One "Grover"
- Rinx
Friday, February 20, 2009
US Bankrupt
or at least according to our new favourite economic YouTube reporter.
caution: Foul language!
http://www.youtube.com/watch?v=DxPcJyypUKc
caution: Foul language!
http://www.youtube.com/watch?v=DxPcJyypUKc
Thursday, February 19, 2009
Tuesday, February 17, 2009
Eastern Europe is about to Blow
I wonder if this is the reason for the parabolic move in Gold today? It's not hard to imagine we are teetering on the edge of the dark interregnum
- Rinx
Written by Mike Whitney February 17, 2009
"ICH" -- -Eastern Europe is about to blow. If it does, it could take much of the EU with it. It's an emergency situation but there are no easy solutions. The IMF doesn't have the resources for a bailout of this size and the recession is spreading faster than relief efforts can be organized. Finance ministers and central bankers are running in circles trying to put out one fire after another. Its only a matter of time before they are overtaken by events. If one country is allowed to default, the dominoes could begin to tumble through the whole region. This could trigger dramatic changes in the political landscape. The rise of fascism is no longer out of the question.
The UK Telegraph's economics editor Edmund Conway sums it up like this:
"A 'second wave' of countries will fall victim to the economic crisis and face being bailed out by the International Monetary Fund, its chief warned at the G7 summit in Rome....But with some countries' economies effectively dwarfed by the size of their banking sector and its financial liabilities, there are fears they could fall victim to balance of payments and currency crises, much as Iceland did before receiving emergency assistance from the IMF last year." (UK Telegraph)
Foreign capital is fleeing at an alarming rate; nearly two-thirds gone in matter of months. Deflation is pushing down asset prices, increasing unemployment, and compounding the debt-burden of financial institutions. It's the same everywhere. The economies are being hollowed out and stripped of capital. Ukraine is teetering on the brink of bankruptcy. Poland, Latvia, Lithuania, Hungary have all slipped into a low-grade depression. The countries that followed Washington's economic regimen have suffered the most. They bet that debt-fueled growth and exports would lead to prosperity. That dream has been shattered. They haven't developed their consumer markets, so demand is weak. Capital is scarce and businesses are being forced to deleverage to avoid default. All of Eastern Europe has gotten a margin call. They need extra funds to cover the falling value of their equity. They need a lifeline from the IMF or their economies will continue to crumble.
The UK Telegraph's economics correspondent Ambrose Evans-Pritchard has written a series of articles about Eastern Europe. In "Failure to save East Europe will lead to Worldwide meltdown" he says:
"Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.
"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.
The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc....
Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.
Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.
They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data). (Ambrose Evans-Pritchard UK Telegraph)An economic crisis is quickly turning into a political crisis.
Riots have broken out in capitals across Eastern Europe. Mr. Geithner had better be paying attention. The prospects for political upheaval are growing. Public anxiety can spill out onto the streets at a moments notice. Governments must act quickly and with resolve. These countries need hard currency and guarantees of support. If they don't get help, the simmering public fury will turn into something much more lethal.
UK Telegraph's economics correspondent Ambrose Evans-Pritchard:
"Global banks have so far written down half the $2,200bn losses estimated by the IMF. On top of this, EU banks have $1,600bn of exposure to Eastern Europe -- increasingly viewed as Europe’s subprime debacle, and EU corporate debts are 95pc of GDP compared to 50pc in the US, a mounting concern as default rates surge.
“It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems. Such considerations are particularly important in the current context of widening budget deficits, rising public debt levels and challenges in sovereign bond issuance." (UK Telegraph)
It's the same wherever banks merged their commercial and investment branches. Debt has skyrocketed to unsustainable levels destabilizing the entire economy. The banks have been operating like hedge funds, concealing their activities on off-balance sheets operations and maximizing their leverage through opaque debt-instruments. Now the global economy is caught in the downdraft of a collapsing speculative bubble. East Europe has been hit hard, but it's just the first of many bowling pins that will fall. All of Europe has been infected by the same virus which originated on Wall Street. Monday's New York Times summarizes developments in the EU:
"Europe sank even deeper into recession than the United States in the closing months of last year, according to figures published Friday...The economy of the 16 countries sharing the euro currency declined by 1.5 percent in the fourth quarter, (an annualized drop of roughly 6 percent) according to the European Union's statistics office. That is even worse than the 1 percent decline in the United States economy during that period, compared with the previous quarter.
“Today’s data wipes out any illusion that the euro zone is getting off lightly in this global downturn,” said Jörg Radeke, an economist at the Center for Economics and Business Research in London. ("Europe Slump Deeper than Expected" New york Times)
The "liquidationists" would like to see governments cut off the flow of funds to ailing financial institutions and let them fail by themselves. It's Darwinian madness, like waiting out a heart attack on the kitchen floor instead of rushing to the hospital for emergency care. The global economy is decelerating at the fastest pace on record. 40 percent of global wealth has been wiped out. The banking system is insolvent, unemployment is soaring, tax revenues are falling, the markets are in shock, housing is crashing, deficits are soaring, and consumer confidence is at its lowest point in history. This is no time to cling to half-baked ideology. The global economy is undergoing a massive system-wide contraction which could spin out of control and plunge us into another world war. Political leaders need to grasp the urgency of the moment and keep the vehicle from careening into the ditch.
- Rinx
Written by Mike Whitney February 17, 2009
"ICH" -- -Eastern Europe is about to blow. If it does, it could take much of the EU with it. It's an emergency situation but there are no easy solutions. The IMF doesn't have the resources for a bailout of this size and the recession is spreading faster than relief efforts can be organized. Finance ministers and central bankers are running in circles trying to put out one fire after another. Its only a matter of time before they are overtaken by events. If one country is allowed to default, the dominoes could begin to tumble through the whole region. This could trigger dramatic changes in the political landscape. The rise of fascism is no longer out of the question.
The UK Telegraph's economics editor Edmund Conway sums it up like this:
"A 'second wave' of countries will fall victim to the economic crisis and face being bailed out by the International Monetary Fund, its chief warned at the G7 summit in Rome....But with some countries' economies effectively dwarfed by the size of their banking sector and its financial liabilities, there are fears they could fall victim to balance of payments and currency crises, much as Iceland did before receiving emergency assistance from the IMF last year." (UK Telegraph)
Foreign capital is fleeing at an alarming rate; nearly two-thirds gone in matter of months. Deflation is pushing down asset prices, increasing unemployment, and compounding the debt-burden of financial institutions. It's the same everywhere. The economies are being hollowed out and stripped of capital. Ukraine is teetering on the brink of bankruptcy. Poland, Latvia, Lithuania, Hungary have all slipped into a low-grade depression. The countries that followed Washington's economic regimen have suffered the most. They bet that debt-fueled growth and exports would lead to prosperity. That dream has been shattered. They haven't developed their consumer markets, so demand is weak. Capital is scarce and businesses are being forced to deleverage to avoid default. All of Eastern Europe has gotten a margin call. They need extra funds to cover the falling value of their equity. They need a lifeline from the IMF or their economies will continue to crumble.
The UK Telegraph's economics correspondent Ambrose Evans-Pritchard has written a series of articles about Eastern Europe. In "Failure to save East Europe will lead to Worldwide meltdown" he says:
"Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.
"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.
The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc....
Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.
Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.
They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data). (Ambrose Evans-Pritchard UK Telegraph)An economic crisis is quickly turning into a political crisis.
Riots have broken out in capitals across Eastern Europe. Mr. Geithner had better be paying attention. The prospects for political upheaval are growing. Public anxiety can spill out onto the streets at a moments notice. Governments must act quickly and with resolve. These countries need hard currency and guarantees of support. If they don't get help, the simmering public fury will turn into something much more lethal.
UK Telegraph's economics correspondent Ambrose Evans-Pritchard:
"Global banks have so far written down half the $2,200bn losses estimated by the IMF. On top of this, EU banks have $1,600bn of exposure to Eastern Europe -- increasingly viewed as Europe’s subprime debacle, and EU corporate debts are 95pc of GDP compared to 50pc in the US, a mounting concern as default rates surge.
“It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems. Such considerations are particularly important in the current context of widening budget deficits, rising public debt levels and challenges in sovereign bond issuance." (UK Telegraph)
It's the same wherever banks merged their commercial and investment branches. Debt has skyrocketed to unsustainable levels destabilizing the entire economy. The banks have been operating like hedge funds, concealing their activities on off-balance sheets operations and maximizing their leverage through opaque debt-instruments. Now the global economy is caught in the downdraft of a collapsing speculative bubble. East Europe has been hit hard, but it's just the first of many bowling pins that will fall. All of Europe has been infected by the same virus which originated on Wall Street. Monday's New York Times summarizes developments in the EU:
"Europe sank even deeper into recession than the United States in the closing months of last year, according to figures published Friday...The economy of the 16 countries sharing the euro currency declined by 1.5 percent in the fourth quarter, (an annualized drop of roughly 6 percent) according to the European Union's statistics office. That is even worse than the 1 percent decline in the United States economy during that period, compared with the previous quarter.
“Today’s data wipes out any illusion that the euro zone is getting off lightly in this global downturn,” said Jörg Radeke, an economist at the Center for Economics and Business Research in London. ("Europe Slump Deeper than Expected" New york Times)
The "liquidationists" would like to see governments cut off the flow of funds to ailing financial institutions and let them fail by themselves. It's Darwinian madness, like waiting out a heart attack on the kitchen floor instead of rushing to the hospital for emergency care. The global economy is decelerating at the fastest pace on record. 40 percent of global wealth has been wiped out. The banking system is insolvent, unemployment is soaring, tax revenues are falling, the markets are in shock, housing is crashing, deficits are soaring, and consumer confidence is at its lowest point in history. This is no time to cling to half-baked ideology. The global economy is undergoing a massive system-wide contraction which could spin out of control and plunge us into another world war. Political leaders need to grasp the urgency of the moment and keep the vehicle from careening into the ditch.
Sunday, February 15, 2009
The American Oligarchy
A must watch PBS video on US Banks. Some of the best thought out solutions to the economic crisis I have heard. This is a benchmark to judge Geitner.
http://www.pbs.org/moyers/journal/02132009/watch.html
- Rinx
http://www.pbs.org/moyers/journal/02132009/watch.html
- Rinx
Saturday, February 14, 2009
Thursday, February 12, 2009
'This is the worst recession for over 100 years'
Ed Balls, the PM's closest ally, warns that downturn is ferocious and says impact will last 15 years
By Nigel Morris, Deputy Political Editor, and Sean O'Grady, Economics Editor
Tuesday, 10 February 2009
Britain is facing its worst financial crisis for more than a century, surpassing even the Great Depression of the 1930s, one of Gordon Brown's most senior ministers and confidants has admitted.
In an extraordinary admission about the severity of the economic downturn, Ed Balls even predicted that its effects would still be felt 15 years from now. The Schools Secretary's comments carry added weight because he is a former chief economic adviser to the Treasury and regarded as one of the Prime Ministers's closest allies.
Mr Balls said yesterday: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years, as it will turn out."
He warned that events worldwide were moving at a "speed, pace and ferocity which none of us have seen before" and banks were losing cash on a "scale that nobody believed possible".
The minister stunned his audience at a Labour conference in Yorkshire by forecasting that times could be tougher than in the depression of the 1930s, when male unemployment in some cities reached 70 per cent. He also appeared to hint that the recession could play into the hands of the far right.
"The economy is going to define our politics in this region and in Britain in the next year, the next five years, the next 10 and even the next 15 years," Mr Balls said. "These are seismic events that are going to change the political landscape. I think this is a financial crisis more extreme and more serious than that of the 1930s, and we all remember how the politics of that era were shaped by the economy."
Philip Hammond, the shadow Chief Secretary to the Treasury, said Mr Balls's predictions were "a staggering and very worrying admission from a cabinet minister and Gordon Brown's closest ally in the Treasury over the past 10 years". He added: "We are being told that not only are we facing the worst recession in 100 years, but that it will last for over a decade – far longer than Treasury forecasts predict."
The minister's comments came as the Chancellor, Alistair Darling, admitted the global economy was "seeing the most difficult economic conditions for generations". Writing in today's Independent, Mr Darling said his plans for shoring up Britain's finances included "measures to insure against extreme losses" as well as separating out impaired assets into a "parallel financial vehicle". Unemployment figures out tomorrow are expected to show the number of people out of work has passed two million. The Bank of England's quarterly inflation report, also released tomorrow, is expected to include a gloomy forecast for economic growth.
Yesterday, the Financial Services Authority warned that the recession "may be deeper and more prolonged than expected", adding that the global financial system had "suffered its greatest crisis in more than 70 years".
Speaking to Labour activists in Sheffield, Mr Balls conceded that the Government must share some of the blame because it had failed properly to control the banks. But he accused the Tories of blocking Labour's attempts to tighten financial rules.
He said: "People are quite right to say that financial regulation wasn't tough enough in Britain and around the world, that regulators misunderstood and did not see the nature of the risks of the dangers being run in our financial institutions – absolutely right."
The other great depressions
*Long Depression, 1873–96
Precipitated by the "panic of 1873" crisis on Wall Street and a severe outbreak of equine flu (Karl Benz's first automobile did not chug on to the scene until 1886), it was remarkable for its longevity as well as its global reach. In Britain, it was the rural south rather than the rich cities of the north that suffered. The UK ceased to be a nation that relied in any way on farming for its livelihood.
*Great Depression, 1930s
The "Hungry Thirties" were rough on many, at a time when welfare systems were rudimentary. The worst period was from the Wall Street Crash of 1929 to about 1932, but in places such as Jarrow, the unemployment rate hardly dipped below 50 per cent until the economy was mobilised in 1940. However, for many in the south and for the middle classes, the times were relatively prosperous.
By Nigel Morris, Deputy Political Editor, and Sean O'Grady, Economics Editor
Tuesday, 10 February 2009
Britain is facing its worst financial crisis for more than a century, surpassing even the Great Depression of the 1930s, one of Gordon Brown's most senior ministers and confidants has admitted.
In an extraordinary admission about the severity of the economic downturn, Ed Balls even predicted that its effects would still be felt 15 years from now. The Schools Secretary's comments carry added weight because he is a former chief economic adviser to the Treasury and regarded as one of the Prime Ministers's closest allies.
Mr Balls said yesterday: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years, as it will turn out."
He warned that events worldwide were moving at a "speed, pace and ferocity which none of us have seen before" and banks were losing cash on a "scale that nobody believed possible".
The minister stunned his audience at a Labour conference in Yorkshire by forecasting that times could be tougher than in the depression of the 1930s, when male unemployment in some cities reached 70 per cent. He also appeared to hint that the recession could play into the hands of the far right.
"The economy is going to define our politics in this region and in Britain in the next year, the next five years, the next 10 and even the next 15 years," Mr Balls said. "These are seismic events that are going to change the political landscape. I think this is a financial crisis more extreme and more serious than that of the 1930s, and we all remember how the politics of that era were shaped by the economy."
Philip Hammond, the shadow Chief Secretary to the Treasury, said Mr Balls's predictions were "a staggering and very worrying admission from a cabinet minister and Gordon Brown's closest ally in the Treasury over the past 10 years". He added: "We are being told that not only are we facing the worst recession in 100 years, but that it will last for over a decade – far longer than Treasury forecasts predict."
The minister's comments came as the Chancellor, Alistair Darling, admitted the global economy was "seeing the most difficult economic conditions for generations". Writing in today's Independent, Mr Darling said his plans for shoring up Britain's finances included "measures to insure against extreme losses" as well as separating out impaired assets into a "parallel financial vehicle". Unemployment figures out tomorrow are expected to show the number of people out of work has passed two million. The Bank of England's quarterly inflation report, also released tomorrow, is expected to include a gloomy forecast for economic growth.
Yesterday, the Financial Services Authority warned that the recession "may be deeper and more prolonged than expected", adding that the global financial system had "suffered its greatest crisis in more than 70 years".
Speaking to Labour activists in Sheffield, Mr Balls conceded that the Government must share some of the blame because it had failed properly to control the banks. But he accused the Tories of blocking Labour's attempts to tighten financial rules.
He said: "People are quite right to say that financial regulation wasn't tough enough in Britain and around the world, that regulators misunderstood and did not see the nature of the risks of the dangers being run in our financial institutions – absolutely right."
The other great depressions
*Long Depression, 1873–96
Precipitated by the "panic of 1873" crisis on Wall Street and a severe outbreak of equine flu (Karl Benz's first automobile did not chug on to the scene until 1886), it was remarkable for its longevity as well as its global reach. In Britain, it was the rural south rather than the rich cities of the north that suffered. The UK ceased to be a nation that relied in any way on farming for its livelihood.
*Great Depression, 1930s
The "Hungry Thirties" were rough on many, at a time when welfare systems were rudimentary. The worst period was from the Wall Street Crash of 1929 to about 1932, but in places such as Jarrow, the unemployment rate hardly dipped below 50 per cent until the economy was mobilised in 1940. However, for many in the south and for the middle classes, the times were relatively prosperous.
Tuesday, February 10, 2009
Call Me A Cynic
but do you ever think the timing of "news" is used to push an agenda?
Case in point, a "global warming" study was released today proving the collateral affects of global warming. Yes, the "Audobon Society" released a report stating the Purple Finch bird habitat is expanding northward. These poor critters are now being spotted by bird watchers in Milwuakee Wisconsin...a full 45 miles north of the limit just 40 years ago. What horseshit.
And the report was released for news consumption when the majority of eastern NA is finally enjoying the first break from icy temps the last 6 weeks....why didn't they release this last week when the same regions were freezing their collective asses off?
We can't have folks calling into question the truth about global warming, can we?
Fact is, we are probably closer to global cooling than global warming...sun spot activity is near a century low...polar ice caps are now in full advance. Think Al Gore will tell you that?
-Rinx
Case in point, a "global warming" study was released today proving the collateral affects of global warming. Yes, the "Audobon Society" released a report stating the Purple Finch bird habitat is expanding northward. These poor critters are now being spotted by bird watchers in Milwuakee Wisconsin...a full 45 miles north of the limit just 40 years ago. What horseshit.
And the report was released for news consumption when the majority of eastern NA is finally enjoying the first break from icy temps the last 6 weeks....why didn't they release this last week when the same regions were freezing their collective asses off?
We can't have folks calling into question the truth about global warming, can we?
Fact is, we are probably closer to global cooling than global warming...sun spot activity is near a century low...polar ice caps are now in full advance. Think Al Gore will tell you that?
-Rinx
Tuesday, February 3, 2009
Can Countries Really Go Bankrupt?
By SPIEGEL Staff
The bailout packages aimed at shoring up financial markets in Europe are getting increasingly expensive. A creeping depreciation of currency is inevitable and state bankruptcies can no longer be ruled out. Could the euro zone also fall victim to the global financial crisis?
"There's a rumor going around that states cannot go bankrupt," German Chancellor Angela Merkel said recently at a private bank event in Frankfurt. "This rumor is not true."
more
http://www.spiegel.de/international/world/0,1518,604523,00.html
The bailout packages aimed at shoring up financial markets in Europe are getting increasingly expensive. A creeping depreciation of currency is inevitable and state bankruptcies can no longer be ruled out. Could the euro zone also fall victim to the global financial crisis?
"There's a rumor going around that states cannot go bankrupt," German Chancellor Angela Merkel said recently at a private bank event in Frankfurt. "This rumor is not true."
more
http://www.spiegel.de/international/world/0,1518,604523,00.html
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