Central banks in Taiwan, South Korea, and Hong Kong cut interest rates last night but could not stop the markets in New York from sliding another 7%.
Bloomberg comments correctly that "Bailouts are a poor substitute for market trust." Hear, hear. Even if the Fed and ECB wake up and begin to take radical action, the piecemeal, ad hoc approach that has dominated responses to the crisis so far has done irreparable damage. The Fed has either failed to understand the nature of a simple balance sheet issue for far too long (given their superior access to information), or it has understood this and failed to establish any contingency plans over the past year. A proper nationalization and bailout would make TARP even more of a wasteful and pointless exercise, but will come far too late for it to restore the necessary confidence in the markets. Trust, once abused, is very hard to get back, as the boy who cried "wolf" learnt. However, the Treasury is looking at its options. VoxEU publish a book of possible ways forwards. Pimco and BlackRock have submitted proposals to manage troubled mortgage-backed securities for the Treasury.
Iceland has seized a major bank and closed its stock exchange. Apparently, small economies should not try to be international banking centers, according to the president of the country. Meanwhile, Britain invoked antiterrorism legislation to claw back British deposits that had been held at Icelandic banks.
The Federal Reserve has thrown another $37.8bn of liquidity at AIG.
$400bn of Lehman CDS unwinds scheduled for Friday may be the silent mover behind the roiled credit markets, which have put the TED spread at a record high.
The Economist discusses the capability of the current EU government to deal with the financial crisis in a concerted way.
The U.S. Treasury will sell more debt in special auctions to address shortages of its supply in the market. The ECB will restructure its lending operations to improve liquidity and reduce spreads.
A good NYT article highlights the differences between the financial crises in Russia and in the U.S., pointing out margin calls and excessively large oligarch stakes in companies as key elements in the meltdown in Russia. The crash there resembles 1929 Wall Street quite well, and highlights why we have not seen similar disruptions, despite all of our (perhaps more major) underlying problems.
A draft US intelligence estimate on Afghanistan calls the situation in that country a "downward spiral."
Without an emergency $140mn, the UN World Food Program will be unable to feed the 6 million Zimbabweans who depend on it. Morgan Tsvangirai spoke on the plight of the Zimbabwean people as an effective power-sharing arrangement remains out of reach.
Dimitri Medvedev spoke on world strategy and policy at Evian, France.
A NATO task force will fight piracy in the Gulf of Aden.
Tensions in Korea are high ahead of planned missile tests by the North Korean government; South Korea has staged a naval review.
Viktor Yushchenko has dissolved the Ukrainian parliament and is calling for early elections.
Climate change on the low end of current predictions would devastate penguin populations.
The NRDC has a new report describing the effects of Alberta oil sands on the Great Lakes watershed, which is beginning to see widespread contamination. For another look, we point you toward our Building Block on tar sands.
The Oil Drum gives an introduction to "Peak Phosphorus." As the most important and widely used fertilizers are phosphates (and nitrates and sulphates), a potential shortage would devastate the agricultural sector. Another argument for organic farming, which avoids synthetic fertilizers, responsible for coastal dead zones across the world. Meanwhile, nitrate concentrations in groundwater continue to increase.
Roger Pielke explains the IPCC's language about attributing climate change to human causes.
SF Bay area wetlands redevelopment show how easy it can be to reclaim and restore important natural habitats, even in highly developed areas.
Fossils of dancing shrimp may be the earliest evidence of group behavior in life, some 525 million years ago.
The UN publishes a Google Earth-compatible database of all the world's protected areas.