Krugman on WTF is Happening to the Economy

A pretty good synopsis:

The current crisis started with a burst housing bubble, which led to widespread mortgage defaults, and hence to large losses at many financial institutions. That initial shock was compounded by secondary effects, as lack of capital forced banks to pull back, leading to further declines in the prices of assets, leading to more losses, and so on — a vicious circle of “deleveraging.” Pervasive loss of trust in banks, including on the part of other banks, reinforced the vicious circle.

The downward spiral accelerated post-Lehman. Money markets, already troubled, effectively shut down — one line currently making the rounds is that the only things anyone wants to buy right now are Treasury bills and bottled water.

The response to this downward spiral on the part of the world’s two great monetary powers — the United States, on one side, and the 15 nations that use the euro, on the other — has been woefully inadequate.

Europe, lacking a common government, has literally been unable to get its act together; each country has been making up its own policy, with little coordination, and proposals for a unified response have gone nowhere.

The United States should have been in a much stronger position. And when Mr. Paulson announced his plan for a huge bailout, there was a temporary surge of optimism. But it soon became clear that the plan suffered from a fatal lack of intellectual clarity. Mr. Paulson proposed buying $700 billion worth of “troubled assets” — toxic mortgage-related securities — from banks, but he was never able to explain why this would resolve the crisis.

And Asia’s markets are not happy today.

A FL Teacher on What C.H.A.N.G.E. Stands For

I’m fresh out of sarcastic comments:

TALLAHASSEE — A Marianna, Fla., middle-school teacher has been suspended for 10 days without pay after he wrote a racially charged interpretation of a commonly used phrase in the presidential campaign of Sen. Barack Obama.

While some parents and community activists were outraged by the actions of Greg Howard, Jackson County NAACP officials want to gather more facts before the group considers taking action. But some parents feel Howard should be fired.

Larry Moore, deputy superintendent for the Jackson County School District, said school officials determined Howard wrote an acronym with an explanation on a dry-erase board in his class Sept. 26 at Marianna Middle School.

It said, “C.H.A.N.G.E. — Come Help A (N-word) Get Elected.”

Howard, who’s been teaching in the district for 17 years, wrote the comment during his seventh-grade social-studies class that included 17 white students, six black students and one Asian.

Howard was suspended with pay Monday while the incident was investigated. The reprimand was elevated to a 10-day suspension without pay starting Thursday. Howard also must write a letter of apology to the students.

(via Rantings of an Arab Chick)

A Blog Post From A Participant in the Pres. Town Hall Debate

From Oliver Clark, the person who asked John McCain about the economy:

How did I feel about Sen. McCain stating “You probably never heard of Fannie Mae or Freddie Mac before this.”

Well Senator, I actually did. I like to think of myself as a fairly intelligent person. I have a bachelor degree in Political Science from Tennessee State, so I try to keep myself up to date with current affairs. I have a Master degree in Legal Studies from Southern Illinois University, a few years in law school, and I am currently pursuing a Master in Public Administration from the University of Memphis. In defense of the Senator from Arizona I would say he is an older guy, and may have made an underestimation of my age. Honest mistake. However, it could be because I am a young African-American male. Whatever the case may be it was somewhat condescending regardless of my age to make an assumption regarding whether I was knowledgeable about Fannie Mae and Freddie Mac.

Obama Releases a Statement

Obama on the markets:

As millions of Americans lost more of their investments and hard-earned retirement savings today, it is critical that the Treasury Department move as quickly possible to implement the rescue plan that passed Congress so that we can ease this credit crisis that’s preventing businesses and consumers from getting loans and causing dangerous instability in our market. While we face a very serious challenge, now is not the time for fear or panic, but for all of us to come together with resolve and determination that we can steer ourselves out of this crisis and restore confidence in the American economy.