession plan,’ which is our internal roadmap for dealing with the extraordinary effects of this recession on consumer spending,” Mary G. Berner, the president and chief executive, said in a statement. “We hope and expect that most of these moves will be temporary.”

Ripplewood Holdings, a private equity firm, bought Reader’s Digest Association less than two years ago in a deal that greatly increased its debt burden. The new management has been more aggressive about marketing new products, selling ads and trimming costs.

The company said it was eliminating the equivalent of 280 full-time jobs, out of 3,500 worldwide. It employs about 1,300 people in the United States.

It said it would impose unpaid time off “where permitted by laws and agreements,” both this year and in 2010, to avoid further layoffs. It did not disclose the duration of the furloughs, or say how many employees would be affected.

Richest 400 Earned on Average 263 Million in 2006.

The income of the 400 wealthiest Americans swelled in 2006, soaring nearly 23 percent from the previous year, to an average of $263 million, according to data released Thursday by the Internal Revenue Service. Since 1996, this group has nearly doubled its share of all income earned in the United States.

The top 400 paid just more than $18 billion in federal income taxes in 2006, or an average of $45 million, on a record $105 billion in total income — the lowest effective tax rate in the 15 years since the agency began releasing such data.

That compares with nearly $1 trillion paid by all other individual taxpayers in 2006.

The gains for the richest took place amid a booming economy, in which hedge funds and private equity firms blossomed and the subprime lending machine went into high gear.

The rising wealth of the nation’s richest taxpayers will most likely intensify debate among tax and policy analysts about the equitability of the tax code, which analysts say favors the ultrawealthy.

Tax cuts enacted by the Bush administration that benefit the wealthy are set to expire by 2011.

“Until recently, we had a financial system that rewarded investors, and we have a tax system that does as well,” said Robert S. McIntyre, the director of Citizens for Tax Justice.

Now wealthy people, he said, pay income tax rates well below those of working-class citizens because of a myriad of tax breaks. A lower capital gains tax, now at 15 percent, down from 28 percent in 1997, benefits investors with big portfolios.

The average adjusted gross income in 2006 of more than $263 million for the top 400 taxpayers compared with an average of $214 million in 2005. It was three and a half times what they earned in 1996, which was $74 million.

And their average tax rate continued to a 15-year low of 17 percent.

But their contribution to federal coffers rose slightly, to nearly 1.8 percent of total contributions by all individual taxpayers. About 130 million taxpayers file returns each year.

The growth in income came primarily from dividends and interest income, not rising salaries and wages. Capital gains income jumped to 63 percent of the adjusted gross income of the richest 400, up from 58 percent in the previous year.

As a percentage of their income, salaries and wages fell to 7.4 percent of their total income, down from more than 12.5 percent just two years earlier. But taxable interest as a percentage of their income rose to nearly 7.8 percent, the highest level since the dot-com boom era of 1995.

The higher income also came from a sharp rise in claims for foreign tax credits, typically through privately owned entities. Such claims rose in 2006 to an average $2.5 million from $1.7 million the year earlier, and quadruple the level in 1996.

More than half, or nearly 54 percent, of all the itemized deductions taken by the wealthiest were related to their charitable contributions, a figure roughly unchanged since 1996.

And while the top 400 wealthiest earned more deductions from their charitable contributions, such gifts still account for just 5.19 percent of all itemized charitable contributions by all taxpayers.

2 Banks to Send Madoff Trustee $535 Million

The Bank of New York Mellon Corporation and JPMorgan Chase & Company have agreed to transfer about $535 million to the trustee liquidating the brokerage of Bernard L. Madoff, the man accused of engineering a global Ponzi scheme, according to court documents filed Thursday.

In the filings in United States Bankruptcy Court in New York, the trustee and the banks asked a judge to approve the transfers at a hearing on Feb. 4.

The move is part of the trustee’s effort under the Securities Investor Protection Act to gather assets to be returned to defrauded investors.

Bank of New York Mellon would send a wire transfer of about $301.4 million, and JP Morgan Chase would send about $233.5 million to the court-appointed trustee by Feb. 6, the documents said. The accounts are held by Mr. Madoff’s brokerage company.

A New York lawyer, Irving H. Picard, is the trustee overseeing the liquidation of Bernard L. Madoff Investment Securities, which collapsed after Mr. Madoff was arrested and charged last month with securities fraud.

Mr. Madoff, a former chairman of the Nasdaq stock market, is under house arrest and 24-hour surveillance in his luxury Manhattan apartment as criminal and civil authorities investigate his global operations, which are said to have lost $50 billion.

Eli Lilly, Reporting a Loss, Cites Imclone Acquisition

Eli Lilly reported flat fourth-quarter sales Thursday and said earnings fell on charges related to its acquisition late last year of ImClone Systems, the biotechnology company.

The company posted a loss of $3.63 billion, or $3.31 a share, in contrast to a profit of $854.4 million, or 78 cents a share, in the period a year earlier.

Excluding one-time items like the $4.73 billion charge related to its acquisition of ImClone, Lilly earned $1.07 a share, slightly better than the $1.05 expected by analysts.

Global sales of $5.21 billion were little changed from a year earlier and were below analysts’ average forecast of $5.39 billion, according to Reuters Estimates. Sales would have risen 3 percent if not for the stronger dollar, which lowers the value of overseas sales.

Sales of the schizophrenia drug Zyprexa, the company’s biggest product, fell 10 percent, to $1.15 billion on continuing lower demand in the United States. Sales also declined overseas, where the product previously had shown strength.

Zyprexa has been hurt by generic competition in Germany and Canada and concerns that the pill causes weight gains that can increase the risk of diabetes.

The drug is expected to face generic competition in the United States in October 2011.

Lilly hopes an experimental blood clot preventer called prasugrel will soon by approved by the Food and Drug Administration and produce blockbuster sales that can help offset expected plunging sales of Zyprexa.

A federal advisory panel of doctors will review prasugrel, which has decreased the risk of blood clots in clinical trials but raised the risk of dangerous bleeding, next week. The agency has delayed a decision on the medicine twice.

Fourth-quarter sales of Cymbalta, a depression drug, rose 15 percent, to $721 million, and sales of a cancer drug, Alimta, rose 31 percent, to $319 million.

Shares of Lilly, which is based in Indianapolis, fell $1.12, to $37.97.

Shares in Sony, Nintendo and Toshiba Fall After Warnings on Outlook

HONG KONG — Shares in the Japanese electronics giants Toshiba and Nintendo plunged on Friday after the companies warned late on Thursday of disappointing earnings ahead.

The problems facing Japanese companies were highlighted after a government report early Friday showed a record decline in industrial production last month.

Toshiba, Nintendo, Sony and NEC Electronics, some of the biggest names in consumer electronics and technology, all reported disappointing results and gloomy outlooks on Thursday, further proof that the slowdown had expanded well beyond big-ticket items like cars and houses, and revealing the extent of consumer pessimism around the globe.

Toshiba, whose products span chips to household appliances, said it now expected a record net loss of 280 billion yen ($3.13 billion) for the business year ending in March, rather than the 70 billion yen profit it had forecast in September, setting off a decline of 14.8 percent in its share price on Friday.

Toshiba lost 121.1 billion yen in the last three months of 2008 and said it would halve capital spending, to 230 billion yen.

“Demand does not seem to be getting any better from the fourth quarter on,” Naofumi Hara, senior vice president at Sony, told a news conference, according to Reuters.

As the global economic downturn drags on, ordinary consumers everywhere, scared by mounting job losses and the stock market rout last year, have slowed spending to a trickle. Companies, too, have cut back investments on anything from factory machinery and research to photocopiers, computers, information technology upgrades and business travel.

As a result, companies in virtually every sector of the economy, from the software giant SAP to automakers around the world, have had to lay off workers, further depressing consumers’ confidence.

Government data on Friday showed Japanese industrial production fell a record 9.6 percent in December, underscoring the point that Japan’s recession deepened much more rapidly than most observers had expected during the last three months of 2008.

Analysts are skeptical that a recovery will come any time soon.

“Given the current severe market conditions, Toshiba’s expectation of the time it will need to recover its profitability and financial profile may prove overly optimistic,” Kazusada Hirose, a senior analyst at the ratings agency Moody’s wrote on Thursday after downgrading the company.

Adding to the gloom Thursday, the games maker Nintendo cut its outlook, setting off a 12.4 percent plunge in its shares on Friday.

Although Nintendo remains one of the few Japanese consumer electronics giants to still expect a handsome profit for the current business year, its popular Wii game console has turned out not to be as recession-proof as many analysts had thought. Nintendo now expects profits of only 230 billion yen, rather than 345 billion yen, for the current business year.

NEC Electronics, which makes chips, warned of a full-year net loss of 65 billion on Thursday and announced job cuts.

And Sony, the sprawling consumer electronics company behind the Walkman, PlayStation 3 game console and Bravia TV sets, last week issued its second profit warning in three months. The company now expects a net loss of 150 billion yen, rather than a profit of 150 billion yen, for the year through March.

Quarterly results announced by Sony on Thursday revealed that the bulk of the bleeding stems from the electronics division. That includes Sony’s television brands, which are suffering both from collapsing demand and fierce price pressure as competition from other manufacturers heats up.

Sony shares, which fell sharply after last week’s profit warning, slid another 5 percent on Friday.

The announcements, along with the latest economic data, underscore the depth of Japan’s recession in the last three months of last year.

Japanese companies have been racing to cut output and lower costs, and more job cut announcements and profit warnings are expected to become a familiar feature of the current earnings season. NEC Electronics and Toshiba between them announced on Thursday that they were shedding 5,200 temporary staff, adding to the thousands of job cuts already announced by Sony and other Japanese companies.

Disney’s TV Unit Will Cut 400 Jobs

The television division of the Walt Disney Company announced Thursday that it would eliminate about 400 jobs from its work force of 6,500 to 7,000, as part of a cost-cutting effort to deal with what it called a weakening economy.

The job cuts will affect all the departments of the Disney-ABC Television Group, as the division is called. Disney-ABC did not release any specific breakdown of the job cuts, though one ABC News executive said that 37 news jobs were included in the reductions.

No ABC executives would offer any other details of the layoffs on the record, but one senior executive said that although 400 jobs were being eliminated, only 200 active workers will be laid off. The other 200 jobs had been vacant and will not be filled, the executive said.

The announcement comes one day after another Disney TV division, the cable sports channel ESPN, announced it would eliminate 200 jobs within the next year. ESPN did not rule out layoffs but said the goal was to reach that number by attrition.

Both Anne Sweeney, the president of the Disney-ABC Television Group, and George Bodenheimer, the ESPN chief executive, cited worsening economic conditions for the job contractions. Mr. Bodenheimer also said he was freezing the salaries of the channel’s top executives.

In a memo to ABC employees, Ms. Sweeney said, “After months of making hard decisions across our businesses to help us adjust to a weakening economy, we’re now faced with the harsh reality of having to eliminate jobs in some areas.”

Ford Reports a Record $14.6 Billion Loss for 2008

DETROIT — After closing the books on a $14.6 billion loss in 2008 — the worst annual result in its 105-year history — Ford Motor Company said Thursday that it would draw the last $10.1 billion from its lines of credit to add to its cash hoard so that it could survive the increasingly bleak vehicle market.

Ford’s chief executive, Alan R. Mulally, said the company, which tapped credit markets to build its cash reserves well before the economy soured, remained determined to finance its operations without the federal aid that was extended to its crosstown rivals, General Motors and Chrysler.

“I think there’s more awareness than ever that Ford is on a very different path,” Mr. Mulally said in an interview.

He added that it had become a marketing advantage for Ford with consumers shopping for an American car. “Our dealers have told us that people know that Ford is in a better place,” Mr. Mulally said.

Ford joined G.M. and Chrysler in December in asking Washington for a combined $34 billion in loans, but has since backed away from seeking its portion of the request. G.M. and Chrysler, however, needed $17.4 billion in emergency loans from the Treasury Department to avoid filing for bankruptcy.

Both G.M. and Chrysler must deliver plans to government officials by Feb. 17 to show they are pursuing the drastic restructuring actions that were required of them as a condition of receiving the federal loans.

Ford’s miserable sales in 2008 worsened sharply in the fourth quarter, with nearly $6 billion of the total $14.6 billion loss coming in the fourth quarter. It was a year in which Ford’s revenue declined almost 20 percent, and its cash reserves declined by $21 billion.

The automaker ended 2008 with $13.4 billion in available cash, which it will augment by tapping into its credit lines for another $10.1 billion.

Ford’s financial health owes considerably to its decision in late 2006 to mortgage its assets and arrange long-term borrowing before the credit markets dried up.

Now, with more than $23 billion in hand, Ford can keep spending billions of dollars on new products during what promises to be another tough year for vehicle sales around the world.

Ford said Thursday that it expects the United States market to total 11.5 million to 12.5 million vehicles in 2009. Last year, industry sales fell 18 percent, to 13.2 million vehicles.

The company is also forecasting lower sales in the already depressed regions of Europe and South America, and little if any growth in Asia.

Still, Mr. Mulally reiterated his pledge that Ford would break even or become profitable by 2011.

To achieve that, Ford will continue its cost-cutting efforts, which have reduced its global employment by more than 40,000 workers in the last three years.

The company said it would reduce its structural costs by $4 billion in the coming year, primarily through cutting salaried personnel and streamlining its global manufacturing and engineering operations.

By 2010, Ford expects that 40 percent of its vehicles sold in North America will have platforms shared with its European operations. “And we expect there will be complete alignment by 2013,” Mr. Mulally said.

More of Ford’s future products will be smaller, more fuel-efficient cars. The company will introduce several important products this year, including a redesigned Taurus sedan and a new hybrid gas-electric version of the Fusion midsize car.

Yet, by most accounts, Ford will be introducing its newest models in a market that appears to be getting worse by the month.

Auto sales plummeted 35 percent in the fourth quarter of last year, and analysts are predicting another sizable drop for January.

Industry sales in January could fall to as low as 730,000 vehicles — an 18 percent decrease from December and a 30 percent decline from the same month last year, according to the auto-buying Web site

Ford and other automakers have cut their production substantially in recent months to match the drop in demand.

Scaling back production until the economy recovers is critical to Ford’s overall goals of conserving cash and avoiding the need to seek government assistance.

“Nothing is more important than matching our production to the real demand,” Mr. Mulally said.

Although Ford is not facing a government directive to cut its labor costs and reorganize its long-term debt load, the company is working toward that end in the same manner as G.M. and Chrysler.

Mr. Mulally said Ford expected to match any concessions that G.M. and Chrysler were able to negotiate from the United Automobile Workers union and their lenders.

“We are having ongoing conversations with all our stakeholders,” he said. “We will not be disadvantaged.”

Six Errors on the Path to the Financial Crisis

WHAT’S a nice economy like ours doing in a place like this? As the country descends into what is likely to be its worst postwar recession, Americans are distressed, bewildered and asking serious questions: Didn’t we learn how to avoid such catastrophes decades ago? Has American-style capitalism failed us so badly that it needs a radical overhaul?

The answers, I believe, are yes and no. Our capitalist system did not condemn us to this fate. Instead, it was largely a series of avoidable — yes, avoidable — human errors. Recognizing and understanding these errors will help us fix the system so that it doesn’t malfunction so badly again. And we can do so without ending capitalism as we know it.

My list of errors has six whoppers, in chronologically order. I omit mistakes that became clear only in hindsight, limiting myself to those where prominent voices advocated a different course at the time. Had these six choices been different, I believe the inevitable bursting of the housing bubble would have caused far less harm.

WILD DERIVATIVES In 1998, when Brooksley E. Born, then chairwoman of the Commodity Futures Trading Commission, sought to extend its regulatory reach into the derivatives world, top officials of the Treasury Department, the Federal Reserve and the Securities and Exchange Commission squelched the idea. While her specific plan may not have been ideal, does anyone doubt that the financial turmoil would have been less severe if derivatives trading had acquired a zookeeper a decade ago?

SKY-HIGH LEVERAGE The second error came in 2004, when the S.E.C. let securities firms raise their leverage sharply. Before then, leverage of 12 to 1 was typical; afterward, it shot up to more like 33 to 1. What were the S.E.C. and the heads of the firms thinking? Remember, under 33-to-1 leverage, a mere 3 percent decline in asset values wipes out a company. Had leverage stayed at 12 to 1, these firms wouldn’t have grown as big or been as fragile.

A SUBPRIME SURGE The next error came in stages, from 2004 to 2007, as subprime lending grew from a small corner of the mortgage market into a large, dangerous one. Lending standards fell disgracefully, and dubious transactions became common.

Why wasn’t this insanity stopped? There are two answers, and each holds a lesson. One is that bank regulators were asleep at the switch. Entranced by laissez faire-y tales, they ignored warnings from those like Edward M. Gramlich, then a Fed governor, who saw the problem brewing years before the fall.

The other answer is that many of the worst subprime mortgages originated outside the banking system, beyond the reach of any federal regulator. That regulatory hole needs to be plugged.

FIDDLING ON FORECLOSURES The government’s continuing failure to do anything large and serious to limit foreclosures is tragic. The broad contours of the foreclosure tsunami were clear more than a year ago — and people like Representative Barney Frank, Democrat of Massachusetts, and Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, were sounding alarms.

Yet the Treasury and Congress fiddled while homes burned. Why? Free-market ideology, denial and an unwillingness to commit taxpayer funds all played roles. Sadly, the problem should now be much smaller than it is.

LETTING LEHMAN GO The next whopper came in September, when Lehman Brothers, unlike Bear Stearns before it, was allowed to fail. Perhaps it was a case of misjudgment by officials who deemed Lehman neither too big nor too entangled — with other financial institutions — to fail. Or perhaps they wanted to make an offering to the moral-hazard gods. Regardless, everything fell apart after Lehman.

People in the market often say they can make money under any set of rules, as long as they know what they are. Coming just six months after Bear’s rescue, the Lehman decision tossed the presumed rule book out the window. If Bear was too big to fail, how could Lehman, at twice its size, not be? If Bear was too entangled to fail, why was Lehman not?

After Lehman went over the cliff, no financial institution seemed safe. So lending froze, and the economy sank like a stone. It was a colossal error, and many people said so at the time.

TARP’S DETOUR The final major error is mismanagement of the Troubled Asset Relief Program, the $700 billion bailout fund. As I wrote here last month, decisions of Henry M. Paulson Jr., the former Treasury secretary, about using the TARP’s first $350 billion were an inconsistent mess. Instead of pursuing the TARP’s intended purposes, he used most of the funds to inject capital into banks — which he did poorly.

To illustrate what might have been, consider Fed programs to buy commercial paper and mortgage-backed securities. These facilities do roughly what TARP was supposed to do: buy troubled assets. And they have breathed some life into those moribund markets. The lesson for the new Treasury secretary is clear: use TARP money to buy troubled assets and to mitigate foreclosures.

Six fateful decisions — all made the wrong way. Imagine what the world would be like now if the housing bubble burst but those six things were different: if derivatives were traded on organized exchanges, if leverage were far lower, if subprime lending were smaller and done responsibly, if strong actions to limit foreclosures were taken right away, if Lehman were not allowed to fail, and if the TARP funds were used as directed.

All of this was possible. And if history had gone that way, I believe that the financial world and the economy would look far less grim than they do today.

For this litany of errors, many people in authority owe millions of Americans an apology. Richard A. Clarke, former national security adviser, set a good example when he told the commission investigating the 9/11 attacks that he wanted victims’ families “to know why we failed and what I think we need to do to ensure that nothing like that ever happens again.” I’m waiting for similar words from our financial leaders, both public and private.