Infinite Unknown

Oct. 21 (Bloomberg) — The Federal Reserve will provide up to $540 billion in loans to help relieve pressure on money-market mutual funds beset by redemptions.

“Short-term debt markets have been under considerable strain in recent weeks” as it got tougher for funds to meet withdrawal requests, the Fed said today in a statement in Washington. A Fed official said that about $500 billion has flowed since August out of prime money-market funds, which with other money-market mutual funds control $3.45 trillion.

The initiative is the third government effort to aid the funds, which usually provide a key source of financing for banks and companies. The exodus of investors, sparked by losses following the bankruptcy of Lehman Brothers Holdings Inc., contributed to the freezing of credit that threatens to tip the economy into a prolonged recession.

“The problem was much worse than we thought,” Jim Bianco, president of Chicago-based Bianco Research LLC, said in a Bloomberg Television interview. Policy makers are trying to prevent “Great Depression II” by stemming the financial industry’s contraction, he said.

JPMorgan Chase & Co. will run five special units that will buy up to $600 billion of certificates of deposit, bank notes and commercial paper with a remaining maturity of 90 days or less. The Fed will provide up to $540 billion, with the remaining $60 billion coming from commercial paper issued by the five units to the money-market funds selling their assets, central bank officials told reporters on a conference call.

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Tags: Depression, economics, Economy, Fed, Federal Reserve, JPMorgan, Lehman Brothers, Politics, Recession, Treasury

Sept. 25 (Bloomberg) — More than 150 prominent U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.

In a letter yesterday to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson’s plan because it’s a “subsidy” for business, it’s ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation.

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Tags: bailout, Bush administration, Congress, Credit Crisis, credit crunch, economics, Economy, Government, Henry Paulson, Politics, Treasury, U.S.

George Soros will not go quietly.

At the age of 77, Mr. Soros, one the world’s most successful investors and richest men, leapt out of retirement last summer to safeguard his fortune and legacy. Alarmed by the unfolding crisis in the financial markets, he once again began trading for his giant hedge fund — and won big while so many others lost.

Mr. Soros has always been a controversial figure. But he is becoming more so with a new, dire forecast for the world economy. Last week he rushed out a book, his 10th, warning that the financial pain has only just begun.

“I consider this the biggest financial crisis of my lifetime,” Mr. Soros said during an interview Monday in his office overlooking Central Park. A “superbubble” that has been swelling for a quarter of a century is finally bursting, he said.

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Tags: British, bubble, Dollar, economics, Economy, financial crisis, financial market, George Soros, Investor, Joseph E. Stiglitz, Nobel, Prophet, Recession, Soros Fund Management

WASHINGTON (AP) - Federal Reserve Chairman Ben Bernanke said Wednesday a recession is possible and policymakers are “fighting against the wind” in trying to steady a shaky economy. He would not say if further interest rate cuts are planned.

Bernanke’s testimony before the Joint Economic Committee of Congress was a more pessimistic assessment of the economy’s immediate prospects than a report he delivered earlier this year. His appearance on Capitol Hill came amid a trio of economic slumps in the housing, credit and financial areas.

“It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke told lawmakers. GDP measures the value of all goods and services produced within the United States and is the best barometer of the United States’ economic health. Under one rule, six straight months of declining GDP, would constitute a recession.

Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill in Washington,
Wednesday, April 2, 2008, before the Joint Economic Committee.
(AP Photos/Susan Walsh)

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Tags: Bear Stearns, Ben Bernanke, Capitol Hill, Congress, credit, economics, Fed, Federal Reserve, finance, GDP, gross domestic product, housing, Inflation, J.P. Morgan, Joint Economic Committee of Congress, Recession, Wall Street, White House

High cost of water adds to pressure to sell, change grapes or even move

MELBOURNE - Australian grape growers reckon they are the canary in the coal mine of global warming, as a long drought forces winemakers to rethink the styles of wine they can produce and the regions they can grow in.

The three largest grape-growing regions in Australia, the driest inhabited continent on earth, all depend on irrigation to survive. The high cost of water has made life tough for growers.

Some say they probably won’t survive this year’s harvest, because of the cost of keeping vines alive. Water prices have more than tripled. Continue reading »

Tags: Australia, Australian Wine and Brandy Corp, CSIRO, economics, Global Warming, harvest, New Zealand, vineyard, water prices, wie, Wine Grape Growers, winemaker