In a story about the lead-up to the conference, World leaders to gather on crisis, no quick fix seen, Reuters reports on Sarkozy's intended message to the United States and the other G20 nations.

French President Nicolas Sarkozy sounded an aggressive note on Thursday as he prepared to head for the summit.

"I am leaving for Washington to explain that the dollar, which after the Second World War was the only currency in the world, can no longer claim to be the only currency in the world," he said. "What was true in 1945 cannot be true today."

Or, as The Guardian puts it: "The French president, Nicolas Sarkozy, for his part, will use the summit to suggest that the days of the dollar as the world's reserve currency are over."

With the United States more than $10 trillion dollars in debt is there much point in pretending that the U.S. dollar won't be devalued drastically at some point in the very near future?

Paulson gave away a Quiet windfall by issuing a five-sentence notice.

The change to Section 382 of the tax code -- a provision that limited a kind of tax shelter arising in corporate mergers -- came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention. Until the financial meltdown, its opponents thought it would be nearly impossible to revamp the section because this would look like a corporate giveaway, according to lobbyists.

The reason it would look like a corporate giveaway is because it is a corporate giveaway — as much as $140 billion. Most tax lawyers think Paulson acted illegally, but Congress seems unwilling to call foul so not to risk being blamed for worsening the financial mess.

So, that's what I think we will get: an interval of deflationary depression followed by a destructive wave of inflation that will wipe out both constructed debt and constructed savings, scraping the financial landscape clean. There's no question that stage one is underway. But we can be sure the giant wave of money recklessly loaned into existence in just a few weeks time will wash back through the global economy leaving a swath of destruction.

And then what? The societies of the world will be faced with the task of rebuilding systems of fruitful activity, i.e., real economies based on productive behavior rather than the smoke-and-mirrors of Frankenstein-finance con games.

Kunstler thinks people will quickly soon catch on and become an "angry peasant mob" demanding some sort of justice be dealt to the economic Frankensteins who jump started the collapse.

The Washington Post reports Greenspan described the financial crisis a "once-in-a-century credit tsunami" and the Los Angeles Times adds Greenspan warns unemployment will rise.

"This crisis ... has turned out to be much broader than anything I could have imagined ... Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment."

According to The New York Times, Greenspan said he "made a mistake" in believing free markets could regulate themselves without government oversight.

On a similar note, the LA Times adds Greenspan "admitted that the crisis showed flaws in his strong free-market ideology", but I don't interpret him saying that at all.

promoted with time edits by afew

The article has been sitting open in my web browser now for almost two weeks wondering when I was going to write about it. Since I've not see this article covered, I want to make sure it doesn't go unnoticed. Unfortunately, I do not find Greenspan very inspiring, so the best I can do at this time is a Lazy Quote Diary™. It begins with a quote from Greenspan.

"Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient." -- Alan Greenspan in 2004

The Guardian has found that the Top Wall Street bankers are to receive $70 billion in pay deals.

Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40.4bn), a substantial proportion of which is expected to be paid in bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash...

Staff at six banks including Goldman Sachs and Citigroup will pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted widespread criticism. The government cash has been poured in on the condition that excessive executive pay will be curbed.

While many Americans' watch their retirement investments vanish in a puff of smoke, Wall Street bankers are patting each other on the back.

"Since mid-2007, when the credit crisis erupted, the country's nine largest banks have written down the value of their troubled assets by a combined $323 billion."

For every dollar the banks earned during the industry's most prosperous years, they have now wiped out $1.06.

Even with the capital from the government, analysts say, the banking industry still needs to raise around $275 billion in light of the looming losses...

Treasury Secretary Henry M. Paulson Jr. is urging them to use their new capital soon. On Monday, Mr. Paulson unveiled plans to provide $125 billion to nine banks on terms that were more favorable than they would have received in the marketplace. The government, however, has offered no written requirements about how or when the banks must use the money.

"There is no express statutory requirement that says you must make this amount of loans," said John C. Dugan, the comptroller of the currency. "But the economics work so that it is in their interest to do so."

Meanwhile, the dollars are stacking up as the banks hoard cash, afraid to trust even other banks to make new loans.

Deutsche Welle reports the German Government Postpones Deutsche Bahn Share Listing.

The German government has announced that it will postpone an initial listing of shares in the national railway Deutsche Bahn "for at least several weeks," a source close to the matter said on Thursday...

Turbulence on equity markets caused by the international financial crisis prompted the delay of the sale of a 24.9 percent stake, in what is set to be the last major privatisation in Europe's biggest economy.

Promoted by -- you never guess it -- DoDo

We found that a trader's morning testosterone level predicts his day's profitability. We also found that a trader's cortisol rises with both the variance of his trading results and the volatility of the market. Our results suggest that higher testosterone may contribute to economic return, whereas cortisol is increased by risk.

Their research findings were published in the Proceedings of the National Academy of Sciences, Endogenous steroids and financial risk taking on a London trading floor.

So, as The Guardian observed Testosterone is the secret ingredient for making (and losing) lots of money. "Money doesn't make the world go round: it's testosterone. The more that traders have, the richer they'll become - up to a point."

The NY Times reports Treasury sets timetable to pick managers. "The Treasury Department put its $700 billion bailout on a fast track on Monday, asking companies to submit bids for running the system by Wednesday and announcing its plan to select winners on Friday."

Yes, the Treasure Department will take only one day to review bids before awarding contracts. Hey, at least Treasury Secretary Henry Paulson didn't just announce no-bid award to, say, Paulson's old company, Goldman Sachs. See if this sounds familiar --

Administration officials plan to outsource almost the entire project, which will largely rely on "reverse auctions" in which the government accepts bids from financial institutions that want to sell their troubled assets.

The Treasury said it intended to hire one company as a "financial agent" to set up the basic system, which would include running the auctions, keeping track of the various portfolios and overseeing all the operational issues.

This is what Horace Engdahl said in an interview he gave exclusively to the AP:

"Of course there is powerful literature in all big cultures, but you can't get away from the fact that Europe still is the center of the literary world ... not the United States."

The film has been around in a shorter form since at least 2002. I think it is important to at least view before we Americans sign $700 billion over to the Wall Street and international banks.

After 8 years in the United States of the war on science by the Bush administration, things wouldn't be much better during a McCain presidency. From the Bad Astronomy blog at Discover magazine: John McCain: literally antiscience. "I am not a fan of John McCain... I have had my doubts on his support for science, but my fears have been at least in part confirmed."

Phil Plait goes on to quote McCain from an AP story, as he changes the subject away from his running mate to Obama:

"That's nearly a million every day, every working day he's been in Congress," McCain said. "And when you look at some of the planetariums and other foolishness that he asked for, he shouldn't be saying anything about Governor Palin."

With the election in the United States (November 4) being less than 50 days away and elections in Canada (14 October) and New Zealand (8 November) flanking it, there is a possibility that three new Western governments will appear in international politics.

Further more there is an endless number of situations Europeans could be concerned with from climate change to energy supply to immigration. Add in many European nations membership with NATO and there is Afghanistan, the recent five-day war in South Ossetia, and nervousness from the Ukraine. On top of that, there is the U.S. 'meddling' in Europe with its missile "defense", "War on Terror", and concern about a nuclear Iran.

In Friday's Open Thread, I touched upon what I thought Europe's relations to the U.S. and the world should be like. Jerome wrote it would be good to repost my comment as a diary, so here it is:

Europe's relations to the U.S. and the world

The Fed likely figured the shock of bank failure today was an excellent time to sneak in a regulatory change. The Fed "widened the set of assets eligible as collateral for loans of Treasuries to include all investment grade paper, and raised the size of these Treasury loans to $200bn."

The Fed also suspended rules that prohibit banks from using deposits to fund their investment banking subsidiaries.

The NY Times reports that the Fed loosens standards on emergency loans. Not just loosen, but "dramatically loosen" their standards.

In an obscure but highly important announcement late Sunday evening, the Fed said it would let Wall Street firms post as collateral much riskier assets -- including equities, junk bonds, subprime mortgage-backed securities and even whole mortgages -- in exchange for emergency loans through the Primary Dealer Credit Facility.

The Fed created the emergency loan program in March, at the same time that it engineered the shotgun marriage of Bear Stearns by JPMorgan. In itself, the program marked a historic expansion of the Fed's lending to cover investment banks rather than only commercial banks.

Back in the late 1970s, President Jimmy Carter tried to shepherd Americans down a path that lead to energy independence, which would likely have made the negative impact of climate change less of a certainty. However, his forward thinking efforts were sabotaged by the man who defeated him in the 1980 presidental election, Ronald Reagan.

MSNBC has been examining the impact of CERN's Large Hadron Collider, and a recent article explores how the LHC has become an international magnet for brain power. The international "brain drain" is no longer flowing toward the United States in the field of particle physics, but rather the bright minds are being attracted to Europe. Or, more simply put — thus begins American "brain drain".

The buzz of activity at CERN's Swiss campus dramatically illustrates a changing of the guard on the frontier of physics, with Europe taking over from the United States. For the past 14 years, Europeans have taken the lead role in building and financing the $10 billion Large Hadron Collider, which was started up on Wednesday. The U.S. federal government kicked in $531 million for construction.

The LHC is just this week's most obvious example of Eurocentrism in science: Less than 200 miles (300 kilometers) away, an even costlier international physics project, the $13 billion ITER fusion research center, is just getting started in southern France. And European officials are currently considering how to move forward with yet another fusion project, the $1 billion HiPER laser-fusion facility.

Meanwhile, in the United States, physicists were shocked last December to see Congress pull back on research spending, to the tune of $94 million. Financial support for ITER was virtually wiped out. It took months for some of that money to be restored in a supplemental funding bill -- and while Congress dithered, scores of research positions were lost.

The United States may have 'invaded' Pakistan.

The Washington Post reports, U.S. and Afghan troops kill 20 in Pakistan. This marks the "first known instance" that U.S. forces "conducted an operation on Pakistani soil since the U.S.-led war in Afghanistan began".

According to the NY Times, NATO Accused of Civilian Deaths Inside Pakistan. The incursion and subsequent attacks were made "a little after 3 a.m. when three U.S. army helicopters carrying American and Afghan troops landed in Musa Nika in the Pakistani tribal area of South Waziristan... Troops then left the helicopters and launched a ground assault on three houses where Taliban fighters were believed to be hiding."

Pakistan is not amused. The "hot pursuit" of Taliban forces across the Afghan-Pakistan border is contentious issue with Pakistan.

"There are a lot of aspects that look like a right-wing think tank. I'm very worried about that possibility," said Bruce Lincoln, a professor of the history of religions who helped draft the letters and petition. "People are concerned about the blurring of the line between Friedman's technical work in economics and his fairly well-known persona as a political advocate of a very pure, free-market conservative or neoliberal position, where the market is the solution to everything."

The US is to send troops to embattled Georgia in the form of a humanitarian aid exercise, President George Bush said.

Mr Bush said military planes would deliver supplies in a move which would put American forces in the heart of the region.

Bush, in a prepared statement, said:

I've also directed Secretary of Defense Bob Gates to begin a humanitarian mission to the people of Georgia, headed by the United States military. This mission will be vigorous and ongoing. A U.S. C-17 aircraft with humanitarian supplies is on its way. And in the days ahead we will use U.S. aircraft, as well as naval forces, to deliver humanitarian and medical supplies.