Tag: finance

Crossposted at Daily Kos

Beatings of a rhetorical sort, of course

    Senator Olympia Snowe all but admitted that a Trigger on a Public Option is total bull yesterday. She basically proved that she is NOT bargaining in good faith, and that if there were any illusions that the trigger she supports is designed to never be pulled, they are totally gone now. How do we know this?

    Because Sen. Snowe VOTED AGAINST a Public Option twice.

    This proves (HELLO! ARE YOU FRAKKING LISTENING DEMOCRATIC POLITICIANS?) that Sen. Snowe WILL NOT vote for an actual Public Option, just the idea of one, or rather, the idea of the idea of one.

    And why? What is Olympia Snowe, the Republican Party, the Insurance Lobbyists and at least 5 DINO Republocrat Senators afraid of?

    This quote from yesterday’s Senate Finance Committee hearing sums it up best. . .

    “What are we afraid of? That Americans might actually like it?”

       ~ Senator John Kerry (D-MA)

    Yes. That is EXACTLY what they are afraid of.

    More and a call to action below the fold.

Reading Pluto’s piece on Chase, America’s soon-to-be most hated bank, and thought to myself “Johnny, now normally you have an economic and civil libertarian bent,but you also believe that when the market fails the gov’ steps in and vice versa.”  This got me thinking (the white russian helps), President Obama is pushing right now for that “public option” (yes, I know, Medicare for all, but so far that ain’t the deal we’re getting) for health care, maybe its time we look at one for banking?

     In Federal Insurance Co. v. Kingdom Of Saudi Arabia, a suit filed by several insurance companies who sought to recover over $300 billion for losses incurred by the 9/11 attacks, the following men are named as defendants.

   Prince Salman bin Abdulaziz al-Saud, president of SHC, who was warned in 2000 of his organization’s ties to al Qaeda;

   Crown Prince Sultan bin Abdulaziz al-Saud, the designated successor to King Abdullah, who received warnings as early as 1994 that some Muslim charitable groups were fronts for al Qaeda;

   Prince Naif bin Abdulaziz al-Saud, who as Saudi Minister of the Interior monitors and controls the charities operating in Saudi Arabia;

   Prince Turki al-Faisal bin Abdulaziz al-Saud, who was the director of the Kingdom’s Department of General Intelligence (“DGI”) until August 2001; and

   Prince Mohamed al Faisal al Saud, who unlike the other princes named is not a government official but a bank manager alleged to have knowingly provided material sponsorship to international terrorism.

cbs2chicago.com

 

    When the crown prince and successor to the throne of Saudi Arabia is warned back in 1994 that charities his family supports are funneling money to terrorist organizations, and then those groups attack America, you would think that somebody in the executive branch would find that interesting.

    But not Bush/Cheney. They spent every minute between the Inauguration and 9/10/2001 trying to find a way to attack Iraq. Defending America from terrorism was not very interesting until after the attack had already occurred.

    This is not the only evidence that the royal family and absolute rulers of Saudi Arabia directly aided Al Qaeda before and up to the attacks against America on September 11th. This evidence is well documented, and yet it went ignored.

    Why was this evidence ignored? I will not speculate on that point, rather, here is more evidence. You may decide for yourself.

All the money is gone. Well, there never was any money, but accounting entries which created money through the issuance of debt. Nonetheless and you can argue magicians’ tricks endlessly, but now not only is the rabbit gone but so is the magician’s top-hat.

Overnight, as though someone turned on a switch which turned off the air itself, trillions upon trillions of dollars of wealth disappeared. Overnight. Poof. Now you see it and now you don’t.

But, just as a magician’s tricks are illusions and not real so to is the disappearance, virtually overnight, of the world’s wealth. Because how can nothing disappear?

Well, I’m a little late to the party, but that should be OK.

It seems as if Wall Street is going to get much of what they want in this upcoming bailout bill, but they’re not going to get all of it.

From Handout to Bailout

It looks like our elected officials showed a bit of spine and common sense in taking this from ‘handout’ to bailout and have placed some checks and balances on the handing over of $700 large to the extortionists on Wall Street.

But the key aspect of this situation is that it was still extortion.

Suggestions to organise a massive bailout of the banks are being floated by central bankers this week-end:

Central banks float rescue ideas

Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis.

Such a move would involve the use of public funds to shore up the market in a key financial instrument and restore confidence by ending the current vicious circle of forced sales, falling prices and weakening balance sheets.

There are more details in that article (including about disagreements between the Fed and the ECB on when the package should be put in place), but two things stand out:

1) the financial crisis is now acknowledged as bad enough to require public intervention;

2) that intervention will require significant injection of public money in bank’s balance sheets.

The western financial system is caught in a trap. On the one hand, there is an urgent need for clearing prices to be established for impaired assets to restore confidence; on the other hand, if this is done in a mark-to-market world, there is a risk that some banks will run out of capital.

(Gillian Tett, Financial Times)

Bank bankruptcies are a realistic prospect in the coming months. And yet, this is not even the worst…

The global economy is facing twin shocks. Natural resource markets are delivering a supply shock of 1970s dimensions, while the financial system is delivering a shock comparable to the bank and thrift crises of the 1988-1993 period.

(Tim Bonds, Barclays Capital, in the Financial Times)

That graph was posted alongside this article in the NYT, and it pretty much captures the unprecedented nature of the credit crisis we’re going through this autumn. In several sectors of the financial world, lending quite simply stopped. Leveraged buy-outs, the big story of the past 18 months, no longer exist. Asset-backed paper is seen as “toxic waste”, and no longer provided – it continues to exist in so far as banks would rather roll over paper that cannot be repaid rather than make all the underlying losses appear in plain sight.

As lending prior to that had been extravagantly exuberant, this is not having an immediate impact for many companies, which have sound balance sheets and advantageous existing credit lines, but as it drags on, the real economy will start to feel the pinch as it needs to finance or refinance its normal activities, let alone investment.

Now that the economy is heading south, worries are being increasingly expressed about the great unwinding, and one sees increasingly frantic attempts to rewrite the economic history of the past few years.

On the eve of the famous Black Friday, one of, or the busiest shopping day in the year, I’d like to point out a column written in the Financial Times, Europe’s main English language business paper, which attempts to spin current worries about the economy on a grand scale. As the author, John Plender, explicitly writes about the “Anglo economies”, I feel it is appropriate to incorporate that in my “Anglo Disease” series (see the links at the bottom for earlier instalments).

This was posted on DailyKos yesterday, but may be worth a read for those of you that have not seen it. It was originally posted on European Tribune.