The news today is overwhelmingly about what is beginning to look like a full-fledged financial meltdown in the US. Obviously, the consequences of a meltdown would be profound, but take a little while to think through. Here are the major stories on what's happening in NYC, and a few interesting items that could have been lost in the mix:
1. Heather Landy and Neil Irwin at the Washington Post write that Lehman Brothers filed for bankruptcy Monday morning. (I wonder whether the new draconian private bankruptcy laws passed at the behest of the banking industry apply to them.)
2. David Hilzenrath at the Washington Post reports that New York will allow AIG to lend money to itself.
3. Michael J. de la Merced and Mary Williams Walsh at the New York Times report that the Fed has asked Goldman Sachs and JP Morgan Chase to put together a $70 billion bail out package for AIG.
4. Binyamin Appelbaum and Zachary A. Goldfarb at the Washington Post report that the Bank of America made a deal to purchase Merrill Lynch for $50 billion over the weekend.
5. The Associated Press reports that the Federal Reserve reported today that industrial output dropped 1.1% last month, far exceeding analyst expectations of 0.3%. The decline was led by an 11.9% decline in motor vehicle and motor vehicle parts production. Output in mining--which includes oil and gas--fell 0.4% in August.
6. Andrew Batson at the Wall Street Journal reports that China abruptly decided to lower benchmark interest rates today on the fear of an economic slow down, and in response to financial news out of NY. The People's Bank of China will reduce the one year benchmark lending rate 0.27 percentage points to 7.2%. Inflation in China fell below 5% in August. Deposit rates (for individual savers) at banks remain at 4.4%, which presumably encourages spending.
7. Randy Fabi at Reuters reports that MEND declared an oil war on Sunday, warning all oil workers to leave the Niger Delta. Evidently the fighting is the worst the region has seen in some time with the Nigerian army, navy, and air force all involved in moves against the militants. Militants set fire to one of Shell's flow stations in the region today. This follows a call for a ceasefire by the MEND on Thursday.
8. Chris Obore of the Kampala Monitor writes that Erik Solheim, the Norwegian Minister of Environment and International Development, has warned Ugandan officials that Norwegian aid was at risk if the country did not more carefully address environmental and transparency concerns.
9. Alison Smale at the New York Times reports that the former European Union envoy to Kabul--Francesc Vendrell--has said that Afghanistan is in the worst shape it has been in since 2001.
10. Interesting op-ed in Wall Street Journal Asia by Richard Bush and Kenneth Lieberthal pointing out the main differences in American foreign policy messages to Taiwan and Georgia. Countries the authors believe face similar dilemmas.