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Wednesday, November 12, 2008

Wednesday News Roundup

The US government is bankrupting our economy by burning through hundreds of billions of taxpayer dollars in the form of bailouts to Paulson and Cheney cronies. American Express is getting bailout money? Seriously? American Express could vanish off the face of the Earth and we'd hardly notice. I think it telling though, that American Express' customers can't pay their bills.

The government needs to focus on saving businesses that could still be saved and are worth saving. And Robert Reich has some choice words about the bailout ...

When a big company that gets into trouble is more valuable living than dead, there used to be a well-established legal process for reorganizing it - called chapter 11 of the bankruptcy code. Under it, creditors took some losses, shareholders even bigger ones, some managers' heads rolled. Companies cleaned up their books and got a fresh start. And taxpayers didn't pay a penny.

So why, exactly, is the Treasury substituting government bailouts for chapter 11? Even if you assume Wall Street's major banks and insurance giant AIG are so important to the national and global economy that they can't be allowed to fail, that doesn't mean they have to be bailed out. They could be reorganized under bankruptcy protection. True, their creditors, shareholders, and executives would take bigger hits than they're taking now that taxpayers are bailing them out. But they're the ones who took the risk. We didn't.

The Treasury seems to have lost sight of its real client. It's client is not the creditors, shareholders, or executives of any of these firms. Its sole client is the American people.

So is the automobile industry one of those industries that should be saved with bailout money rather than through bankrupcty? I don't know. But I do notice that people who were amazingly eager to throw bailout money at banks, money which then went to pay for fatcats' bonuses, are lining up in lockstep to say the automobile industry can't be saved.

Here are some news stories I find interesting today ...

Best Buy Cuts Full-Year Profit Forecast on `Seismic' Slowdown in Spending Best Buy Co., the largest U.S. electronics retailer, said full-year profit will be lower than it expected because of the recent turmoil in the financial markets and the U.S. economic slump
U.S. Slump May Be Longest in Three Decades as Economy `Fell Off a Cliff' The U.S. downturn will be the longest in three decades, and the drought in consumer spending may be the worst ever, according to economists surveyed by Bloomberg News.

BHP's West Australian Iron Ore Exports Decline 7.6% as China Demand Wanes BHP Billiton Ltd., the world's biggest mining company, exported 7.6 percent less iron ore from Western Australia in October amid a slowdown in demand from China.
Retail Sales Climb 22% in China as Crisis Fails to Damp Consumer Spending China's retail sales rose 22 percent, close to the fastest pace in nine years, signaling that domestic demand may help the fourth-biggest economy withstand a looming global recession.

Oil Falls to 20-Month Low on Expected U.S. Supply Gain as Demand Weakens Crude oil fell to a 20-month low on forecasts that a report will show U.S. crude inventories grew last week as the worsening economy wears down energy demand.
World Must Find a Kuwait a Year to Meet Demand, Replace Fields, IEA Says The world must find an extra 64 million barrels a day of oil production by 2030, equivalent to replacing Kuwait's output every year, to meet demand growth and counter the decline of existing fields, the International Energy Agency said.
China Plans to Spend at Least $27 Billion on Energy Projects in Future China, the world's second-biggest oil consumer, will spend at least 188.5 billion yuan ($27 billion) to build six energy projects including a natural gas link and nuclear power plants to spur economic expansion.
OPEC President: We May Cut Again If Oil Falls Further
"If the prices continue their decline most probably OPEC will have to take a further decision on a cut in supply," Khelil told Reuters.
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