Bad news from the Fed, banks, stock market ...

 Bad news from the Fed, banks, stock market ...

 Bad news from the Fed, banks, stock market ...

A summary of what's in the major U.S. newspapers.
July 16 2008 5:12 AM

The Sky Is Falling

The economic news yesterday was bad, bad, and more bad, and it is the lead story of all the newspapers. "A sense of economic gloom gripped Washington on Tuesday," the New York Times writes. The Washington Post goes with a near-banner headline, "An Economy Thrown Into Turmoil." USA Today's front page also features several big arrows; the ones for good things are going down and those for bad things are going up. "So this is what a day of reckoning feels like. … If it wasn't clear before Tuesday, it is now: This is no ordinary economic crisis, and it won't be over anytime soon," the paper writes.

So what all was going wrong? Federal Reserve Chairman Ben Bernanke testified in front of Congress that economic growth was "on a sluggish pace," and that on top of that, inflation was a risk. The Commerce Department reported that wholesale prices were up 1.8 percent, and retail sales rose just 0.1 percent in June over the previous month and were down 0.5 percent when gas-station sales were excluded. The stock market was down 93 points, and stocks in London, Paris, and Tokyo suffered as well. The dollar fell to a new low against the euro. Police in California had to be summoned to restore order at banks, where customers waited in line to withdraw their money. "It was a day of ugliness," said one analyst quoted in the Los Angeles Times. "What else can you say?"

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The lone (sort of) optimistic voice of the day belonged to President Bush, who held a snap press conference at which, in the words of the New York Times, "he felt compelled to remind Americans that their deposits were insured up to $100,000."

"I understand there is a lot of nervousness," Bush said. "But the economy is growing, productivity is high, trade is up, people are working. It's not as good as we'd like, but to the extent that we find weakness, we'll move."

Most of the lead stories are similar wrap-ups of the main economic events of the day. The Post's focuses on the international ramifications and the extent to which the world economy is dependent on the U.S. economy. It also off-leads a piece on the woes of Wachovia Bank and of the banking sector in general. The L.A. Times fronts an analysis showing how the economic crisis is making Americans lose faith in free markets. USA Today's lead is a forward-looking analysis of what future bad news the economy might hold: more U.S. assets being bought up by foreign companies, dozens of large banks failing, and the possibility of the worst economy since the Great Depression. The Wall Street Journal fronts the Securities and Exchange Commission imposing an emergency 30-day ban on short selling of the stocks of 19 financial companies, including Fannie Mae and Freddie Mac.

Both the NYT and the Post front new polls about the presidential race. The Post shows Barack Obama leading John McCain by eight points nationally. Those polled said Obama is far more able to deal with the economy, the deficit, immigration, and social issues like abortion and same-sex civil unions. But McCain pulls even with him on international affairs and national security. The NYT poll focuses on race relations in the United States and how they affect the presidential race. Among the findings: While more than 80 percent of black voters had a favorable opinion of Obama, only 30 percent of white voters did.

The L.A. Times and the Post front Obama and McCain's sparring over the wars in Iraq and Afghanistan. Obama gave a 37-minute speech in Washington laying out his plan to withdraw from Iraq and focus more heavily on Afghanistan, while McCain hit back, saying that Obama is making strategy without consulting U.S. military leaders in the field. The Post notes that Obama and McCain are roughly on the same page on the need to concentrate on Afghanistan; the difference is in "Obama saying Iraq is a distraction from the fight against terrorism and McCain calling it a proving ground for tactics needed to beat back a resurgent Taliban."

The L.A. Times fronts a chilling dispatch from Ciudad Juarez, Mexico, where violence from the drug trade is taking more and more innocent victims. "Gun battles interrupt traffic in the middle of the day along Triumph of the Republic Boulevard and the city's other main drags; corpses, sometimes mutilated or headless, turn up at shopping centers and fast-food joints; hospitals come under machine-gun fire. Ominous voices break into emergency-frequency radio traffic, warning paramedics not to pick up bodies, journalists not to approach the scene," the paper writes.

Russians are voting for their history's greatest heroes, and Josef Stalin is a front-runner, the Wall Street Journal reports. Liberals are wringing their hands and blaming Vladimir Putin. "Putin told history teachers the purges weren't as bad as atrocities perpetrated by other nations, notably the U.S.'s use of the atomic bomb. New textbooks hail Stalin as an effective manager, and TV documentaries stress his achievements and alleged selflessness," the paper writes.

Joshua Kucera is a journalist based in Istanbul and the Turkey/Caucasus editor of EurasiaNet.