How we got into this money mess
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/09/18/art.vert.financial.street.jpg width=292 height=320]Editor’s note: Glenn Beck is on CNN Headline News nightly at 7 and 9 ET and also is host of a conservative national radio talk show.
Glenn Beck
CNN Headline News Anchor
"Greed is good."
At least, that's what Michael Douglas' character Gordon Gekko claimed in the movie Wall Street. But, just like Gekko, the modern-day companies that followed that motto now find themselves wondering how everything could collapse so fast.
You know the names by now: Countrywide Financial, Bear Stearns, IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, AIG. And that's not even counting companies like Citigroup, Merrill Lynch, and Goldman Sachs that, while still in existence, have lost untold billions in market value and have laid off thousands of employees.
Maybe greed isn't so good after all.
Lehman was founded in 1844 when Henry Lehman, a German immigrant, opened a small shop in Montgomery, Alabama. His brothers joined him six years later and, by 1858 they were busy turning cotton provided by local farmers into a cash crop - a business that didn't have anything to do with helping low-income families afford 27-bedroom McMansions.
The Shot: Animals to make you ooo and aah
A helpful elephant and a cute baby squirrel. All together now ... Awww!
The last house standing..."It's my sister's"
Katie Hawkins
iReport Producer
Yesterday, we received an amazing submission from iReport.com user 'austinheli.' His photos showed a lone house standing in a wasteland left in Ike's aftermath.
We contacted austinheli, who is Ray Asgar, a private helicopter pilot based in Austin, Texas. He visited Gilchrist and Galveston Monday to photograph the damage left after Hurricane Ike slammed the coastal area last weekend.
The lone yellow house caught Asgar's attention. He said it was the only structure standing for miles. Considering the extent of Ike's devastation, he said, it was "odd to have nearly any damage to one home."
Several users left comments on Asgar's iReport, joining a debate about whether or not his photos were real. One user who jumped in was Kelley1. "This is my sister's house. It is real," she wrote.
Shortly afterward, Kelley1 uploaded a photo of the yellow house that was taken in May. Kelley1 is Judy Hudspeth and the house belongs to her sister, Pam Adams.
Up for the assignment? Go to iReport.com to submit your iReports!
O.J. Trial: Audio of hotel room confrontation expected today
Editor’s Note:
O.J. Simpson is on trial for robbery and kidnapping charges nearly a year after police arrested him in Las Vegas, Nevada. Prosecutors say Simpson and five other men stormed into a Las Vegas hotel room last September 13 to recover sports memorabilia that Simpson said belonged to him. They say at least two men with Simpson had guns as they robbed two sports memorabilia dealers. The following dispatches come from our Paul Vercammen covering the trial.
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Paul Vercammen
CNN Senior Producer
O.J. Simpson said "good morning" to a handful of onlookers, and walked into the Clark County Regional Justice Center.
Day four of the testimony in the case will resume shortly.
Detective Andy Caldwell, audio recordings of the alleged armed robbery, a crime scene specialist and collectibles dealer Tom Riccio are all expected in court today.
Riccio set up the meeting in the Palace Station Casino that led to Simpson and five other men allegedly storming into a hotel room to get sports memorabilia Simpson says was his.
Palin's Japanese glasses: Demand can't keep up
Kyung Lah | BIO
CNN Correspondent
When Republican VP nominee Gov. Sarah Palin told a political rally that Hillary Clinton left “18 million cracks in the glass ceiling,” the fashion world paid notice–to the glasses on her face.
Since Palin burst on the national scene just weeks ago, optometrists have been feeling a lot like hairdressers when Victoria Beckham and Jennifer Aniston started their hair crazes. Betty Ruths all over the US were marching in, carry pictures of Palin saying, "I want that." Distributors can’t keep up with demand, leading to a two-month wait in the US and overdrive for the manufacturer in Japan.
“We can’t keep up,” says Sotaro Masunaga. Masunaga says they’ve sold more of the Kawasaki 704’s in two weeks than the company has all year. Even in Japan, customers are lining up, asking for the glasses worn “by that famous American woman.”
The man behind the glasses, Kazuo Kawasaki, is a little caught off guard.
FULL POST
Morning Buzz: Banker-In-Chief?
Penny Manis
AC360 Senior Producer
Bailouts, proposed mergers, and Wall Street tumbles. It sounds intense, doesn’t it? The candidates continue to fine tune their economic messages in a week that has been hit by one bad financial story after another. Today the Fed and central banks around the world announced a coordinated effort to pump billions of dollars into the banking system to help ‘shore up confidence.’ We can expect John Mccain and Barack Obama to continue talking non-stop about this crisis, it’s kind of hard not to as the screaming headlines are coming at full speed, and this issue was #1 for voters even before this latest cycle of grim news.
Will this Wall Street turmoil be a boom for Democrats? Will John Mccain be able to ride this wave and prove that he is the man to lead the US out of it? Come to think of it, who has weeks to wait before either of these folks are in place? President Bush (remember him?) has canceled a trip to Alabama and Florida to work with advisers on the country’s economic struggles. He has kept himself in the background amidst all this election hoopla, perhaps he’ll throw himself into the forefront of the media amidst this crisis.
FULL POST
Nobel prizewinner: 6 ways to fix Wall Street
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Joseph Stiglitz
Professor, Columbia University
Editor's Note: Joseph E. Stiglitz, professor at Columbia University, was awarded the Nobel Prize in Economics in 2001 for his work on the economics of information and was on the climate change panel that shared the Nobel Peace Prize in 2008. Stiglitz, a supporter of Barack Obama, was a member and later chairman of the Council of Economic Advisers during the Clinton administration before joining the World Bank as chief economist and senior vice president. He is the co-author with Linda Bilmes of the Three Trillion Dollar War: The True Costs of the Iraq Conflict.
Many seem taken aback by the depth and severity of the current financial turmoil. I was among several economists who saw it coming and warned about the risks.
There is ample blame to be shared; but the purpose of parsing out blame is to figure out how to make a recurrence less likely.
President Bush famously said, a little while ago, that the problem is simple: Too many houses were built. Yes, but the answer is too simplistic: Why did that happen?
One can say the Fed failed twice, both as a regulator and in the conduct of monetary policy. Its flood of liquidity (money made available to borrow at low interest rates) and lax regulations led to a housing bubble. When the bubble broke, the excessively leveraged loans made on the basis of overvalued assets went sour.
For all the new-fangled financial instruments, this was just another one of those financial crises based on excess leverage, or borrowing, and a pyramid scheme.
The new "innovations" simply hid the extent of systemic leverage and made the risks less transparent; it is these innovations that have made this collapse so much more dramatic than earlier financial crises. But one needs to push further: Why did the Fed fail?
Stalling out and seizing the election momentum
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Editor's note: Last night on AC360° we looked at how Senators Barack Obama and John McCain are responding to the crisis on Wall Street. Here is an excerpt of that discussion with David Gergen, an AC360° Contributor and Senior Political Analyst.
Anderson Cooper: David Gergen, there is a new phase [in the election cycle]. How do you see this playing out the last couple of days?
David Gergen: Overall, Anderson, neither candidate has demonstrated a mastery of this economic situation and the financial markets. Neither has offered a clear plan for going forward, neither has really shown an urgency about it. I think you have to say Barack Obama has gained from this more than John McCain has.
First of all, Obama can blame it on the Bush administration. Secondly, he is making a forceful argument against the folks in charge. That helps him, in the critique, I think it is helping him.
John McCain today coming out with Sarah Palin, that is interesting, it does seem in the light of what has happened yesterday, the whole town hall clips we saw, doesn't that seem like yesterday? So from my point of view, I think, the momentum for John McCain and Sarah Palin has stalled out. There is a little momentum on Barack Obama's part. He hasn't yet fully seized it and it is still very close. John McCain could still take it away from him.
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