Weekend Economists' Groundhog Day Weekend Jan. 30-Feb1, 2009

[Demeter]

Well, looky here! Not only is it the weekend again (already), it is the very special weekend, in which Barack Obama reprises the Bill Murray role of the beleaguered weatherman who went off to interview the groundhog and ended up repeating himself for YEARS until one magic day, he finally got it right.


Let us all fervently pray, exhort, and hope that Mr. Obama is a quick study. We don't have years.


But in order that we may make the best use of the time we have, we need the best information. That is the goal of this regular (mostly) posting, so have at it. Post them if you have them!

First, some humor to lighten the mood (or not):

First, Dogbert the Canny Capitalist (and why isn't anyone else doing this?):




And then Oliphant:

[Demeter]

1. First, the Friday Night Bank Closing: Suburban Federal bank closed by federal regulators

http://www.baltimoresun.com/business/investing/bal-suburbanfed0130,0,4938511.story

53-year-old family-owned Md. institution found to be undercapitalized and in unsound condition

Federal regulators this evening closed Suburban Federal Savings Bank of Crofton, in the first bank failure in Maryland since 1992. The Bank of Essex in Tappahannock, Va., has acquired Suburban's branches and all of its deposits.

The 53-year-old family-owned bank, which was trying to recover from millions of dollars in soured loans, had been given a deadline of today to find a buyer or be taken over.

The Office of Thrift Supervision had declared the bank, with seven branches and 60 employees, was undercapitalized and in unsound condition.

Suburban branches will open tomorrow as usual but under the Bank of Essex banner. Customers will be able to continue to write checks and use ATM cards.

[Demeter]

2. Hidden Bonuses Enrich U.S. Government Contractors (Correct)

Read this only if you need to sober up, or really want a good reason to cry

http://www.bloomberg.com/apps/news?pid=20601109&sid=aYYHKPn4DOe8&refer=home

[Demeter]

3. Meanwhile, Over in France they Lead Us by Example

http://pensionpulse.blogspot.com/2009/01/vive-la-revolution.html

[Demeter]

4. The Farmer in the Dell Speaks Out: Steep drop in world wheat crop forecast

http://www.ft.com/cms/s/0/386fb65e-ee2f-11dd-b791-0000779fd2ac.html



The world’s wheat harvest is likely to “fall sharply” in 2009-10 as farmers cut the acreage devoted to the cereal, the International Grains Council said yesterday in its first forecast for the incoming crop.

The London intergovernmental body said the 2009-10 season wheat crop would fall to 650m tonnes – down about 5 per cent from a record 687m tonnes last season.

“The largest declines are expected in the EU, Russia, Ukraine, the US and China,” the IGC noted in its monthly report.

The lower output is likely to support forward cereal prices. But traders warned that near-term prices would remain under pressure from the large stock build from the 2008-09 harvest.

In Chicago, soft red wheat yesterday traded at about $5.80 a bushel, down 2.5 per cent on the day.

Further damaging the immediate price outlook, traders said a lack of access to credit was forcing wheat-importing countries to buy on a hand-to-mouth basis, reducing immediate demand.

Food aid organisations have warned that the world’s poorest countries are facing difficulties in obtaining credit lines to buy agricultural commodities.

Wheat prices have risen about 25 per cent from December’s low of $4.55 on concerns about the impact of a severe drought in Argentina, the world’s fourth largest exporter. But wheat prices remain higher than they were 18 months ago.

“While the immediate supply and demand outlook for grains remained generally bearish, with global stock forecasts mostly adjusted upwards, increasing concerns about South America’s crops and continued firm international demand for wheat attracted buying interest in futures markets,” the IGC said.

The record harvest last season came as farmers, encouraged by record high prices, increased planting.

The IGC said the steep decline in prices from last year’s peak, when soft wheat hit an all-time high of $13.34½ a bushel, as well as the high costs of inputs such as fertilisers, prompted farmers to cut the world’s planted area by about 1 per cent.

IF I RECALL CORRECTLY, THERE WAS A CONCERN IN SOME QUARTERS THAT THE WORLD'S GRAIN STOCKS HAD BEEN SO DEPLETED THAT NOT EVEN ONE EATING SEASON'S WORTH WAS ON HAND FOR CUSHIONING DROUGHTS, FAMINE, ETC.

[Joe Chi Minh]

72. What a contrast between right-winger, Sarkozy's response to the crisis, and

that of the shifty trimmer, and Socialist fifth-columnist, Brown with his creepy, boot-licking assurance to his capitalist masters: the, not so much "running dogs", as "overpaid, festering dogs" who have brought the world to this pretty pass. "Oh, we must not abandon globalisation", is the gist of his latest "pronunciamento".

Not that you would have expected anything else from him. If there's one thing he's learnt from Blair, it's what Blair learnt from Thatcher: ingratiate yourself with Big Money; and the bigger, the better. Hence the grotesque photo-opportunity of inviting Thatcher to no 10 for the photo-opportunity on the door-step.

In today's column by economic editor of the UK Daily Mail, Alex Brummer:

"Still, the bankers need not worry. Dick Fuld of Lehman has shown the way ahead by shuffling off his Floriday estate to his wife for £50, just in case shareholders decide to come after his personal wealth."

I believe in the UK, in cases of imminent bankruptcy, if it is thought that if such a virtual gift was made to avoid accountability / payment, it "won't hold water", as far as the law is concerned. Would similar recourse be open to the shareholders in this case, in the US, on the same basis?

[Demeter]

75. I Think It Was Only 5 Pound

[Joe Chi Minh]

95. Should have made it the proverbial peppercorn!

[Demeter]

5. George Soros Analyzes the Recent Difficulty: The game changer By George Soros

http://www.ft.com/cms/s/0/49b1654a-ed60-11dd-bd60-0000779fd2ac.html



Published: January 28 2009 19:55 | Last updated: January 28 2009 19:55



In the past, whenever the financial system came close to a breakdown, the authorities rode to the rescue and prevented it from going over the brink. That is what I expected in 2008 but that is not what happened. On Monday September 15, Lehman Brothers, the US investment bank, was allowed to go into bankruptcy without proper preparation. It was a game-changing event with catastrophic consequences.

For a start, the price of credit default swaps, a form of insurance against companies defaulting on debt, went through the roof as investors took cover. AIG, the insurance giant, was carrying a large short position in CDS and faced imminent default. By the next day Hank Paulson, then US Treasury secretary, had to reverse himself and come to the rescue of AIG.

But worse was to come. Lehman was one of the main market-makers in commercial paper and a large issuer of these short-term obligations to boot. Reserve Primary, an independent money market fund, held Lehman paper and, since it had no deep pocket to turn to, it had to “break the buck” – stop redeeming its shares at par. That caused panic among depositors: by Thursday a run on money market funds was in full swing.

The panic then spread to the stock market. The financial system suffered cardiac arrest and had to be put on artificial life support.

How could Lehman have been left to go under? The responsibility lies squarely with the financial authorities, notably the Treasury and the Federal Reserve. The claim that they lacked the necessary legal powers is a lame excuse. In an emergency they could and should have done whatever was necessary to prevent the system from collapsing. That is what they have done on other occasions. The fact is, they allowed it to happen.

On a deeper level, too, credit default swaps played a critical role in Lehman’s demise. My explanation is controversial and all three steps of my argument will take the reader to unfamiliar ground.

First, there is an asymmetry in the risk/reward ratio between being long or short in the stock market. (Being long means owning a stock, being short means selling a stock one does not own.) Being long has unlimited potential on the upside but limited exposure on the downside. Being short is the reverse. The asymmetry manifests itself in the following way: losing on a long position reduces one’s risk exposure while losing on a short position increases it. As a result, one can be more patient being long and wrong than being short and wrong. The asymmetry serves to discourage the short-selling of stocks.

The second step is to understand credit default swaps and to recognise that the CDS market offers a convenient way of shorting bonds. In that market the asymmetry in risk/reward works in the opposite way to stocks. Going short on bonds by buying a CDS contract carries limited risk but unlimited profit potential; by contrast, selling credit default swaps offers limited profits but practically unlimited risks.

The asymmetry encourages speculating on the short side, which in turn exerts a downward pressure on the underlying bonds. When an adverse development is expected, the negative effect can become overwhelming because CDS tend to be priced as warrants, not as options: people buy them not because they expect an eventual default but because they expect the CDS to appreciate during the lifetime of the contract.

No arbitrage can correct the mispricing. That can be clearly seen in US and UK government bonds, whose actual price is much higher than that implied by CDS. These asymmetries are difficult to reconcile with the efficient market hypothesis, the notion that securities prices accurately reflect all known information.

The third step is to recognise reflexivity – that is to say, the mispricing of financial instruments can affect the fundamentals that market prices are supposed to reflect. Nowhere is this phenomenon more pronounced than in the case of financial institutions, whose ability to do business is dependent on confidence and trust. That means that “bear raids” to drive down the share prices of these institutions can be self-validating. That is in direct contradiction to the efficient market hypothesis....


The writer is chairman of Soros Fund Management and founder of the Open Society Institute. These are extracts from an e-book update to The New Paradigm for Financial Markets – The credit crisis of 2008 and what it means (Public­Affairs Books, New York)

[Demeter]

6. Larry Elliott Does Davos: So, when does the contrition start?

http://www.guardian.co.uk/commentisfree/2009/jan/28/worldeconomicforum-davos

There seems little appetite here for remorse, let alone for the radical measures needed to save the world's economies.

In normal times, the World Economic Forum at Davos kicks off with a tub-thumping session in which executives congratulate themselves on another record-breaking year, claim none of it would have been possible without free markets, privatisation and de-regulation, and warn governments not to blunder in and ruin everything.

These, though, are not normal times and this year one of the opening sessions in Davos featured Benjamin Zander, the conductor of the Boston Philharmonic Orchestra, showing how it was possible for the former masters of the universe to cheer themselves up by singing along to Beethoven's Ode to Joy.

But it would be wrong, dangerously wrong, to assume that the events of the past 18 months have changed the world forever. Sure, there is a recognition that things went badly awry during the bubble. Yes, there is the mantra – always familiar at the bottom of any economic cycle – that this must never be allowed to happen again. But there is, as yet, little evidence of an action plan and – to be honest – little real appetite for radical measures either.

Gerard Lyons, the chief economist at Standard Chartered Bank, says the problems of the global economy can be summed up as the three G's – Glass-Steagall, Greenspan and greed – and it is a compelling argument. Glass-Steagall was the enforced split between retail and investment banks forced on Wall Street by Roosevelt in the 1930s, but after years of lobbying it was repealed by Bill Clinton in the late 1990s.

The repeal of Glass-Steagall allowed commercial banks to forget about their ordinary customers and act like high-rolling investment banks. Alan Greenspan's over-lax monetary policy meant there was plenty of cheap money sloshing around the global economy. And greed meant that a very large chunk of this excess liquidity ended up, not in productive uses, but in risky speculative plays.

How much of this has changed? Not much. Far from severing investment banks from retail banks, the crisis of the past year has created a small number of megabanks. Interest rates are heading for zero, or are already at zero, across the developed world. And there has been scant evidence of an end to the corrosive bonus culture of the past decade. Such contrition as is in evidence in Davos is tempered by a plea from banks, hedge funds and private equity that government should not "throw the baby out with the bath water" through excessive regulation. That, it is said with an apparent straight face, would risk killing the goose that lays the golden egg.

Three thoughts spring to mind. The first is that there were no second chances for big labour when it was blamed for the stagflation of the 1970s; regulation – and plenty of it – was imposed and been kept in place.

Second, the sort of regulations required – global action to clamp down on tax havens, legal curbs on bonus packages that encourage systemic risk, the banning of new products until they have been approved in the way that new drugs have to be sanctioned – are a long way off.

Third, the sad fact is that real reform will not take place unless this crisis gets a whole lot worse. Which, if the mood in Davos is anything to go by, it easily could.

[snot]

101. this mantra that Clinton repealed Glass-Steagall --

makes it sound like it was all his idea (and I've seen this meme elsewhere).

Was it? Or was it simply a failure to veto? A passive capitulation to massive conservative pressure?

Still his bad; but.

[Demeter]

7. For All Our Survivalists: Life after the apocalypse

http://www.guardian.co.uk/lifeandstyle/2009/jan/29/apocalypse-survival-guide-tanya-gold

What if the doomsayers are right ... what if society, as we know it, really is about to collapse? Do you have what it takes to make it in a world without electricity and running water? Tanya Gold offers an essential survival guide:

"I am standing in a wood with a tall man and a dead pheasant. There is blood everywhere: on my shoes, my hands, my face. Why am I here? Because the man - his name is Leon Durbin - is preparing me for the apocalypse, now.

What would happen if you awoke one morning and everyone was dead? Or if, less melodramatically, the world as we know it - and our teetering financial systems - ceased to function? What if you awoke to find your bubble-wrapped, gilded life was over, and for good? Could you survive? Could I?

I am an urban girl. I have no skills except whingeing and bingeing. I can barely open a packet of Hobnobs without an explosive device. But, unlike you, doomed and dying reader, I have decided to prepare for The End, and I am prepared to share the life-saving knowledge I will accrue. This is your cut-out-and-keep guide to the apocalypse. Put it in a drawer. One day you may need it.

So you wake up; everyone is dead. For the purpose of this exercise, imagine it's like Survivors, the cheap BBC rendition of the apocalypse, where a plague wipes out humanity and then everyone is mildly annoyed that the trains are delayed. We could imagine total financial or ecological collapse leading to the failure of social structures, but let's say it's a plague. So, how long can you stay in your house?

The answer is: not long. According to the people at the National Grid, the electricity will stop. So will the water. These systems have buttons. Buttons need fingers. Fingers need people who are alive. You have a day, maybe two, of electricity. Then you will be in darkness, with no way of washing your face.

What should you do? You can steal food from supermarkets but the rotting corpses on the floor of Sainsbury's will be fetid fonts of infection. And if you try to sit out the plague in your home, you could burn or drown. After a lightning strike, fires will begin and they will not stop. And if you live in London, the Thames barrier will fail without electricity and the low-lying areas of the city will flood.

So you have to leave. But where do you go? The apocalyptic norm - see 28 Days Later and Survivors - is for survivors to sit in desirable country mansions, eat tinned tomatoes, develop post-traumatic psychosis and shoot each other. Never in any apocalyptic scenario in any movie I have seen - and I have seen them all - does anyone try to live off the land. They prefer to feed on the crumbs of the lost civilisation. It never works. How can you rebuild civilisation with tinned tomatoes? You need to grow your own food.

But where? I choose Devon. It is warm and wet and fertile, and I have been happy there. There are cows. This is where I would live off the land, but I need to learn how. This thinking has led me to Durbin and the dead bird.

Durbin is tall and tweedy. He is the sort of man who keeps firewood kindling in his pocket, just in case. He owns Wildwood Bushcraft, a company that explains how to survive if you are dropped into the wilderness with no supplies, no warning and no clue.

Durbin leads me through the spindly, sleeping trees, pointing out different kinds of branch and bush, and their uses. According to him, the wood is a shop that will give you everything you need. "Willow bark can be boiled to relieve a headache," he says. "Yew is for making long bows. Oak is for shelters. Ash is for tool handles. Have you ever had a beech-leaf sandwich?" I don't bother replying.

To be competent in bushcraft, you have to be well equipped: before you leave the city, stop for a saw, chisel, spade, axe and hunting knife. Durbin has them all. They poke out of his rucksack in a manly fashion.

We arrive at a clearing and Durbin demonstrates how to light a fire. He places a small block of wood on the ground and puts a wooden stake on it, point down. He takes a bow, made of wood and string, places it round the stake and, when he moves the bow in a sideways motion, the stake rotates very fast. Its friction with the block of wood magically creates a pile of super-hot matter. It can ignite dry hay or bark. This creates a conflagration that can light a fire.

How will I get water? Durbin runs bushcraft weekends for angry executives here, so he knows where it is. "Water," I cry, lunging at a small stream. "Careful," says Durbin. "We have to filter the water with a sock full of sand. Then we have to bring it to a rolling boil." Why a sock? He ignores me.

Food is harder. It is winter and the countryside is closed for repairs. My two main vegetarian foods, Durbin explains, will be burdock root and hazelnut. Both are high-energy. You can make chips out of burdock and you can boil, mash and dry hazelnut to produce a repulsive kind of biscuit. Durbin picks up a spade and starts digging for burdock. He finds some, but it's rotten. "Winter," he sighs. "Hmmm."

So, with a fiendish flourish, I produce a dead pheasant from my handbag. I had spent the day before negotiating with the Guardian as to the legal and moral implications of murdering a rabbit for the purposes of this article. Finally we had compromised, and I had gone to a posh butcher's in Mayfair and bought this beautiful pheasant for £3.50. Durbin looks impressed. "You have to pull off its head," he says. "Just twist it."

I close my eyes and twist. The head comes off easily; it feels like wringing out a slightly damp scarf. Then Durbin makes a hole in the pheasant's bottom and I stick my hand up and clutch everything inside. Out comes a squelchy mass of once-living flesh. Durbin grabs the heart and cuts it open. "Very nutritious," he says. I am slightly sick in my mouth. I pluck, and soon I have a pile of bloodstained feathers - and a nude bird. Durbin sticks it on a spit over the fire. When it is cooked, we eat it. It tastes slightly of excrement but I still feel strangely empowered. It was much easier than I thought it would be, to rip this bird apart.

I now have bloodlust. I ask Durbin how to trap animals. I could theoretically shoot them, but trapping is more suitable for the lazy or incompetent survivor. He looks slightly nervous. "It's illegal," he says slowly. But I prod and he tells me about different types of trap. I could try the pit trap, he says, where you dig a hole in the forest floor, line it with sharpened stakes and camouflage it. It is for large animals - deer, wild boar, parents, other journalists. There is also the deadfall trap, which is for small animals. They saunter over a trigger mechanism, and a lump of wood falls on their head. Bon appetit and ha ha.

But what would I eat if I couldn't trap? "Bugs," says Durbin happily. "Worms." There are 40 calories in a worm, apparently; this is the equivalent of two Maltesers. "Or snails," he adds. "But quarantine the snail for three days before you eat it. It may have eaten poisonous plants, and you will have to wait until it expels them."

Now you need shelter. If I had the choice, I would probably look for a small stone cottage - hardy and easy to maintain - but if I am foraging, I have to go to where the food is. So Durbin shows me how to make a survival shelter. He hurls logs up against a tree trunk, and covers them with a foot of leaves and bracken and mud. "It is waterproof," he says. I climb in and lie down. It is a hole that only a troll could love. But there they are, the four pillars of survival: food, water, fire and shelter.

The next day, I go to Pullabrook Wood in Devon to practise my skills. It was easy to survive yesterday, with Durbin standing by. Can I cope alone? Pullabrook is a lovely wood, administered by the Woodland Trust. It is full of happy Tories and happy Labradors. But now I have my own mini-apocalypse. I fail at bow drilling. I find a stream, but a happy Tory says the water is poisonous, even if filtered by sock. Why? "Because sheep droppings have contaminated it," he says. Death by Sheep is only slightly behind Death by Snail in the encyclopaedia of embarrassing ways to die.

The first shelter I build is too small for me to enter. My second shelter collapses. I decide to abandon bushcraft. I will try my hand at farming. Woman cannot live on worm alone.

So, a few days later, I am standing inside an Iron Age roundhouse at Butser Ancient Farm in Hampshire. Butser is a project that re-enacts Iron Age life. The roundhouse is huge and round and dim. I feel a bit as if I am standing inside a giant breast. Steve Dyer is the archaeological director. He is tall and red-faced, with a frizzy white beard.

"Roundhouses are easy to make," he says, waving his arms. He points out two animal skulls, tied to the entrance posts. Is that a cow's skull? Dyer grimaces politely. "It's a horse," he says, before proceeding to tell me how to make a roundhouse.

The ingredients are: 27 large oak trees, 60 small oak trees, 100 hazel trees, 100 ash trees, wheat straw for thatching, and animal hair, clay, manure, soil and water for the walls.

You will also need animals. Dyer escorts me to his pigpen to meet two nameless pigs. To domesticate animals, he says, you just have to enclose them in smaller and smaller areas. Provide them with what they need - food, water and attention - and they will obey you. You can then eat them, and peel them, and tan their hides for soft furnishings. But beware of sheep, he says, waving a bright red finger. "I know this guy called Si," he says. "He approached a frisky ram. It jumped up and broke his nose." I am back at Death by Sheep.

I telephone the psychologist Cecelia De Felice. I want to know if I will go insane in my new one-woman world, especially when faced with tasks such as chopping down 27 large oaks. "You will be in a state of trauma," she agrees. "You will quickly become lonely and paranoid. It is possible you will have a breakdown." And if I meet other survivors? Be cautious, she advises. "They too will be lonely and paranoid. Of course you are stronger in a group. But you do not know whether they will help you or just steal your resources. Trust no one."

I am (vaguely) confident I will not starve. But there is one other thing I am sweating over: nuclear power stations. Professor Alan Weisman wrote The World Without Us, a description of what he believes would happen to Earth if we all vanished. I call him. He says I am right to worry. Why? Because most nuclear plants are water-cooled. Water, he explains, in a dry, calm voice, needs to circulate around the reactors, or they will explode. If there were no humans to operate it, the plant would shut down automatically, and the water would be cooled with diesel fuel. For about a week. Then the heat from the reactor would evaporate and expose the core. "It will either melt down or burst into very radioactive flames," he says. So what would you do, Professor Weisman? "I would probably go to Canada," he says. "There aren't many nuclear power stations in Canada."

So, it comes to this. No matter how hard you try, Britain will probably become a nuclear wasteland. The snails that are your lunch will either die, or look very weird. So, again, what to do? My considered advice is this. You, Guardian reader, need to begin building a boat - a sailing ship, actually - to take you to - yes, Canada. Before you leave the city you should pause at a library and steal the entire boat-making and maintenance shelf. Canada may be your only hope of salvation. And that is as fitting an obituary for our civilisation as I can type. In The End, it turns out you don't just have to be the heroine of Survivors. You need to bloody well be Noah too.

Happy apocalypse.
It's not all bad: Fun things you could do after the apocalypse

• Pop into the National Gallery and take Jan Van Eyck's Portrait of a Man off the wall. (If you have no taste, take a Renoir.) The Van Eyck is hanging in the Sainsbury Wing. If you want to preserve it properly, Thomas Almeroth-Williams of the National Gallery suggests you store it in a slate mine, where the temperature and humidity levels are perfect for its conservation.

• Go to the British Library and help yourself to one of its two copies of Shakespeare's First Folio. One is in a box in a strong room under the library floor; the other is in a glass case in the Treasure Room. If you want to preserve it properly, Helen Shenton of the British Library suggests you store it in a cool, dark place, and watch it carefully for infestations by animals or fungi. Dust regularly.

• Steal the crown jewels. If you can. "There are contingency plans in place in event of a power failure," says a Royal Palaces spokesperson, "so the crown jewels should remain safe." Really? To preserve them properly, do nothing. A diamond is for ever.

• Invade the News of the World - it's in Wapping - and read all its secret files. Then break into M15. It's on Millbank. Read all its secret files too. Oh, no! She was murdered! I knew it!

• Go and stand on the stage at the Theatre Royal, Drury Lane. Skip over the bodies of the dead actors. Re-enact the whole of Oliver!
The vital skills you will need

How to make bread

I type this in full because I want bread at The End, and I want you to have it too (should you survive). So, clear the land, turn the soil over to create furrows, take seed from any wheat growing wild, sow it 20cm apart and kick the soil over. Make sure that the birds don't eat the seed.

Stop browsing animals by hedging the field off and root out weeds. When the corn is ripe, thresh it by hitting it with a stick and mill it by rubbing it between large stones. Add the flour to water to make dough. Stick it in a pan on the fire. Result? Wholemeal flatbread!

How to make sanitary products and toilet paper

Find some sphagnum moss and use that. It is very spongy and it contains iodine, so it is slightly antiseptic.

How to eat snails

Always, always quarantine snails before eating them. Take the snail and put it where there is nothing for it to eat. Ignore its cries of hunger, leave for three days and then consume.

How to purify water

Collect the water from the purest source available, ideally a spring, minimising sediment and avoiding chemical contamination. Filter it through a sock full of sand. Sterilise the water by bringing it to a rolling boil for a few seconds.

How to clay bake a fish

Wrap the fish in large leaves, tying up the parcel with nettle stalk. Dig for clay in the earth. After combining the clay with water, cover the fish with a centimetre of clay, leaving no cracks. Scrape a shallow pit in the centre of the fire and lay the fish in it. Cover the fish with embers. After an hour, remove the fish and crack the outer shell open. The fish should be perfectly cooked.

How to remove the skin from a cow

You can kill a cow by strangulation apparently, although I have never met anyone who has done it. Or you can cut its throat, or spear it through the heart. Split the cow along its belly from the groin to the throat. Remove the internal organs. Hang the cow up by its hooves for several days to let the blood run out. Cows are heavy, so do not attempt to do this alone. To take the skin off, slide a blade or a sharp stone between the skin and the flesh. Once you have inserted the tool a little way, you can just peel the skin off.

How to shoot a deer with a bow and arrow

Deer are sensitive to human noise and smell. If you stomp through the wood with a bow and arrow you will never find one. Find out where the deer are going to be - they often walk the same way to the same place. Camouflage your scent, be quiet and do not move. When you see a deer, shoot it from 20m away. You ideally need a kill shot, eg in a lung. You don't want to hit it in the bottom, because it will run off and you won't get your dinner. TG

• Sources: Leon Durbin (Wildwood Bushcraft), Steve Dyer (Butser Ancient Farm) and Ben Jones (Merlin Archery Centre).

[Demeter]

8. And for the Truly Bizarre: A Golddigger's Blog

http://www.nytimes.com/2009/01/28/nyregion/28daba.html?_r=1&ref=business

GO TO THE LINK TO SEE THE SHAMELESS HUSSIES IN THEIR LITTLE BLACK DRESSES



It’s the Economy, Girlfriend
By RAVI SOMAIYA

The economic crisis came home to 27-year-old Megan Petrus early last year when her boyfriend of eight months, a derivatives trader for a major bank, proved to be more concerned about helping a laid-off colleague than comforting Ms. Petrus after her father had a heart attack.

For Christine Cameron, the recession became real when the financial analyst she had been dating for about a year would get drunk and disappear while they were out together, then accuse her the next day of being the one who had absconded.

Dawn Spinner Davis, 26, a beauty writer, said the downward-trending graphs began to make sense when the man she married on Nov. 1, a 28-year-old private wealth manager, stopped playing golf, once his passion. “One of his best friends told me that my job is now to keep him calm and keep him from dying at the age of 35,” Ms. Davis said. “It’s not what I signed up for.”

They shared their sad stories the other night at an informal gathering of Dating a Banker Anonymous, a support group founded in November to help women cope with the inevitable relationship fallout from, say, the collapse of Lehman Brothers or the Dow’s shedding 777 points in a single day, as it did on Sept. 29.

In addition to meeting once or twice weekly for brunch or drinks at a bar or restaurant, the group has a blog, billed as “free from the scrutiny of feminists,” that invites women to join “if your monthly Bergdorf’s allowance has been halved and bottle service has all but disappeared from your life.”

Theirs is not the typical 12-step program.

Step 1: Slip into a dress and heels. Step 2: Sip a cocktail and wait your turn to talk. Step 3: Pour your heart out. Repeat as needed.

About 30 women, generally in their mid- to late-20s, regularly post to the Web site or attend meetings.

:puke:

[boomerbust]

32. All fine looking ladies

But not to bright. They should have been syphonimg off a little money to hold them over until they get their claws into another victim.:evilgrin:

[CatholicEdHead]

74. Yes, those ladies are highly hittable

but ones I will run away from with screwed up priorities. I have a couple of exes like them and they are as psycho as ever looking for what they think will make them happy.

[Hugin]

33. I've got a couple more steps for them...

2. Grow up.

3. Get a job. (Horrors!)

They might want to save their "cocktail money" too. This is going
to be a long one and they'll be over 30 by the time this crisis is over.
If ever... (Horrors! again.)

Yeesh! That water runs shallow. Barely enough to dip a toe.

I can't believe I read that article. :/

[Demeter]

9. AIG Said to Offer $1 Billion in Retention to Workers (Update1)

http://www.bloomberg.com/apps/news?pid=20601087&sid=auhzcUg60VZA&refer=home

By Hugh Son

Jan. 28 (Bloomberg) -- American International Group Inc., the insurer saved from collapse last year by government money, may have committed more than $1 billion to employees to keep them from leaving the company.

About 400 workers at New York-based AIG’s financial products unit may get $450 million in two installments, said two people familiar with the situation who declined to be identified because the plan is confidential. That is in addition to about $619 million in retention pay going to 4,200 executives and employees at subsidiaries including life insurance.

AIG is trying to hold onto employees while it sells businesses to repay a government loan. The insurer took a federal bailout in September after the financial-products unit, which sold credit-default swaps that plunged in value amid the housing market collapse, caused about $34 billion in writedowns. AIG said the program was disclosed before the government rescue, which is now valued at $150 billion.

“I was extremely disappointed -- but not surprised -- to learn that AIG will be awarding bonuses to the very division that drove the company into the ground,” said Representative Elijah Cummings, a member of the House Committee on Oversight and Government Reform, in an e-mail. AIG shouldn’t be awarding “millions of unmerited dollars to employees while at the same time begging the U.S. government for financial life support.”...

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10. Treasury pushes Citi to cancel jet order

http://www.ft.com/cms/s/0/e4093646-eca6-11dd-a534-0000779fd2ac.html


...Mr Geithner’s action came as he raced against time to change public perceptions of the government’s bank rescue effort – the troubled asset relief programme inherited from the Bush administration....

[Demeter]

22. Citigroup execs are also quietly trying to unload two of their older Dassault 900EXs.

http://www.nypost.com/seven/01262009/news/nationalnews/just_plane_despicable_152033.htm

Those jets, nearly 10 years old, are worth an estimated $27 million each. They were still listed for sale yesterday on the Web site of Citigroup's aviation broker, Aviation Professionals.

[Demeter]

11. What is a non-performing loan?

http://brontecapital.blogspot.com/2009/01/what-is-non-performing-loan.html


What is a non-performing loan?

Once upon a time I saw loan restructurings as code for faking the accounts. That was with good justification.

Conseco – before it blew up – had a habit of restructuring any loan that was delinquent. After restructure it was no longer delinquent – and lo – the credit metrics seemed OK.

After Conseco finally went bankrupt the truth came out. Loan performance went from sort-of-OK-if-you-ignored-the-fact-that-cash-actually-coming-back-in-payments-was-low to utterly desperate. The AAA strips of Conseco securitisations failed widely.

These days restructuring loans is the stated objective of many powers that be – most notably Sheila Bair. I never quite got that. If you show too many non performing assets (NPAs) Sheila Bair will just confiscate your bank. So the incentive is to restructure and restructure early. If the borrower can perform to restructured spec then presumably they are no longer an NPA. What Sheila Bair appeared to be advocating was government sanctioned account faking.

[Hugin]

12. Lots to catch up on this week...

Things are moving pretty fast.

(Oh, BTW... I'm here.)

[Demeter]

13. Like Ships in the Night

You must have come on just after I left. Welcome, Hugin!

[Demeter]

14. The Fed Awakens

http://www.motherjones.com/washington_dispatch/2009/01/federal-reserve-consumer-protection.html


The Federal Reserve had the power to protect consumers. Until now, it just chose not to use it." />

The good news: The Federal Reserve Board, the overseer of the nation's monetary system, has hired a consumer activist. The bad news: The Fed won't let him talk to the press.

In September, the stodgy financial regulator took the unusual step of hiring scrappy consumer advocate Allen Fishbein, who most recently worked at the Consumer Federation of America as its director of housing and credit policy. For years, Fishbein had sounded the alarm about abuses occurring in the subprime lending market and the dangers of deregulating the banking industry. He's now an adviser to Sandra Braunstein, the director of the Fed's division of consumer and community affairs.

His colleagues in the consumer protection world see Fishbein's hiring as one of a handful of indicators that the Fed is offering a mea culpa and trying to be receptive to average people, not just neoclassical economists. "I think the reason they brought Allen on is a recognition of their failure," says Ira Rheingold, executive director of the National Association of Consumer Advocates, who notes that the Fed "completely missed" the problems leading to the current financial crisis.

In a sign, perhaps, that the Fed is still not entirely comfortable in its new role, Federal Reserve officials have decided to keep their new hire under wraps. Fishbein's hiring didn't merit a press release, and when Mother Jones attempted to profile him in his new role, it took the Fed more than a month to respond to a request for access. And, when it did, the answer was no. (Even prying Fishbein's official job description out of the Fed was a chore.)

The Fed's reluctance to publicize the existence of an outsider in its midst is typical of one of the nation's most conservative and opaque institutions. Change at the Fed has traditionally been glacial. But Fishbein's arrival there is one of several hints that real change is indeed afoot. Recent developments suggest that the Fed is cracking open the doors of the temple and may be taking a more aggressive approach to banking regulation on behalf of consumers.

In December, for instance, the Fed issued new regulations reining in some of the more abusive practices of credit card companies. Among other things, the rules require credit card firms to mail bills at least 21 days before the payment is due, since many banks have created billing cycles so short that some customers are late in paying. Credit card companies are also banned from arbitrary and undisclosed interest rate hikes. There's some indication, too, that the Fed is planning on tackling excessive overdraft fees on checking accounts, a major gripe of many consumers.

Nessa Feddis, the senior federal counsel of the American Bankers Association, says that the new credit card regs were more the result of congressional pressure than innovation by the Fed. Sen. Chris Dodd (D-Conn.) and Rep. Carolyn Maloney (D-N.Y.) had been leaning on the Fed to use its authority to deal with credit card abuses, she says. Nonetheless, she agrees with the consumer advocates that the Fed is changing. Hiring Fishbein, whom she's known for many years, is out of character for the institution, Feddis says.

While the Fed, of course, isn't saying as much, the reason for its unusual hire isn't hard to intuit. For one, the Fed totally whiffed on preventing the subprime lending meltdown. Critics, including a former board governor, have fingered former Fed chairman Alan Greenspan for failing to heed warnings from consumer advocates and Legal Aid lawyers who, even in the early '90s, were dealing with the wreckage of an out of control subprime lending market.

It's not that the Fed didn't have the power to act; it just chose to remain on the sidelines. In 1994, Congress passed a law authorizing it to crack down on predatory and subprime lending by banks and other financial institutions. That law gave the Federal Reserve the power to regulate not just banks but all mortgage companies. It could have required some basic underwriting standards, like, say, insisting that mortgage lenders ensure that borrowers can actually repay their loans. It could have also curbed deceptive practices like teaser rates that increased sharply after a couple of years. If it had, the Fed might have averted much of the current financial mess. Instead, the board finally got around to issuing tough new lending regulations last year, long after the subprime industry had imploded.

Some Fed-watchers suspect that recent criticism of the institution has sunk in. Dan Immergluck, an associate professor of city planning at the Georgia Institute of Technology who has worked with the Fed, sees "an awakening" in the institution that for most of its history has been dominated by neoclassical economists who have viewed consumer protection as incompatible with the Fed's role of ensuring the safety and soundness of the banking system. As proof, he points to the Fed's response to a campaign last year by conservatives and mortgage industry officials to blame the Community Reinvestment Act for the foreclosure crisis—implying that the law, designed to combat racial discrimination in mortgage lending, had caused the meltdown. Immergluck says that the Fed governors forcefully disputed that notion, even posting research on the agency website to counter these claims.

Immergluck says the CRA also came under attack in the late 1990s, by conservatives like former Texas Senator Phil Gramm, when Congress was deregulating the banking system. Back then, when Greenspan was the Fed chairman, the institution never defended the law or corrected the record when critics misconstrued it, Immergluck says. He and other Fed-watchers attribute the change in tone and the Fed's new consumer protection focus to two things: the financial crisis, which laid waste to much of the conventional wisdom surrounding regulation of the banking sector, and a change in leadership. While Ben Bernanke has been harshly criticized for his handling of the bailout, consumer advocates say that he has ushered in a sea change at an agency that was headed for so long by Greenspan, a libertarian whose idea of consumer protection was tinkering with mortgage disclosure forms.

For years, the only real input consumers had on Fed policymaking came through involvement on the Fed's Consumer Advisory Council, a group that meets three times a year and provides feedback to the Fed governors. As many advocates are quick to point out, much of the council is made up of credit card industry officials. Another chunk consists of representatives of community development groups that are clients of the Fed. Only a handful of council members are what you'd think of as traditional consumer representatives.

Greg Squires, a professor of sociology, public policy, and public administration at George Washington University, served on the council from 1996 to 1998, during the Greenspan years. "We were there primarily to provide cover for the Fed so they could say they heard from consumer folks," he says, adding that Fed officials never really considered any of the council's recommendations, even after they had spent months drafting them.

Kathleen Keest, an attorney with the Center for Responsible Lending who also served on the consumer advisory council in the early 1990s, says that the Fed never wanted the consumer protection role Congress empowered it with. Fed economists have tended to regard consumer protection regulations as a drag on the market, she says, so consumers have always been second-class citizens in the Fed's eyes.

Keest says that the Fed has largely followed the advice of bankers, who have long argued that any sort of regulation of the market would lead to a reduction in access to credit. Now that the financial crisis has shown the opposite to be the case, Keest says that Fed officials have become slightly more willing to listen to the concerns of consumers. She says that the Fed is starting to realize that consumer protection is an important component of protecting the safety and soundness of the nation's banks.

Hence the hiring of Fishbein, who will presumably advise Fed officials from a more grassroots perspective and flag potential threats to the financial system before they go critical. Rheingold says the changes are baby steps; the credit card regulations are, for instance, "too little, too late" in part because they don't take effect until 2010 and may get eclipsed by congressional legislation. But even so, he says that combined with Fishbein's hiring, the Fed's recent activity is "such an enormous improvement over what we've had."



Stephanie Mencimer is a reporter in Mother Jones' Washington, DC, bureau and the author of Blocking the Courthouse Door: How the Republican Party and Its Corporate Allies Are Taking Away Your Right to Sue (Free Press, 2006).

[snot]

102. surprise!

"Keest says that the Fed has largely followed the advice of bankers , who have long argued that any sort of regulation of the market would lead to a reduction in access to credit."

[Demeter]

15. US set for ‘big bang’ financial clean-up

http://www.ft.com/cms/s/0/15f37800-ef05-11dd-bbb5-0000779fd2ac.html


The Obama administration is gearing up for a “big bang” announcement next week that will combine a bank clean-up with measures to reduce home foreclosures and probably steps to kick-start credit markets.

The plan will involve an overhaul of the troubled asset relief programme – the $700bn bail-out fund – including strict curbs on compensation at banks receiving public aid. The Tarp overhaul is intended to restore public confidence in what is a deeply unpopular programme and ensure that taxpayer money is not used to fund excessive pay, bonuses and dividends to shareholders.

“There will definitely be a cap of some sort on bonuses,” said a Wall Street executive who has taken part in talks with the authorities. “The political climate is such that there is a need to punish Wall Street.”

The announcement will follow Friday’s news that the US economy contracted at an annualised rate of 3.8 per cent in last year’s final quarter – less than analysts were expecting, but still the worst quarter since 1982. The fall was cushioned by ballooning inventories, which suggest the economy could shrink faster than expected in the first quarter.

The “big bang” approach reflects the belief of Tim Geithner, Treasury secretary, and Lawrence Summers, National Economic Council director, that the Bush administration was wrong to dribble out policy initiatives. Mr Geithner intends to present a “comprehensive” plan that policymakers hope will command market confidence.

Details of the financial overhaul are being finalised and have yet to be approved by President Barack Obama, but it may include both the purchase of toxic assets by a “bad bank” and insurance-style guarantees for problem assets remaining on bank balance sheets.

Anti-foreclosure efforts are likely to focus on subsidising programmes that reduce unsustainable monthly mortgage payments, though there may also be support for schemes that subsidise the partial writedown of loans that exceed the value of the home. Treasury may also unveil new efforts to revitalise dysfunctional securitisation markets.

Additional reporting by Francesco Guerrera

[Demeter]

16. Shell Sells Oil Cargoes, Phibro Tanker Leaves Orkney

AHA! REMEMBER FRIDAY'S SMW WITH MY REPORT ON SHELL'S PROFITS DOWN BECAUSE THEY COUNTED THEM BEFORE THEY SOLD THE OIL?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aalHiInlBJ8g&refer=home



By Alexander Kwiatkowski

Jan. 27 (Bloomberg) -- Royal Dutch Shell Plc sold more than 1 million barrels of crude stored off the U.K. and a vessel hired by Citigroup Inc.’s Phibro LLC left its anchorage in Scotland for the U.S. as the incentive to keep oil in tankers disappears.

Shell sold two 600,000-barrel cargoes of North Sea Forties crude for delivery in mid-February at Scapa Flow near Scotland’s Orkney Islands to oil trader Vitol Group, the companies said. The oil, already on board the supertanker Oliva, has been anchored off the U.K. coast since at least December, according to Bloomberg vessel tracking data.

Oil companies and traders have stored as much as 80 million barrels of crude on tankers as the so-called contango, a market where buyers pay more for supplies later in the year than now, allowed them to profit from storing crude. The incentive to store oil on vessels is shrinking as the spread between 1st- and 12th-month crude narrows to about $12 a barrel from $17 in early December.

“If the contango continues to flatten, then even the most optimistic of those companies storing crude will try to get rid of their oil,” said Ehsan Ul-Haq, head of research at oil market consultant JBC Energy GmbH in Vienna. Higher spot prices may encourage traders to release cargoes back into the market now rather than waiting, he said....

The contango allowed traders to profit by buying oil for immediate loading, keeping it for months at sea and selling futures at a higher price than the spot price. They could profit as long as the difference was greater than storage, insurance and finance costs.

Speculation that OPEC supply cuts will reduce inventories in the second quarter of this year is causing the contango to narrow, Gareth Lewis-Davies, a London-based energy analyst at Dresdner Kleinwort Group, said in a research note last week.

As the contango decreases and freight costs rise, the incentive to store crude on vessels is disappearing, he said.

The cost of shipping a crude oil supertanker west across the Atlantic has climbed about 20 percent since the beginning of December to $2.25 a barrel today, according to Bloomberg data.

OPEC Supply Reductions

The Organization of Petroleum Exporting Countries, which supplies more than 40 percent of the world’s crude, agreed last month to cut oil supply by a further 9 percent from January in an attempt to support prices as demand slumps. The International Energy Agency forecasts that oil demand will shrink for a second year in 2009, the first back-to-back contractions since 1983.

The Forties crude cargoes sold by Shell will be transferred directly from the Oliva to one or more tankers hired by Vitol, a process known as a ship-to-ship transfer. Scapa Flow, a natural harbor where Germany’s High Seas Fleet was scuttled in 1919, is used for such transfers because of its deep water and shelter.

Three vessels storing Forties remain at Scapa Flow, according to information on the harbor’s Web site. They include the Eagle Vienna, a supertanker hired by BP Plc.

Reported trades, bids and offers of North Sea oil typically occur during a “trading window” that ends daily at 4:30 p.m. London time. Platts, a unit of New York-based McGraw-Hill Cos, uses data from the window to make price assessments.

To contact the reporter on this story: Alexander Kwiatkowski in London at [e-mail];
Last Updated: January 27, 2009 13:08 EST

[Demeter]

28. OPEC Achieves Cuts in Output, Halting Price Slide By JAD MOUAWAD

http://www.nytimes.com/2009/01/26/business/worldbusiness/26opec.html?_r=1&ref=business



After months of gradually closing the oil spigot, members of the OPEC cartel have managed to stop the slide in oil prices — at least for now.

Showing an unusual degree of discipline, members of the Organization of the Petroleum Exporting Countries have slashed their output by more than three million barrels a day in recent months as they sought to put a floor under oil prices, which have fallen by $100 a barrel since last summer. That is about 75 percent of the production cuts pledged by members of the cartel since September.

The cuts have been led by Saudi Arabia, the world’s top exporter, which has trimmed its production to eight million barrels a day this month, down from nearly 10 million barrels over the summer.

In September, OPEC producers vowed to reduce their output by 4.2 million barrels a day, or about 5 percent of global production.

“Compliance has been extremely high,” said Kevin Norrish, an oil analyst with Barclays Capital in London. “Most OPEC countries have done most of what they’d pledged to do.”

Oil lost 70 percent of its value in recent months as the global economy fizzled and oil consumption fell. In the United States, the world’s biggest consumer, demand has dropped nearly 8 percent, or 1.6 million barrels a day, from a year ago. Most experts believe global oil consumption will decline in 2009 for the second straight year.

But OPEC’s policy seems to be catching up with the economic downturn. After hitting a peak above $145 a barrel in July, and falling to $32 a barrel by December, their lowest level since the end of 2003, oil prices have stabilized in recent weeks. As the latest OPEC cuts have influenced the markets, prices have been trading in a range from $35 to $45 a barrel.

OPEC’s success has created the prospect of a rebound in prices — most oil-producing countries want prices well above $70 a barrel. But such a rebound could hobble the world economy further, making an eventual recovery more difficult.

Already, retail gasoline in the United States has bottomed out and begun to rise. It is still far below the high of $4.11 a gallon in July, but is up about 20 cents over the last month, to a national average of $1.86 a gallon.

On Friday, oil prices rose $2.80 a barrel, or 6.41 percent, to settle at $46.47. While that is well below last summer’s level, it remains relatively high by historical standards.

The precipitous slide in recent months had alarmed many producers, as well as some Western oil companies, which warned of lower investments for new energy supplies.

ConocoPhillips, for example, last week trimmed its investment program by 18 percent, or $2.8 billion, for this year. Suncor Energy, which produces oil from Canadian tar sands, slashed its investments for the second time in a few months. After posting a loss in the fourth quarter, Suncor cut its spending plans to $3 billion this year, down from $10 billion.

“Politically, it is better to say we need the lowest possible oil prices, but there are economic implications to low prices, and not just for OPEC producers,” said Olivier Jakob, the managing director of Petromatrix, an independent research firm in Zug, Switzerland. “Lower prices defer investments in the energy sector that could hurt Western economies in the longer term.”

The steep drop means that oil prices have returned to levels last seen before 2004. But given a rise in production costs, and vast government spending programs initiated by most oil-producing states, many oil exporters today need significantly higher prices to balance their budgets.

Saudi Arabia, for example, once seen as favoring low prices, recently said that it considered $75 a barrel to be a fair price.

Oil companies also say they need higher prices to develop complex and costly resources, like deepwater fields or tar sands, that have higher break-even costs.

“If economies recover, we will quickly face the same challenges on the supplies,” Helge Lund, the chief executive of StatoilHydro, a Norwegian oil company, said in a recent interview. “We won’t be able to meet the increase in demand.”

The drop in prices, if sustained, may lead to a realignment of policies even for the most nationalistic producers, analysts said. Kazakhstan and Venezuela, for example, recently indicated they might relax investment terms or seek new deals with foreign companies in a bid to bolster their production and increase revenues.

The OPEC cartel’s discipline reflects a more forceful stance taken by Saudi Arabia, the group’s most powerful producer, which has taken the lead in aggressively cutting production in recent weeks.

The country’s oil minister, Ali al-Naimi, said the kingdom would go even beyond its OPEC pledges with a unilateral cut that would bring its output next month below its official target. Analysts expect the kingdom to reduce its output by an additional 300,000 barrels a day below its OPEC quota.

“We are working hard to bring the market in balance,” Mr. Naimi said a few days ago in New Delhi.

Saudi Arabia’s economy is expected to shrink this year, and the country is planning to run a budget deficit because of the slump in oil prices.

OPEC has received some involuntary help from other producers. These include Mexico, where output from the country’s biggest oil field is declining sharply; Russia; and Canada, where producers of tar sands have shut down some operations that are becoming uneconomical at today’s lower oil prices.

The last time the cartel met, in December, its members pledged to reduce production by 2.2 million barrels a day. It was the group’s third agreement in four months to cut its output, after pledges of 500,000 barrels a day in September and 1.5 million barrels a day in October.

But not everyone believes that OPEC’s actions can keep prices from falling further, especially if the global economy continues to worsen.

OPEC has announced 12 quota reductions since 1993, and 80 percent of the time the cartel succeeded in defending a floor for oil prices, according to an analysis by Deutsche Bank. The times when the cartel failed was when global economic growth was falling sharply, as in 1998 and 2001.

OPEC’s president, José Maria Botelho de Vasconcelos, has said he expected oil prices to eventually recover to around $75 a barrel this year as a result of OPEC’s actions. The cartel is expected to meet again in March. At least one producer, Iran, has said the group might slash production even further to push up prices.

“If all the cuts are carried out within the established time frame, there will be an impact in the market that will lead to a positive trend in terms of oil prices,” Mr. de Vasconcelos told Reuters.

[Demeter]

31. Repost from SMW Friday--It Was Added So Late

tclambert (1000+ posts)

Fri Jan-30-09 09:00 PM
Response to Reply #32


Other than the Bush administration, name someone who has done more harm to America than Exxon Mobil.

Or the world. Since Bush and Co. were largely acting as Exxon's reps, you might even be able to include them. Something like 30 years ago, Brazil committed to energy independence. It took a long time, but they did it. That could have been us. 6 Presidents could have committed us to breaking the oil habit, but failed to do so. Instead, we let Exxon lead our energy policy.

Our official energy policy of the last 30 years should have been to utterly destroy Exxon Mobil.

[Demeter]

17. Economic Cures Are Like Booze for an Alcoholic: Caroline Baum

http://www.bloomberg.com/apps/news?pid=20601110&sid=aPJkziibdxM8


Jan. 27 (Bloomberg) -- Someone returning to Earth from a yearlong sojourn in outer space could be excused for feeling disoriented.

After all, when said space traveler departed our fair planet, the U.S. economy was buckling under the weight of the burst housing bubble. The blame game was in full swing, with the villains ranging from Alan Greenspan and his easy money policies to consumers borrowing and spending beyond their means to financial institutions enabling profligate spending to a misallocation of capital to housing.

Fast forward one year, the crisis is still going strong, the villains are still under attack, yet something curious has happened: The policies and actions responsible for the economy’s illness are now being prescribed as cures.

How can that be? It’s not just our space traveler who’s confused. CLICK ON LINK TO FIND OUT!

[Demeter]

18. Bet against a sovereign government at your own risk

http://www.ft.com/cms/s/0/27f29e1e-ec12-11dd-8838-0000779fd2ac.html


Betting against the creditworthiness, or continued eurozone membership, of Portugal, Italy, Ireland, Greece and Spain has become a mainstream activity. Once the province of marginalised sceptics and sensation-seeking columns (such as this one), it seems to be attracting more attention, in part because it has been so profitable.

Back in late June, when we last reviewed the euro spread-widening trade, the extra interest (spread) paid by Italian 10-year bonds over that of German 10-year bonds was 50 or 60 basis points. Recently, it has been close to three times that.

However, I am beginning to think the forces that created the success of the trade could turn it into a trap. Betting against a sovereign government, and winning, should make one very nervous. As long as there was no imminent threat of eurozone financial crises, the trade was an entertaining and profitable game that could be executed with low transaction costs and little execution risk. Before the autumn's credit crisis, dealers and banks were perfectly happy to pick up a basis point or two selling total return swaps that let speculators go short one euro-country's issuance, and long another's. The real problem with selling the risk/reward to one's partners was that for many months, or even years, shorting the weaker European economies was less than gripping.

Now, unfortunately, it's interesting, and the risks of the strategy will only increase. But how good a sense of humour do sovereign governments have about traders and the like betting against their character and economic capacity? Not much these days.

Those of us with memories that stretch back to the 1970s, or earlier, remember "exchange controls". UK controls were in place from 1939 to 1979. Of course, the Maastricht Treaty amendments to European law prohibit member countries from restricting movement of capital.

There are holes in that prohibition. Article 73(d) says the previous provision establishing free capital flows in Europe "shall be without prejudice to the right of member states . . . to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions . . . or to take measures which are justified on the grounds of public policy or public security."

That's an opening the size of the Gotthard Tunnel for any government that decides it doesn't like a bunch of rootless cosmopolitan speculators borrowing its bonds for the purpose of short selling.

Oh, and the European Union as a whole is subject to exchange controls when Brussels decides they're a good idea. Article 73(f): "Where, in exceptional circumstances, movements of capital to or from third countries cause, or threaten to cause, serious difficulties for the operation of economic and monetary union, the Council, acting by a qualified majority, on a proposal from the Commission, and after consulting with the ECB, may take safeguard measures with regard to third countries for a period not exceeding six months . . . "

So, no exchange controls again, just "safeguard measures". They aren't safeguarding you, Mr Macro Manager. You could argue that you were borrowing Spanish bonds and selling them short because it wasn't you, but Spain's lack of competitiveness that was causing those "serious difficulties for the operation of economic and monetary union". But while I would agree with you, I don't think those tax and banking inspectors would care much about our opinions. So your account would remain frozen until all those questions they raised were cleared up.

I wondered about my interpretation of European sovereigns' rights, so I called Cleary Gottlieb, the law firm that advised Argentina on its devaluation-default-depegging whatever. They wouldn't even say for the record whether anyone had asked their opinion. Jonathan Blackman, a partner in the firm's sovereign practice, said: "Countries will individually or collectively do what is necessary to protect themselves from catastrophic events. As Justice Jackson said, 'the Constitution is not a suicide pact'. That is also true of the treaty governing the euro."

In other words, you can bet against the weaker European governments until it really matters. Then you will probably lose, one way or another, in an unexpected way.

One monetary economist notes: "A few weeks ago, everyone in the market was pro euro. Now it's apparent that the euro is making things worse."

For the targeted countries, the only way out of their lack of competitiveness would be either drastic wage deflation, which would lead to myriad defaults, or a supernatural increase in productivity. The numbers, though, are daunting. Spain would have to make up for a 17 per cent rise in unit labour costs, compared with the rest of the industrial world, since 1999.

In these circumstances, successful speculators can count on being targeted for revenge.

[e-mail]

[Demeter]

19. Pfizer Buys Wyeth: Layoffs Financed by You and Me

http://econblogreview.blogspot.com/2009/01/pfizer-buys-wyeth-layoffs-financed-by.html


I have spent the last two decades working in and around the pharmaceutical industry. Having now spent the last year focusing on the worsening financial and economic conditions in the U.S. and globally, it is fascinating to see the latest useless combination of one tired pharmaceutical giant with another dovetail unexpectedly with the financial crisis.

To wit, the leaks the last few days were correct: Pfizer has agreed to purchase the former American Home Products, now called Wyeth, which got smart years ago and saw that better living through chemistry would make its shareholders richer than pots and pans could. And so it came to pass. After all, purchasing products for the kitchen lacked a direct subsidy, but drug benefits provided by employers - now there's an opportunity to jack up profit margins. This mid-course corporate life change was brilliant and has now been definitely rewarded. While matters are less clear from Pfizer's standpoint, what appears likely is that the U.S. taxpayer is indirectly subsidizing future massive layoffs in one of the "green" knowledge-based industries that we need to encourage, having just subsidized the preservation of jobs in the U.S. auto industry that has fought greenness in every way it can.

Please see the press release, "PFIZER TO ACQUIRE WYETH, CREATING THE WORLD'S PREMIER BIOPHARMACEUTICAL COMPANY" for Pfizer's take on things.

Here's my take. I'll get to the tie-in to the financial mess and TARP in points 3, 4 and especially 5.

1. Buried in the press release is the fact that Pfizer is cutting its dividend in half.

2. It is well-known in the pharmaceutical industry that Pfizer functions like the military- with unbelievable rigidity; but without the operational flexibility that battlefield commanders in the military have; and with the same creativity of the French military in preparing for WW II; and without the capacity to learn from its mistakes. That said, Pfizer has the gall to trumpet the concept that this already-stultified company will become flexible- think pre-pubescent Chinese gymnasts:

"Unique and Flexible Business Model Features Focus and Agility of Smaller Enterprises Backed by Resources and Scale of Global Company".

Excuse me. I'm going to take a 5 minute break and decide whether to have a good belly laugh or vomit.

3. (I'm back. I'll keep you in suspense as to what I did.) The press release again:

"Combination Strengthens Platform for Improved, Consistent, and Stable Earnings Growth and Sustainable Shareholder Value"

However, here's Bloomberg's take on how Pfizer can struggle to keep earnings from declining, forget about growing earnings:

"The Wyeth transaction . . . could keep Pfizer’s earnings unchanged at $2.69 a share from 2010 to 2015, when patents expire on some of Pfizer’s biggest products, Anderson (a Sanford C. Bernstein analyst) said in his report. That compares to a 68 percent drop without the acquisition, to $1.40 in 2015."

"To achieve that, Pfizer would need to cut 70 percent of Wyeth’s research, marketing and administrative costs, Anderson said."

So Pfizer is going to put most of Wyeth out of business. Heck, Wyeth could have done that today on its own and basically become a free cash flow machine.

(My non-cynical take is that Big Pharma should cancel 100% of its research into new chemical entities. It should outsource all of it to those that really know how to do it, such as small companies; academia; and, surprisingly, government, which has a major public policy interest in success. Let Big Pharma stick to what it is good at, which is convincing doctors to prescribe expensive new drugs to patients, whether or not those new drugs have any advantage over others that are available for much less cost in generic form; and doing clinical trials of a drug that has already been discovered.)

4. Bloomberg again:

"Pfizer also will halve its quarterly dividend to 16 cents a share, fire 10 percent of the pre-merged workforce, or about 8,000 people, and close five factories."

In other words, Pfizer is shrinking along with cutting its dividend. Note the term "pre-merged" (I can't call it a word, as I can't find it in an on-line dictionary). The press release also ignores the fact that Pfizer has sunk so far in its own estimation of its own industry's growth prospects that has let it be known that it is now also a full-fledged generic drugs company.

5. Bloomberg once more:

"Among the banks advising Pfizer and arranging a loan package to finance part of the purchase price are Bank of America Corp., Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc., and JPMorgan Chase & Co., said people with knowledge of those banks’ roles."

So here's the bottom line. The taxpayer has kept BofA, Citigroup, Goldman Sachs and JP Morgan alive with TARP money and other goodies. Now these same firms are going ahead and "arranging a loan package" that will keep Pfizer's earnings up (maybe) with mass layoffs in a transaction so large that it will of necessity be anti-competitive even if OK with Justice (which it will be).

These companies have no shame.

They will finance a mammoth deal such as this takeover that will destroy lots of jobs so that Pfizer can perhaps one day boast about raising its dividend (ignoring that it has been halved), but they won't get serious about keeping people who purchased toxic mortgage products from them or their brethren stay in the homes they never could afford.

These financial institutions deserve the death sentence if they can't support themselves absent government largesse.

[Tansy_Gold]

50. "Capital" punishment indeed

These financial institutions deserve the death sentence if they can't support themselves absent government largesse.


The only time I believe in the death penalty.



TG

[Demeter]

20. Credit Crunch Leads Nations to Barter for Food

http://www.nakedcapitalism.com/2009/01/credit-crunch-leads-nations-to-barter.html

No, the headline is not an exaggeration. And it demonstrates that credit conditions remain tight for many less than stellar borrowers.

From the Financial Times:http://www.ft.com/cms/s/0/3e5c633c-ebdc-11dd-8838-0000779fd2ac.html

In a striking example of how the global financial crisis and high food prices have strained the finances of poor and middle-income nations, countries including Russia, Malaysia, Vietnam and Morocco say they have signed or are discussing inter-government and barter deals to import commodities from rice to vegetable oil.

The revival of these trade practices, used rarely in the last 20 years and usually by nations subject to international embargoes and the old communist bloc, is a result of the countries’ failure to secure trade financing as bank lending has dried up.

The countries have not disclosed the value of any deals, and some have refused even to confirm their existence. Officials estimated that they ranged from $5m for smaller contracts to more than $500m for the biggest.

Josette Sheeran, head of the United Nations’ World Food Programme, said senior government officials, including heads of state, had told the WFP they were facing “difficulties” obtaining credit to purchase food. “This could be a big problem,” she told the Financial Times....

The countries’ struggle to obtain credit to import food is boosting the price of domestic crops. Ms Sheeran said that prices of crops in some African countries were rising sharply even as international food commodities prices had fallen from last summer.

[Demeter]

21. Merrill Pay Down Only Slightly for 2008 from 2007

http://www.nakedcapitalism.com/2009/01/merrill-pay-down-only-slightly-in-2008.html

In case you had any doubts about the propriety of Merrill's 2008 pay packages, this Wall Street Journal story on the continuing slugfest between Merrill's former CEO John Thain and Bank of America's chief Ken Lewis should put any doubts to rest:

http://online.wsj.com/article/SB123298094568215539.html

According to a securities filing last week, Merrill's overall compensation and benefit expenses were down by 5.7%, to $15 billion in the year ended Dec. 26, from $15.9 billion a year earlier. The average Merrill employee got $247,423 in compensation and benefits in 2008, down just slightly from 2007.

By contrast, Bank of America employees got $75,577 in average compensation and benefits in 2008, down from $89,420 in 2007.


The gap in pay between commercial bankers and investment bankers is one of the biggest sources of friction, but the fact that far less handsomely paid workers took far bigger hits is rubbing salt into an open wound.

Thain defended the Merrill pay levels by saying the discretionary bonus pool fell 41% last year. Hhm, that would seem to imply that during his tenure, there was a much higher proportion of staff with "fixed" compensation levels, meaning guaranteed bonuses. It appears that Thain and his hires shifted average comp significantly (as in skewed it considerably from what it would otherwise have been).

[Demeter]

23. Chain of Blogs With Humorous Intent

Inflation v. Deflation

http://nihoncassandra.blogspot.com/2009/01/inflation-v-deflation.html

Dear Diary:

For the record, on the Inflation vs. Deflation debate, I know that you know that I've personally held the view that since core asset prices began to slide in 2007, that deflation was more likely than inflation. We predicted the demise of commodities (fully requited) and the diminuation in precious metals (partly requited) too, that disinvestment would trump investment implying further destruction of core asset prices. We believed this for the simplistic reason that we believed we'd witnessed "Peak Credit", causing such massive destruction in core asset prices (particularly real estate, and equity) combined with destruction of wealth and bank capital from paper backed by these real estate (and other unsecured and poorly-secured consumer-related) assets was, and would continue to be far greater than any measure of recapitalization or monetary conjuring the authorities could implement or that lawmakers could politically countenance. This was the crux of a debate with Steve Waldmann at Interfluidity last Spring, and has continued on-and-off with the inflation-fearors - most passionately the Austrians - through to the present.

It was, I believe a contrarian view until Q3 08, when the world seemingly en-masse discovered revulsion, risk-aversion, and wholesale fears of deflation - fear not seen since Q3 02. Despite the swinging of the pendulum towards the deflationary outcome, chatter amongst sound money types (of which I AM one though our concept of sound money was collectively one which would have insure we were never in this situation in the first instance) has remained decidedly critical of Bernanke, and the Fed, and all official attempts to ameliorate the collapse of the financial system as we know it, on moral, philosophical and financial grounds, the latter being mostly predicated present or future inflation risks. The derision is shared by many I respect such as Willem Buiter, and Martin Wolfe, not to mention a number of Austrians with whom I correspond off-line.

As much as I agree philosophically, I am more forgiving and sanguine - of both the the authorities modus operandi and at least in the near and medium-term, of the consequences since I believe that with the money markets seized as they were, and after the Lehman lessons, letting any large financial institution liquidate at THIS time, into a disorderly market - i.e. not guaranteeing all deposits, and senior bank debt, and probably most junior albeit with possible haircuts, would entail unmentionable panic, bank runs, and unspeakable systemic dislocation as EVERYONE withdraws deposits and tried to sell bank debt in lieu of government securities, further complicating adjustment, and reinforcing the most pernicious of deflationary forces. Such an outcome in my opinion is wholly untenable, and probably even unnecessary. This doesn't mean I agree with TARP or asymmetrical Treasury initiatives to help friends of Hank , or their methods, but it does mean that I am not nearly as harsh on the Fed for ballooning its sheet, attempting to do what it can in the immediate term, and again, sanguine about it's ultimately inflationary impacts. Of course, I believe the authorities should have contemplated the inevitable arrival at this point in time when when they unleashed these forces, and dismissed the germanic disdain for unbridled credit growth. But the key point is that I've viewed efforts as band-aids and non-inflationary since they are merely triaging the hemorrhaging of asset prices and capital THAT ARE ALREADY OUT THERE - houses already built, capital already expenditured and consumed. As result of this, no one is going to build new housing, time shares or officer buildings, plant & equipment or such. No American consumer is going to be permitted to become more indebted or consume much beyond what he takes in. No financial institution is going to expand their balance sheet when everyone and everything is deleveraging from Peak Credit. And in any event the official sums proposed are too small in relation to that which has been destroyed, and will continue to be destroyed as assumptions about debt service, future growth, consumption and asset prices reverts to long-term means. Moreover, there should be no shock whatsoever that consumption has fallen off a cliff. It is not mysterious, but merely a return to that which the people can afford sans Refi and HELOCs, sans tax-cut, sans expanding credit, sans increasing vendor financing, sans rising asset prices. It seems to me I can recall others than myself who saw the faux-prosperity and faux-recovery from 03-07 for what it was: massively-goosed by non-extrapolatable, non-recurring items that would.. inevitably.. unwind.

But that was then. And this is now, and I still find few of those skeptical financial calvinists I respect articulating a similarly sanguine view, excepting Dr Roubini who seems to favor the bold actions without fearing the inflation that so many others seemingly fear. Recently I came across a post about the ballooning Fed balance sheet in Doc Hamilton's post (tnx NT!), he does a super job of teasing out the costs and benefits of Fed actions, and proposes modification by eliminating the payment of interest on reserve balances. There follows a super exchange in the comments section on the mechanisms of inter-CB swaps, and other exchanges about the inflation-deflation debate. Buried in there were some comments by Dr Perry Mehrlingat Columbia (who Capital Chronicle has pointed out has a CV with esteemed accomplishments of a length approaching Tolstoy's War&Peace), who finally articulated the 1,000,000,000,000-dollar question that has been on the forefront of my mind:

Everything in the post is correct, and very much on the minds of every Fed watcher. The question is, what does it mean? I have what may be a contrarian view.

It seems to me that what we are seeing is simply the balance sheet consequences of the Fed's decision to take the wholesale money market onto its own balance sheet. Banks (and other entities) that used to lend to one another, are now lending and borrowing through the intermediation of the Fed. This is so not just domestically but also internationally (the huge swap line), since foreign banks used to fund dollar asset holdings in the dollar money market.

In this view, inflation seems much less likely. Why not? If the original wholesale money market borrowing and lending was not inflationary, then why should its substitute be inflationary? Indeed, the real question is whether the expansion of the Fed's balance sheet is keeping pace with the contraction of money market credit more generally. If not, then the consequence may be deflationary.

Posted by: Perry Mehrling at December 22, 2008 05:12 AM


So finally, I see what I feel intuitively in words. They look right. And I want to know: If this is NOT right, why not? If inflation is just around the corner, how and in what form will it emerge? Who's balance sheet will expand to create the money sufficient to offset the destruction in already-consumed asset prices and consumption beyond one's means that is, by all accounts, unfinance-able at this and probably future points in time. If there is a plausible alternate reality, please paint it for me here and now, both technically and anecdotally.

Yours truly,

Cassie

[Demeter]

24. Why the Federal Reserve should LITERALLY throw money out of helicopters

http://brontecapital.blogspot.com/2009/01/why-federal-reserve-should-literally.html

Cassandra (who normally does Tokyo) has a diary note in which (s)he explains – in layman’s terms – why the Fed printing all that money (expanding its balance sheet) is not inflationary....

This is of course correct – as far as it goes. To the extent that Fed balance sheet expansion simply offsets private balance sheet contraction there is no net increase in money and near substitutes – and so the Fed balance sheet expansion cannot be inflationary. We are – to that end – stuck in our deflationary spiral.

The situation has a name in the economic jargon - a liquidity trap. An American – not a Japanese version of a liquidity trap – but a liquidity trap nonetheless. No matter how much “money” the Fed supplies the public will want to hold it. Monetary policy is thus useless.

This is usually made out (by Krugman et al) as an excuse for massive fiscal policy. And I am not averse to that.

However there is another approach which I detailed in my lessons from shorting JGBs post. The argument: if you can’t fix the problem with increasing money supply then maybe you can fix the problem with decreasing money demand.

You need to convince people not to hold money. You need to convince them that cash is trash.

And to do that you need to convince the public that there will be inflation (the above gross leverage argument notwithstanding).

To do that the Federal Reserve has to be credibly irresponsible. It is not enough to print a couple of trillion dollars (which they have) because everyone thinks (with some justification) that they will suck back the money supply when the crisis is over.

No – you have to be more visibly reckless than that. You have to really convince people that there will be inflation.

So the suggestion in my title is literal. The Federal Reserve should hire a couple of hundred helicopters and load each one 10 million dollars in neatly bound parcels of $1000 each. Total cost $2 billion plus trivial helicopter hire.

It should fly them over 200 randomly picked American cities and throw the money out the window. It should press release this – but press coverage will be excessive. Indeed I suspect that the press coverage would give the Fed’s inflation policy greater awareness than the Coca Cola Company. (The Coca Cola Company’s annual advertising budget is $2.8 billion – so this is already cheap compared to some private sector alternatives.)

The press release should be simple. We are doing this to induce inflation. If there is no inflation as a result we will simply do it again.

Of course people will fall of roofs after searching for money that might have landed on their house. They might die. Of course people might get trampled in the crush. They might die too.

All of this increases the visible recklessness of the policy.

But the charm of this. It may actually induce mass spending of American dollars for (self-fulfilling fear of inflation)– a massive stimulus. And it will do it all for $2 billon. Obama has a stimulus package of $1.2 trillion – or about 600 times as large. This is relatively cheap.

The real case for throwing money out of helicopters is that it looks like it will work better than anything else that anyone has come up with yet.

And it will be cheap. Much cheaper than alternatives that are actually being implemented.

The secondary benefit is that most of the losses from inflation will be in the hands of the Chinese who have built huge reserves of soon-to-be-deflated US dollars.

Hey what better – lets kick start the economy and get the Chinese to pay.

I am serious. At least serious until I can get a credible explanation as to why this won't work at least as well as any of the alternatives being mooted.





John Hempton

[Demeter]

25. Reaction to the Helicopter post

http://brontecapital.blogspot.com/2009/01/reaction-to-helicopter-post.html

The helicopter post has had the most reaction of any post on this blog. I guess that is the territory when you suggest that the solution to the financial crisis is to literally throw money from helicopters. Nonetheless I wish I could get that sort of reaction to a more serious post.

The reaction to the helicopter post fell into three categories:

* those that didn’t get it
* those that got it but may have had ethical problems, and
* those that understood it all too well.


I got one comment – via email – which explained very simply why the helicopter proposal wouldn’t work. I think that commentator’s argument is accurate – so – at the end I will lay it out and (tentatively) withdraw the helicopter proposal.

Those that didn’t get it

There seemed to be several comments (email and on blog) which suggested that it would be better if we just gave everyone a tax holiday (payroll, income, death duties depending on where in the political spectrum the commentator was).

This does not cut it. The purpose of the proposal (throwing money out of helicopters) was not to distribute money (for which plenty of effective mechanisms exist). The purpose was much more radical – to remove trust in money itself.

The proposal I made was remarkably cheap (a $2 billion solution to a multi-trillion dollar problem) and if it works it works for purely psychological reasons – which is that it is so reckless and irresponsible that nobody could ignore the inflationary impacts of Federal Reserve policy. Reckless and irresponsible (and small) was the charm of this proposal.

Indeed I suggested in the comments that it would work even better if Bernanke continuously surrounded himself with buxom prostitutes paid out of freshly minted moolah, but that image was just too horrific – even for this purpose (although it may be effective).

Some that simply got it

There were a couple of posts that simply got it. The cutest came from someone calling themselves the German Trader who put it very simply (if in very poor English):

You only give something away when you think it is worthless and what you get is of greater worth. While seeing the riots after Bens helicopters came past I surely want buy a new car.


Kieren (who I do not know) pointed out that the trick was really to produce inflationary expectations (and hence to get people to spend) without producing inflation. That is why this might work. The amount of money involved is small ($2 billion versus over $2 trillion in money supply) so its effect should also be small – but the expectations effect could be enormous. That was – in theoretical terms – what I was trying to achieve.

Some who got it and raised ethical objections

There were a few ethical objections raised – firstly by people who thought I was right that this policy would cause riots and deaths and then promoted more responsible ways of doing the same trick. The people killed in riots are collateral damage of a deliberately irresponsible policy. I don’t know how to weigh one life versus another – but this financial crisis will kill hundreds of people before it is over – either suicides or more bluntly hunger in some countries badly hit. The ethical objection is real – and I have no solution. The policy proposed is deliberately irresponsible – and irresponsibility causes death in some instances.

The main ethical objection I expected was about property rights and theft. I wrote the post in Australian hours and it was seen by Australian/Asians then English/Europeans and finally by North Americans.

I had to wait until American waking hours for someone to point out the obvious - which is that the policy being advocated was the deliberate theft of property (deliberate inflation being theft). Europeans somehow seem less concerned than Americans about property rights.

I am usually very harsh on government policies which involve the removal of property rights simply because those policies are usually counter-productive. There are plenty of posts on this blog along those lines. However those posts are argued on a facts-and-circumstances basis – the abrogation of property rights is argued as a problem in this instance and property rights are not automatically given full moral status. That is my position generally – honouring property rights is a good thing to do because it generally leads to better outcomes. I understand that some people (almost all Americans and including many readers of this blog) have raised property rights to full ethical status (along with for instance the rights to liberty etc). Not my ethics – but I understand – and the outcomes are usually OK so I am generally happy to leave that form of right wing fundamentalism alone.

I prefer argue for property rights from an outcomes perspective (as incidentally did many Modern Scots - esp Hume - but later Smith with regard to some economic matters*). Your blogger does not really wish to comment on the property rights as a moral precept here – other than to note for some people this really is fundamental. Just leave it at that.

The commentators that got it all too well

The comment on the post which got the most comment from other commentators was someone that got it all too well. The comment was that – as a result of this policy – some right wing “nut” would load a truck with fertilizer and diesel and blow up the Federal Reserve.

Some people objected to calling that person a nut – but I have no other word for suicide bomber of any persuasion. More to the point – this person – and eventually many others – would realise what this policy was about – which is removing all trust from dollars – and hence theft of one ideal that they hold quite dear.

The question which was raised in emails was about how you would reintroduce trust after you have destroyed it. I think that is actually a key problem. Trust is essential for an economic system in general – but trust in money at the moment is quite destructive as people would prefer hold enormous quantities of money rather than build real assets and employ real people. However you can’t build real assets and employ real people without trust either. The helicopter proposal is targeted at getting rid of trust in one place and one time only (the trust in money in the rare instance of a liquidity trap). Whether you can conduct a strike that surgical with a helicopter full of rolls of money is open for question. Military strikes are nowhere near as precise as the pictures on CNN.

Finally – the real objection

This came in an email from one of the most astute commentators on my blog:

It won't work because immediately after the drop, Congress would arrest Bernanke along with the entire Fed board (probably replace it with a money czar)…. Politicians would be forced to promise responsibility and accountability in the face of the threat of civil unrest - don't forget, a lot of people own guns legally in this country. There will be new laws designed to keep the value of the dollar. In the end, the dollar would get stronger, not weaker…


In other words the whole idea won’t work because it is actually not possible to be that irresponsible – that the underlying US system is sufficiently strong – that if Bernanke were that irresponsible he would simply be replaced.

If Bernanke can’t plausibly be quite that irresponsible we might as well park the helicopters.

And if you can’t use monetary policy to solve this recession then alas we are left with what appears to be two inferior choices (a) a fiscal expansion of gargantuan proportions or (b) letting the system burn and winding up in a great depression type scenario. Both are unpalatable – but I would vote for the fiscal expansion.

It would be much better to just load up that helicopter. Alas...



John

[Joe Chi Minh]

73. One flaw that occurs to me, Demeter, is that you and German Trader

seem to assume that money floating down from the skies would be interpreted in the way you posit, i.e. "It's growing on trees now. Let's have a ball."

The thing about the Wall Street Crash "bubble" - I mean the first one in the Twenties - was that the ubiquitous sense that money was "growing on trees" would have come about gradually (until the shoe-shine man inadvertently tipped off Blackjack Kennedy that there was zummit very, very wrong with the market, when telling him the latest stock to make a bundle from) but I think non-financially savvy people, such as myself, would be more likely to be put on our guard by a sudden shower of money from the sky, and salt it away asap. Well, assuming there was no more horse-racing, in my case.

There are always people who don't realise that, if something looks too good to be true, it almost certainly is, but I think a large majority even of my peers in financial naivety do. Just my take on it, though, Demeter. It still sounds a good idea - as long as I'm in the right place at the right time. But then, it's much more likely I'd be caught unawares and knocked senseless by the falling package. The Jerk and I must have been separated at birth.

[Demeter]

76. I Just Post Them--Not Hold Any Opinion On It

[Joe Chi Minh]

94. Sorry. I need to pay closer attention.

[Demeter]

26. For $10, Fuld Sold Florida Mansion to His Wife By LOUISE STORY

http://www.nytimes.com/2009/01/26/business/26fuld.html?ref=business



Housing prices are falling around the country, but this one sounds hard to believe: A seaside mansion on Jupiter Island in Florida, bought for more than $13 million five years ago, was just sold for $10.

That’s right, 10 bucks. But in this case, the transaction is likely to raise eyebrows for reasons other than the price.

The seller, according to county records, was Richard S. Fuld Jr., the former chairman and chief executive of Lehman Brothers. The buyer was his wife, Kathleen.

The motivation is unclear, but Mr. Fuld has been under intense scrutiny since Lehman declared bankruptcy in September.

The longtime leader of the brokerage firm is at the center of a federal investigation into whether Lehman executives misled investors about the state of the company. And he was grilled by lawmakers at a Congressional hearing in October.

Mr. Fuld said in sworn testimony before a Congressional panel last year that while he took full responsibility for the debacle, he believed that all his decisions “were both prudent and appropriate” given the information he had at the time.

The couple jointly bought the home in Hobe Sound, Fla., for $13.75 million in March 2004, and the sale to Mrs. Fuld on Nov. 10 was first reported by Cityfile.com.

It is possible that he is now transferring properties because of his fears of investor lawsuits or a possible bankruptcy, lawyers in Florida said.

“This is the oldest trick in the books” said Eric S. Ruff, a lawyer with Ruff & Cohen in Gainesville, Fla. “It’s common when you hear the feet of your creditors approaching to divest yourself.”

Mr. Fuld has been accused by some of doing too little too late to save the firm. However, he has said publicly that the blame should be shared by regulators and that he took steps to try to save — or sell — the investment bank.

Florida has particularly generous home protection laws that protect residents from losing their homes in the case of lawsuits or bankruptcy. But Mr. Fuld may not see much benefit by shifting the house to his wife’s name because the Fulds may not be able to prove residency there.

Mr. Ruff, the lawyer in Florida, said that it might be difficult for him to claim residence in Florida, because he primarily lived and worked in the New York area. That could mute any bankruptcy benefit.

And, Mr. Ruff said, the transfer to his wife could be deemed fraudulent conveyance if she did not pay enough for the house. That would make the house fair game for creditors who come after Mr. Fuld.

It is also unclear how much Mrs. Fuld paid for the house. It is standard for property deeds to contain a placeholder number. The $10 on the deed in Martin County could simply be a placeholder, and Mrs. Fuld might have paid more, lawyers said.

The tax stamp on the deed says there were 70 cents of taxes, which would suggest that she may have paid as much as $100 for the house.

“All that you can say is that he transferred it. We don’t know his motivation,” said Jordan E. Bublick, a bankruptcy lawyer in Miami. “But he’s one of the rogue’s gallery. A lot of people when they’re in trouble say, ‘Oh, we’re going to put everything in my wife’s name.’ ”

Mr. Fuld has owned his house in Florida since 2004, according to records in Martin County, Fla. He also owns a sprawling property in Greenwich, Conn., the leafy suburb of New York. The Fulds could not be reached for comment at either residence.

Mr. Fuld received about $34.4 million in 2007, though much of that was in stock that later became worthless. Mr. Fuld left as chief executive at the end of 2008, with no bonus or severance payments, the firm has said.

The Fulds have taken steps to cut back, like selling some of their multimillion-dollar art collection. Still, they are thought to be worth tens of millions. When Mrs. Fuld went shopping at Hermès over the holidays, she requested white bags — rather than the brand’s signature orange ones — to try to disguise her purchases.

Mrs. Fuld is well known among art collectors in the New York area. When the Museum of Modern Art honored Mr. Fuld for their giving a few years earlier, he said in a speech, according to people who were there, “My wife loves art, and I love my wife.”

[Demeter]

27. History Lesson: Bad news: we're back to 1931. Good news: it's not 1933 yet

http://business.timesonline.co.uk/tol/business/industry_sectors/industrials/article5587443.ece

Barack Obama inherits an economy already contracting at an annual rate of 6pc, much like the mid-Depression year of 1931 (-6.4pc), writes Ambrose Evans-Pritchard


By Ambrose Evans-Pritchard
Last Updated: 8:38AM GMT 26 Jan 2009



This may beat Germany (-7pc) Japan (-12pc) and Korea (-22pc) over the fourth quarter. But that merely underlines the dangers ahead as the collapse of global trade chokes the mini-boom in US exports, setting off another stage of the crisis.

The US is losing 500,000 jobs a month. Brazil lost 650,000 in December. Beijing says 10m Chinese have lost their jobs since the crunch began. Japan's exports fell 35pc last month, year-on-year. The central bank is printing money furiously, buying bonds to prevent a relapse into deflation.

So yes, it is like early 1931. Citigroup and Bank of America have more or less disintegrated. JP Morgan's health is failing fast. General Motors and Chrysler survive only on life-support from the US taxpayer.

But it is not yet like 1933. That second leg down was the result of "liquidation" policies by a Dickensian leadership blind to the dangers of debt deflation. By then the Gold Standard had degenerated into an instrument of torture. It forced the Fed to raise rates from 1.5pc to 3.5pc in October 1931 to stem gold loss, with predictable results for shattered banks.

It is worth glancing at the front page of New York Times on Monday March 6, 1933 to see what the world looked like three days after Franklin Roosevelt moved into the White House.

The newspaper splashed with the story that FDR had closed the US banking system – invoking the Trading with Enemies Act – and ordered the confiscation of private gold. From left to right, the headlines read: "Hitler Bloc Wins A Reich Majority, Rules Prussia"; "Japanese Push On In Fierce Fighting, China Closes Wall, Nanking Admits Defeat"; "City Scrip To Replace Currency"; "President Takes Steps Under Sweeping Law of War Time"; "Prison For Gold Hoarders".

President Obama faces a happier world. The liberal economic order is still in tact, if fraying at the edges. Capital and ships move freely. North America and Europe talk the same political language. China has so far proved a dependable pillar of the international system.

But then the world seemed benign enough in early 1931. It is the second phase of depression that does terrible things.

Roosevelt took over a country where the economic machinery had completely broken down. The New York Stock Exchange and the Chicago Board of Trade had closed. Thirty-two states had shut their banks. Texas had restricted withdrawals to $10 a day.

Few states could borrow on the bond markets. Illinois and much of the South had stopped paying teachers. Schools closed for months. An army of 25,000 famished war veterans squatting in view of Congress had been charged by troopers of the 3rd US cavalry with naked sabres – led by a Major George Patton.

Armed farmers threatening revolution had laid siege to a string or Prairie cities. A mob had stormed the Nebraska Capitol. Minnesota's governor was recruiting Communists only for the state militia. Lawyers attempting to enforce foreclosures were shot. More than 100,000 New Yorkers applied to go to the Soviet Union when Moscow advertised for 6,000 skilled workers.

We forget how close America came to open revolt. Eleanor Roosevelt feared the country was beyond saving. Her husband kept the faith. He channelled the anger against Wall Street, diffusing it. "The practices of the unscrupulous money-changers stand indicted in the court of public opinion," he began his presidency.

The Fed was an ideological deadweight. Bowing to pressure from Congress it began to purchase bonds in mid-1932 to boost the money supply, but then recoiled, before retreating into pitiful self-justification. A third of the rescue funds in Hoover's Reconstruction Finance Corporation had been embezzled.

Today there has been no such failure of US institutional imagination, even if, as George Soros argues, the Treasury's policies have been "haphazard and capricious".

The twin blasts of fiscal and monetary stimulus have been massive. In short order the Fed has slashed rates to zero. It is now conjuring money out of thin air on an industrial scale, buying $600bn of mortgage bonds to force down the cost of home loans, and propping up the commercial paper market to avoid mass corporate default. Ben Bernanke, a Depression junkie, is proceeding with a messianic sense of certainty. The wash of money should ensure that the next 18 months will not mimic the cascade of disasters from late 1931 to early 1933.

It buys time. But it does not solve the deeper problem, which is that a West addicted to Ponzi credit has put off the day of reckoning with ever more extreme monetary policy with each downturn, stealing prosperity from the future.

It will be an extremely delicate task to right the ship again. Central banks will have to extricate themselves from their venture into the bond markets without setting off a bond debacle in 2010 or 2011. Governments will have to map out of a path of Puritan discipline for year after year.

This will be Barack Obama's grim test of statesmanship.

[Demeter]

29. The Drama of John Thain's Firing

http://www.ft.com/cms/s/0/7de9ad20-eb05-11dd-bb6e-0000779fd2ac.html

[Demeter]

30. Jack Welch Believes the TARP Is Working

http://seekingalpha.com/article/116376-jack-welch-believes-the-tarp-is-working?source=feed

[Hugin]

47. Jack Welch also thought nobody would notice how he was carrying on with...

the editor of the Harvard Business Review.

Y'know the one... Suzy.

http://www.sptimes.com/2002/03/24/Columns/Welch_divorce_will_de.shtml

[Demeter]

34. American exporters in last-ditch attempt to stop Obama raising the trade barriers

http://business.timesonline.co.uk/tol/business/industry_sectors/industrials/article5587443.ece


A coalition of leading American exporters, including Boeing, Caterpillar and General Electric, is trying to stop a “Buy America” clause being included in President Obama’s $825 billion stimulus package.

The American Steel First Act would ensure that only US-made steel was used in $64 billion of federally funded infrastructure projects.

The money, earmarked for roads, bridges and waterways, is aimed at kickstarting the economy, but the initiative by steelmakers, which secured support last week in the House of Representatives Appropriations Committee, is opposed by American exporters, who fear retaliation by foreign governments.

Their concern is given credence by the European Commission and by Eurofer, the association of European steelmakers, which said that it would urge the European Union to challenge the “Buy America” clause at the World Trade Organisation.

Gordon Moffat, director-general of Eurofer, said that the clause was a clear case of protectionism.

He said: “It looks like they are trying to shut out imports. If we have the means to attack that under WTO rules, we would urge the Commission to do so.”

A spokesman for the European Commission said that America was a signatory to the Government Procurement Agreement, a WTO treaty aimed at ensuring fair access to state investment programmes.

He said: “We would be entitled to retaliate and would certainly do so if they withdraw from .”

Mounting evidence that governments are taking steps to shut out imports and protect domestic jobs is arousing concern at the Geneva-based trade organisation.

Pascal Lamy, the WTO director-general, will today publish a report on protectionism, highlighting a profusion of recent initiatives taken by governments, including tariffs, subsidies and a 39 per cent increase in antidumping cases between WTO members.

The global recession has led to a slowdown in international trade, exacerbated by the banking crisis.

Last month, the World Bank warned that trade volumes would contract in 2009 for the first time since 1982.

Efforts by governments to prop up the flagging automotive sectors have been hedged by undertakings to protect domestic jobs.

Last week François Fillon, the French Prime Minister, promised up to €6 billion (£5.6 billion) in aid to Renault and PSA, the owner of Peugeot-Citroën, provided that they gave a commitment to French suppliers and French employment.

“There is no question of the State helping a manufacturer which would purely and simply decide to close one or more plants in France,” Mr Fillon said.

In a letter to Nancy Pelosi, the Speaker of the House of Representatives, trade bodies such as the US Chamber of Commerce, the National Foreign Trade Council and the Aero-space Industries’ Association wrote last week: “If the United States further restricts access to our market , these other countries will certainly follow our lead, shutting US exporters and their workers out of hundreds of billions of dollars of new business, while propping up their own national champions, to the detriment of the United States.”

The letter continued: “One issue we urge you to bear in mind as you prepare this legislation is the vitally important role that international markets play in sustaining US jobs and the role they will play in economic recovery. Without sales abroad and access to inputs, many US workers would be out of a job.”

[Tansy_Gold]

49. Okay, let's just see what would happen. . . . . . . . . .

It's all "theoretical" anyway. . . . .

1. American Steel First becomes law.

2. Infrastructure contracts are signed, agreeing to use American materials.

3. Other WTO members cancel existing contracts with Boeing, other U.S. manufactturers. (Would they actually CANCEL existing contracts? :shrug: I dunno, but it's all imaginary anyway.)

4. American steel mills come back to "life" to fill need, rehiring American workers.

5. American iron ore operations resume, as does shipping. Workers rehired.

6. American workers rehired to work on infrastructure projects.

7. American workers now have money in their pockets. They begin to buy things. Cars. Refrigerators. Dog beds. They want to travel to visit distant relatives.

8. Airline traffic increases as American workers with regular paychecks start traveling.

9. Airlines order new planes. . . .


See how that works, folks? These execs aren't concerned about losing business/jobs; they're concerned about losing THEIR PROFITS AND BONUSES.

As I said in another thread a couple days ago: WTO notwithstanding, we do NOT have a single, unified "global economy." Chinese workers, German workers, Nigerian workers, Bolivian workers, Canadian workers, Turkish workers, U.S. workers all labor under different systems and produce profit in different ratios. The corporations, on the other hand, ARE global, and they can pit one labor group against another to maximize profits. Those same corporations exploit the illusion of a global economy for their own benefit, to the point that they have many of us believing in it, to our own detriment.

ISO was going on and on last night about the tax structure. He's fallen for some libertarian bullshit that if the corporations were fully taxed, there would be no need for individual income taxes. "No working person should have to pay any tax on their income," he proclaimed. But huge estates should not be taxed either, he said, because people who "earn" a lot of money or build up a business have the "right" to pass that on to their heirs. I countered with, "BUT THEY'RE DEAD. THEY NO LONGER HAVE ANY RIGHTS."

He continued to argue but I finally managed to shut him up: You can't have it both ways. You can't have an equitable system of taxation if you don't have an equitable system of wealth distribution. Those who have a lot will pass the legislation to keep it, and you still see yourself as one of those who don't want the rich taxed because you think you're gonna be rich someday and you don't want yourself taxed. You don't want inheritances taxed because you still think someone's gonna die and leave you a millionaire. IT AIN'T GONNA HAPPEN, and that kind of fantasy is what keeps working people like you and me under the thumb of the uber-rich. Stop believing in fairy tales. The only way to achieve anything approaching fairness is to prevent the vast accumulation of obscene wealth that brought down the Russian royalty, the French royalty. Don't think it can't happen here..

What happened, of course, is that the Haves got greedy. They knew that the way to make more money was to get the working classes to part with more and more of their money. And they figured out the way to do it: Get people to buy more and more and more "stuff."

1. Make the "stuff" cheaper using slave labor. (Seriously, I wonder how many of the legislators and lobbyists who promoted off-shoring of manufacturing are from the South and have a personal family heritage of defending slavery-related issues such as anti-union, anti-immigration, states' rights, anti-integration, etc.)

2. Make credit more available so people were not only spending every dime they earned but every dime they would earn in the future. Obviously, this would eventually kill the goose laying the golden eggs, which is what DID happen, but greed apparently blinded them.

The other measures to kill the American economy were more subtle and perhaps even unintentional, but they stemmed from the same mindset -- destroy public education so fewer people are capable of figuring out what's going on; destroy public health care so more people are afraid of what's going to happen to them; destroy the dream of retirement (much of which was a deliberate creation of the New Deal) so more people will continue to work at lower wages out of fear of poverty. Understand that fear is their #1 weapon. FDR and his "team" understood it far, far better than we.

Obama is still afraid. He's afraid to stand up to the pukes and tell them fuck off. Who cares what you think, John Boehner? Really, man, who gives a shit? You're powerless. You're irrelevant. You're nothing. You and Rush and Hannity and all the rest of the screaming meemies can just shut the fuck up and do it now.

Unless and until Obama -- along with Pelosi and Reid and Boxer and Feinstein and Durbin and Dorgan and Schumer and Levin and Conyers and Jackson Lee and Raul Grijalva -- gets over that fear and is able to stand up to the Kyls and the McConnells, the Bonds and Specters and the Hatches, he's not going to get anything done. And WE will suffer for it.

A friend of mine sent me an email with a clip from some CBSNews program about an elephant that has adopted a dog as her "best friend." The email contained the comment "When will humans learn this?" because the dog, a fat little furry thing, has no fear of the elephant, and the elephant is devoted to the dog who provides nothing but companionship. "No fear." Not because the dog is armed to the teeth with weapons and projects an attitude of bullying and power. No fear because there is nothing to fear.

We have to be able to reach that point. We have to trust, not only others but ourselves. And that may be the scariest part of all.

We are in a downward spiral that is rapidly approaching a speed beyond our control. We can be afraid of what would/might/could happen if we throw the switch and stop the merry-go-round or we can cling for dear life to our wooden horse until the laws of physics and centrifugal force throw us off.

Which would you rather do?


1. American Steel First gts signed into law. . . . . . .


Tansy Gold

[Hugin]

51. I don't see a...

Journal Updated box up there ^ Tansy_Gold.

[Tansy_Gold]

55. I KNEW you were gonna say that!

In fact, I almost put a signing statement "And look, DUer formerly known as Prag, I updated my journal." But I got distracted by a barking dog. . . . . . .

At any rate, it's updated now!


Thanks, as always,



and always,




Tansy Gold

[Dr.Phool]

69. Yeah, but what about my roquefort?

Now, I'll have to stuff my olives with plain old bleu cheese.

Bush even fucked up my Super Bowl drinks!

[Tansy_Gold]

70. Can't you just use Velveeta? Or Cheez Whiz?

:evilgrin:

(On a slightly more serious note, since I know YOU already KNOW this, but some of the lurkers might not: When the economy is strong, both exports and imports become cheaper. You can have your blasted roquefort. I just hope those are California olives. . . .. .)



TG

[Dr.Phool]

71. I did my part for the economy.

I just got back from the liquor store, and got 2 jars from the Santa Barbara Olive Company. One stuffed with BLEU cheese, and the other with habanero peppers.

I also think I'm floating the whole Russian economy, with a boatload of Stoli.

The Fudd cleaned out the last of the Cheez Whiz last night.

[Demeter]

35. Not Only Here: Six arrested in £400m stock exchange fraud

Spanish police have arrested six people suspected of involvement in a £400 million fraud on shareholders of a former London-listed company, thought to be Langbar International.

The main suspect in the fraud, which began in 2003, is among six people who were arrested in Madrid, Barcelona and the town of Elche in the southeast, police said in a statement. Five of the men are Spaniards and the other is from Argentina.

“Through complex commercial and stock market operations, as well as falsifications, the arrested managed to make the value of the shares of a firm on the stock market increase, without deposits to back it up, and profited from the subsequent sale of the shares,” it said.

Police did not name the firm, which was listed on the Alternative Investment Market (AIM) of the London Stock Exchange in October 2003, or give the names of those arrested. ...

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5603850.ece

[Demeter]

36. 'Don't shun bankers: they're part of the solution', says Davos chief

FILE UNDER "HUMOR, UNINTENTIONAL", OR ALTERNATIVELY, "IRONY"

http://business.timesonline.co.uk/tol/business/economics/wef/article5603463.ece


Jenny Booth

Bankers who helped to cause the global economic crisis should not be shunned but included in the hunt for a solution, the head of the World Economic Forum said today.

Klaus Schwab, the founder and executive chairman of the World Economic Forum, which opens today in Davos, Switzerland, called for unity and said that executives from troubled financial institutions had their part to play in finding a way out of the current economic crisis.

“Those people, and there are many of those here, have the feeling they are standing at a cliff and they may fall over at any moment,” Mr Schwab said in a speech to mark the opening of the 39th annual forum.

“But those people are not only part of the problem," he said. "They are part of the solution.

"We need a well-functioning financial community, we should not forget. Otherwise, we don’t have a well-functioning economy.”

Senior officers from Citigroup, Bank of America and UBS AG, all of them facing severe financial problems, are among the Davos audience that will mingle this year with more than 40 world leaders.

The leaders include Gordon Brown and other prime ministers: Wen Jiabao, of China, Vladimir Putin, of Russia, Taro Aso, of Japan, Angela Merkel, the German Chancellor, and José Manuel Barroso, the President of the European Union.

Mr Putin is to give the keynote address this evening, even as Russia’s bankers and energy tycoons struggle with debt and plunging oil prices.

Mr Schwab said that the Davos summit was a chance for bankers and politicians to discuss the crises facing the world's economies — caused, he said, by a failure to address the needs of society — and a formula for solving them.

"It's an overlapping of different crises, we have the crisis that was caused by an imbalance in our economies, we have a financial crisis, we have a confidence crisis and above all we have a systems crisis," Mr Schwab said in an interview with the BBC.

"Everyone feels isolated, everyone wants to understand. Bringing the people together, the politicians, business leaders and particularly also experts to sit together and to try to find out what really happened, I think this is exactly this year what Davos is about."

Mr Schwab said that those who were attending Davos needed to focus on identifying the mistakes that had been made and debating how to reset the world's financial systems.

"Without change we will leave a world for our children and our grandchildren that will be horrible ... A reconfirmation of what we have done would be stupid because it would lead us into a new crisis.

"No, we have to rethink. We have to reboot the whole system."

He rejected the idea of completely rewriting the global economic system, however.

He said: "I think a free market economy is still best of all systems, but we have to make sure that this free market economy serves more society, and that is what we failed to a certain extent to do in the last years."

There are many absentees from Davos this year. Bob Diamond, the president of Barclays, the UK bank, pulled out yesterday without giving a reason after a volatile fortnight for the British bank. However, Marcus Agius, the chairman of Barclays, is expected to attend.

John Thain, the former head of Merrill Lynch, who was ousted last week as president of global banking at Bank of America, will not attend.

Mr Thain attended Davos last year, before Merrill Lynch was rescued by Bank of America.

The $50 billion (£35 billion) deal officially completed this month, but Mr Thain resigned from the merged lender only days later after Merrill revealed larger-than-expected losses of $15.3 billion, forcing Bank of America to borrow $20 billion from the US Government.

Other absentees include Vikram Pandit, the chief executive of Citigroup, the embattled US bank, and Richard Fuld, the former chief executive of the collapsed Lehman Brothers Holdings, whose annual lecture at Davos has been cancelled.

Martin Sullivan, the former chief executive of American International Group (AIG), which, until this year, was one of the forum's highest-paying members, will not be at Davos, and Marcel Ospel, who was replaced as chairman of UBS AG in April, will not attend.

At last year's World Economic Forum, Mr Thain talked extensively about the future of the economy and the banking sector.

In a comment that he has probably come to regret, Mr Thain said that Merrill Lynch was not concerned about future losses because it had marked down all the complex financial instruments exposed to distressed debt.

Last January he said: “They’re marked down so low that we have no concerns left about this at all.”

[Demeter]

37. Quelle Surprise! Big Banks Who Got TARP Funds Reduced Lending

http://www.nakedcapitalism.com/2009/01/quelle-surprise-big-banks-who-got-tarp.html

Before we get to the particulars of tonight's Wall Street Journal story, we need to step back a second.

Just like the war in Iraq, which had a ton of justifications served up by the Bush Administration, none of which added up (and the most obvious one, that the Bushies wanted to control the second biggest oil reserves on the planet, somehow never gets mentioned in polite company in the US), we've also had too many rationales offered for the TARP in its very short life.

The one that has stuck with Congress and in the public's mind is that it was meant to get banks lending again. And the Journal tells us that measured against that benchmark, it hasn't worked.

Like the war in Iraq, it's a given that the stated rationales for the TARP were not the real one. Cynics see it as a plutocratic transfer, son of the grossly inflated outsourcing contracts to Halliburton and friends in the Middle East, a last opportunistic looting of the Treasury (literally, in this case).

But this may instead have been the a recycling of Paulson's bazooka notion. Remember when he asked for and secured authority to increase Fannie's and Freddie's credit lines with the Treasury and buy equity:

If you've got a squirt gun in your pocket, you probably will have to take it out. If you have a bazooka in your pocket and people know it, you probably won't have to take it out.


That, as we now know, proved to be patently untrue, as the markets called the Treasury Secretary's bluff. But Paulson is a very stubborn man and also seems to have remarkably few ideas (his initial plan for the TARP funding was a rejiggered version of his failed "rescue the SIVs" MLEC plan of the previous fall).

Recall also that Paulson is a deal guy out of Goldman. Anyone who has been in the deal business knows that the verbal representations are meaningless, and what counts is what is in the contract, or in his Treasury role, in the legislation. And Congress approved a huge blank check.

Thus I suspect the real rationale behind the TARP was that Paulson would have so much money at his disposal that he could credibly rescue the banking system, and in Bazooka version 2.0, he would not need to use it in a major way (although he would need to be perceived to have ready access to it, hence his protests over having only $350 billion for his immediate use). The existence of the funding capability would (presumably) restore confidence in the banks.

That theory would be consistent with the shifting rationales and plans. Paulson saw this as emergency authority to be used as needed and figured with that much money, he could punch above his weight (recall that $700 billion seemed simply enormous back in October, we've now become inured). But anyone who was up on the work from Bridgewater Associates, or connected the dots from what bank analyst Meredith Whitney was saying, or took Nouriel Roubini seriously (to name just a few) would know that $700 billion wasn't sufficient to plug the leaks the banking system had ALREADY sprung.

But that aside, why should we expect that the TARP would lead to more lending? First, there should be less lending, independent of the economic contraction. We know now that TONS of credit was extended to people who shouldn't have gotten it at all or should have been granted much less than they got. Those balances NEED to shrink, ideally by paying them down, although a fair bit will be via defaults and writedowns.

Second, in case you somehow missed it, the economy stinks. Even among the solvent, far fewer businesses and consumers are keen to borrow than in "normal" times. Thus, as bankers know well, those who want more credit now are likely to have a higher level of adverse selection than you'd see most of the time.

Now offsetting that to a fair degree is that a lot of businesses are dragging out payments, which puts financial stress on their vendors. They could really use more financing now, if you assume that the business itself is viable and the customers won't default on their obligations. But banks aren't set up to do that level of credit investigation. If you fit in the right box on their grid, great, otherwise, you are toast.

That is a long-winded way of saying it's no surprise the banks aren't lending. If their assets were valued realistically, most doubtless need even more equity than the TARP provided. Shrinking their balance sheets is part of their effort to get their equity back to healthy levels (memo to regulators: why isn't there more in the way of formal regulatory forbearance right now? It's standard bank recession practice to let banks officially run with lower equity levels as they try to get themselves back on their feet. It's better to admit banks are undercapitalized and give them a temporary waiver than play blind with balance sheet games than undermine investor confidence).

From the Wall Street Journal:

http://online.wsj.com/article/SB123293041915314113.html?mod=djemalertNEWS

[Hugin]

38. "executives from troubled financial institutions had their part to play"

Yeah, every Organ Grinder needs a Monkey.


(Translation: It makes all of those down-and-out supply-side economists at Davos feel better to see these guys walking around all dog faced... Schadenfruende for all!)

[Demeter]

39. Letter from Eisenhower

the most successful Republican of the 20th century up to that time, Dwight D. Eisenhower, had been quite happy with a top income tax rate on millionaires of 91 percent. As he wrote to his brother Edgar Eisenhower in a personal letter on November 8, 1954:

"o attain any success it is quite clear that the Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it. The political processes of our country are such that if a rule of reason is not applied in this effort, we will lose everything--even to a possible and drastic change in the Constitution. This is what I mean by my constant insistence upon 'moderation' in government.

"Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt , a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid."

[Demeter]

40. WHAT OUR FIRM WOULD DO WITH A TAX CUT By Richard Wise

http://www.opednews.com/articles/WHAT-OUR-FIRM-WOULD-DO-WIT-by-Richard-Wise-090128-130.html

January 28, 2009



House minority leader John Boehner appeared on Meet the Press on Sunday to hee-haw about the $825 billion stimulus plan.

“You can’t borrow and spend your way to prosperity,” he brayed, apparently unaware of what his own party has been trying to do for the past eight years.

Okay, if the stimulus will not work, what in his view will work?

“Tax cuts.”

We have to “allow Americans to keep more of what they earn.” We must give people an incentive to save and to reinvest in the economy.

Of course. That would be just what we need – more of the same tax cuts that reduced the savings rate to zero, brought lending to a standstill, doubled the national debt over the past eight years and, arguably, helped to propel and extend the present financial crisis.

“Give this man his bale of hay,” I mused. “He may not be as smart as a mule but he’s as stubborn as one.”

Einstein had a name for the practice of doing the same thing over and over again, and expecting different results. Rep. Boehner should look it up.

Still, the test of a good theory is whether it works in practice. That made me wonder: if our firm did receive a tax cut, what would we do with the extra money? Would it give us an incentive to create jobs and to “reinvest in the economy”?

My partner and I discussed this question on Monday. At length, we decided that if our business received a federal tax cut, we would spend the money according to these priorities:

1. Reserve for increased state taxes. Our state and local taxes will surely increase as their revenues from the federal government decline. Somebody has to pay for state and local operations and, unlike the feds, the state has to balance its budget. Guess how.

2. Reduce commercial debt. Most small businesses have some outstanding bank loans and, right now, we are lucky if we can maintain our existing credit lines. Paying down some debt may give us a little more borrowing power. We hope.

3. Reduce trade debt. The best way to maintain leverage, and credit, with suppliers is to pay their bills in full and on time. That gives us the most favorable service, pricing, and terms. It also ensures we will have trade credit when we need it.

4. Make infrastructure investments. Like every business, our systems, technologies, and equipment wear out or become obsolete over time. It costs money just to stay even in this area.

5. Increase marketing. No small business can reach the prosperity Mr. Boehner so earnestly wishes for us by merely cutting costs – even tax costs. Our prosperity depends on a steady influx of new business. Mr. Boehner can cut our taxes to zero and we will still go out of business in a year without new and repeat clients and projects. Getting that new business costs money.

6. Pay ourselves a dividend. With whatever is left of the “found money” from our tax cut, we would pay ourselves a dividend. After all, we have the risk capital in the business; we are the ones who met the payroll even when there was no money coming in. So we would pay the remainder to ourselves … and, of course, we would pay taxes on the amount we pay to ourselves.

And that’s how we would spend our tax cut-driven windfall.

No new jobs?

No new jobs. Not even one. Not even a part-time one.

Why not?

Because the additional demand for our services is not out there right now. If we are going to create additional jobs and fill them, we will do it in response to increased demand in the marketplace for our products and services. That is the only reason to create jobs that makes good long-term economic sense.

Memo to Rep. Boehner: Say’s Law is defunct. A supply of product does not create demand; it creates inventory. A supply of workers does not create work; it creates cost. And, in the present economy, tax cuts for small business do not create investment capital; they allow us to pay down debt, repair or replace obsolete equipment, and put the rest in our pockets.

So much for new job creation. So much for “reinvesting in the economy.”

Our firm is certainly not going to hire people just because we have some extra money from a one-time tax savings. After all, who is going to pay for their salaries, benefits, payroll taxes on a continuing basis? Who is going to pay for their working space, equipment, and overhead? Who is going to pay to train and supervise them? Who is going to pay their other overhead costs?

We, the business owners, will have to pay those on-going costs. And a slight reduction in marginal tax rates will not come close to covering those costs. Tax cuts by themselves will not spur us to create even one new job. We do not create jobs until we have to, to meet increased client demand.

Now, if a big fat government contract came our way, then we would have an excellent reason to hire good people fast and put them to work as soon as possible.

But according to Mr. Boehner, that would not work. That would be “slow-moving government spending.” Worse, it would be “wasteful Washington spending, padding the bureaucracy and doing nothing to create and preserve jobs.”

Only tax cuts would work.

I wonder what Einstein would have to say about that.




Authors Bio: Rick Wise is an industrial psychologist and retired management consultant. For 15 years, he was managing director of ValueNet International, Inc. Rick was a Vietnam-era Navy Hospital Corpsman. Rick holds PhD and M.Ed. degrees from Penn State. His BS is from West Chester University. He completed post-doctoral work at Rensselaer, Northwestern, University of Colorado, and Harvard. A native of Pennsylvania, Rick now lives in New England.

[Hugin]

45. I am very happy this author included this particular word...

"we will still go out of business in a year without new and repeat clients and projects."


Are we finally weeding the 'new business' and 'growth for the sake of
growth' mentality which has held sway for the past 30 years?

Is large corporations providing identical services and swapping customers back and forth in a sick pantomime of true competition coming to an end?

I wait with bated breath...

[Demeter]

46. Only if You've Been Eating Herring, Prag

It's "bated" breath, meaning that you are holding your breath. Think "abate".

[Hugin]

48. I knew that.

Damned contextless spell-checker!

Picking-nits today, are we... Demeter?

(Thanks for catching that. :lol: )

[Demeter]

41. Meltdown: Iceland on the brink

http://www.independent.co.uk/news/world/europe/meltdown-iceland-on-the-brink-1515753.html

Two years ago, Iceland was top of the UN living index. Now it is in the frontline of the global economic crisis after the failure of its banks, reports Sophie Morris in Reykjavik

Just a few short years ago, Iceland had much to be proud of. The good times were rolling so fast that one expected the country's almost round-the-clock summer daylight to last all year. Business was booming, society overfed, and the capital, Reykjavik, was in vogue as a travel destination for rich revellers, gastronomes and culture lovers... When, in 2007, it topped the UN's Human Development Index for its high standard of living, literacy and life expectancy, the tiny community of 310,000 felt they had proved their educated, hard-working and resilient character on an international scale.

The previous year, America had abandoned its long-standing naval air station at Keflavik. Symbolically, the move set Icelanders free from more than seven centuries of foreign domination, first as a Norwegian and then a Danish colony, and for the past 65 years, less formally, under the wing of the US.

"The Vikings" had risen again, and this is the admiring title the country bestowed upon the small group of aggressive businessmen whose high-risk investing bloated the island's economy to 10 times its GDP, buying up chunks of the British and Continental European high streets in the process. French Connection, Debenhams, Karen Millen, Oasis, Warehouse, Mappin & Webb, Hamleys and many more fell into Icelandic ownership. So did West Ham United football club. When Icelanders visited Copenhagen, they would strut into its smartest department store to buy expensive fashions from "their" shop. Like many British chains, it too was owned by the "Viking" Jon Asgeir Johannesson's Baugur group: one in the eye for the mother country.

Few stopped to consider, let alone fret over, whether their swift financial ascent would end in an equally steep plunge into oblivion. They were too busy flying to Barcelona for dinner, opening smart boutique hotels, investing in art, planning massive public buildings and buying Range Rovers and Audi Q7s – Iceland is one of the top car-owning countries in the world.

In October, Iceland's three main banks were nationalised and declared bankrupt. Overnight, any Icelander – and there were many – who had bought these status vehicles or invested in luxury new properties with a foreign loan found the value of their purchases plummeting as repayments soared. The currency, the Krona, fell to one quarter its value before trading in it was suspended. Thousands of hard-working couples nearing retirement age had placed their life savings in stocks with the Landsbanki, Glitnir and Kaupthing banks which led the crash. For many, every penny disappeared into the turbulent waters which connect Iceland with its American and European neighbours.

Frugal Icelanders have been stung too. Food and petrol costs are rising all the time and with interest rates nearing 20 per cent, domestic mortgages, even modest ones, are becoming impossible to service....

Iceland's troubles did reveal themselves during last week's tumultuous events. Peaceful demonstrations began in Reykjavik's main square, outside the Althing (parliament) building, had begun in October immediately after the crash. Last week they erupted in the worst riots since it became a founding member of Nato in 1949. Rocks were hurled at police and the Althing. Its windows were smashed and the building set alight. Over 130 protesters received treatment after police used tear gas to disperse the crowd, and one police officer was seriously injured.

On Friday morning, human rights campaigner and protest organiser Hordur Torfason told a chilling anecdote to illustrate the desperation many Icelanders are feeling. He had received a phone call from a man who said that four generations of his family had lost everything. "He wanted me to help them build a gallows in front of the parliament building," says Torfason. "I asked him if this was to have some symbolic significance. 'No,' came the answer. 'A member of my family wants to hang himself in public.'"

"I said I would help them but not in this way," says Torfason. "But he killed himself two days ago."

Red Cross employees and volunteers are working overtime to prepare for depression and desperation. The relief agency has expanded and is setting up support groups and activities for the unemployed. "One of the effects of long-term unemployment is depression," says the agency's Thor Gislason...

As many as 8,000 people braved the damp cold to demonstrate last week, the largest number to attend a public protest in the history of Iceland. On Friday, the Prime Minister, Geir Haarde, who has cancer, called an election for9 May and announced that he will not run again. Yet protesters called for his immediate resignation on Saturday. The government's efforts amount to too little, too late, they say. They want parliament dissolved, a new constitution, and an investigation of those politicians they believe accountable. "Every other person is basically bankrupt," said organiser Magnus Bjorn Olafsson. "This is a revolution and we want to create a new constitution like the French did."

.............................

Iceland: The facts

*Population: 313,376

*Currency: Icelandic Krona (ISK)

*Unemployment in October 2008 1.9%; January 2009: 7%. Expected to rise to 8.6% in 2010.

*Inflation: 13.1%

*Interest rates 18%

*GDP per capita in 2007: $42,000

*GDP per capita now: $39,400

*The world's eighteenth largest island, Iceland has nearly 5,000km of coastline.

*Iceland's natural resources include geothermal power and diatomite, many rivers and waterfalls are used for hydroelectricity.

*Did not gain full independence from Denmark until 1944. Granted limited home rule in 1874.

*Althing, the Icelandic parliament, is the oldest functioning legislative assembly in the world, which was established in 930.

*In 2007 Iceland was ranked the most developed country in the world by the UN.

*The Apollo 11 astronauts trained in Iceland because of the terrain's similarity to the moon.

[Demeter]

43. The List: The Next Iceland By David Kenner

http://www.foreignpolicy.com/story/cms.php?story_id=4648&page=0



Oli Scarff/Getty Images

Great Britain

Economic damage: The financial crisis has gotten so severe in Britain that it has earned London a new nickname in the international media: Reykjavik-on-Thames. The question in Britain is no longer when the economy will enter a recession, but when it will enter a depression, with many bracing for a slump that could rival the 1930s in severity. GDP fell 1.5 percent in the fourth quarter of 2008, and the European Union estimates it will contract another 2.8 percent in 2009. Unemployment is projected to balloon to more than 8 percent by year's end, and an estimated 23 percent of adult Britons currently consider their debt level "unmanageable."

The British downturn is especially severe because the U.K. is more dependent on its financial sector than most developed economies. All told, British banks currently hold about $4.4 trillion in foreign debt (which, until recently, included a large amount of Iceland's debt). For a $2.1 trillion economy, that's a heavy load to bear.

Political fallout: Prime Minister Gordon Brown initially earned voters' confidence by seizing a leading international role in the response to the crisis but, as the recession deepened, British sentiment has turned against the government. A recent poll showed that almost 6 in 10 Britons think the latest economic recovery measures will fail and gave the opposition Tories a 15-point edge over Brown's Labour Party.

The government has already nationalized much of its financial sector, and investors fear that another round of nationalization might be around the corner. Government intervention has become so pervasive that nearly half of the economy will consist of state spending in the coming year. This, in turn, has earned Britain another nickname: Soviet Britain.


Latvia

Economic damage: Latvia is arguably the one country that most resembles Iceland, and not just because of the cold climate. The small, developing country's lofty growth rates in recent years were fueled by heavy investment from elsewhere in Europe, massive foreign debt, booming consumption, and minimal savings. After growing at an extraordinary 12.2 percent rate in 2006, Latvia's economy is now the weakest of the 27 EU member states. A European Commission report forecast that Latvia's GDP is set to contract 6.9 percent in 2009 and a further 2.4 percent in 2010, with unemployment climbing into the double digits by next year. The International Monetary Fund has approved a $7.3 billion bailout package for Latvia, but a long road to recovery remains.

With financial markets tightening and housing markets crashing down to earth, Latvian businesses have ground to a halt and the government has been forced to cut services to the bone. A new program will involve a 25 percent cut in the state budget, 15 percent wage reductions, and widespread layoffs.

Political fallout: The financial crisis threatens not only Latvians' livelihoods, but it also poses a danger to their nascent democratic system. The government's popularity currently sits at about 10 percent. In the largest protests since the rallies against Soviet rule in the 1980s, more than 10,000 Latvians gathered earlier this month in the capital of Riga to protest the government's mismanagement of the economy. Some demonstrations turned violent, as angry youths threw rocks and eggs at police and lobbed cobblestones at the Parliament building.

The government has initiated a crackdown of its own, unleashing its security forces against those guilty of economic pessimism. When a university lecturer speculated that the crisis might cause a devaluation in Latvia's currency, he was arrested and held in jail for two days.


Greece

Economic damage: The Greek economy, burdened by a debt-to-GDP ratio of more than 90 percent, is one of the shakiest in the European Union. The adoption of the euro had previously fueled Greece's economic boom, but it is now one of the primary obstacles to getting the country out from underneath its massive debt. The typical method countries use to alleviate their debt is to depreciate their currency, lessening the real value of their liabilities. But with a single currency in use across the euro zone, Greece no longer controls its own monetary policy. Faced with the strain of falling tax revenues and the need to fund a bailout program, Greece could be forced to withdraw from the euro zone or default on its debt.

Standard & Poor's cut the country's sovereign debt rating earlier this month due to concerns over its rising deficit. Now, Greece must pay 5.6 percent to finance its 10-year debt, 2.5 percentage points more than Germany. As the financial crisis continues, expect the rift between the haves and the have-nots in the EU to widen further.

Political fallout: Outrage over a police shooting spilled over into widespread rioting throughout Greece in December. More than 150 banks were targeted by youths during the first days of the riots. Greece's bleak economic situation is widely considered to be the underlying cause of the unrest. Greek banks had invested heavily in development in the Balkans and, with the onset of the financial crisis, found themselves dangerously overextended. The center-right government was forced to bail them out, but at the cost of drawing funds from social welfare programs. The image of the Greek government handing bags full of money to wealthy financiers while services were cut for the general populace has decimated the government's credibility.


Ukraine

Economic damage: Ukraine's export-oriented economy and its volatile political system have combined to make the country one of the hardest-hit eastern European markets in the financial crisis. Steel exports are at the heart of Ukraine's economy, and plummeting international demand has brought the country's mills to a near standstill. The production of metals needed to manufacture steel dropped 43 percent in December 2008 compared with that month in 2007, when Ukraine ranked as the world's eighth-largest steel producer. Ukraine was only saved from complete economic collapse by a $16.5 billion loan from the IMF in October, the largest package given to a country in Eastern Europe. But recently, the Parliament approved a 2009 budget with a planned deficit of 3 percent, in violation of the terms of the IMF loan, which requires a balanced budget. This could delay the next, desperately needed installation of IMF funds, due in February.

Political fallout: Ukraine's politicians, meanwhile, are bickering while their country goes bust. In early October, Ukrainian President Viktor Yushchenko dissolved Parliament and called for early elections in a bid to weaken his rival, Prime Minister Yulia Tymoshenko. Tymoshenko responded that it would be irresponsible to burden Ukraine with the costs of an election during the crisis, and blocked funding for the elections. A poll conducted in December found that only 26 percent of Ukrainians thought the government could tackle the country's economic crisis. If the politicians' bickering continues to harm Ukraine's economic standing, both ruling parties could pay for it at the next election – whenever that may be.


Nicaragua

Economic damage: Nicaraguan President Daniel Ortega, an old U.S. enemy from the Cold War, explained the financial crisis by stating, "God is punishing the United States." But the ripple effects from the crisis will likely reach all the way to his own country. Nicaragua's economy is heavily dependent on remittances, with the central bank estimating that Nicaraguans abroad send back between $800 million and $1 billion every year. The U.S. economic downturn means that fewer Nicaraguans will have money to send home. The financial crisis has also pushed down the price of coffee, Nicaragua's main export, as investors have abandoned the commodity market.

Political fallout: To make matters worse, Ortega's increasingly authoritarian tendencies have earned him the enmity of developed countries, which Nicaragua depends on for aid. In the run-up to municipal elections in November, Ortega's government disqualified two opposition parties, sent police to intimidate his regime's leading critics, and banned independent local and foreign observers from monitoring the election. In response, the United States and six European countries suspended an estimated $150 billion in development aid to the Western Hemisphere's second-poorest country.

Ortega might come to regret his schadenfreude at the U.S. economic downturn when it's his country that is feeling the effects.


David Kenner is an editorial researcher at FP.

I'D ADD A SIXTH CANDIDATE TO THAT LIST.....WHICH COUNTRY, DO YOU THINK?

[Dr.Phool]

42. Good Morning Fellow Groundhogs!

[Demeter]

44. Good Morning, Doctor!

IS there a team called "the Groundhogs", by any chance?


I hope that's enough research to keep the restless natives busy....I am now off to work myself to a frazzle doing my OWN housework, for a change! See you all later tonight!

[Tansy_Gold]

52. G'morning, Demeter! Dr.Phool! all the others!

I, too, am opting for housework today, having finally caught myself up on the at-home day job for a change.

But as you can see, I found time to post a little bit, too.

Have a good one, all!




Tansy Gold, who constantly wonders what happened to the commodity erroneously called common sense?

[Hugin]

53. My common sense is telling me I need to opt for...

sleep this weekend as I'm just now getting over something.

Blah.

Off Topic... But, did anyone hear from Ghost Dog this week?

[Tansy_Gold]

56. Yes, GD poseted in SMW Friday at least, I think.

I'll go back and check


TG

[Demeter]

62. Neither Hide Nor Hair of Her

No news might be okay, though.....I hope.

[Demeter]

61. Speculation and Hoarding

Turns out it was all a bunch of derivatives.....

[Hugin]

63. What is really needed is...

5th recommendation on this thread!

:)

[Dr.Phool]

67. You got it.

I can't believe I forgot.:silly:

[Hugin]

68. Thanks.

Much better!

I figured it was a regular and I secretly suspected the oversight
was Tansy...

I was reluctant to say anything because Tansy has a rock collection
and was likely to throw it at me.

:hide:

[Tansy_Gold]

86. I don't throw my rocks.

[Hugin]

89. Lovely!

:D

[DemReadingDU]

99. Very pretty!

Is that for sale?

[Tansy_Gold]

103. No, that one's not for sale

sorry.

give me a few weeks, though. I'm makin' more. . . . .

[DemReadingDU]

104. ok, thanks!

It will be birthday present to myself
:)

[Hugin]

54. Since I haven't come up with a WEE movie of the weekend yet... Here's a musical interlude.

"Nothing from Nothing"

(Billy Preston and Bruce Fisher)

Nothin' from nothin' leaves nothin'
You gotta have somethin'
If you wanna be with me
Nothin' from nothin' leaves nothin'
You gotta have somethin'
If you wanna be with me

I'm not tryin' to be your hero
'Cause that zero is too cold for me, Brrr
I'm not tryin' to be your highness
'Cause that minus is too low to see, yeah

Nothin' from nothin' leaves nothin'
And I'm not stuffin'
Believe you me
Don't you remember I told ya
I'm a soldier in the war on poverty, yeah
Yes, I am

-Instrumental Interlude-

Nothin' from nothin' leaves nothin'
You gotta have somethin'
If you wanna be with me
Nothin' from nothin' leaves nothin'
You gotta have somethin'
If you wanna be with me

You gotta have somethin'
If you wanna be with me
You gotta bring me somethin' girl
If you wanna be with me

http://www.oldielyrics.com/lyrics/billy_preston/nothing_from_nothing.html <-- Warning: Lots of pop-ups.

For the Youtubers... http://www.youtube.com/watch?v=KQ5-BTdcqjk

[Demeter]

80. This Weekend's Movie Is Of Course: GROUNDHOG DAY!

Nothing else will do.

[DemReadingDU]

100. Of course!

my niece was born today, she's 13
:party:

[DemReadingDU]

57. Credo in $

1/31/09 From Dmitry Orlov's blog...
Today's guest post is by Frank, who uncovers what must be the deeply held beliefs of those who still have hope that the status quo can be maintained. (We're just going through a rough patch, right, people?) Axiomatically, to have hope, you must have faith. (And if your hope turns out to be false, there is always charity.) Hast thou yet hope, O {username}? If so, please genuflect, direct your gaze heavenward, and repeat after Brother Frank:


I believe in worldwide Ponzi schemes and universal gullibility. I believe that reckless lending can be cured by reckless borrowing and that fraudulent borrowing can be healed by fraudulent lending. I believe that a housing bubble fueled by loose credit can be corrected by easing credit. I believe that each trillion of hallucinated dollars that disappears in a puff of Wall Street smoke then always reappears magically from behind a Treasury Department mirror.

I believe in America's almighty financial geniuses and monetary officials, who destroy wealth indiscriminately and indefinitely, and whose kingdom shall have no end. It is divine justice that those who cause financial catastrophes are rewarded with public money, while innocent bystanders are punished in their stead. I believe that central banks can print all the money anyone will ever need. I believe that if one stimulus package does not work, the next one surely will.

full creed...
http://cluborlov.blogspot.com/2009/01/credo-in.html

Good morning all
:hi:

[Demeter]

64. I've Never Seen a Better Definition of Harry Paulson, or Insanity

Thanks, I think.

[DemReadingDU]

58. An angry President Obama strongly condemns Wall Street bonuses

1/30/09 from John J. Xenakis blog...

One of the most interesting aspects of this growing crisis is the increasing condemnation of bankers, brokers and other financial executives.

When I was growing up the in the fifties, my mother and many other people frequently spoke of the greediness of bankers and brokers. I didn't understand it at the time, and actually forgot about it later, as the societal bitterness toward bankers disappeared in the decades that followed.

Now the bitterness toward bankers is returning quickly, and we can see the secular cycle completing itself right before our eyes.

President Obama said the following:

"There will be time for them to make profits, and there will be time for them to get bonuses. Now is not that time.
.
. <lots more>
.
I would like to warn web site readers against the easy seduction of believing that "the worst is over," that "there'll be nothing worse than long recession" and that "there won't be a panic."

There is absolutely no possibility that any of these things are true. There is no theoretical support for any of these views, and there are no historical examples of these scenarios. The global economy is headed for a massive black hole that will make all current discussions irrelevant. Any belief otherwise is simply wishful thinking.

The Law of Mean Reversion has not been repealed by the new Democratic party Congress. Since the stock market has been far overpriced since 1995, as I described in "How to compute the 'real value' of the stock market," and since the Law of Mean Reversion still applies, there must still a generational panic and crash in store.

It could come next week, next month or thereafter, but it's coming with absolute certainty, and nothing that has happened or is being planned has any possibility of stopping it, no matter how angry President Obama becomes.

more...
http://www.generationaldynamics.com/cgi-bin/D.PL?xct=gd.e090130#e090130

[DemReadingDU]

59. Forbes: Here Comes The BARF

Here Comes The BARF
Liz Moyer, 01.29.09, 04:30 PM EST
Why creating a Bad Asset Repository Fund for Wall Street's toxic assets could make banking even sicker.

First there was TARP. Get ready for BARF.

They haven't named it that yet, but calling a federal "bad bank" to soak up toxic assets the Bad Asset Repository Fund would be truth in advertising at least. Despite Washington's renewed enthusiasm for the idea, there is a strong case to be made against it.

there's more...
http://www.forbes.com/2009/01/29/tarp-treasury-department-business-wall-street-0129_barf.html

:puke:

[Hugin]

60. Scary thought this could make some headway... It's a terrible idea and here's why.

Now, it's true this is what was done during the S&L Crisis.

-BUT- What they aren't considering is that was then and this is -NOW-. Two entirely different situations.

Then: The S&L Crisis largely centered on 'SECURED CREDIT'... Yes, some of that material collateral was junk... But, eventually some of it appreciated and the Govt recouped some losses.

Now: This current crisis centers on Junk Paper held by Banks (That were formerly Investment Banks)... There is no appreciation and it will -NEVER- appreciate. It's worthless. So, setting up a 'Bad Bank' and letting the Former Investment Banks choose which of their Bad Assets to put there is a recipe for disaster for the Govt. Because, the Banks did learn something... They learned to hold onto their material collateral and only dump the junk leaving the Govt looking like Chumps.

This is such an unbelievably stupid idea.

Congress needs to stop listening to the Tiny Tims of the world and return to the real "Jobs and Wages" crisis which is at the center of the problem.

Edited for better wording.

[Demeter]

65. I'd Hate to See the US Pay Off on Losing Betting Slips

which is what the casino-bankers want so desperately. Let them suck it up like men and take their losses. If they can't stand the thought of living on food stamps, there are plenty of methods of meeting your Maker faster than projected for the cowards.

[Hugin]

66. Good way of describing the Investment Bank 'assets'... "Losing Betting Slips". n/t

:thumbsup:

[Dr.Phool]

77. If anybody ever deserved a French Revolution Severance Package.

This is at the top of the front page.

General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program

By Russ Dallen
Latin American Herald Tribune staff

SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Meanwhile, he cut the company's revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.

GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x55340#55341

-------------------------------------------------------------------
And this from post #9 on that thread.


http://www.colorado.edu/AmStudies/lewis/2010/decline.ht...
n the 1970s and 1980s, many of the industrial giants in the United States, Europe, and Japan became global companies; they no longer wanted to claim allegiance to any country in the world. By becoming global companies they could force nations to compete with each other to attract their companies to build factories in their countries. By the 1980s, these global companies, now often called Transnational corporations (TNCs) were aggressively using this strategy of globalization to blackmail countries into reducing their costs and increasing their profits. I believe that President Reagan's economic program, which Phillips and others have called Reaganomics, reflect the increasing reality of the global industrial economy and the power of TNCs to blackmail even the biggest and strongest countries and force them to create economic, political, and social conditions that will reduce their companies' costs and increase their profits. Let's now look at some of the major demands these TNCs imposed on industrial countries in the 1980s and 1990s:

Demands Made by Transnational Corporations to do Business in a
Country under the Global Economy

1. Greatly reduce Corporate taxes and taxes on the rich.

2. Greatly reduce government spending in order to cut taxes.

3. Increase taxes on the middle-class and poor to pay for the necessary government services, such as support for TNCs.

4. Reduce environmental, work-safety, and product-safety regulations.

5. Provide millions and millions of dollars in tax incentives and subsidies to TNCs in order to convince them to locate in your country.

6. Build and support modern industrial factories for TNCs to use rent-free.

7. Create tax-free export processing zones so that TNCs can produce products without paying any taxes at all.

8. Reduce and lower worker's wages by keeping the minimum wage low or eliminating the minimum wage altogether.

9. Reduce the costs of hiring workers by reducing or eliminating workers' compensation taxes, social security taxes,and health insurance taxes.

10. Allow child-labor at almost any age and under any conditions.

11. Do not enforce maximum work-day hours, such as the eight hour day or the 40 hour week.

12. Use government power to crush and weaken labor unions. Allow companies to hire security firms to harass and intimidate workers and unions.

13. Allow TNCs to freely take their money and profits out of your country.

14. Reduce government support for health-care, education, and anti-poverty and anti-hunger programs, forcing workers to work for any wage just to take care of and feed their families.

15. Support global free trade and work to prevent countries from denying companies the right to sell their products despite the brutal conditions, environmental destruction, and exploitation of their workers.

16. Don't restrict or limit immigration and encourage high levels of unemployment in order to force workers to compete by working for lower and lower wages.

17. Limit and restrict local and national government control over their economies. Encourage global bodies to set economic standards that will benefit TNCs.

18. Limit the ability of workers and citizens to challenge the TNCs and their own government's economic programs which help the TNCs at their expense.

19. Create massive national debts in order to bankrupt governments and force them to be even more at the mercy of the TNCs. Governments can thus say they have no choice but to accept these conditions.

20. Force your citizens to accept lower standards of living and quality of life in order to guarantee higher profits for TNCs.
This is the DU member formerly known as stillcool47.

[Demeter]

81. Yup. So Noted and Ordered!

Thanks Dr!

[Tansy_Gold]

84. Wow! This is fantastic. Scary but fantastic

This is all the stuff I've been trying to articulate for months, all laid out nice and neatly.

Needs to be spread far and wide.



TG, up early to make chicken tacos for super bowl party

[DemReadingDU]

87. Wow, very interesting. Check out the: Test your economic IQ section

many true/false, multiple choice questions (with answers!)

edit for link:
http://tinyurl.com/dxbfuv




Bookmarking for future reference.

[Tansy_Gold]

78. WHERE'S OUR JOBS FORUM????

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4953832

[Hugin]

79. I say we take over this group!

http://www.democraticunderground.com/discuss/duboard.php?az=show_topics&forum=255

Originally I thought maybe the Baking and Cooking Forum...

But, they have all of those sharp utensils and flatware. :hide:

[Tansy_Gold]

83. Can we do that?

Seriously?

[Hugin]

88. Well, employment related threads would certainly fit in with the EA&PL group...

Since nobody has posted there since the 16th of January it could use some action.

Only problem being, it's a 'Group' and not a true 'Forum' so only donation star members can access it... But, maybe if we make a show of being serious about this maybe the Admins will listen.

Just a thought... :)

[Hugin]

90. Here's the low-down on groups...

What are DU Groups?

Edited on Fri Nov-12-04 05:17 PM by Skinner

DU Groups are a special type of discussion forum. DU Groups are forum topics suggested by the DU Members themselves. DU Groups are different from regular forums in the following ways:

1. DU Groups are forum topics suggested by groups of DU Members. (To learn how to start your own DU Group, please read the topic called "How to suggest a DU Group.")

2. Each DU Group has a specific mission statement, which has been submitted to and approved by the administrators of Democratic Underground. Administrators reserve the right to withhold approval from any group idea suggested.

3. In order to post in a DU Group, a member must agree with that group's mission statement. Off-topic postings that violate the mission statement of a DU Group are not permitted. Members who disagree with the mission statement of a particular group may be blocked from posting in that group.

4. Only members with a DU Donor star next to their user-name may post messages in the DU Groups. Non-donors and non-registered lurkers are permitted to read DU Groups, but they are blocked from posting in them.

5. Currently, thread topics started in any of the DU Groups will not appear on the Latest Page. In the future, we may give members the option to show them on the Latest Page, provided that it does not put undue stress on our web server.

6. Please be aware that no members "own" or "run" any particular group, nor do members have the ability to decide who participates in any given group. The regular DU rules apply to postings in the DU Groups. If a DU Group becomes disruptive to the rest of the message board, the Administrators reserve the right to shut it down.

7. The Administrators will occasionally delete DU Groups that do not attract significant traffic or postings. If a particular DU Group is in danger of being deleted, the Administrators will post a warning in that Group at least 24 hours before it is removed.

We hope that these DU Groups will return some of that "small community feeling" that has been lost on DU during the last few years of rapid growth.

Enjoy!

Skinner
EarlG
Elad

The Administrators of Democratic Underground

_________________________________________________

If you're interested, the obvious place to start is at #2 developing
a 'Mission Statement' for a DU:Jobs Group... What it is to provide and
not to provide. Is it a locale for commiserating or is it a networking area or both? (I'm no good at mission statements.)

Also, on closer inspection and reflection a Jobs Group might be better than an open Forum... For the reason that only starred members can post there, but, anyone can read the posts. Might make for less disruption.

[Hugin]

91. How to Suggest a DU Group

How to Suggest a DU Group

Edited on Wed Apr-27-05 05:10 AM by Skinner

One of the best things about DU Groups is that members have the ability to suggest new groups to the Administrators of Democratic Underground. If you wish to suggest a group, please follow this procedure:

1. Start one discussion thread in the forum of your choice to tell people about your idea for a DU Group.

2. In that thread, you must get responses from at least ten DU members who agree to be active participants in the suggested DU Group. All ten members to respond must have donor stars.

3. In that thread, members must agree on a proposed mission statement for the DU Group.

4. When enough members have signed on to join the group and have agreed on a proposed mission statement, one member must officially suggest the DU Group to a DU Administrator (Skinner, EarlG, or Elad), by sending an email. Please be sure to include a link to the thread where members have discussed the proposed Group.

5. The Administrators will consider the request and make a decision. The Administrators will either 1) Accept the Group as it is proposed, 2) Deny the Group outright, or 3) Ask for changes to the Group or its mission statement which would be necessary for its approval.

6. Once the suggested Group has been accepted by the Administrators, the Administrators will create a new DU Group in the "DU Groups" Category forum, and pin the mission statement of that Group to the top of that Group's forum.

If you are considering a DU Group on a controversial topic, the Administrators would appreciate if you contacted us before collecting your ten members, so we may discuss any sensitive issues. This courtesy will increase the chance that your Group is approved. Also, please be aware that proposed Groups that are redundant with existing DU Forums are unlikely to be approved.

If you have any questions, please contact a forum Administrator.

Skinner
EarlG
Elad

Democratic Underground Administrators

____________________________________________________

So, let's get cracking on that 'Mission Statement'... Personally,
I don't see any problem getting the 10 "Me-toos" from the SMW and
WEE crowds.

[Demeter]

82. Strike by 24,000 refinery workers averted for now

http://news.yahoo.com/s/ap/20090201/ap_on_bi_ge/refiners_labor_8/

HOUSTON – A strike by some 24,000 refinery workers was averted, at least for now, as both sides agreed to extend negotiations for at least 24 hours.

Workers at refineries near New Orleans, Houston and as far away as Billings, Mont., will show up for scheduled shifts Monday, though negotiators will be back at the table on Sunday.

"We have made progress in that there was no strike at midnight," said Lynne Baker, a spokeswoman for the United Steelworkers, which represents more than 30,000 oil workers nationwide. "But there are still issues that need to be worked out and notice of a strike could be given at any time if that progress stalls."

The union agreed to a rolling 24-hour extension, which allows the union to give the required one-day notice to strike.

The nation's biggest refiner, Valero Energy Corp., said it would shut down some facilities if workers walk out. So did European oil company BP PLC.

Shell Oil Co., the lead negotiator for the industry, along with Exxon Mobil Corp., said its refineries would continue to make gasoline, diesel and other fuels using nonunion or replacement workers.

Chemical refiners would also be affected. LyondellBassell Industries said it was bringing in managers from locations not involved in contract negotiations to keep refineries going.

A strike would affect 60 producers, Baker said.

Thursday, union negotiators turned down the most recent offer of a 2.5 percent wage increase for each of the next three years, in addition to changes in medical coverage.

The impasse comes with refiners already cutting back production and industry experts are divided over whether a strike would hit the pocketbooks of motorists.

Job numbers are in free fall, which has led to unprecedented declines in miles driven by Americans.

Motorists cut their driving by 12.9 billion miles in November, down 5.3 percent from the same month a year earlier, the largest such decline of any November since monthly data estimates began in 1971, the Federal Highway Administration said this month.

On the surface, that suggests retail gasoline prices should be falling, but refiners are reading the same headlines and have aggressively cut back production.

Refiner cutbacks and the threat of a strike pushed gasoline futures up throughout the week on the New York Mercantile Exchange.

Friday, gasoline futures rose nearly 4 cents to $1.27 per gallon. When gasoline futures rise, retail prices tend to follow. The national average for a gallon of gasoline hit $1.846 on Friday. While that's still $1.14 less than last year at this time, gas is getting closer to $2 a gallon just a month after bottoming out at $1.61.

With refiners turning away oil shipments, crude storage levels have risen by about 20 million barrels in the past month, according to the U.S. Department of Energy.

Antoine Halff, an analyst with Newedge Group, said workers may actually be doing the industry a favor by going on strike with demand for gasoline so low.

Many of the refineries are on the Gulf Coast, near Houston and New Orleans. There are about 4,000 refinery workers in Houston alone. But the strike would reach into states like California and Tennessee, which also have refineries with labor contracts expiring.

Valero told employees Friday that it would close its facilities in Delaware City, Del., and Memphis, Tenn., if there is a strike.

The company said it would keep its Port Arthur, Texas, plant open with a contingency work force that is being trained.

"We would rather reach an agreement without a work stoppage at all," said spokesman Bill Day.

Exxon Mobil said plants would remain operational until a collective bargaining agreement was reached.

____

[DemReadingDU]

85. Martin Weiss: Washington’s Day of Reckoning

2/1/09 Washington’s Day of Reckoning by Martin Weiss

some snippets...

If you read just one of my Money and Markets issues this year, make sure it’s this one.

You will not hear what I’m about to say from our nation’s leaders. Nor will it pour forth from talking heads on Wall Street.

Some will say that the new warning I’m about to give you is too outrageous; too extreme. But they’ve said the same about nearly every other warning I’ve issued in recent years:

don’t be surprised to see …

* A massive collapse in the economy and stock market, triggering a tidal wave of bankruptcies, despair and even homelessness …

* A massive, global cleansing of the debt that caused this crisis …

* And, provided we avoid some major pitfalls, the first step toward rebuilding the foundations upon which our economy can grow for generations to come.


Fast forward to Washington’s day of reckoning and you will see how the bailout game could end:

On that day, Washington will have to either pay rates of interest that wound paralyze, and virtually KILL the economy … or it will have to slash and even abandon its bailout efforts.

Ultimately, it will have no choice but to step aside and let failing companies fail … collapsing industries collapse … and sinking markets sink.

The carnage will be traumatic and terrifying. But it will also be the beginning of the end of the crisis. Once trillions in toxic debt are swept away, America will finally be ready to lay the foundations upon which this economy can grow for decades to thereafter.

In the meantime, though, if you thought 2008 was a nightmare, brace yourself. The months ahead are likely to be far more brutal than anything we’ve seen so far.

more...
http://www.moneyandmarkets.com/washingtons-day-of-reckoning-29510

[DemReadingDU]

92. The Next Catastrophe - Pension funds

1/31/09 The Next Catastrophe by Jon Entine
Think Fannie Mae and Freddie Mac were a politicized financial disaster? Just wait until pension funds implode.

Funds worth trillions of dollars start to plummet in value. Political pressure to be “socially responsible” distorts the market decisions of government-related enterprises, leading to risky investments. Investors who once considered their retirements safely protectedwake up to a sinking feeling of uncertainty and gloom.

Sound like the great mortgage-fueled financial crisis of 2008? Sure. But it also describes a calamity likely to hit as soon as 2009. State, local, and private pension plans covering millions of government employees and union workers with “defined benefit” accounts are teetering on the brink of implosion, victims of both a sinking stock market and investment strategies influenced by political considerations.

There is about $3.5 trillion sloshing through the U.S. retirement system, scattered across more than 2,600 public pension funds and federal retirement accounts. Another $1 trillion or so covers union workers at corporate jobs in which the union has key management control of the fund. These public and union-based defined benefit plans cover 27 million people and represent more than 30 percent of the $15 trillion dollars held in U.S. retirement accounts.

Traditionally, public investments and union-based corporate pension funds were managed according to strict fiduciary principles designed to protect workers and taxpayers. For the most part they invested in safe government securities, such as bonds or U.S. Treasury bills. Professional managers oversaw the funds with little political interference.

But during the last 30 years, state pension funds began playing the market, putting their money into riskier and riskier securities—first stocks, corporate bonds, and foreign investments, then real estate, private equity firms, and hedge funds. Concurrently, baby boomers whose politics were forged in the 1960s and ’70s began using those pension funds to advance their social visions. Investments designed for the long-term welfare of retirees began to evolve into a political hammer. Some good occasionally came from the effort, as when companies were pushed to become more accountable in their practices. But advocacy groups often used their clout to direct money into pet social projects with dubious fiduciary prospects. Sometimes the money went to the very companies and financial instruments that, in the wake of the market meltdown, are now widely derided.

Union-led pension funds are also trying to rattle political cages, but they’re running closer to empty every day. Even before the sell-off, in the summer of 2008, while nearly 90 percent of nonunion funds met minimum safe funding thresholds—meaning they had adequate cash on hand to pay their benefits—40 percent of union funds were at risk. “These are high risk numbers even in a steady economy,” writes Diana Furchtgott-Roth, a pension fund specialist with the conservative Hudson Institute, in a recent study. Furchtgott-Roth notes that union fund management practices are opaque, costs are higher than at nonunion funds, and the plans have promised more than they can ever hope to deliver. “When workers entrust their retirement assets to an outside party, it is important that this party’s only interest be achieving the best returns possible,” she argues. “Unions clearly do not do this.”

more...
http://www.reason.com/news/show/130843.html

[Demeter]

93. Amazing! It's 40F! Spring Has Come!

Nothing like a 40 degree rise in temperature to make life worth living.

You are all watching the Super Bowl, I expect. I'll do some posting in the evening, if I get a nap now.

May the best team win.

[Dr.Phool]

97. Don't miss the Puppy Bowl on Animal Planet!

It beats the pre-game shows, and runs until about midnight.

[UpInArms]

96. Worst January Ever: Economy, bank woes drag market to worst January ever

http://www.reuters.com/article/hotStocksNews/idUSTRE50K4DA20090131

NEW YORK (Reuters) - Stocks closed out their worst January ever with another slide on Friday after data showed the economy contracted at the fastest pace in nearly 27 years in the fourth quarter.

Uncertainty about the fate of a plan by the Obama administration to relieve banks of money-losing assets added to the bearish tone, with Citigroup (C.N) plunging 9 percent and Bank of America (BAC.N) dropping 3 percent.

Procter & Gamble Co (PG.N), the maker of Pampers diapers, Gillette razors and Tide laundry detergent, was the Dow's top drag, sliding 6.4 percent, after its quarterly profit missed expectations. P&G also added its name to a growing list of companies cutting outlooks.

"We're in for another tough year," said Dean Barber, president of investment firm Barber Financial Group in Kansas City.

"You have consumer sentiment at an all-time low, job losses that have exceeded the total number of job losses in the '81-'82 recession, we're 13 months into the latest recession, so people feel bad."

The Dow Jones industrial average .DJI fell 148.15 points, or 1.82 percent, to 8,000.86. The Standard & Poor's 500 Index .SPX slid 19.26 points, or 2.28 percent, to 825.88. The Nasdaq Composite Index .IXIC tumbled 31.42 points, or 2.08 percent, to 1,476.42.

...more...

[Joe Chi Minh]

98. In case any of you missed this Guardian article posted by Joanne98 in another thread,

it seems worth posting it here:

http://www.guardian.co.uk/business/2009/jan/30/world-social-forum-latin-america

Incidentally, another great cartoon by Demented in today's Mail on Sunday:

Slimy-looking type, in one hand, holding out a top hat people are throwing coins into, in the other, a glass of champagne: "charming...." "thank you so much", he intones in the first picture. You can't make out even the top line of the words on the notice board standing on the pavement at his side.

In the next picture, he murmurs, "too kind....", and you get to see the plea on the notice board: "Private jet to support".