PARIS: The Federal Reserve, the European Central Bank and other central banks massively escalated the assistance offered to global money markets on Thursday, coordinating efforts to ease funding constraints stemming from the financial turmoil emanating from Wall Street.

The Fed said in a statement that it had authorized a $180 billion expansion of its temporary reciprocal currency arrangements, known as swap lines, to allow banks to borrow more dollars in markets at a lower rates.

"This is clearly a very significant help and central banks are showing decisive leadership here as risk aversion is hitting the private sector," said Julian Callow, chief European economist at Barclays Capital in London.

The Fed also authorized increases in the existing swap lines with the European Central Bank, up to $110 billion from $55 billion, and the Swiss National Bank, up to $27 billion from $15 billion.

Panic is the word of the hour on Wall Street. Now even Morgan Stanley is fighting for survival. The commercial bank Wachovia and China's Bank Citic are being discussed as possible rescuers. The crisis has led President Bush to cancel a trip.

 For traders, now might just be the worst of times. The original plan actually called for humor. On Wednesday evening, actress Christy Carlson Romano was supposed to ring the closing bell on the floor of the New York Stock Exchange (NYSE) to mark her debut in the Broadway musical "Avenue Q." She plays two roles on stage -- a romantic kindergarten teaching assistant, and a slutty nightclub singer.

After that day on the floor, the stock traders could have used a bit of comic relief. But it was not to be. Instead of Christy Carlson Romano, a NYSE employee in a joyless gray suit stood on the balcony and silently pressed a button. The bell rang and he disappeared. No waving, no clapping, none of the usual jubilation.

By the end of Wednesday, no one here was in the mood for laughter. The bad news on Wall Street was coming thick and fast. All the US indexes were crashing again after Tuesday's brief and deceptive breather. In its wild, rollercoaster ride, the Dow Jones lost about 450 points, which was almost as much as it lost on Monday, the most catastrophic day on US markets since 2001.

More than 200 mafia suspects were arrested in an international operation conducted by authorities in Italy, the United States, Mexico, Panama and Guatemala, Italy's anti-mafia department said.

The bust on Wednesday, Sept. 17, included the arrests -- six in the US and 10 in Italy's southern Calabria region -- of 16 alleged members of a notorious crime family of the 'Ndrangheta, the Calabrian version of the mafia, the Rome-based National Anti-Mafia Directorate said in a statement.

Authorities also seized more than 15 tons of cocaine and $57 million in cash, the statement said.

The operation was led by the Italy's Carabinieri paramilitary police's special anti-organized crime unit ROS with the US Drug Enforcement Administration (DEA) and the Federal Bureau of Investigation (FBI).

Australia should not sell uranium to Russia, a parliamentary committee says.

It said the $800 million deal should not go ahead until Russia assuaged doubts about the separation of its civilian and military uses of uranium.

The deal was signed by former Prime Minister John Howard and Russian leader Vladimir Putin last year.

The committee said assurances were needed on Russia's compliance with, and long-term commitment to, the Nuclear Non-Proliferation Treaty.

Opposition members of parliament supported the uranium sales. They argued Australia would benefit from the trade, and said safeguards against any future military use of the uranium were adequate.

Russia snubbed its nose at the United States today by announcing plans to sell military equipment to both Iran and Venezuela.

The head of the state arms exporter said that Russia was negotiating to sell new anti-aircraft systems to Iran despite American objections.

"Contacts between our countries are continuing and we do not see any reason to suspend them," Anatoly Isaikin, general director of Rosoboronexport, told Ria-Novosti at an arms fair in South Africa.

Reports have circulated for some time that Russia is preparing to sell its S-300 surface-to-air missile system to Iran, offering greater protection against a possible US or Israeli attack on the Islamic republic's nuclear facilities. The missiles have a range of more than 150 kilometres and can intercept jets approaching at low altitudes

Frustrated by the US government's rescue of AIG, Fannie Mae and Freddie Mac, a group of 100 conservative congressmen today urged the Bush administration to stop keeping Wall Street afloat.

In a letter to the treasury secretary and Federal Reserve chairman, members of the conservative Republican Study Committee (RSC) lamented the abandonment of free-market principles.

Rescuing failing financial firms has "set a dangerous and unmistakable precedent for the federal government both to be looked to and relied upon to save private sector companies from the consequences of their poor economic decisions," the RSC members wrote.

Though the RSC has carried significant influence with Republican leaders in recent years, this week's economic implosion has stoked longstanding tension between conservatives and the Bush administration into a full-blown ideological rift.

The government takeover of private businesses under a Republican president's watch has left conservatives reeling.

Bright Side of a Total Financial Market Collapse: Michael Lewis
...A lot of attractive office space seems to be opening up in midtown Manhattan, for instance, and the U.S. government is now getting paid to borrow money. (And with T-bills yielding 0 percent, they really ought to borrow a lot more of it, and quickly.)
...1) We finally get to see what's inside these big Wall Street firms.
...2) We are creating the financial leaders of tomorrow.
...3) Ordinary Americans get a lesson in low finance.
...4) We have lots of new houses.
...5) Huge numbers of Wall Street executives will have the time to raise their children.
...

By Alex Nicholson and William Mauldin
     Sept. 17 (Bloomberg) -- Russia poured $44 billion into its three largest banks and halted stock trading for a second day in a bid to stem the most severe financial crisis since its devaluation and debt default a decade ago.     The Finance Ministry extended the repayment period on loans available to OAO Sberbank, VTB Group and OAO Gazprombank to three months from one week. The benchmark Micex stock index plunged as much as 10 percent, taking its three-day decline to 25 percent, and brokerage KIT Finance said it's in talks with investors to sell a stake after failing to meet some obligations.
     Russia's markets are facing the biggest test since the government defaulted in 1998. The decade-long economic boom is fading, foreign investors have pulled at least $35 billion from the nation's stocks and bonds since the five-day war in Georgia last month, and the collapse this week of Lehman Brothers Holdings Inc. and American International Group Inc. prompted a flight from emerging markets.
     ``I will tell my clients today to continue to abstain from buying Russian assets'' until economic problems are solved, said Zina Psiola, who manages a $1 billion Russian equities fund at Clariden Leu AG in Zurich.
     The cost of lending has soared to a record, with the MosPrime overnight rate reaching 11.1 percent today, deterring speculative bets in equities. Russian stocks have lost more than $425 billion in value since reaching an all-time high May 17.

                        `Effectively Closed'

     ``The bond market remains effectively closed and banks are reluctant to lend to one another,'' said Julian Rimmer, head of sales trading at UralSib Financial Corp. in London. ``The problems experienced by KIT Finance have heightened counterparty risk and reduced liquidity further.''
      Moscow-based KIT today said it is seeking to sell a stake after failing to meet some financial obligations related to repurchase agreements.
      ``Every day Russia falls due to people not being able to meet margin calls,'' said Marina Akopian manager of the Hexam EMEA Absolute Return Fund in London.
     The cost of protecting bonds sold by Sberbank from default jumped 60 basis points to 3.55 percentage points, according to CMA Datavision prices at 3 p.m. in London. Credit-default swaps on OAO Gazprom, the gas export monopoly, fell 38 basis points to 421.
Contracts on VTB Group declined 35 basis points from an all-time high to 6.53 percentage points, according to CMA.

                        Necessary Measures

     Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline signals the opposite.
     A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.
     President Dmitry Medvedev met Prime Minister Vladimir Putin today to discuss developments surrounding the economy.
     ``The situation is being followed very closely,'' Putin's spokesman, Dmitry Peskov, said in a phone interview. ``Necessary measures are being taken.''
     The ruble has lost 4.8 percent against the dollar since Aug.
8, when Russia sent troops and warplanes into Georgia for a military campaign that led to the worst relations with NATO since the Cold War. Investors have pulled at least $35 billion out of the country since the war, according to BNP Paribas SA estimates.

                           Economic Woes

     Oil production, the government's biggest source of revenue, and accelerating inflation are adding to concerns for investors.
Crude output is falling for the first time since 1998 and the inflation rate advanced more than expected in August, to near a five year high of 15 percent.
     Industrial output grew more slowly than economists expected in August and economic growth in the second quarter slowed to an annual 7.5 percent from 8.5 percent in the previous period.
     Still, unlike 1998, Russia is ``pretty well prepared'' to weather the turmoil, the World Bank's chief representative in Russia, Klaus Rohland, said today. The economy has grown every year for a decade and its international reserves have surged in the period by almost 50 times to $574 billion, more than any other country except China and Japan.     International banks have entered the Russian market in recent years. Societe Generale, France's second-largest bank, owns OAO Rosbank, a top 10 retail bank. Commerzbank AG, Germany's second- biggest lender by assets, owns a 15 percent stake in Promsvyazbank and Unicredit SpA, Europe's fourth-biggest bank, recently purchased Moscow International Bank. Raiffeisen International Bank-Holding AG is the largest foreign bank by assets in Russia.

                        `Calm Nervousness'

     The Finance Ministry yesterday's added $20 billion to the interbank lending market.     Sberbank, VTB and Gazprombank ``are market-making banks capable of insuring the liquidity of the banking system,'' the ministry said in a statement today. The government and central bank will take more measures to improve liquidity this week, the ministry said.
     Finance Minister Alexei Kudrin said the measures should ``smooth over the shock changes'' in the markets. ``With foreign borrowing stopping, we must soften the impact with additional funds, then the situation will stabilize,'' he said on state television.
     The ruble-denominated Micex Stock Exchange suspended trading indefinitely at 12:10 p.m. after its index erased a 7.6 percent gain and plunged as much as 10 percent within an hour. The benchmark fell 17 percent yesterday, the biggest decline of the 88 indexes tracked by Bloomberg. The dollar-denominated RTS halted trading after similar declines.
     Sberbank is down 32 percent and VTB Group 47 percent this week.
     ``The primary objective of these measures is to inject liquidity to calm nervousness,'' Alexander Morozov, chief economist at HSBC Bank in Moscow, said by telephone. ``Hopefully other banks will be able to get this money via the interbank market and this should prevent the rise of rates,'' he said.

--With reporting by Torrey Clark, Denis Maternovsky, Greg Walters and Maria Levitov in Moscow. Editors: Brad Cook, Chris Kirkham.

 

The US is seeking $20bn from its allies to help stabilise Afghanistan as it plans to send thousands more of its own troops to confront the growing insurgency in the country, American officials disclosed yesterday.

Robert Gates, the American defence secretary, said the US was considering a fundamental review of its strategy. But his message was clear - the US expected countries which did not contribute troops to Afghanistan to contribute money instead.

That idea of scutage again. Would someone like to tell the US that we are not their fucking vassals?