Paulson Regrets Errors That Created Crisis

By: CBS News
By: CBS News

WASHINGTON, DC - Treasury Secretary Henry Paulson on Thursday expressed regret for the many errors made that led to the biggest financial crisis in seven decades, but he insisted the U.S. administration is pursuing the correct course now to end the debacle.

"We're not proud of all the mistakes that were made by many different people, different parties, failures of our regulatory system, failures of market discipline that got us here," Paulson said in an interview on Fox Business Network. But he said he had "no regrets" about the steps the government is taking now to address the problem.

"We will mitigate the impact on the real economy and we'll get this financial system working again," he said.

Meanwhile Thursday, fears of recession trumped fears of inflation.

A crucial barometer of U.S. inflation came in flat last month, temporarily halting Wall Street's slide. Stocks ended another volatile day Thursday, with the Dow Jones industrial average climbing around 400 points. Stock prices fell globally, too. Credit markets remained tight and oil prices declined to a nearly 14-month low.

The positive data came too late to save overseas markets, though. They slumped on rising fears that the global economy is sinking into a deep recession. Thursday's data may not completely alleviate that anxiety. The prices people pay for gas, food, clothes, medicine and other essentials still have risen at an annualized pace of 4.5 percent, faster than the 4.1 percent increase for all of 2007.

Analysts predict it may be the worst holiday shopping season for retailers since the 1991 recession, with surveys showing more than a third of consumers planning to spend less this year.

And the U.S. economy is already suffering from other woes: falling wages, weak consumer spending, tight credit, slumping home prices and rising job losses.

Even good news on the economy contains worrisome kernels. The number of new people signing up for unemployment benefits last week dropped, but new claims still totaled 461,000 - a figure associated with deep troubles in employment conditions.

"Given the likely drawn-out nature of the prospective adjustments in housing and financial markets, I see the most probable scenario as one in which the performance of the economy remains subpar well into next year and then gradually improves in late 2009 and 2010," Donald Kohn, vice chairman of the Federal Reserve, concluded Wednesday evening.

Worries about the economy sent the Dow Jones industrials down a staggering 733 points Wednesday.

The selling spree carried over to Asia, where stocks fell sharply Thursday. Japan's key stock index plummeted more than 11 percent, South Korean shares shed 9.25 percent, and Hong Kong's Hang Seng Index was down 4.8 percent. Following Asia's lead, benchmarks in Britain, Germany and France slipped about 3 percent. Russia's RTS also fell.

Wednesday's daylong stock market sell-off came as retailers reported the biggest drop in sales in three years, while a Federal Reserve snapshot showed Americans are spending less and manufacturing is slowing around the country.

Piling up losses in a rough final hour of trading, the Dow ended the day down nearly 8 percent - its steepest drop since one week after Black Monday in 1987. The Dow has wiped out all but about 127 points of its record-shattering 936-point gain on Monday of this week.

Earlier this week, after governments around the world announced plans to use trillions of dollars to prop up banks, including a U.S. plan to buy about $250 billion in bank stocks, the market appeared to be turning around - or at least calming down.


631 SW Commerce Pl. Topeka, Kansas 66615 phone: 785-272-6397 fax: 785-272-1363 email: feedback@wibw.com
Gray Television, Inc. - Copyright © 2002-2014 - Designed by Gray Digital Media - Powered by Clickability 31144064 - wibw.com/a?a=31144064