http://www.independent.co.uk/news/business/news/we-must-print-more-money-says-bank-1625947.html
The Bank of England is now officially printing money. Narrow rentier-focussed inflation control is dead. Hurrah England!
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Update:
http://www.independent.co.uk/news/business/analysis-and-features/printing-money-is-a-163100bn-leap-in-the-dark-1634558.html
The US government is also effectively trying to print its way out of trouble:
http://www.thestar.com/News/Insight/article/594406
Recapping the previous threads:
Trouble in Bank Land IV
The World Financial Crisis
The World Financial Crisis II
Continued World Financial Crisis Fallout
World Financial Crisis Deepens
Planet Earth's Financial Crisis Part V
Coming to some town near you, sooner, rather than later.
I had to laugh when recently reading Vancouver Real estate Promoter Bob Rennie's current advice was don't sell your home now if you don't have to. What he was actually saying is he can't sell his product at a profit now and he doesn't want homeowners competing with him for the measely sales, developer fire sales or not, that are taking place across the Lower Mainland.
I still have no sympathy for those folks that got dollar signs in their eyes and figured they could buy a house and then flip it in a year.
Whatever happened to the ethic of paying for something you intend to use?
Cars depreciate so fast they're almost as bad as computers for resale value, yet you don't see people walking away from auto loans just because the car's worth less a year later than when they bought their cars.
But heaven forbid a house fall in value! Heaven forbid that you buy something, have to borrow money to purchase the asset, and then stick to repaying the loan!
Land price increases are not a God-given gift to homeowners. If they have negative equity - too bad! They didn't purchase a boat cruise or some intangible service they can get a refund on. They purchased a roof over their heads - something physical and usable! Just like a car. Physical and usable.
I agree that the very idea of a housing market is ridiculous given that land is no longer essentially infinite in today's world, but in the context of a housing market and the need to purchase housing, I find it utterly ridiculous that people think it is moral and ethical to simply quit paying for the place one has chosen to live in just because the dollar signs in one's eyes blinded one to the facts about paying for something one intends to use.
I agree Dr. Conway. That mentality is really pushed though. Not just through the real estate busness but through many cultural and consumer oriented fare. Just watch any home reno show and your more then likely going to hear, this reno is going to increase the resale value of your home ot don't do this because it will make your house harder to sell in the future. I know for instance that kitchens and bathrooms sell houses because I'm told that even by the service rep at my local home improvment store. "You want to paint your kitchen pink with yellow polkadots? Are you insane? Don't you know what that will do to it's value?" But *I* like pink with yellow polka dot, it's my 'home'.
I exagerate somewhat but not really that much. The idea that your not just renoing for yourself but for all the people that will come after you is such a common refrain that it's basically part of the 'common sense' of renoing and decorating to the point where it's all part of the calculations about deciding whether this stove, vanity or type of sink will be worth it or not.
A house is no longer a home it's an investment that one just passes through on the way to something else.
I ran into this when I was buying a house. I actually didn't go with the first real estate agent I saw and talked too, because he couldn't get past looking at from this point of view and actually argued that my view on the criteria that I was looking for was just going to get me into trouble with my future house market viability. Not the exact words and he was very polite about it but that was basically it. So buying a fixer upper was on really viable and smart is the costs of fixing it came in under whatever the future market value would be with those costs, doing anything otherwise, I was an idiot. One of the things I really wanted was land where I could grow things and had specific crietera about what that land should consist of, the house was only one priority and not even the main one. I got a real nice talking to about 'values' and the resalability of those types of improvements being pretty much nil in the market. I would spend more then I could get back blah blah. Yes I know all that thank you but I'm buying a HOME where I am going to actually LIVE. Yeesh.
Anyways the guy I eventually worked with understood and didn't treat me as if I was some sort of ignorant loon for not caring so much about what was going to happen when and if I sold it in some unknown future. I really could care less what the current land value is because the land I'm on has value that currently isn't as recognized as valuable in that market.
Bank of England to begin "Quantitative Easing"
One thing I'm particularly chuckling over is this:
Well, blow me down with a feather. Really?
Too bad the dumb bastards had to watch the stock market get all the glitz while the real economy lagged, and then watched housing prices get completely out of control before they realized that consumer price inflation is probably a lot less harmful, economically, when taken in mild doses.
I never moved in those circles, and have wondered just how singularly self-posessed one would have to be to not raise such questions in their polite, inner-directed society.
Wonder what they read besides the market news?
Bank of England set to pump cash into economy to avoid deflation
The era of central-bank autonomy is coming to a close as well, I think. The article says thus:
It was a landmark moment. In the following decade, the country grew used to the idea that it was no longer the Treasury, but the Bank, that was at the economy's helm. On one Thursday each month, the hand of the "Old Lady of Threadneedle Street" was felt on the tiller as the Bank's decisions emerged at midday.
The next major event would be for either the Fed or for the ECB to come under direct governmental control, directed by the government in the interests of more than just rentiers.
I do agree with you that the amount that people expect houses to go up is ridicoulous however that is where my agreement ends when it comes to "house flippers".
A car is usually so broken after 20 years of use that it is not drivable (I have driven 4 cars to the car graveyard because I had them at the end of their lifecycle). A house is still usable with maintenance after hundreds of years.
House flippers are not the homes owner. They are there to do a service, one that I find valuable.
I think people who fix up older houses are actaully doing a service by allowing a house that in some cases are in so much disrepair that it would have been torn down for a new house.
Houses should remain stable because they are reusable for a lot longer than a car and any improvements to it should increase their value because then it will be usable for a lot longer.
I'm tired of people thinking that a house should be garbaged after a certain number of years and be bulldozed for newer houses that are "worth more". We should be fixing up what we have and if someone buys an older house to fix it up to be better than when they bought it they should get a new price for the better house that they fixed it up to, not a bad price because it is old and should be worth less than a newer house.
I do agree if you are living in the house you shouldn't base decisions on increases in value and resaleability (this coming from a girl who's father wouldn't let her put posters up because he didn't want holes in the wall for when he resold it) however because a house is reuasable for so long I think they should be able to maintain its value because it is just as valuable as a new house and sometimes more so.
BRUSSELS (AFP) — British Prime Minister Gordon Brown said Sunday he will head to Washington this week hoping to secure President Barack Obama's backing for a "global grand bargain" to save the world economy.
"As part of the grand bargain the whole world must agree, as Europe has done, on the need to reject protectionism, which is the road to ruin and the route to deeper recession," Brown said after an emergency EU summit in Brussels.
He said there was European "consensus" that united action was required to tackle the deepening recession.
Save the Wal-Mart economy or bust!
Would it be too much to hope for a Tobin tax, or even better, outright controls over capital flows?
At ll a.m., the TSX is down more than 400 points, more than wiping out last week's gains.
The bailout of insurers stateside continues.
The useless CATO Institute should close up shop.
Revenge of the Glut
http://www.nytimes.com/2009/03/02/opinion/02krugman.html?_r=1
Mr. Bernanke cited “the depth and sophistication of the country’s financial markets (which, among other things, have allowed households easy access to housing wealth).” Depth, yes. But sophistication? Well, you could say that American bankers, empowered by a quarter-century of deregulatory zeal, led the world in finding sophisticated ways to enrich themselves by hiding risk and fooling investors.
And wide-open, loosely regulated financial systems characterized many of the other recipients of large capital inflows. This may explain the almost eerie correlation between conservative praise two or three years ago and economic disaster today. “Reforms have made Iceland a Nordic tiger,” declared a paper from the Cato Institute. “How Ireland Became the Celtic Tiger” was the title of one Heritage Foundation article; “The Estonian Economic Miracle” was the title of another. All three nations are in deep crisis now.
For a while, the inrush of capital created the illusion of wealth in these countries, just as it did for American homeowners: asset prices were rising, currencies were strong, and everything looked fine. But bubbles always burst sooner or later, and yesterday’s miracle economies have become today’s basket cases, nations whose assets have evaporated but whose debts remain all too real. And these debts are an especially heavy burden because most of the loans were denominated in other countries’ currencies.
At ll a.m., the TSX is down more than 400 points, more than wiping out last week's gains.
Good thing I'm not retiring for at least 30 years. I'll need it. I feel sorry for anyone who has to much sooner.
I admit to a minor amount of Schadenfreude at the way Ireland went from "Tiger" to "Basket Case", and it really does strike me that those countries that so aggressively pursued a boom were the ones that most quickly went bust.
Any sane person knows that capitalist economies are inherently susceptible to boom-and-bust cycles. That's just the nature of unregulated economies, and the United States' own history bears this out many times in the 19th century. It doesn't take reading Karl Marx to realize that the natural response to this would be to build in counterweights and countervailing mechanisms to moderate out the booms and busts, but the typical response of political conservatives has been to put in place mechanisms which enhance the booms and worsen the busts; their avoidance of responsibility is also just as typical, as they blame everybody but themselves and their cronies.
It's like Wall Street and the western banking cabal have basically taken over the reins of resource allocation, and our so-called elections have become little more than stooge-offs for bought and paid for politicians
I enjoyed this trader's face from the NYSE:
Impending eye-splosion!
Great environmental news - not so good economic news. The US car market won't ever be the same again, says Jeff Rubin at CIBC for what seems a very good reason. If there is an economic recovery, gas prices go right back up to what they were last year, because there's been no change in supply.
http://research.cibcwm.com/economic_public/download/feature1.pdf
America's Fiscal Collapse
In actuality, what we are dealing with is the most drastic curtailment in public spending in American history, leading to social havoc and the potential impoverishment of millions of people.
The Obama promise largely serves the interests of Wall Street, the defence contractors and the oil conglomerates. In turn, the Bush-Obama bank "bailouts" are leading America into a spiralling public debt crisis. The economic and social dislocations are potentially devastating. . .
War and Wall Street
This is a "War Budget". The austerity measures hit all major federal spending programs with the exception of: 1. Defence and the Middle East War: 2. the Wall Street bank bailout, 3. Interest payments on a staggering public debt.
The budget diverts tax revenues into financing the war. It legitimizes the fraudulent transfers of tax dollars to the financial elites under the "bank bailouts".
The pattern of deficit spending is not expansionary. We are not dealing with a Keynesian style deficit, which stimulates investment and consumer demand, leading to an expansion of production and employment.
More socialism for the rich
"The global financial crisis has revealed the need to rethink fundamentally how financial systems are regulated. It has also made clear a systemic failure of the economics profession."
Abstract: "The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession’s insistence on constructing models that, by design, disregard the key elements driving outcomes in real-world markets. The economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake, as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models."
http://www.debtdeflation.com/blogs/wp-content/uploads/papers/
Go to Dahlem Report: Economic Crisis, etc.
Economists forecast drop of 0.8% to 5% and the actual drop is 7.7%
Like the weather person who often just needs to look out the window, some of these economists need to get a grip on what's going on the real world, instead of the the fantasyland that a lot of them live in.
I wonder how many people are considering to permanently stop looking to purchase a home. With this kind of debacle possible, they may decide to rent for the rest of their lives. Less hassles, no repairs, no mowing the lawn, and much more money to go towards a safe, if there is such a thing, RRSP, for their retirement. Do homeowners actually realize how much it actually costs them to have their own home? Investment my ass. A lot of these people are being destroyed financially by owning a home.
Pending U.S. Home Resales Slump More Than Forecast (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYDO.ah13lRM&refer=home
Economists forecast a 3.5 percent drop in pending sales after an originally reported gain of 6.3 percent in December, according to the median forecast of 32 economists in a Bloomberg News survey. Estimates ranged from declines of 0.8 percent to 5 percent.
The S & P 500 is below 700. Incroyable!
It looks like the stock market has lost approximately 40%-50% of its value in the past six months alone.
http://investdb.theglobeandmail.com/invest/investSQL/gx.show_chart?pl_comp_id=&pl_errmsg=&iaction=Chart&pl_primary_listing=SPX-I&iaction=Chart&pl_additional_listing=0&pl_period=6D&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0
The U.S. stock market is down over 55% from its August 2007 high.
Good thing I'm not retiring for at least 30 years. I'll need it. I feel sorry for anyone who has to much sooner.
Not long till I retire. And I'm definitely not insulated from all this.
But all things in perspective: I get to quit going to work and that makes me a happy camper. Period. I'll just figure out how to do it with less- even if its a lot less.
Not the first time.
We live in a rich country. If you are sufficiently resourceful, even a poor person has a lot of slack to work with.
Some [hopefully] comforting words of advice from those looking to the future.
If you weren't planning on qualifying for or needing Old Age Supplement, but find that you will be... there is asubstantial silver lining. The after tax effects of the income you thought you had but do not, it had a huge tax clawback that is not transparent. So you will not need nearly as much as you thought to replace that, and there are resourceful ways to without much difficulty end up with almost the same spending/purchasing power.
Don't worry they tossed a 30 Billion meesly dollars to AIG AGAIN!!
That company has gotten 180 Billion alone and they still think it will go under. That is tax payers money proping up the rich. wonder what the average america could do with 1000 dollars? As that is the price to keep AIG afloat after their poor management that got paid MILLIONs to fuck everything up.
They're doing that though because they think it avoids the trillion-dollar problem that would ensue if AIG collapsed. Whether it really avoids it rather than just delaying it, we'll have to see.
I wonder if the actuaries are working out their chances?
Meet the Mortgage Pig!
http://www.calculatedriskblog.com/2009/03/interesting-technical-pattern....
The horrifying health consequences of the current economic and financal crisis are noteworthy. The World Health Organization notes the following:
" As a consequence of the financial crisis in OECD countries, the world risks the most serious economic downturn since the 1930s. The impact of earlier increases in the cost of food and fuel are estimated to have tipped more than 100 million people back into poverty. The challenge facing the world now is to prevent an economic crisis becoming a social
and a health crisis…. A grave human crisis is already happening."
Capitalism is death. The sooner it comes to an end the better.
The quote is from " The Financial Crisis and Global Health" by the World Health Organization (WHO).
This is too much.
Maybe the financial community needs a "Dirty Harry"
How much are we supposed to put up with?
Also the comment section provides a good read.
Ex-Leaders at Countrywide Start Firm to Buy Bad Loans
http://www.nytimes.com/2009/03/04/business/04penny.html?_r=1&hp
Fairly or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis. After all, the banking behemoth made risky loans to tens of thousands of Americans, helping set off a chain of events that has the economy staggering.
So it may come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess.
Stanford L. Kurland, Countrywide’s former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.
"The Great Recession of 2008 (and beyond) is hurting men more than women. It is hurting homeowners and investors more than renters or retirees who rely on Social Security checks. It is hurting Latinos more than any other ethnic group. A year ago, a greater share of Latinos held jobs than whites. Today, the two have switched places.
If the Great Recession, as some have called it, has a capital city, it is El Centro, Calif., due east of San Diego, in the desert of California's Inland Valley. El Centro has the highest unemployment rate in the nation, a depression like 22.6 percent.
. . . .
In the long run, this Great Recession may end up afflicting the comfortable more than the afflicted.
. . . .
Yet I still think the Great Recession will eventually end up compressing the rungs on the nation's economic ladder, for the same three fundamental reasons that the Great Depression did. Why?"
http://www.nytimes.com/2009/03/04/business/04leonhardt.html?hp
While it's useful to go over the mortgage-backed securities (MBS), collateralized debt obligations (CDO), structured investment vehicles (SIV) and all the exotic financial products and instruments that have fueled the bubble since the dot.com collapse in 2000, it's also important to point out, very clearly, that the boom, founded to a large extent on a real estate boom that took the system forward from the last crisis, that has become a bust is inherently part of the capitalist cycle. A crisis like the current one was inevitable. The question was simply, "When?"
All this class warfare by the boss class against working people, whether privatization, deregulation, social cutbacks and other atrocities, or endless warfare and militarization of society, or racing to the brink of planetary ecological disaster, or inter-imperialist rivalry over resources and global political dominance - all of this has led to the accumulation of gigantic profits and surplus that had nowhere to go. So-called effective demand by people that have been impoverished over these years has been eviscerated by the obscene accumulation of wealth at the tippy top. The financialization process over the last, say, 30 years, and the endless creation of ever new capitalist bubbles that pop ending in another bust in the cycle, have led to the current impasse.
It's the system. Sure, there are lots of members of the oligarchy that, shark-like, will swim in the bloody water looking for fresh profits and victims. But when has that been immoral under capitalism?
In other parts of the world, people are making herculean efforts to move forwards, away from the capitalist rush to the precipice. In Venezuela, in Cuba, in Bolivia, an alternative approach to the juggernaut has emerged. These efforts are worthy of careful study from which people who have not been completely infected by market fundamentalism and market idolatry can learn from.
But time is running out. A fightback, class warfare in response to the class warfare from the bosses over the last 30 years, defence of Mother Earth, and political organization around an alternative is the way to go. That alternative is socialism. It is either that or more capitalist barbarism.
I don't think people have suffered enough. They have turned the corner but still have to travel down the block and make another left before anything will be done. Pulling away ever so slightly will not do much to change things, but that is what they are trying to get away with.
Thank god for our strong banking institutions; they have lessened the burden for us for sure.
Speaking of God, how's that invisible hand doing these days?
Those banks will be even stronger when they're nationalized under democratic control. But which one to nationalize first? Yes, perhaps some real competition could be introduced into Canadian banking for a change. I'm sure the broad shoulders of the generous and civic-minded bankers could manage the burden. Don't forget we'd have to give them substantial raises and bonuses for all that effort. Maybe give them a raise anyway. Know what I'm sayin' ?
Would these be the same banking institutions that continue to suck hundreds of millions of dollars put of our pockets, even in times of economic distress? Yeah, I guess the burden of carrying around all that cash has definitely been lightened for us by "our" strong banking institutions!
Would these be the same banking institutions that continue to suck hundreds of millions of dollars put of our pockets, even in times of economic distress? Yeah, I guess the burden of carrying around all that cash has definitely been lightened for us by "our" strong banking institutions!
They are those, the same increasinly deregulated banks which needed bailing out big time during Mulroney's terrible reign after gambling losses on stocks, oil and gas, and the Canary Wharf fiasco in London. They were bailed out big time on order of the shadowy Bank for International Settlements, and Mulroney complied in 1991 with ramming a bill thru parliament which privatised the remainder of money creation in Canada to a level of about 96%.
They would be the same banksters who wanted a green light for mergers in order that they should be big enough to gamble big time with their US counterparts at the same casino tables. But pressure from the NDP and other groups helped put the kibosh to those plans.
And thank goodness CMHC was never privatised as were Freddy Mac and Fanny May, no thanks to the Harpers introducing private US mortgage insurers into Canadian housing market to compete with CMHC on the QT and hush. Sometimes Ottawa heistated with introducing more of the neoliberal voodoo. But they still havent learned. They are still the same two old line parties filled to the brim with rightwing ideologues with somewhere under 35% percent of popular voter support combined and preaching the same failed second-hand rightwing market ideology
To M. Spector, your recipe for success is privatizing them? hmm the States are sure doing well with that. just a thought. I mean sure we have some capital vested in them, but think about what kind of a hole a more private alternative would have put us in.
I'm not saying our banking system is the utopian model for the world but hey, were boding PRETTY good compared to some of our other G8 counterparts.
Sure thing. Bush's TARP bailout was more transparent and made public than Harper was with taxpayer funded handouts to Canada's banksters, and US taxpayers are being ripped off for generations to come.
Canada's 75 Billion Dollar Bank Bailout
The $64 Billion Federal Budget Deficit is intended to Finance Canada's Chartered BanksNo Parliamentary Debate
The $700 billion US bank bailout under the Troubled Assets Relief Program, was the object of debate and legislation in the US Congress.
In contrast, in Canada, the granting of 75 billion dollars to Canada's chartered banks was implemented at the height of an election campaign, without duly informing the Canadian public.
Canada's media and financial press bears a responsibility in this regard. The matter was barely mentioned. It passed virtually unnoticed a few days before a federal election.
Media coverage was minimal. There was no parliamentary debate. No discussion, no debate as one would have expected from the opposition parties at the height of an election campaign as well as in its aftermath.
Nobody seemed to have noticed. Most Canadians do not know that there was a 75 billion dollar bailout of Canada's financial institutions.
And for the record, Brian Masse(NDP) did mention the big bank heist in the House of Commons on December 1st
It is interesting, because the Conservatives talk about distancing themselves further when the banks have received over $100 billion of support from provisions of the federal government.
Specifically we have federal government CMHC purchases, pooled together mortgages from the banks, $75 billion for that; a bank account that offers short term credit through PRA to banks, $50 billion-plus for that; the Bank of Canada offers short term credit through PRA to private money markets, $5 billion there; the Bank of Canada established a new term loan facility to assist banks and others, $8 billion there; the Bank of Canada releases treasury bills to investment dealers, $10 billion there. Also the federal government agrees to guarantee loans to private banks and the Bank of Canada accepts asset-backed commercial paper as collateral. What do we get from that? Not a single thing
Another big time bank heist on the backs of Canadian workers. Will these idiots ever learn?
The Wall Street Media according to Jon Stewart:
http://www.thedailyshow.com/video/index.jhtml?videoId=220252&title=cnbc-gives-financial-advice
The value of CitiBank shares went under a dollar yesterday, down from a peak of $57. Includes a slideshow of things that will cost you less than a CitiBank share:
http://www.huffingtonpost.com/2009/03/05/citigroup-stock-sinks-to_n_1721...
The U.S. economy continued to bleed jobs at a rapid rate in February, as employers cut 651,000 jobs from their payrolls, the U.S. Department of Labour reported Friday.
The big job losses pushed the U.S. unemployment rate up to 8.1 per cent - the highest since late 1983 - from 7.6 per cent in January.
Economists had been predicting a total of 648,000 jobs lost last month. February's job losses follow a January employment drop of 598,000.
http://www.cbc.ca/canada/story/2009/03/06/usjobsfebruary.html
The payroll drop in January was revised up to 655,000 from 598,000 and December now shows a 681,000 drop, up from the 577,000 previously estimated. The December decline was the biggest since October 1949.
The U.S. economy has now lost almost 4.4 million jobs since the recession began in December 2007, the biggest employment slump of any economic downturn in the postwar period.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aesonW0og4.Y&refer=n...
orangelib:
"I'm not saying our banking system is the utopian model for the world but hey, were boding PRETTY good compared to some of our other G8 counterparts."
---------------------------------------------------------
And my bank, BMO, has just post a profit of $230m in the first quarter. But they informed me, two weeks back, that my line of credit cost was going up a percentage point, even though the central bank's overnight rate to them had been dropped to 1 per cent. And that, of course, flies in the face of the need for them to make it easier for us all to keep on buying. But they have to remain competitive in the market with other insitututions , so that the investor will stay loyal, find some safety in an otherwise scary market.
Oh yes, orangelib, we are all so happy our banks are profitable. But they should be nationalized. Don't forget, it was a conservative (small c) liberal government that stopped them from expanding into unprofitability in the neo-con expansion frenzy of the 90s.
And, jeez, maybe they won't raise my rates with this latest bank rate drop to 0.5 per cent. We live in hope of their success!
To M. Spector, your recipe for success is privatizing them? hmm the States are sure doing well with that. just a thought. I mean sure we have some capital vested in them, but think about what kind of a hole a more private alternative would have put us in.
I'm not saying our banking system is the utopian model for the world but hey, were boding PRETTY good compared to some of our other G8 counterparts.
Yes, the Canadian banks have certainly done well for themselves, I'll give you that. At our expense, of course.
So which banks do you have shares in?
Walden Bello
A steep rise in US housing foreclosures is a crucial element of the present credit crisis. Unfortunately, many of these ‘toxic’ assets are still held by the banks, which are unable to liquidate them from their balance sheets without first going insolvent. No one on the market is willing to buy or sell them, in part as these troubled assets are extremely difficult to price. Even once they are marked down to a selling price, a significant proportion of US banks will still have to enter into bankruptcy proceedings. This represents a painful but necessary step that must occur should the US economy have any hope for recovery. To prevent the death of the patient and to facilitate recovery, it is absolutely necessary, in medical parlance, to first amputate the diseased limbs of the US economic engine.
Unfortunately, the Obama Administration’s plan makes impossible the very outcome that is needed for recovery, and therefore unwittingly enables the disease to spread throughout the entire body. Keeping insolvent banks alive with capital infusions from the government merely postpones the inevitable failure of a large segment of the US banking industry, while damaging the rest of the economy. The Stimulus Package, furthermore, rapidly increase debt spending to overcome a problem whose origin lies in excessive debt spending. If water were previously flooding one-third of the ship, the Stimulus Package makes it inevitable that the rest of the ship will eventually succumb to flooding as well.
Nicholas Vakkur
What actually happens in an economic collapse anyway?
Put simply, wages and prices drop until people can justify buying and hiring again or until the government does it for us.
And thousands of private banks fold up as per 1929 America, 1985 Chile, 2008 - ? America and neoliberalized economies. National debt soars and unemployment skyrockets.
Howoever, we should not see a real do-over of 1929 in North America with the collapse of "leave it to the market" capitalism then. Governments are much larger today than then and are pumping money into the economy and creating public sector jobs that just didnt exist back then 80 years ago. The "new" liberal capitalism since the 1980s basically said that public sector economy is bad and should either be privatized or made to run according to an efficient business model. As governments pared down public sector economy and deregulated various sectors of our economies - and basically moving us somewhat closer to the way it was in the 1920's and 30's - the wheels began falling off. And it was as if they'd forgotten that laissez-faire capitalism has never worked anywhere in the world where tried.
People lose their jobs, their homes, and their life savings. Crime rates go up. Suicide rates go up. Public health declines. The underground economy grows. A massive assault is launched on the labour movement and its hard-won gains are rolled back. As the ruling class begins to panic, the possibility of fascism increases.
A hopeful GV:
"And, jeez, maybe they won't raise my rates with this latest bank rate drop to 0.5 per cent. We live in hope of their success!
"
------------------------------------------------------
Looks like it's not to be. A letter-writer in the Globe yesterday was notified "interest rates on lines of credit are to be increased" and got a "paragraph of bafflegab explaining why."
In that newspapers "report on business weekend" section, eureka: "A switch toward more profitable products, such as lines of credit, is helping the core operations churn out strong earnings" for the BMO. It leads the way with double-digit dividends, and finally, it seems our PM can with confidence say that there are prime pickings in the market - the banks' shares are nearly 50 per cent lower than they were Aug. 1, 2007.
Mind you, Jim Flaherty's new-found Keynesian faith might founder when he sees the results of concerns among bankers...that letter writer continued:
"I was shocked, shocked - Claude Rains himself couln't have put it any better. Needless to say, it will be a very long time before this family responds to governments and experts urging us to help the economy spend its way out of the recession by spending our way into debt."
And unless Jimmy nationalizes the banks
, that's got to be my response as well.
Huge UK bank bailout
In one of the bleakest assessments yet, economists at the World Bank predicted on Sunday that the global economy and the volume of global trade would both shrink this year for the first time since World War II.
The World Bank said in a new report that the crisis that began with junk mortgages in the United States was causing havoc for poorer countries that had nothing to do with the original problem.
As a result, it said, nations in Latin America, Africa and East Asia have had not only their growth stifled but their access to credit as well.
http://www.nytimes.com/2009/03/09/business/09bank.html?_r=1
Yay, we're doomed!
Financial crisis hits Irish teachers, nurses
As if that wasn't enough, Horan now can scarcely believe that the government plans to cut her pay by 10 percent or more — a sacrifice to be shared by hundreds of thousands of middle-class families across Ireland's unraveling economy.
A government that long profited from a property boom is now raising income taxes and pension charges to combat a sudden, gaping hole in the public finances that means borrowing one euro for every three spent. Its emergency approach is fueling rebellion throughout the bedrock of Irish society — teachers, bus drivers, police officers and nurses — who feel they are being asked to surrender too much in defense of a wealthy, discredited elite.
"Our genius government blew the boom. On their friends in the banks, on property madmen who made the whole country insane with greed. We had a once-in-a-lifetime chance to pull this country out of the muck. All that money wasted," rued Horan, dragging deeply from a cigarette outside her crowded emergency room on an icy March night.
"They can find billions for the banks, and we're getting our salaries and budgets slashed. It's a sick, sick joke
Tent City USA
See, it's really happening - it's on Oprah!
A fine agenda for re-regulating finance - probably nobody important will listen:
http://www.voxeu.org/index.php?q=node/3232
I have this theory about finance. Finance is really about doing nothing. It's about daming the river of trade and hording essentials to gain power over the population.
Government spending on social welfare is full of problems but they can be measured and corrected by concrete results.
The cause of this crisis was and perhaps still is about giving too much to the finance sector, the monetary intelligentia.
Imagine a card game were everyone has to bring there own money except the financier. He brings a bond rating agent and no money. Evertime he wants to bet he asks the game for credit. The game asks the bond rater if Joe Finance is good for his marker. "yup", the agent says.
This card game is the stock market.It goes on for 24/7. Every time he loses he just asks for more credit. Probability dictates that with these unlimited resources he will win all the money at the table if people keep playing. The banks get up an leave with their cash. But the government says that they will give them more. It won't matter.The dynamics of unlimited credit will always result in the ul;timate triumph of Joe Finance and his unlimited markers.
Will "regulation" work? I don't think so. We need to radically downsize the finance sector not strengthen it. How can this be done while ensuring that things like pensions, healthcare, education, public transportation are preserved?
The answer is simple - socialism.
Financialization, the change of the centre of gravity from production to finance in the capitalist economy, is an objective trend that's been going on for some decades. While it's certainly true that the cascading Financial Crisis which began in July 2007 with the collapse of two Bear Stearns Hedge Funds took place in this growing part of the economy, there are differing views on the benefits of downsizing this part of the economy. Short of socialism, Harry Magdoff and Paul Sweezy noted in 1985:
"Does the casino society in fact channel far too much talent and energy
into financial shell games. Yes, of course. No sensible person could
deny it. Does it do so at the expense of producing real goods and services?
Absolutely not. There is no reason whatever to assume that if you
could deflate the financial structure, the talent and energy now employed
there would move into productive pursuits. They would simply
become unemployed and add to the country’s already huge reservoir of
idle human and material resources. Is the casino society a significant
drag on economic growth? Again, absolutely not. What growth the
economy has experienced in recent years, apart from that attributable to
an unprecedented peacetime military build-up, has been almost entirely
due to the financial explosion."
Socialism, sure, as a permanent long, term remedy is the solution. In the meantime, measure should be taken to assist the most needy.
http://www.doctorhousingbubble.com/
Canadian unemployment rate rises to 7.7%
http://www.cbc.ca/canada/story/2009/03/13/unemployment-february-998.html
The Chinese premier Wen Jiabao expressed concern on Friday about the safety of China's $1 trillion investment in American government debt, the world's largest such holding, and urged the Obama administration to provide assurances that its investment would keep its value in the face of a global financial crisis.
. . . .
China has the world's largest reserves of foreign exchange, estimated at $2 trillion, the product of years of double-digit growth.
Economists say half of that money has been invested in United States Treasury notes and other government-backed debt.
http://www.nytimes.com/2009/03/14/business/worldbusiness/14china.html?hpIt is the rot at the top that has brought us to the brink of another world depression, and until we have in place very strict reulations to police these Madoff-type creeps, as well as reversing all the tax concessions given to the rich, we will never sort out this financial mess.
Instead of that idiot CEO who was lamaenting the vilification of business corporations, perhaps these gready vultures from Wall Street or Bay Street, wherever, might trying emulating this:
Warren Buffett’s Berkshire Salary Remains $100,000
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKSmwPf7CItc&refer=home
Berkshire this month said book value per share, a measure highlighted on the first page of the Omaha, Nebraska-based company’s annual report, fell for the second time since he wrested control of the company four decades ago. Buffett gets no stock options or grants for serving as chief executive officer and chairman, Berkshire said in a regulatory filing today.
Buffett, 78, built the once-failing textile manufacturer into a $130 billion investment and holding company with businesses from ice cream and candy stores to insurance and corporate jet leasing. He is Berkshire’s largest shareholder, and has pledged the bulk of his stake to the Bill & Melinda Gates Foundation and four family charities.
I added a comment above in response to the remarks of blackhand9. The remarks had to do with the long term trend of financialization in the economy. There's more ... I've found a very, very readable interview with the editor of Monthly Review and here are a few sections ...
J.B.Foster: I think it is true, as you say, that the American people have been misled by analyses of the crisis into focusing on mere symptoms, or on the straws that broke the camel's back, such as subprime loans. There is still a great deal of toxic financial waste out there in the financial superstructure of the economy, but the real problems go much deeper. One reason for this failure to account realistically for the crisis is that those at the top of the system have very little clue themselves, given the near bankruptcy of orthodox economics. A second reason is that the dominant ideology is designed to naturalize/externalize economic disaster, pretending it has nothing to do with the inner contradictions of the system but is simply the result of human psychology, mistakes of federal regulators, deregulation, corruption of a few individuals, etc. Under these circumstances, what you get from the elites and the media is mostly nonsense ....
What's happening right now?
Rather we are experiencing one of the greatest robberies in history. I have written on the question of nationalization for the "Notes from the Editors" forthcoming in the March 2009 Monthly Review. All the attempts to rescue the financial system at this time go in the direction of nationalization. The federal government is providing more and more of the capital and assuming financial responsibility for the banks. However, they are doing everything they can to keep the banks in private hands, resulting in a kind of de facto nationalization with de jure private control. Whether the federal government is forced eventually toward full nationalization (that is, assuming direct control of the banks) is a big question. But even that is unlikely to change the nature of what is going on, which is a classic case of the socialization of losses of financial institutions while leaving untouched the massive gains still in the hands of those who most profited from the whole extreme period of financial speculation.... The fact that Geithner, Obama's pick for Treasury Secretary, is overseeing the enormous robbery taking place, probably exceeding any theft in history, with the ordinary taxpayers picking up the tab, should certainly cause one to ask questions about the "progressive" nature of the new administration.
And what's needed?
What is needed in the United States today, we argue in The Great Financial Crisis, is a renewal of the classic concept of political economy (with its class perspective), whereby it comes to be understood that the economy is subject to public control and should be wrested from the domination of the ruling class. The bailing out of the system right now is going on with taxpayer funds but without the say of the public. A revolt to gain popular control of the political economy is therefore necessary.
http://mrzine.monthlyreview.org/foster270209.html
Why do I get the impression that what the peasants were told by their leaders leadng up to the 1930s depression is the same thing our leaders are telling us now.
4 Economic Trends and Stories Impacting the way you Live: Retail Sales up Because of easing in Credit Standards, Millionaires no More, Bankrupting on Foreclosures, and Bear Market Rallies come out of Hibernation.
http://www.doctorhousingbubble.com/4-economic-trends-and-stories-impacting-the-way-you-live-retail-sales-up-because-of-easing-in-credit-standards-millionaires-no-more-bankrupting-on-foreclosures-and-bear-market-rallies-come-out-of/
Some people think that stock market rallies only happen in full on bull markets. That is not the case. In fact, some of the fiercest short term jumps happen when the economy is in utter disarray. Let us take a look at the Great Depression for example:
From November of 1929 to September of 1932, the Dow saw 5 rallies over 20+%. One hit 72% and one hit 48%! In fact, the 72 percent rally happened right after the market hit the abyss. Yet as we all know, the Great Depression caused fundamental problems in the economy that lasted the entire 1930s. So only looking at the stock market as an indicator is problematic. And keep in mind the rally occurred right on the heels of thousands of bank failures in the 1930s and unemployment spiking to 25%.
We also have the problem of interpreting math results. For example, everyone was cheering the 40 percent rise of Citigroup this week but forgot to mention that this amounted to 40 cents. You gained 1 quarter, 1 dime, and 1 nickel for each share you owned. The rally we are currently seeing is strictly a technical rally. Don’t fool yourself into thinking otherwise. It is the same as the Great Depression bear market rallies. We will test lows again soon. Maybe once those stress tests are released or when the 1st quarter results are announced starting in April of 2009. For the mean time, enjoy the bear market rally.
What an idiot!
Who is he pimping for - Harper or the business community. Most probably both. Evertyone knows his economic forecasts aren't worth the paper they are written on.
Carney hedges economic rebound prediction
http://www.theglobeandmail.com/servlet/story/RTGAM.20090314.wg20wrestle0314/BNStory/Business
Speaking to reporters at the Group of 20 finance ministers meeting in Horsham, Bank of Canada Governor Mark Carney hinted strongly that his last forecast for 3.8 per cent growth in 2010 is no longer valid. “Clearly the risks are breaking to the downside,” he said, referring to the string of grim Canadian and international growth data in recent weeks.
Officially, the 3.8 per cent growth figure stands. The number is revised four times a year and the next revision comes in late April. Mr. Carney would give no clue what the new number might be but said the bank is “in broad agreement” with the International Monetary Funds' growing pessimism about the potential for recovery in 2010. “Many of the downside risks we identified in our last Monetary Policy Report Update are now materializing,” he said.
Mr. Carney's comments came as the G20 meeting ended with broad pledges for a “sustained” effort to end the global recession, which is deepening by most indications, though the ministers stopped short of announcing specific new monetary and stimulus measures. “The situation remains critical and most forecasters, including the IMF, believe we have not hit bottom,” Jim Flaherty, Canada's finance minister, said at a press conference.
The BOC is hoping nobody will notice that they started printing money.
(Click "printing money")
This is incredibly sick.
What is the matter with government negotiators that they are allowing something like this to happen.
A.I.G. Planning $165 Million in Bonuses After Huge Bailout
http://www.nytimes.com/2009/03/15/business/15AIG.html?_r=1&hp
The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year¨
We are living in a new historical moment. Today's threefold crisis of capitalism--viewed in terms of economy, ecology and empire--is potentially the worst in history, not excluding the 1930s and '40s. The current economic downturn already compares in many ways with the Great Depression, and the bottom has not yet been reached. The ecological catastrophe is the most serious that humanity has experienced, threatening the mass extinction of species and human civilization. The struggle over empire, with US hegemony waning but far from gone at present, points to the danger of more frequent and larger wars. I have discussed the three aspects of this historical crisis in The Great Financial Crisis (recently published with Fred Magdoff), The Ecological Revolution (forthcoming in April) and Naked Imperialism (2006). Any realistic treatment of the world situation, and the need for socialism, must attend to all three of these global contradictions emanating from capitalism.
Fortunately, global resistance to the system is also growing, in response to its economic, ecological and imperial contradictions. Today Venezuela, Bolivia and Ecuador, together with Cuba, are leading the way in promoting a "socialism for the twenty-first century." Much of the rest of Latin America is also in revolt against decades of neoliberalism. In Nepal a revolutionary struggle has overthrown the monarchy and is working at establishing more egalitarian and democratic conditions. A broad, popular movement against neoliberalism has emerged in South Africa. General strikes have broken out in Guadeloupe and Martinique (the French Antilles). Widespread revolts have arisen in Greece and throughout the European Union with millions in the streets. The governments of Iceland and Latvia have been toppled. A New Anti-Capitalist Party (NAP) has been established in France. China is experiencing labor unrest as a result of the crisis.
If there is one place in this world ferment where mass dissent seems noticeably absent at the moment, it is in the United States, the epicenter of the global crisis. In my view, this is likely temporary....
Here's some positive news for a change -
Gordon Brown last night hailed the beginning of the end for tax havens, as Switzerland opened up its legendary system of bank secrecy and agreed to hand over information on wealthy clients suspected of tax evasion.
The move, described as historic by anti-poverty campaigners, came as international pressure, including action from Brown and Barack Obama, forced the world's tax havens to hand over previously undisclosed data on account holders.
In a remarkable week, Europe's secrecy jurisdictions – Liechtenstein, Andorra, Austria, Luxembourg, Jersey and Switzerland – all entered into international information sharing agreements.
http://www.guardian.co.uk/business/2009/mar/13/switzerland-tax-evasion-f...
I smell exchange controls on the horizon. It's the next logical step as governments start cracking down on what rich people have been able to get away with doing.
Incidentally, if you want to get the right-wingers on board, tell the hoary old anti-Communists that the KGB was taking advantage of deregulation of financial markets in the 1970s to build up the USSR's hard currency reserve by gambling on the forex markets.
(It's actually true, by the way; KGB officers built up their own personal war chests as well as the KGB's war chest in a sort of judo use of the West's own penchant for thinking big business can do anything better than a government can)
Oh, that explains it. The police forces were too busy fighting the millions and billions of terrorists to go after the white-collar criminals. What a convenient diversion by Bush & Wall Street.
When will bad bankers go to jail?Wall Street lies in tatters, but we're still waiting for the prosecutions that might reassure investors that the system works. One key issue: Were risk-taking bankers criminals? Or just dumb?
http://finance.sympatico.msn.ca/Investing/MichaelBrush/Article.aspx?cp-documentid=18547376
Rio Tinto Alcan is going to be rebuilding the aluminum smelter in Kitimat. It had a bit of a false start in 2008, so I wonder when this project will actually take off.
Chinalco scrutiny increased
http://business.theage.com.au/business/chinalco-scrutiny-increased-20090315-8yzo.html
Paul Kalfadellis, a Monash University lecturer who has researched foreign investment in Australia, said the Chinalco application may draw the most scrutiny. "In this case I think there is a general reticence for a BHP or Rio Tinto to be taken over by a Chinese firm," he said.
Rio has said it will wait for FIRB to rule on the investment agreement before it puts the matter to a shareholder vote. Rio chief executive Tom Albanese has also indicated the terms of the $US7.2 billion of convertible bonds and $US12.3 billion of asset sales are unlikely to be altered before a ruling from FIRB.
The deal needs the approval of 50 per cent of Rio's shareholders, and Chinalco has agreed to refrain from voting its existing 9 per cent stake in the company.
It seems that the big winners are those that strongly went against the pervailing wisdom in the financial community:
What Economic Crisis?http://www.motherjones.com/politics/2009/03/10-people-who-are-profiting-global-economic-crisis
-------------------------------------------------
God bless America!
October 17, 2008
http://www.portfolio.com/html/assets/AndrewLahdeFarewell.pdf
obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight
years, which would have reigned in the predatory lending practices of now mostly defunct
institutions. These institutions regularly filled the coffers of both parties in return for voting down all
of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to
know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there
has been a dearth of worthy philosophers in this country, at least ones focused on improving
government. Capitalism worked for two hundred years, but times change, and systems become
corrupt. George Soros, a man of staggering wealth, has stated that he would like to be
remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for
great minds to come together to create a new system of government that truly represents the
common man’s interest, while at the same time creating rewards great enough to attract the best
and brightest minds to serve in government roles without having to rely on corruption to further their
interests or lifestyles. This forum could be similar to the one used to create the operating system,
Linux, which competes with Microsoft’s near monopoly. I believe there is an answer, but for now
the system is clearly broken.
What does one TRILLION dollars look like?
A Continent Adrift
http://www.nytimes.com/2009/03/16/opinion/16krugman.html?em
Why is Europe falling short? Poor leadership is part of the story. European banking officials, who completely missed the depth of the crisis, still seem weirdly complacent. And to hear anything in America comparable to the know-nothing diatribes of Germany’s finance minister you have to listen to, well, Republicans.
But there’s a deeper problem: Europe’s economic and monetary integration has run too far ahead of its political institutions. The economies of Europe’s many nations are almost as tightly linked as the economies of America’s many states — and most of Europe shares a common currency. But unlike America, Europe doesn’t have the kind of continentwide institutions needed to deal with a continentwide crisis.
This is a major reason for the lack of fiscal action: there’s no government in a position to take responsibility for the European economy as a whole. What Europe has, instead, are national governments, each of which is reluctant to run up large debts to finance a stimulus that will convey many if not most of its benefits to voters in other countries.
"Capitalism is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work for the benefit of all."John Maynard Keynes
Destabilizing the EU Banking System
"......the LEAP/E2020 team (which warned about housing risks in Central and eastern Europe as early as December 2007 in GEAB N°20 decided to study carefully in the present public announcement the reality of this so-called “Eastern European banking bomb” which has invaded the media in the last month...........it represents in our opinion a deliberate attempt on the part of Wall Street to make the world believe in some rupture within the EU and to instil the idea that some deadly risk is weighing on the Eurozone, by endlessly conveying phony news on a banking risk coming from Eastern Europe......One aim is also to divert the attention from the increasing financial problems encountered in New York and London, and to weaken the Europe position on the eve of the G20 summit........The idea is brilliant: pick up a current and “in the news” theme to ensure interest, add one or two striking analogies to guarantee that the media and internet are eager to circulate the information; then call on a few devoted men and organisations, always available to tell one more lie.......Then, to make the idea more credible, you select some virulently anti-Euro media such as the UK’s Telegraph, for instance...."
Everyone hates CEOs - amusing
Also some fairly big news out of the US - the Federal Reserve is going to start buying treasury bills - $300 billion worth this year. This essentially amounts to the US government printing that amount of money to spend rather than borrowing it. It speaks to the concern that must exist about deflation and might also be intended to further devalue the dollar now there's no way to reduce interest rates to accomplish that.
http://money.cnn.com/2009/03/18/news/economy/fed_decision/index.htm
Scenes from the recession
Baby Boomers ‘Under Water’ (clickable link)
Oh, poor them! They got the subsidized educations and the good jobs in the 1950s and 1960s and now, after they voted to take the punch bowl away from their children over the last 20 years by falling for Reagan's, Mulroney's, Thatcher's crap about government being the problem, they'll have their goddamn hands out saying they decided government was good for something, after all.
from Doc's link:
Another factor that has led to a decline in personal wealth is what the report calls “the near zero level of savings nationally” from 2004 to 2009.
“As a result of the bubble-inflated values of their homes, tens of millions of families opted not to save during what would typically be their peak saving years,” the report said.
Savings shmavings, what do they need money for anyway? In perestroika years Russia, economic shock therapists considered Russians' life savings as pesky overhang and needed to be wiped out in order that market forces could work the magic.
It must be that US boomers, like those lazy Russians of post-Soviet rule, all need straightening out and noses put to grindstones while Wall St. fat-cats lap up what's left of the cream. It must be a shocking experience
The Real AIG Scandal. It's not the bonuses. It's that AIG's counterparties are getting paid back in full
Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?
For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.
It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG's counterparties are justified with an appeal to the sanctity of contract. If AIG's contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.
The bottom line is that the American public is being fed a carefully crafted mythology (no doubt “market tested” on “response groups” to see which images fly best) to mislead the American public into misunderstanding the nature of today’s financial problem – to mislead it in such a way that today’s policies will make sense and gain voter support.
But this mythology is based on false analogies, not economic reality. It is designed to make Wall Street appear as a savior, not an arsonist – and to depict the Fed and Treasury as protecting the welfare of American citizens by shoveling billions of dollars at the banks whose gambles have caused the crisis.
AIG employees have been told not to wear AIG clothing or other items with the company logo in public for their personal safety.
http://latimesblogs.latimes.com/money_co/2009/03/aig-security-am.html
Ouch. You think people are angry?
ha! Guy on the news says AIG stands for arrogance, incompetence, and greed
"...distracting attention from the real causes."
It appears that Europe wants structural changes and America wants to re-inflate the present system.
Although the spotlight has temporarily rested on AIG (Jack in Lord Of The Flies?), perhaps a bit of this is going on:
The scapegoat was a goat that was driven off into the wilderness as part of the ceremonies of Yom Kippur, the Day of Atonement....Since this goat, carrying the sins of the people placed on it, is sent away to perish, the word "scapegoat" has come to mean a person, often innocent, who is blamed and punished for the sins, crimes, or sufferings of others, generally as a way of distracting attention from the real causes. Wiki
I believe it has links to human sacrifice. Catharsis is not just drama, it's also a primitive medicine.
Let the fun of this Spring of Our Discontent begin!
Office workers face chaos next week with swaths of London in security lockdown for the G20 summit and warnings that bankers will be targeted in a series of protests aimed at causing maximum disruption.
Staff in the City are being advised to dress down and postpone non-essential meetings amid fears that they will be forced to run the gauntlet of protesters. Thousands of G20 Meltdown campaign posters show a mannequin wearing a suit being hanged, while an anarchist website has the slogan: "Burn a banker!"
Details of direct action, gleaned from chatter on anarchist websites and meetings attended by the Observer, include a rumoured plan to block the Blackwall Tunnel and cause a security scare on the London Underground by leaving bags unattended on trains. There is also speculation that protesters will drive a tank to the ExCeL conference centre in London's Docklands, where the G20 are meeting, and attempt to harass politicians with wake-up calls to their hotels in the middle of the night. None of the organisers of the peaceful demonstrations say they are aware of any such tactics.
http://www.guardian.co.uk/business/2009/mar/22/g20-anti-globalisation-protests
Which is too bad, because they sound good.
thanks for that link, Doug! the 'four horsemen of the apocalypse' ...[chuckle] what a lot of creativity - hope it goes well for everyone,
Will the rewards of failure never cease? Apparently not yet.
Remember the rating agencies? S&P? Moody's? The folks who rated all that subprime paper Triple-A?
Well, the Fed's baillout program is going to be issuing a lot of new asset-backed securities, which means the rating agencies are about to be busy again. In fact, the Wall Street Journal estimates that they'll make $1 billion of fees rating the paper produced in the latest bailout programs.
http://www.businessinsider.com/henry-blodget-lousy-rating-agencies-to-make-1-billion-on-bailout-2009-3Call the Waaaaambulance!
After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.
http://www.nytimes.com/2009/03/25/opinion/25desantis.html?_r=2&pagewanted=1
I have to wonder if he's falling on his sword or trying to win the world's smallest violin contest. They gave this guy $740 THOUSAND and he's bitching and whining? No wonder people are so hacked off at AIG. This isn't giving a deserved year-end bonus to workers struggling in today's economy; this is just grabbing taxpayer money and throwing it at the already wealthy, just like the Busheviks did with their tax cuts.
Disappearing jobs overrunning stimulus: official
[Parliamentary Budget officer]Page noted that Flaherty had estimated the stimulus would save or create 190,000 jobs over two years, but that Canada has already lost 212,000 in the first two months of the year before a dime of the stimulus is spent.
As many as 385,000 jobs will vanish in the first half of this year, he said.
IMF director warns of war WSWS
Dominique Strauss-Kahn, managing director of the International Monetary Fund, warned on Monday that the global economic situation is "dire" and could lead to social upheaval and war. The statement is the latest in a series of worried pronouncements from leading international figures in the financial and political establishment.
The IMF is projecting a 1 percent decline in the global economy this year, which Strauss-Kahn noted would be "the first setback of the world economy in over 50 years." The IMF chief was speaking before a meeting of the International Labour Organization (ILO) in Geneva, Switzerland. . .
The implications of the economic collapse for working people internationally are still in their initial stages. The ILO predicted in January that up to 50 million jobs would be eliminated throughout the world in 2009. This is likely an underestimation, as the economic crisis has sharply accelerated over the past several months.
Nevermind the fact that unemployment does nothing to represent true levels of employement. It is much worse than the past. The CBC had donna dasco on saying she doesn't understand why people are so down on the economy when unemplyment is only 7.8% unlike when we had 11 percent back in the 90's. Well dumb rich person, unlike the people you hang out with who see the stocks going back up as what means a good economy or not, we have to look at being under-employed.
If I go from a 20 something(you know the gardeners money) an hour job to a 10 dollar job, I am employed all right, but my standard of living will have been more than cut in half. But yes you are right I am employed. Or maybe I happen to be on workshare waiting for the other shoe to drop. Yep I'm employed but working 20 hours a week and struggling to make the bills. But hey the emploment numbers aren't that bad. Nevermind the fact that 60% can't qualify a ton of people have fallen off the EI ranks, homeless, moved etc.
I know I keep harping on this, but an economist said in november that employers that were not doing poorly were using the downturn to do layoffs they had on the books because they now had a good excuse to do so, even if they didn't NEED to.
Again the selfish ME ONLY group relies on other companies(see government) to do the heavy lifting of sustaining an economy as long as they continue to rake in the profits without helping out themselves. If I can reduce my workforce but people buy my service/product for the same price(or more, remember what the market will bare) that is all that matters. Well the tipping point is about to be reached were people can't afford it. This is why Henry Ford decided he needed people he employed to be able to afford the products they made, unlike today where it's a race to the bottom.
Belinda S talked about baking a bigger economic pie so we can all keep our share of the pie(meaning they won't give up the gluttonous portion they have). Well procuctivity and overall growing of the economy has happened. But here are the resault.
The original 10 kilo pie that had the 5% of people eating 5 Kg of the pie and the other 95% of us also having 5 kg of pie has expanded a lot say to a 20 kg pie, but 95% of us still have to eat from that same 5 kilos while the rich eat from their original 5 kg plus the additional 10 kilograms of the new bigger pie. So no matter how big the pie gets we still only get that 5 kg slice while they have the 45 kg of a 50kg pie. And their supporters will say that we should be grateful we get such a heavy slice to start with.
Cities Deal With a Surge in Shantytowns
"Hoovervilles" sprouting across AmericaChina would like to reform the IMF:
http://news.bbc.co.uk/2/hi/business/7967706.stm
Eat THAT, USA :P
Federal Government in Denial as Economic Crisis Slams Canada
As the grim news of growing job losses mounts in Canada, the federal Conservative government is continuing the politics of denial that marked last autumn’s election campaign. Especially troubling for the working class is that opposition political parties, including the trade union-based New Democratic Party, are offering no substantial alternative.
This is a really excellent article in some ways
In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.
But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.
http://www.theatlantic.com/doc/200905/imf-advice
The American economy shed another 663,000 jobs in March, the government reported Friday, bringing the toll of job losses during the recession to 5.1 million.
The Bureau of Labor Statistics reported that the national unemployment rate climbed to 8.5 percent from 8.1 percent in February, its highest levels in a quarter-century, as employers raced to cut their payroll costs. It was the 15th consecutive month of job losses.
. . . .
The agency also drastically revised the job losses in January to 741,000 from the earlier report of 655,000, but left February's job loss estimate of 651,000 unchanged.
http://www.nytimes.com/2009/04/04/business/economy/04jobs.html?hp
My city is now at 13.7 Offiicial for last month. Harper "We won't see a recession" Really? Now if we use real world data like workshare, part time, and unable to recieve benefits the numbers are much worse. Nor does that factor taking lesser jobs to pay the rent. Probably close to 1 in 4 or 1 in 5. When you say that as 1 in 4 that sounds intense, more so than just a number. If in a group of 20 people and 5 of them don't have a job and your the middle class that speaks volumes to what is really happening. Thanks for the chart doc.
The Tower of Basel: Secretive Plans for the Issuing of a Global Currency
Do we really want the Bank for International Settlements (BIS) issuing our global currency?
"A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order.
"We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity,' it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.
"In effect, the G20 leaders have activated the IMF's power to create money and begin global 'quantitative easing'. In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it."
Indeed they will. The article is subtitled, "The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity." Which naturally raises the question, who or what will serve as this global central bank, cloaked with the power to issue the global currency and police monetary policy for all humanity? When the world's central bankers met in Washington last September, they discussed what body might be in a position to serve in that awesome and fearful role. . .
And if that vision doesn't alarm conspiracy theorists, it should. The BIS has been called "the most exclusive, secretive, and powerful supranational club in the world."
Founded in Basel, Switzerland, in 1930, it has been scandal-ridden from its beginnings. According to Charles Higham in his book Trading with the Enemy, by the late 1930s the BIS had assumed an openly pro-Nazi bias.
This was corroborated years later in a BBC Timewatch film titled "Banking with Hitler," broadcast in 1998. In 1944, the American government backed a resolution at the Bretton-Woods Conference calling for the liquidation of the BIS, following Czech accusations that it was laundering gold stolen by the Nazis from occupied Europe; but the central bankers succeeded in quietly snuffing out the American resolution.
Freddie Mac's CFO apparently committed suicide. Uh-oh! I wonder what he knew.
http://www.cnn.com/2009/US/04/22/kellermann.death.freddiemac/index.html
I've started another thread on this important topic.