Morning Brief: Bernanke’s 3 a.m. call
Top Story Spencer Platt/Getty Images In a big-time move announced at 3 a.m. Thursday morning, the U.S. Federal Reserve teamed up with the European Central Bank, the Bank of Japan, and others to inject $180 billion into global money markets. The Fed authorized the expansion of its “swap lines,” temporary reciprocal currency arrangements, to unlock ...
In a big-time move announced at 3 a.m. Thursday morning, the U.S. Federal Reserve teamed up with the European Central Bank, the Bank of Japan, and others to inject $180 billion into global money markets.
The Fed authorized the expansion of its “swap lines,” temporary reciprocal currency arrangements, to unlock credit markets that froze up when banks around the world essentially stopped lending to one another in dollars. Jim O’Neill, chief economist for Goldman Sachs in London, explains, “There’s a lot of cash hoarding and people losing trust in banks, so the central banks are acting to relieve that.”
The Fed’s move came after a harrowing day on Wall Street Wednesday. The Dow Jones industrial average fell by 449 points and the S&P 500 dropped to its lowest level in over three years. Gold prices shot up and yields on three-month Treasury bills plummeted as investors fled stocks and debt for safer assets, raising the cost of borrowing for financial firms that are already under great pressure.
“It’s like having a fire in a cinema,” Princeton economist Hyun Song Shin told the New York Times. “Everybody is rushing to the door. You are rushing to the door because everyone is rushing to the door.”
European markets recovered slightly today, but Asian stocks continued to fall. Meanwhile, investment bank Morgan Stanley is reportedly in merger talks with regional bank Wachovia, while Washington Mutual is working on a sale.
Hackers broke into Alaska Gov. Sarah Palin’s private e-mail account.
In an interview with a Miami radio station, John McCain appeared to confuse Spanish PM José Luis Rodríguez Zapatero with U.S. enemies such as Venezuelan President Hugo Chávez.
Election officials are bracing themselves for a huge mess on Nov. 4.
Time asks: Is Bolivia headed for civil war?
President Evo Morales angrily rejected the U.S. decision to place Bolivia on the list of countries that aren’t cooperating in the war on drugs.
Interpol agents in Brazil caught a former Argentine army major who allegedly committed crimes against humanity during Argentina’s “dirty war.”
Five people were killed in South Waziristan by a U.S. missile strike aimed at a militant camp. Pakistan was not warned, according to its foreign minister.
China arrested 12 more people for alleged involvement in the tainted milk scandal that has killed four people and sickened at least 1,200.
Sri Lanka is fighting a pitched naval battle with Tamil Tiger rebels.
Middle East and Africa
Israeli Foreign Minister Tzipi Livni narrowly won the Kadima Party’s elections. Now, she must put a coalition together within 42 days or face snap elections that could bring the Likud Party’s Benjamin Netanyahu to power.
Seven U.S. soldiers died when their Chinook helicopter crashed in southern Iraq.
Zimbabwe’s President Robert Mugabe finds his power-sharing deal with opposition leader Morgan Tsvangirai a “humiliation.”
German Chancellor Angela Merkel promised to work with her coalition partners even though they seek to replace her during next year’s elections.
The AIG bailout may embolden opponents of free markets.
The U.N. tribunal held a hearing Wednesday on Radovan Karadzic, the former Bosnian Serb leader who stands accused of committing war crimes.
U.S. President George W. Bush canceled a fundraising trip to Florida and Alabama, saying he needs to concentrate on the economy.
Secretary of State Condoleezza Rice gives a “significant speech” on Russia.
McCain/Palin is in Iowa and Wisconsin; Barack Obama is stumping in New Mexico while his running mate, Joe Biden, campaigns in Ohio.
Blake Hounshell is a former managing editor of Foreign Policy.
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