Morning Brief: Change of plans

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Without explicitly admitting error, U.S. Treasury Secretary Henry Paulson announced yesterday that his widely criticized plan to buy up illiquid mortgage-related assets had hit a few snags. Paulson indicated the Treasury would focus instead on ensuring that American consumers have continued access to credit.

The Washington Post reports that $290 billion of the $700 billion in bailout money has already been committed but “it’s sort of a joke in terms of oversight,” in the words of one congressional staffer.

Paulson’s press conference came amid another tough day in the markets. The Dow Jones Industrial Average fell more than 400 points as dire economic news kept piling up. Asian stocks followed the downward trend today, while European markets rose slightly despite word that OECD countries are probably in recession. China, meanwhile, posted its slowest growth in industrial output in seven years.

Financial luminaries have issued hair-raising warnings this week about the shape of things to come. Merrill Lynch CEO John Thain thinks the U.S. economy is contracting faster than at any point since 1929. JPMorganChase CEO Jamie Dimon says the recession in the real economy could be worse than the credit crisis. And former Goldman Sachs Chairman John Whitehead fears the coming economic slump will in fact be “worse than the depression.”

U.S. Presidential Transition

President-elect Barack Obama is sending former Iowa Rep. Jim Leach and former U.S. Secretary of State Madeleine Albright as his representatives to the G-20 summit.

The Obama team signaled it will be taking swift action on climate change.

The New York Times looks at what it takes to get a top job with Obama.

The Boston Globe previews Obama’s technology policy.

Americas

Thousands of Colombians rioted against investment scams.

U.S. experts believe the plane crash that killed Mexico’s interior minister was an accident.

Asia

A suicide bomber killed at least 19 people in eastern Afghanistan, while a tanker bomb in Kandahar killed at least six.

China denied having a hand in the arrest of former Taiwan President Chen Shui-bian, who has gone on hunger strike to protest his detention.

North Korea says it will no longer allow nuclear samples.

Middle East and Africa

An Iraqi soldier shot and killed two U.S. troops in western Mosul.

Iran suddenly doesn’t seem so excited about talking to the incoming Obama administration.

Israeli President Shimon Peres had kind words for Saudi Arabia’s peace plan.

Europe

Russian President Dmitry Medvedev says Russia is “ready to abandon” its plan to put missiles on the Polish border if the United States “decides to abandon its anti-missile system.”

The U.S. military insists its missile defense technology is farther along than President-elect Obama, who has expressed doubts about the system, thinks.

Speaking in Estonia, U.S. Defense Secretary Robert Gates urged Moscow not to see NATO expansion as a threat.

The New York Times chronicles the woes of post-boom London.

Today’s Agenda

U.S. Vice President-elect Joe Biden visits Dick Cheney at the Naval Observatory, the vice president’s official residence.

President Bush is due to address the U.N.’s “interfaith dialogue” event in New York, after which he’ll speak on the financial crisis.

Financier George Soros testifies on hedge funds before the House Committee on Oversight and Government Reform. Hedge funds lost $100 billion in October.

Photo: Alex Wong/Getty Images