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...result was a parallel system almost as big as the banking system that had none of its post-Depression stabilizing pillars: no deposit insurance, no access to the lender of last resort, no resolution regime and only a patchworky, inadequate framework of restraints for risk-taking. In the old system, Americans' deposits in regular banks financed the system. In the shadow banking system, Americans' deposits in money market funds provided the asset anchor. As AIG teetered on the brink in mid-September, a run began by institutional investors on the money market funds...
...loans. Fueled by the shadow system's demand for loan-based derivatives, enough regular banks issued lousy loans that now they too are failing, hence the fate of Washington Mutual and Wachovia. In the worst case of an unchecked, full-blown panic, even banks that operated cautiously within the post-1929 safeguards could be vulnerable. At that point, Paulson and Bernanke would have to resort to even more extreme measures...
...distress is also potent proof of the crisis’ gravity. Betting on the decline of selected financial firms’ stocks, known in finance as “short-selling,” is now banned in the United States and Britain. According to South China Morning Post, Chinese banks were recently told to suspend lending to U.S. financial institutions. The weak dollar caused import prices to surge by 20 percent from last year, which should have helped local enterprises; it has provided an advantage to some businesses but it also increased prices for most American consumers...
...advantages of a South Dakota childhood is that there is so little around you intellectually that you reach out for broader sources of material. I was always aware of what was going on in New York, or other power centers." - Brokaw in the Saturday Evening Post...
...surprise to many that much of Africa is doing rather nicely, in some cases recording healthier economic expansion than nations in the industrialized world. Even amid the financial meltdown in the West and dire predictions of a global recession, the International Monetary Fund estimates that Africa will post economic growth of 6.5% this year, although the world credit crisis could trim that to 5%. And the Organization for Economic Cooperation and Development reports that a larger share of the money coming into Africa since 2006 has been investment by entrepreneurs seeking profit rather than...