The federal government took control of Pasadena-based IndyMac Bank on Friday in what regulators called the second-largest bank failure in U.S. history. 

Citing a massive run on deposits, regulators shut its main branch three hours early, leaving customers stunned and upset. One woman leaned on the locked doors, pleading with an employee inside: "Please, please, I want to take out a portion." All she could do was read a two-page notice taped to the door.  . . .  

Federal authorities estimated that the takeover of IndyMac, which had $32 billion in assets, would cost the FDIC $4 billion to $8 billion. Regulators said deposits of up to $100,000 were safe and insured by the FDIC. The agency's insurance fund has assets of about $52 billion.

"Bridgewater Associates has issued an apocalyptic warning to clients that bank losses from the worldwide credit crisis may reach $1,600bn [$1.6 trillion], four times official estimates and enough to pose a grave risk to the financial system.  . . .  

The bottom line is that they estimate there is at least another $1.1 trillion of losses that will have to be written off by institutions all over the developed world, including very large potential write-offs from insurance companies. 

Banks and investment institutions worldwide may need another $400 billion in capital infusions. But where they are going to get it is the problem. They have burned through the usual suspects, and burned is the correct word. . . .  

Bear Stearns is not a one-off deal. I think it is likely we will see at least one European bank nationalized. Losses the size that Bridgewater describes are beyond ugly. They are life-threatening for more than one major institution.  

[T]he risk of a US recession has intensified CONSIDERABLY, as defined by what amounts to one of the largest nominal credit contractions in DECADES, at (-) $154.3 billion, and a clear-cut violation of the uptrend in place since at least 2001."   . . .  

Treasury Secretary Paulson said Thursday that no bank is too big to fail. That is for public consumption. The fact is that there are any numbers of banks that are too big to fail, depending upon (and borrowing from my favorite linguist, Bill Clinton) what your definition of fail is. If by fail you mean that shareholders are wiped out, then he is correct, there is no institution too big to fail. If by fail you mean that the operations and debt obligations will be allowed to collapse, then there are institutions whose collapse would pose major systemic risk to the world markets. They cannot be allowed to collapse.

Drawing a sharp distinction with the Democratic presidential candidates, Senator John McCain, warned on Tuesday against hasty government action to solve the mortgage crisis, saying "it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers."

In an address focusing on domestic issues following his stops in the Middle East, McCain, the presumptive Republican nominee, did not propose any government bailout. 

"Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy," said McCain, spoke before a business group in Santa Ana, California

Senator John McCain said here Thursday that he would be open to federal intervention to save the nation’s two most important mortgage companies, Fannie Mae and Freddie Mac, whose shares are plummeting as they struggle to raise billions of dollars in fresh capital.

“Those institutions, Fannie and Freddie, have been responsible for millions of Americans to be able to own their own homes, and they will not fail, we will not allow them to fail,’’ Mr. McCain said during a stop at the Senate Coney Island Restaurant here. “They are vital to Americans’ ability to own their own homes. And we will do what’s necessary to make sure that they continue that function.’’

Iraq said for the first time yesterday that it wanted to set a timetable for the withdrawal of US troops from its territory.

President Bush has long resisted a schedule for pulling his 145,000 soldiers out, arguing that it would play into the hands of insurgents. Nouri al-Maliki, the Shia Prime Minister, who boasted last week that he had crushed terrorism in the country, suggested that it was time to start setting time-lines.

“The current trend is to reach an agreement on a memorandum of understanding either for the departure of the forces or to put a timetable on their withdrawal,” Mr al-Maliki said during a visit to the United Arab Emirates. He rejected efforts by Mr Bush to hurry through an agreement on vital issues such as the immunity of US troops in Iraq and use of the country’s airspace. Mr Bush had hoped to sign a Status of Forces Agreement (SOFA) by the end of July to establish the basis for a long-term presence of US troops in the country.

The Iraqi parliament has bridled at pushing through such a binding deal with the outgoing and unpopular Bush Administration, saying that the negotiations have been secretive and could undermine Iraq’s sovereignty. “I don’t know anything about this agreement and neither does parliament,” said Ezzedine Dawla, a Sunni MP. “We’re going to pass something we don’t know anything about.”

Q: Senator, with Iraqi leaders now calling for a timetable for U.S. troop withdrawals–

McCAIN: Actually, the Iraqis are not. The Iraqis were widely reported as short a time ago as a couple of weeks ago that there would be no status of forces agreement, and Maliki would say that, and it got headlines, and of course it turned out not to be true.

The fascination with the current US presidential election around the world is all the more valuable because it is not about the rest of the world: it is America deciding its future for itself. And yet, the quadrennial presidential exercise brings America a great deal of attention and, usually, admiration, for what it reveals about the US to the rest of the world.

The election of a president Obama will, in particular, have a transformative effect on the rest of the planet. There are basically two stereotypes out there about America, one positive and one negative. The first is of America as Goliath, the big bully getting its way around the world through the ruthless and muscular pursuit of its national interests (interests usually seen as very narrowly conceived). The other is of America as the Land of Dreams, the Land of Hope and Opportunity, where anybody can be anything, where anyone can earn anything, and anyone can transform their lives in ways their parents could never have imagined.

Ever since 9/11, the world has only seen the first stereotype; at least that's the one that has been reinforced in people's imaginations around the world by the Iraq invasion, Guantanamo, Abu Ghraib, torture, rendition, Blackwater's killings of Iraqi civilians, and so on. The election of a black 46-year-old first-term Senator, the son of an African immigrant, one bearing a Muslim name and who has lived in the Third World, would instantly dispel that stereotype and reinforce the second. Because he would be the living embodiment of the miraculous truth of the second stereotype, it would make America once more, in the world's eyes, the shining beacon of light upon a hill that Ronald Reagan spoke of, a country unlike any other.

That doesn't mean that those who currently dislike American policies will suddenly find Washington more congenial. Despite the novelty of having a black man in the White House, there will be a certain continuity of domestic and foreign policies, and the machinery of government will for the most part be operated by people who have done it before. But the symbolic value of a president Obama will be incalculable. On the other hand, a defeat for Obama in what is widely seen as a Democratic year will lead a lot of people of colour around the world to see Americans as more fundamentally racist than they pretend to be. For America's sake, I hope it doesn't work out that way.

In an extraordinary move, the Bush administration plans to publish a document Friday listing various ways to control global-warming gases, while simultaneously disavowing the document's analysis.

Rebutting environmental agency staff that said society could see a net benefit from emission regulation under the Clean Air Act, the White House instead warned that new regulations could lead to a "command-and-control" regime covering a "broad range of commercial and household activities," including factories and power plants, but also lawnmowers.

The document - which has been the subject of a weeks-long conflict between officials at the White House and Environmental Protection Agency - attempts to summarize the benefits and costs of regulating greenhouse gas emissions without drawing any conclusions.

The Bush administration has long opposed allowing the EPA to regulate greenhouse-gas emissions, arguing that doing so would turn the agency into a massive planning and zoning board, with the power to block construction of schools, hospitals, apartment buildings and a range of other facilities, the emissions of which previously haven't been subject to regulation.

In a letter accompanying the EPA document seen by Dow Jones Newswires, Susan Dudley, Administrator of the White House Office of Information and Regulatory Affairs, bluntly disavowed the analysis, saying it relied on "untested legal theories" and "cannot be considered Administration policy or representative of the views of the Administration."

"There is strong disagreement with many of the legal, analytical, economic, science and policy interpretations in the draft. These letters do reflect agreement with you that the Clean Air Act is a deeply flawed and unsuitable vehicle for reducing greenhouse gas emissions," Dudley wrote in the letter, dated Thursday and addressed to the EPA's administrator, Stephen Johnson.

"The onerous command-and-control regulation contemplated in the EPA staff draft would impose crippling costs on the economy in the form of a massive hidden tax, without even ensuring that the intended overall emissions reductions occur," White House spokeswoman Dana Perino said in a statement.

The administration's decision to publish the EPA analysis - while also attacking many of its conclusions - represents the latest twist in a long-simmering conflict between the EPA and White House over how to respond to last year's Supreme Court decision charging the EPA with determining whether greenhouse gases endanger public health or welfare.

The US Republican party is changing tactics on the environment, avoiding ‘frightening’ phrases such as global warming, after a confidential party memo warned that it is the domestic issue on which George Bush is most vulnerable.  The memo, by the leading Republican consultant Frank Luntz, concedes the party has ‘lost the environmental communications battle’ and urges its politicians to encourage the public in the view that there is no scientific consensus on the dangers of greenhouse gases. ‘The scientific debate is closing [against us] but not yet closed. There is still a window of opportunity to challenge the science,’ Mr Luntz writes in the memo, obtained by the Environmental Working Group, a Washington-based campaigning organization. ‘Voters believe that there is no consensus about global warming within the scientific community. Should the public come to believe that the scientific issues are settled, their views about global warming will change accordingly. Therefore, you need to continue to make the lack of scientific certainty a primary issue in the debate.  The phrase ‘global warming’ should be abandoned in favor of ‘climate change’, Mr Luntz says, and the party should describe its policies as ‘conservationist’ instead of ‘environmentalist’, because ‘most people’ think environmentalists are ‘extremists’ who indulge in "some pretty bizarre behavior... that turns off many voters’.”  -- Guardian Unlimited