October 14, 2008

CRASH TALK OCTOBER 14

Steve Lohr, International Herald Tribune - If the U.S. government moves ahead with a plan to take ownership stakes in American banks, as seems likely, it would be an exceptional step - but not an unprecedented one. . . In 1917, the government seized the railroads to make sure goods, armaments and troops moved smoothly in the interests of national defense during World War I. Bondholders and stockholders were compensated, and railroads were returned to private ownership in 1920, after the war ended.

During World War II, Washington seized dozens of companies including railroads, coal mines and, briefly, the Montgomery Ward department store chain. In 1952, President Harry Truman seized 88 steel mills across the country, asserting that unyielding owners were determined to provoke an industry-wide strike that would cripple the Korean War effort. That forced nationalization did not last long, since the Supreme Court ruled the action an unconstitutional abuse of presidential power.

In banking, the U.S. government stepped in to take an 80 percent stake in the Continental Illinois National Bank and Trust in 1984. Continental Illinois failed in part because of bad oil-patch loans in Oklahoma and Texas. As one of the country's top 10 banks, Continental Illinois was deemed "too big to fail" by regulators, who feared wider turmoil in the financial markets. Continental was sold to Bank of America in 1994.

Yet the nearest precedent for the plan the Treasury is weighing, finance experts say, is the investments made by the Reconstruction Finance Corporation in the 1930s. The agency, established in 1932, not only made loans to distressed banks but also bought stock in 6,000 banks, at a total cost of about $3 billion, said Richard Sylla, an economist and financial historian at the Stern School of Business at New York University. . . When the economy eventually stabilized, the government sold the stock to private investors or the banks themselves.

BBC -
Concern about the economy is keeping about half of people in the UK awake at night, an online poll suggests. Nearly half of the 1,000 men and women surveyed by NetDoctor said they were sleeping worse now than a year ago. One-fifth of them are regularly getting fewer than five hours sleep a night and a quarter wake up more than three times a night, the survey suggests. Stress was cited as a major factor, with two-thirds blaming money and work worries for their insomnia. Snoring was also a contributing factor, with 30% complaining that their partner's snoring keeps them awake at night.

0 Comments:

Post a Comment

<< Home