October 2008

Oct 1  Harold Meyerson of the Washington Post writes that "A new order, in which Wall Street plays a diminished role and Washington a larger one, is aborning, but the process is painful and protracted." He describes the old order as "Reagan-age institutions built on the premise that the market can do no wrong and the government no right."

Oct 2  Chancellor Angela Merkel of Germany meets in Russia with President Dmitry Medvedev. They want to strengthen economic ties between their nations. Medvedev says that the era of US global economic dominance is over and that the world needs a "more just" financial system. He adds that a new Cold War will be as impossible as bringing back the Berlin Wall.

Oct 2  India's government bans smoking in public buildings and elsewhere in public. Many are ignoring the ruling.

Oct 2  Regarding Iraq, General Petraeus says that he might never use the word "victory." In today's debate with Joe Biden, vice-presidential candidate Sarah Palin says "We've got to win in Iraq." She lauds Petraeus as a general and "hero" and told Biden, "Your plan is a white flag of surrender in Iraq and that is not what our troops need to hear today that's for sure."

Oct 2  According to Factcheck.org, "An Obama-Biden TV ad once again twists McCain's position on Social Security."

Oct 3  Congress passes and President Bush signs into law a plan to "rescue" the economy. Some call it a "bailout" of Wall Street, and some are sorry that Congress and the president are not leaving the markets to mend the economy. But there are reports of urgency because people can't borrow money to make payroll, mortgage payments, buy cars and people are losing their jobs.

Oct 5  Sixty Minutes explains the nation's economic crisis. It began with Lehman Brothers, Bear Sterns, AIG and others selling repacked mortgages as investment securities – investments that involved "hundreds and hundreds of pages" of flawed legalese which few read. These sales involved a credit default swap as a risk-saving device. Because it was a swap and not insurance there was no requirement of adequate capital reserves – a gimmick that avoided government regulation. Executives making millions per year bet money that they did not have without fully grasping what they were doing. (cbsnews.com, "Sixty Minutes, Shadow Markets")

Oct 5  The Los Angeles Times reports that in rural Brazil girls as young as fifteen have been thrown into jail routinely with male prisoners, gang raped and forced into sex in exchange for food, with prison police being complicit or indifferent.

Oct 6  In a synod (assembly) of a couple of hundred cardinals from the US and around the globe, Pope Benedict plans to examine what he describes as a declining interest in the Bible. The assembly will be more than a sociological seminar. Pope Benedict is opening the gathering by reading the Book of Genesis. He will be followed by others in a marathon read. It will be broadcast by Italian state television.

Oct 6  In recent decades Icelandic financiers have become big international players in the world's financialization boom, and now, with an international banking crisis, Prime Minister Geir Haarde announces that there is a "very real danger ... that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could have been national bankruptcy." Iceland's currency falls about 30 percent to record lows against the euro as the country tries to avert financial meltdown.

Oct 6  The dollar rises against the euro. In Argentina, stocks drop more than 9 percent, in Russia 20 percent before trading is suspended. Reuters describes European stocks as posting "their worst day on record" and describes this as the result of "fears that the credit crisis will not be contained." US shares drop around 4 percent. Shares in China drop 5.23 percent. Gold remains at around $850 an ounce, down from a high of $1,000 an ounce in March.

Oct 7  In recent days the McCain-Palin candidacy has tried to advance itself by attacking Obama's character, using a guilt by association strategy. To today this has failed. In a Gallop poll taken before the second McCain-Obama debate, McCain has dropped to eleven percent behind Obama. A new low.

Oct 9  In Malawi, the introduction of irrigation, crop diversification, science and soil management is producing a new abundance of crops and new hope.

Oct 9  Iceland suspends stockmarket trading for two days and the government takes over the country's largest bank – the third takeover in a week. The government acquires new powers to create a bank to take over domestic banking operations. Iceland had risen in per capita GDP above that of Switzerland, and its economy was considered a success, but now Icelanders are stunned. People have lost money, but a spirit of unity and hope has spread among the population. Iceland's most famous rocker, Bubbi Morthens, says Iceland is "experiencing a new dawn."

Oct 10  Factcheck.org: "In a TV ad, McCain says Obama 'lied' about his association with William Ayers, a former bomb-setting, anti-war radical from the 1960s and '70s. We find McCain's claim to be groundless. New details have recently come to light, but nothing Obama said previously has been shown to be false."

Oct 10  In China, local authorities announce the arrest of a suspect who produced more than 600 tons of fake protein powder laced with melamine. The powder had been added to milk.

Oct 10  Investment advisors in the US have been slow in coming to terms with the fact that the economy is in the kind of dificulty that produces a steeply declining stock market. This week people with stocks are dismayed. The investing public has been described as like mushrooms: left in the dark and fed manure. Stocks represented by the Dow Jones Industrial Average end the week down 18.2 percent. And today, Asian and European markets are hit by more panic selling. The Dow is down 40 percent from its high last year. Small investors, including people with retirement accounts, are hurting.

Oct 12  On television, Sunday talk shows feature economists. The world has gotten where it is now because of too much consumer spending relative to how much is being produced and too much borrowing. A big bubble has burst. China will suffer because consumption elsewhere is in decline, but China has been doing well because it has been producing and selling more than it has been consuming. The US has been doing the opposite and paying for it by borrowing – credit and debt. In the US, people with money to spend should spend less of it on non-vital things, and more money should go to government in the form of taxes to pay for vital government services and to pay down the debt.

Oct 12  Leaders in China's Communist Party announce an agreement on a reform plan to create more individual responsibility and creativity in rural land management and more government investing in rural education, health, housing, pensions and employment – a plan it is hoped will double per capita wages for rural people by 2020.

Oct 13  On Saturday in Washington, the G7 nations agreed on a five point program to "unfreeze" credit markets. Yesterday, Sunday, European leaders agreed to allow no big bank to fail. Today, Australia's stock index rises more than 5.5 percent, Singapore and South Korea's 3 percent, and India's 7.68 percent. Stocks in Norway are up nearly 8 percent, in Britain up 8.3 percent. Stocks in Germany, France, and the United States rise 11 percent.

Oct 14  President Bush announces that the federal government is to buy stakes in a wide variety of US banks. The money is to come from the $700 billion bailout package that was signed into law a few days ago.

Oct 14  UCLA scientists find that searching the web stimulates centers in the brain and may improve brain functions.

Oct 15  In Vietnam, a judge sentences journalist Nguyen Viet Chien to two years in jail. A human rights group calls it "revenge" against a daring journalist revealing state corruption.

Oct 15  Uganda bans female circumcision.

Oct 18  Ghana responds to higher prices of imported wheat by increasing its harvesting of Cassava roots. Bread with cassava flour is said to taste as good as wheat bread.

Oct 18  Candidate McCain as been stating that he is not George Bush. McCain is accusing Candidate Obama of wanting to "share the wealth" and of being dishonest for not being upfront regarding "socialism" like Europe's "socialist" leaders. This is a response to Obama's stated plan to increase taxes on people making more than $250,000 per year. McCain's crowds roar their disapproval of wealth sharing and socialism.

Oct 19  On this Sunday in Cuba a Russian Orthodox cathedral opens. Raul Castro is present and calls it "a monument to Russian-Cuban friendship."

Oct 20  Speaking of globalization, Jayati Ghosh, economics professor at Nehru University, complains that while a minority in India benefited materially from the nation's high economic growth, real wages for most workers actually fell, hunger increased and nearly 200,000 farmers committed suicide.

Oct 22  A study released in Paris by the Organization for Economic Cooperation and Development (OECD) claims that the economic growth of the past 20 years widened the gap between the rich and the middle class in some countries, including the United States, Germany and Norway. The study finds poverty rates lowest in the Czech Republic, Denmark and Sweden.

Oct 23  On the development of the financial crisis in the US, Alice Rivlin says on the PBS News Hour that, "The financial structure was changing very, very rapidly, new products, new institutions, and we didn't modernize the regulatory system to keep up with that."

Oct 23  Alan Greenspan, former chairman of the Fed, tells a congressional committee that he had learned the economic philosophy he had been adhering too was false. That was the philosophy of the late Ayn Rand.

Oct 24  Yaron Brook, a professor of finance and executive director of the Ayn Rand institute, complains that "opponents of the free market are giddy at Alan Greenspan's declaration that the financial crisis has esposed a 'flaw' in his 'free market ideology.'" Brook accuses Greenspan of having "abandoned" a belief in free markets "long ago."

Oct 27  Syria accuses the US of a raid by troops in helicopters across the border from Iraq. They describe the raid as having killed eight civilians. The US has complained that Syria has not been doing enough to control their border.

Oct 27  In South Waziristan (inside Pakistan) a missile strike by a US drone aircraft is said to have killed a Taliban leader and, it is said, twenty others whose bodies were dug from the rubble.

Oct 27  In Egypt a senior civil servant and his wife are under arrest, accused of wife-swapping parties organized on the internet. Extra-marital sex is illegal in Egypt.

Alice Rivlin

Alice Rivlin

Alan Greenspan

Dr. Alan Greenspan

Yaron Brook

Dr. Yaron Brook

Oct 28  The UN's largest peacekeeping force – 17,000 strong – is engaged in fighting against rebels in the eastern part of the Democratic Republic of Congo against the army led by renegade general Laurent Nkunda. His forces control several major towns. Refugees are on the move, and hunger prevails. Some are angry with the UN for not having protected them.

Oct 28  The target of the US the raid into Syria was Abu Ghadiyah, said to have been an al-Qaeda coordinator. A "senior US official" says that Syria was reluctant to move against Ghadiyah and that this "left us with no choice but to take these matters into our hands." The Iraqi government denounces the raid and speaks of its opposition to the US using its territory as a launch-pad against its neighbors. Iran, friendly with the Iraqi government, joins in condemning the attack. So too does Russia, which is building closer ties with Syria.

Oct 28  West Africa's regional Court of Justice, located in Niger's capital, Niamey, has ruled that Niger failed to protect Hadijatou Mani from being sold into slavery at the age of 12 – for $500. The court has ordered Niger's government to pay the woman, now 24, about $12,000 in damages. With this money, Mani plans to buy a house and to send her children to school "so they can have the education I was never allowed as a slave." Yahoo News reports that Mani had been jailed for bigamy after her former master opposed her marriage to another man, insisting that she had automatically become his own wife when he freed her in 2005.

Oct 29  In Saudi Arabia, King Abdullah launches the foundation for the kingdom’s first women-only university, which is to have a capacity for 40,000 students.

Oct 29  Cuba opens an embassy in Saudi Arabia. The United Nations General Assembly approves its thirteenth annual resolution condemning the US embargo against Cuba. Three nations side with the United States against the resolution: Israel, Palau and the Marshall Islands.

Oct 30  Washington Post columnist David Ignatius describes hedge fund managers offering their services to an elite who could afford their "hefty fees." He describes the managers as believing they had engineered highly leveraged investments without risk. Ignatius writes that their "make-believe world began to crash in August 2007," that suddenly there was no market for the paper assets they had created out of pools of mortgages, "because in a falling market, nobody knew what they were worth."

Oct 30  This month the TED-spread (see October 9, 2007) has skyrocketed to around 4.5 percent. It has dropped to 2.7 percent, still above the normal 1 percent. The Dow was at 10,881 on October 1. It hit a low at 8378 on October 24 and has climbed to 9180.

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