Foundations of Modern Capitalism

I guess Europeans are as quick to move as Americans are-- they finally got around to a statement. From today's London Times: "At a summit in Paris, the 15 countries using the euro pledged that no bank will be allowed to fail. The European accord follows Saturday's announcement by the Group of Seven industrialised countries of an "action plan" to thaw frozen credit markets. The two moves may be the prelude to a wider international gathering of world leaders. George W Bush has suggested he may convene such a meeting later this week where the very foundations of modern capitalism may be reassessed." George Bush... where have I heard that name.... Who is that again?

Paul Krugman, the Cassandra of the Financial World: "Last month, when the U.S. Treasury Department allowed Lehman Brothers to fail, I wrote that Henry Paulson, the Treasury secretary, was playing financial Russian roulette. Sure enough, there was a bullet in that chamber: Lehman's failure caused the world financial crisis, already severe, to get much, much worse. The consequences of Lehman's fall were apparent within days, yet key policy players have largely wasted the past four weeks. Now they've reached a moment of truth: They'd better do something soon — in fact, they'd better announce a coordinated rescue plan this weekend — or the world economy may well experience its worst slump since the Great Depression."

Reuters has more on the global financial crisis, as it gets bigger than just the G7 countries...for obsessive crisis-monitors like me. A handy collection of international articles on who's going down. Apparently, if you're a poor country to start with, it's like being a poor person watching this crisis. "African economies have so far been only indirectly hit by global market turmoil but tighter credit markets may impact funding for projects, even profitable ones, the International Monetary Fund said on Friday."

And on domestic shores, GM and Chrysler appear to be in negotiations for a merger! "A merger would be a historic event, with two of the most iconic names in American industry coming together to survive in an increasingly difficult environment. Both have roots dating back decades in Detroit and, with Ford, long dominated the auto industry — until Japanese and other foreign car makers began making inroads into the American market...General Motors' stock has fallen from more than $43 a share last year to less than $5, and it is burning through its cash hoard at a rapid rate. Chrysler, as a private company, no longer needs to report its finances."

By the way, during the debate, McCain claimed that he too had written a letter warning of the dangers of a Fannie Mae/Freddie Mac housing market meltdown, "I'd like you to see the letter that a group of senators and I wrote warning exactly of this crisis. Senator Obama's name was not on that letter." ProPublica asks, um.... which letter was that? T'would be interesting if the McCain campaign could provide us the letter.