The Irish Republic announced it was in recession following two consecutive down quarters taking the roar out of the Celtic Tiger. The government of New Zealand also reported it is in recession for the first time in a decade.
According to the BBC, Spain's housing market is freezing up: Spanish house sales dived over a quarter (-26.3%) for the year through June, and mortgage lending is down a third (-33.2%).
On the eve of the debate and vote on the Paulson Plan in the United States, the landscape of Wall Street has change dramatically. Literally overnight storied investment banks have vanished: Bear Stearns, Merrill Lynch, and Lehman Brothers. The remaining investment houses, Goldman Sachs and Morgan Stanley, converted into bank holding companies subject to federal regulatory oversight.
The global insurer AIG and the largest American mortgagers, Fannie Mae and Freddie Mac, were all placed in government conservatorship to avoid insolvency.
Seattle-based Washington Mutual, Inc., founded in 1889, the country's largest savings-and-loan declared bankruptcy on September 26, 2008 after being nationalized by the US government. JP Morgan Chase bought most of WaMu's assets.
The Paulson Plan, the structural elements around which the bipartisan remedy was fashioned, is a stop-gap measure aimed at triaging a mortally hemorrhaging American financial system. It is a plan unprecedented in cost, sweeping in scope, and exceptional for its transfer of power. It marks an end to the era of deregulation commenced in the Reagan Revolution of 1980.
It is unclear what the effects of the plan will be. While credit flow may ease with reassurance that the US government shall intervene to prevent financial calamity and market chaos, the broader, long-term effects on the American economy, small businesses, consumers, and taxpayers are unknown at best. To be sure, the government may need to treat more deep, widespread wounds as the twenty-first century American economy continues to evolve.
Financial upheaval in the states continued yesterday as Citigroup and Wells Fargo were reported by the NYT to be in a "bidding war" to purchase Wachovia Corporation, based in Charlotte, North Carolina, the US's fourth largest banking chain.
Stock markets in Europe, from Amsterdam and Brussels to London and Zurich, and across the Asia Pacific region were down sharply on Monday.