SCOTT BENNETT : CIA, SWISS BANKS FUND ISIS

October 5, 2014

The US government has covered up many things over the years.

Like the USS Liberty.  9/11 and well many other things.

I won’t go into them right now. But it is well known they have covered up many things over the years.

This however reaches, deep into the hearts and lives of everyone the world over.

This was published on October 2, 2014

Citizens the world over watch this.

The US could have cut funding to terrorist groups but instead prevented all information from going public.

The Question everyone must ask, is why was all the extremely valuable information kept hidden?

My only thought is is that the US government does not want the wars to end.

Why the cover up?

With all the information that was provided to the US government, many men,

women and children, would still be alive and well today.

That includes many Military personnel, from many different countries.

Many of the people who were injured and maimed, would be whole today.

This is a rather long interview, but is definitely worth watching.

Everyone in the world should listen to what Scott has to say.

He certainly is telling the truth.

Published on Oct 2, 2014

Discussion of the book SHELL GAME A Military Whistleblowing Report to the U.S. Congress Exposing the Betrayal and Cover-Up by the U.S. Government of the Union Bank of Switzerland-Terrorist Threat Finance Connection to Booz Allen Hamilton and U.S. Central Command

By 2LT Scott Bennett 11th Psychological Operations Battalion (retired)

Part of the reason behind Eric Holder’s immediate retirement.

BACKGROUND OF SPEAKER:

Scott Bennett is a U.S. Army Special Operations Officer (11th Psychological Operations Battalion, Civil Affairs-Psychological Operations Command), and a global psychological warfare-counterterrorism analyst, formerly with defense contractor Booz Allen Hamilton.

He received a Direct Commission as an Officer, held a Top Secret/Sensitive Compartmentalized Information (TS/SCI) security clearance, and worked in the highest levels of international counterterrorism in Washington DC and MacDill Air Force Base in Tampa, Florida. He has worked at U.S. Special Operations Command, U.S. Central Command, the State Department Coordinator for Counterterrorism, and other government agencies. He served in the G.W. Bush Administration from 2003 to 2008, and was a Social Science Research Fellow at the Heritage Foundation. His writings and lectures seek to enhance global awareness and understanding of modern psychological warfare, the international intelligence.

http://projectcamelotportal.com/video…

Kerry Lynn Cassidy
PROJECT CAMELOT
http://projectcamelot.org

CLICK HERE TO VIEW PDF FILE REGARDING THIS CASE

More greatest hits of Eric Holder: Monsanto, drugs, CIA spying, transparency, strip searches

Be sure to pass this on.

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Published in: on October 5, 2014 at 9:45 pm  Comments Off on SCOTT BENNETT : CIA, SWISS BANKS FUND ISIS  
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Cyprus Banks steal Depositors money

This is rather a long read. It is important that we all know the facts. If banks were properly regulated this would not have happened. It all started back in 2008 in the US and is still continuing. The question we all should be asking is, why is it those who created the problem never get punished?

Cyprus Steal The West’s Premeditated Bank Robbery

By Jeff Nielson 04/01/13

VANCOUVER, Canada (Bullions Bull Canada) — The veils have been removed. The open criminality of Western regimes is now on display for all the world to see. Bank robbery is now official government policy across the West with no debate and no voting.

As was noted in my original commentary on this government-perpetrated crime, it was immediately obvious that this was an entirely staged/scripted event. To fully comprehend the premeditated nature of this crime requires a detailed examination of the chronology.

December 10, 2012:

The U.S. Federal Deposit Insurance Corporation and the UK Bank of England jointly release a “position paper” titled “Resolving Globally Active, Systemically Important, Financial Institutions.” Sounds wonderful: “resolving.” They are finally coming up with a plan to put the “Too Big To Fail” fraud factories out of our misery. Wrong.

This document is a blueprint for precisely the opposite: propping up these TBTF monstrosities forever. This manifesto was simply coming up with new “proposals for financing” — i.e. feeding the Beast. And one of these proposals was the “bail-in.”

…[Item 19] The introduction of a statutory bail-in resolution tool (the power to write down or convert into equity the liabilities of a failing firm)… [emphasis mine]

Why was there no rioting in the streets of the U.S. and UK? Why were there no scathing condemnations from our wonderful “free press?” In fact, why did the media not even mention the “bail-in” was now government policy for the U.S. and UK?

And what about our “leaders,” the politicians? Why did not a single one of these stalwarts in the U.S./UK utter so much as a “peep” about bank robbery becoming official government policy in the United States and United Kingdom?

Because when these traitor governments made this their “official policy” they never fully defined what they really meant by “bail-in.” Here is as close as the FDIC/Bank of England come to telling the truth:

…A bail-in tool would enable the U.K. authorities to recapitalize an institution by allocating losses to its shareholders and unsecured creditors…[emphasis mine]

Why were no UK politicians protesting the “bail-in?” Because when the Bank of England spoke of “allocating losses to…unsecured creditors” no one would have dreamed that what this central bank really meant was stealing the money out of peoples’ bank accounts.

It should be noted that while that provision was explicitly designated as applying only to “the U.K. regime” that it can be implicitly understood that it applies to the U.S. as well. While the provisions for “the U.S. regime” do not use the term “bail-in,” here is the vague language which was employed:

…Title II [of the Dodd-Frank Act] requires that the losses of any financial company placed into receivership will not be borne by taxpayers, but by common and preferred stockholders, debt holders, and other unsecured creditors… [emphasis mine]

December 10, 2012:

The U.S. Federal Deposit Insurance Corporation and the UK Bank of England jointly release a “position paper” titled “Resolving Globally Active, Systemically Important, Financial Institutions.” Sounds wonderful: “resolving.” They are finally coming up with a plan to put the “Too Big To Fail” fraud factories out of our misery. Wrong.

This document is a blueprint for precisely the opposite: propping up these TBTF monstrosities forever. This manifesto was simply coming up with new “proposals for financing” — i.e. feeding the Beast. And one of these proposals was the “bail-in.”

…[Item 19] The introduction of a statutory bail-in resolution tool (the power to write down or convert into equity the liabilities of a failing firm)… [emphasis mine]

Why was there no rioting in the streets of the U.S. and UK? Why were there no scathing condemnations from our wonderful “free press?” In fact, why did the media not even mention the “bail-in” was now government policy for the U.S. and UK?

And what about our “leaders,” the politicians? Why did not a single one of these stalwarts in the U.S./UK utter so much as a “peep” about bank robbery becoming official government policy in the United States and United Kingdom?

Because when these traitor governments made this their “official policy” they never fully defined what they really meant by “bail-in.” Here is as close as the FDIC/Bank of England come to telling the truth:

…A bail-in tool would enable the U.K. authorities to recapitalize an institution by allocating losses to its shareholders and unsecured creditors…[emphasis mine]

Why were no UK politicians protesting the “bail-in?” Because when the Bank of England spoke of “allocating losses to…unsecured creditors” no one would have dreamed that what this central bank really meant was stealing the money out of peoples’ bank accounts.

It should be noted that while that provision was explicitly designated as applying only to “the U.K. regime” that it can be implicitly understood that it applies to the U.S. as well. While the provisions for “the U.S. regime” do not use the term “bail-in,” here is the vague language which was employed:

…Title II [of the Dodd-Frank Act] requires that the losses of any financial company placed into receivership will not be borne by taxpayers, but by common and preferred stockholders, debt holders, and other unsecured creditors… [emphasis mine]

The official policy of the U.S. government is precisely the same as that of the UK (hence the joint “position paper”). The FDIC simply didn’t articulate its own plans for bank robbery to the same degree. Put another way: There were seven sections detailing how the UK would “resolve” these “systemically important institutions” (but no mention of bank-robbery) versus only two sections for the U.S.

Now we come to the remainder of the chronology, which not only proves that the Cyprus Steal was planned (at least) as far back as December 2012, but that the fix was in: our traitor governments had already reached agreement with the traitor government of Cyprus to perpetrate this crime.

March 15:

The EU banking cabal and its puppet politicians “surprise” the world by announcing a plan to steal money out of the bank accounts of ordinary people in order to “recapitalize” a private bank in Cyprus, while a publicly owned bank would be liquidated and also fed to the private bank. Victimizing the people twice in order to temporarily prop up another reckless/insolvent fraud factory.

As noted previously, this was obviously a proposal intended to fail in this silly, two-act theater. This was proven by the zealous insistence of the European Central Bank that the original proposal must “magnify the hit” on smaller depositors. This would ensure maximum public outrage, and guarantee that the politicians would vote against it.

The ECB is the third member of the Western Troika, along with the Federal Reserve and the Bank of England. They were solely responsible for the final language of the original proposal; solely responsible for its rejection.

March 19:

Cyprus politicians (government and opposition alike) unanimously reject the “bail-in.” What a surprise!

March 21:

Stephen Harper, leader of Canada’s Conservative government officially tables the 2013 Canadian Budget, which makes the “bail-in” the official law of Canada.

[page 145] The Government proposes to implement a bail-in regime for systemically important banks…

As with the U.S. and UK, the Canadian document contains nothing but weasel-words that never fully define what “bail-in” really means — i.e. robbing peoples’ bank accounts to temporarily prop-up reckless/parasitic banks.

Is Stephen Harper the most stupid politician in the Western world? Two days after the government of Cyprus unanimously rejects bank robbery as a means to “recapitalize banks,” Harper makes this the official law of Canada. Would he really want to go into the next election as “Stephen Harper: Bank Robber of the West” or did Harper know something then, almost no one else knew?

March 25:

The government of Cyprus approves the “new and improved” Cyprus Steal amid reports that the Big Money had already been warned about this bank robbery, and had moved their own money out weeks/months ahead of time.

Now our picture is complete.

We have our traitor governments planning this bank robbery months in advance and warning the big-money oligarchs so they would not be affected. We have them then staging an “emergency.”

The TG’s then tell us that because of this “emergency” they need to instantly raise a lot of money, and so they don’t have time to fairly and systematically “tax” people with some broad, general levy; rather, they “need to” simply seize wealth from a particular group of targeted victims.

This time it was stealing money out of bank accounts. Next time it might be confiscating pensions. The blueprint (i.e. script) is now firmly in place:

  • (Secretly) plan the robbery.
  • Warn the Big Money (so all their wealth is moved to safety).
  • Announce/stage an “emergency.”
  • Perpetrate the theft.

The criminality of the West’s traitor governments is now a matter of record. Their written confessions are contained in official, public documents.

The question then becomes: What will be the response of the Sheep — i.e. the pseudo-citizens of these regimes? Will they simply sit back and submit to a “taxation regime” that has now abandoned even the pretense of legitimacy?

If the answer to that question is “yes” then one can only conclude the Sheep deserve to be robbed. They elect these traitor governments. They continue snoozing when the politicians publicly announce they plan on openly stealing from them. They allow themselves to be robbed.

You can’t help victims who refuse to help themselves.

What about the rest of us, the remaining citizens of these once-legitimate regimes? We have no choice but to protect ourselves — not with guns, but with our brains.

With first “MF Global” and now the Cyprus Steal we have incontrovertible proof that no paper asset is safe in the West. Period.

We must therefore divest ourselves of as much paper as possible, with “physical” gold and silver bullion being the best/safest option. Do not pump every last penny of your wealth into our “bubble” real-estate markets. They are all doomed to suffer major crashes.

Obviously, we will receive no further “warnings” from our governments. Source

 

‘It’s robbery!’ New Cyprus bombshell as Britons are told they may lose EVERYTHING over £85k

  • Bank of Cyprus will see 37.5% of deposits over £85k converted into shares
  • Laiki Bank customers are also reported to be facing the loss of 80%
  • Experts say there is a good chance that shares will be worthless

By Dan Atkinson And Ian Gallagher

March 31 2013

British expats in Cyprus face a near-total wipe-out of any deposits over £85,000 as the full nightmare  of the stricken island’s EU bailout became clear yesterday.

Although it was known that the wealthiest savers would take a  large hit from last week’s €10 billion (£8.5 billion) EU rescue deal, the loss is far greater than feared.

The blow will fall on customers of the country two biggest banks – Bank of Cyprus and Laiki Bank.

Bank of Cyprus savers will see 37.5 per cent of any deposits over €100,000 (£85,000) converted into shares in the bank, with a strong possibility that these will prove worthless. Another 40 per cent will be repaid only if the bank does well in future, while 22.5 per cent will go into a contingency fund that could be subject to further write-offs.

Laiki Bank customers are also reported to be facing the loss of 80 per cent of their deposits above the £85,000 limit.

An early bailout plan – highlighted by The Mail on Sunday two weeks ago – would have seen the losses shared across all bank customers, regardless of their balance.

However, that plan was voted down by the Cypriot parliament, leaving the country in urgent need of a new solution to raise its €5.8 billion contribution towards the bailout.

The deal – which was clinched last Monday between Cyprus, the European Union and the International Monetary Fund – made clear that richer bank customers would shoulder a much larger bill.

Although it is not known how many of the 60,000 British expats living  on the island have deposits of  more than £85,000, it is likely that a considerable number will be caught in the net.

Neil Hodgson, 48, who moved to Paphos, on the south-west coast of the island, six years ago, said he has lost nearly £200,000. The former farmer, who has two accounts with Bank of Cyprus, added: ‘I had more than €300,000 in my deposit account and €20,000 in my current account. When I went to the bank the other day I was told the total balance for both is €100,000.

‘They were unable to explain how this had been worked out but indicated I might get some back at a later stage.

‘I checked online and it confirmed that the €20,000 in my current account remains, but that I only have €80,000 in my savings account. It’s robbery, plain and simple.’

Laiki Bank customers are also reported to be facing the loss of 80 per cent of their deposits above the £85,000 limit

Banks in Cyprus are open for normal business but with strict restrictions on how much money their clients can access, after being shut for nearly two weeks

Mr Hodgson, from Newcastle upon Tyne, whose wife died two years ago, said he moved to Cyprus believing he was destined for a ‘happy life of semi-retirement’.

‘Our farm in Ayrshire was bought by a mining company and I came into a lot of money,’ he added. ‘We moved to Cyprus for the sunshine and easy life but it has turned into  a nightmare.

‘My big mistake was to move all my money here, but at the time things were very stable. Most of  the Brits here had the foresight to move their money in the last few months, but I genuinely thought it would be OK. I’m not sure what the future holds now.’

The Treasury has said it will  compensate any of the 3,000 British Service personnel facing losses.
Those hit hardest include thousands of wealthy Russians who  have deposited millions of euros on the stricken island. Peter Dixon, strategist at European bank Commerzbank, said: ‘These suggested new sacrifices being demanded of better-off depositors sound even worse than we assumed.

‘The problems in Cyprus are twofold. First, the central bank ignored the huge build-up of debt. There was a problem of mismanagement.

‘Secondly, the Cypriots essentially imposed these tough solutions on themselves and the eurozone rubber-stamped them.’

Last week markets took fright at suggestions that the Cyprus model could be a blueprint for future  bailouts elsewhere in Europe.

Those with less than £85,000 in the bank have also seen themselves hit by the bailout. Temporary capital controls have been imposed to stop residents taking cash off the island, including capping cash machine withdrawals at €300 a day.

At the same time, businesses have been told they will be unable to transfer more than €5,000 abroad without approval, while no one, including tourists, can leave the island with over €1,000 in cash.

Meanwhile, the spotlight has now swung to Slovenia, another small member of the single currency in which investors are losing faith.

Last week, the price it had to pay to borrow money jumped sharply as markets began to take account of the risk that the country may default on its debts. However, on Friday, finance minister Uros Cufer insisted: ‘We will need no bailout this year. I am calm.’

 

Dan Atkinson: How the euro turned into the biggest theft in history

For a currency that promised to provide a sure bet on a glorious future, the euro is turning into the biggest theft of people’s savings in Western Europe since the war.

Greece, Ireland, Portugal  and Spain were among the first  to be crushed by the fallacy of  a one-size-fits-all currency.  Now it is Cyprus’s turn, and the scale of losses for some savers  is eye-watering.

Last week, the latest Cypriot bailout proposals hinted at a 40 per cent levy on all deposits of more than €100,000, or £85,000. This weekend, it emerged that the true cost for those better-off depositors could be much closer  to 80 per cent. British expats feature prominently among those who will suffer from an effective confiscation of their assets.

Claims that the victims are shady Russian oligarchs have  a nasty whiff to them, and even  if some of the cash that will be taken is of doubtful provenance, that cannot justify the burden now being placed on the tiny island economy.

Smaller savers may not have been hit by a levy on their bank accounts, but they will be swept up in the economic storm that is sure to descend  on Cyprus as a result of such draconian measures.

It’s tempting to wonder why any troubled eurozone country like Cyprus was ever let into what was obviously a rich man’s club.

But that is unfair – the poorer members were welcomed with open arms, with the assurance that the euro would turn them into German-style economic titans. It was like persuading  a pauper to join a casino.

Yes, Cyprus let its banking sector balloon wildly and, yes, it is the Cypriot government that has dreamt up some of the more masochistic features of the various bailout plans.

But all this human sacrifice in the eurozone – austerity, mass unemployment, arbitrary bank account levies – is about saving the euro. You wonder how much pain there has to be before someone realises that what must be sacrificed is the euro itself. Source

Morici: The Insanity of the Cyprus Crisis

By Peter Morici 03/28/13

NEW YORK Cyprus did not manufacture its banking crisis. The European Central Bank and European Union bear that responsibility. Yet, Cypriots will pay the price for their dysfunctions.

Until recently, Cyprus was a prosperous island economy with robust tourism, shipping and a significant international banking sector. Its big banks, like others in Europe, attracted large overseas deposits and invested heavily in sovereign debt. In Cyprus, much of the money came from Russia and was invested in Greek bonds.

Like the United States, the large banks are subject to stress tests but with an important distinction. The Federal Reserve is responsible both for undertaking those tests and sustaining the operation and protecting depositors of large money center banks in a crisis. During the recent financial meltdown, the Federal Reserve printed billions of dollars to purchase souring bonds and the U.S. Treasury borrowed to inject new capital into large banks when their mortgage-backed securities failed.

In the eurozone, the European Banking Authority undertakes those stress tests, and in 2010 and 2011 — well aware of their considerable holdings in Greek bonds — determined Cypriot banks had plenty of capital to withstand a financial crisis.

Meanwhile, Greece was in the throes of a financial crisis. In February 2012, the European Central Bank and European Union, along with the International Monetary Fund, imposed a 53.5% haircut on all private bondholders — for all practical purposes, that sunk the large Cypriot banks and manufactured their crisis.

Unlike the Federal Reserve, the European Central Bank lacks the authority to print money to rescue failing banks. European Banking Authority is an arm of the European Union, which lacks the borrowing authority of the U.S. Treasury and the taxing capacity to back up bonds. Hence neither the ECB nor EU is in a position to bail out the Cypriot banks without substantial contributions and consent from the largest and healthiest European economy, Germany.

Germany might be willing to extend ECB the authority to print money and the EU to borrow and tax to save banks in Frankfurt but not in Cyprus or just about anyplace outside Germany. Domestic politics prevent the German government from borrowing and taxing to bail out other troubled European banks and governments without extracting a high price from private actors. In Greece, those were private bondholders, which included banks spread throughout Europe but most heavily those in Cyprus.

Simply, Cypriot banks hardly have enough capital to cover their losses on Greek sovereign debt, and their economy is too small to afford the Cypriot government the borrowing and taxing capacity to rescue them.

In exchange for 10 billion euros in aid, the ECB and EU are demanding that Cypriot banks be downsized — banking in Cyprus can be no larger than the average for the entire European Union. Moreover, under eurozone rules, championed by Germany, austerity — cuts in government spending and strict limits on deficits — will be required.

In Cyprus, the loss of international banking will impose double-digit unemployment of perhaps as high as 20% because this small island economy cannot devalue its currency to attract new investment, as Iceland did after its crisis. Most laid-off workers, whose native tongue is generally Greek, have few employment options elsewhere in Europe.

Thanks to a crisis manufactured by the European Central Bank and European Union, with the help of the International Monetary Fund, Cyprus will join Spain, Portugal and Greece in a permanent recession.

Spain suffered a similar banking crisis premised on foreign money inflows and real estate loans and similar problems engineering a recovery. The contrast between Spain and Cyprus, which are locked into the euro, and Iceland, which has its own currency and recovered, plainly illustrates the euro does not make sense for these economies.

Germany’s prescription for all these economies is austerity. Observing failed experiences with those policies across the Mediterranean recalls the definition of insanity: Doing the same thing over and over again but expecting a different result.

The bailout terms and prescriptions for restructuring imposed on Cyprus are nothing short of insane, and the only sane course would be for Cyprus and the other Club Med states to negotiate an orderly withdrawal from the euro. Source

The Great Cyprus Bank Robbery

Ron Paul

After Cyprus, the EU’s Attention Turns to Tiny Luxembourg

By Peter Coy

March 29, 2013

It’s getting hot in Luxembourg, a nation that’s something like Cyprus on steroids. Its population is smaller and its banking sector is bigger. If you thought it was risky for banks in Cyprus to have assets about eight times the national gross domestic product, then what is one to make of Luxembourg, where the multiple is nearly 23?

Worryingly for Luxembourg, there’s a new idea afloat that European Union nations, even small ones, should take responsibility for saving banks operating within their borders, instead of falling back on the EU for help. This week, Dutch finance minister Jeroen Dijsselbloem, who is president of the euro zone group of finance ministers, had tough words for the likes of Luxembourg and Malta in a joint Reuters-Financial Times interview:

Deal with it before you get in trouble. Strengthen your banks, fix your balance sheets, and realize that if a bank gets in trouble, the response will no longer automatically be: We’ll come and take away your problems. We’re going to push them back. That’s the first response that we need. Push them back. You deal with them.

Dijsselbloem later said that he did not intend to say that the original Cyprus plan to tax depositors of Cypriot banks should be a template for other bailouts.

Seemingly in response, the government of Luxembourg warned that the European Union risks hurting financial stability if it moves to isolate banking systems within national borders. “Luxembourg will therefore not adhere to policies that intend to renationalize elements of the single market,” the government said in an e-mailed statement, according to Bloomberg News.

In a March 27 statement, (PDF) the Luxembourg government said it is “concerned about recent statements and declarations” on financial systems and the “alleged risks” of over-dependence on banks. It pointed to the “very high solvency ratios” of the mostly international banks, insurers, and asset managers operating on Luxembourg soil.

Luxembourg has a population of about 520,000 people, making it no bigger than Albuquerque, N.M. It relied on financial services for 23.5 percent of its gross domestic product in 2011, the highest proportion in Europe, according to the European Union’s statistics office. The figure for Cyprus was 8.9 percent. Assets of its banks are nearly 23 times as big as the national gross domestic product. That compares with a little over eight for Cyprus. Still, Luxembourg’s banks are far healthier than those of Cyprus, which were overexposed to Greece.

There’s no realistic way for Luxembourg to rescue its banking sector if serious trouble develops. That’s why for Luxembourg, shoring up the commitment to shared responsibility for bank bailouts is a matter of life and death. Source

 

European Austerity Costing Lives:

As the euro crisis wears on, the tough austerity measures implemented in ailing member states are resulting in serious health issues, a study revealed on Wednesday. Mental illness, suicide rates and epidemics are on the rise, while access to care has dwindled. Source

 

Financial Wars:

Attack is the Best Form of Defence

By Alexander GOROKHOV

The US has been using its best endeavours to create a Free Trade Zone with the European Union with a view to finally removing the remaining barriers to the penetration of American capital into Europe and, after engineering the collapse of the euro, to buy up Europe’s tastiest morsels using vastly inflated dollars under the pretext of saving the EU’s economy.Source

The criminals are protected and everyone else pays.

Believe me when I say no one wants to live in a Free Trade Zone.

 

Published in: on April 3, 2013 at 3:34 pm  Comments Off on Cyprus Banks steal Depositors money  
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Violence erupts as general strike shuts down Greece

Oct. 19 2011

ATHENS, Greece — Hundreds of rioting youths smashed and looted stores in central Athens on Wednesday during a big anti-government rally against painful new austerity measures that erupted into violence.

Outside parliament, demonstrators hurled chunks of marble and gasoline bombs at riot police, who responded with tear gas and stun grenades. Police said at least 14 officers were hospitalized with injuries. At least three journalists covering the demonstrations sustained minor injuries.

The violence spread across the city centre, as at least 100,000 people marched through the Greek capital on the first day of a two-day general strike that unions described as the largest protest in years.

Police and rioters held running battles through the narrow streets of central Athens, as thick black smoke billowed from burning trash and bus-stops.

Wednesday’s strike, which grounded flights, disrupted public transport and shut down shops and schools, came before a parliamentary vote late Thursday on new tax increases and spending cuts.

International creditors have demanded the reforms before they give Greece its next infusion of cash. Greece says it will run out of money in a month without the C8 billion ($11 billion) bailout money from its partners that use the euro and the International Monetary Fund.

Most of the protesters who converged in central Athens marched peacefully, but crowds outside of parliament clashed with police who tried to disperse them with repeated rounds of tear gas. A gasoline bomb set fire to a presidential guard sentry post at the Tomb of the Unknown Soldier outside Parliament, while running clashes broke out in several side streets near the legislature and the capital’s main Syntagma Square.

Nearby, groups of hooded, masked protesters tore chunks of marble off building fronts with hammers and crowbars and smashed windows and bank signs. Scuffles also broke out among rioters and demonstrators trying to prevent youths from destroying storefronts and banks along the march route.

Vendors sold swimming goggles to rioters, who used them to ward off the tear gas.

Thousands of people watched the skirmishes, some standing on kiosk roofs to get a better view. Trash was strewn around the streets, and some protesters set clumps of it on fire.

In Greece’s second city of Thessaloniki, protesters smashed the facades of about 10 shops that defied the strike and remained open, as well as five banks and cash machines. Police fired tear gas and threw stun grenades.

All sectors — from dentists, hospital doctors and lawyers to shop owners, tax office workers, pharmacists, teachers and dock workers — walked off the job before a parliamentary vote Thursday on new austerity measures which include new taxes and the suspension of tens of thousands of civil servants.

Flights were grounded in the morning but some resumed at noon after air traffic controllers scaled back their strike plan from 48 hours to 12. Dozens of domestic and international flights were still cancelled. Ferries remained tied up in port, while public transport workers staged work stoppages but kept buses, trolleys and the Athens subway system running to help protesters.

In Parliament, Finance Minister Evangelos Venizelos told lawmakers that Greeks had no choice but to accept the hardship.

“We have to explain to all these indignant people who see their lives changing that what the country is experiencing is not the worst stage of the crisis,” he said. “It is an anguished and necessary effort to avoid the ultimate, deepest and harshest level of the crisis. The difference between a difficult situation and a catastrophe is immense.”

About 3,000 police deployed in central Athens, shutting down two subway stations near parliament as protest marches began. Protesters banged drums and chanted slogans against the government and Greece’s international creditors who have pressured the country to push through rounds of tax hikes and spending cuts.

“We just can’t take it any more. There is desperation, anger and bitterness,” said Nikos Anastasopoulos, head of a workers’ union for an Athens municipality.

Other municipal workers said they had no option but to take to the streets.

“We can’t make ends meet for our families,” said protester Eleni Voulieri. “We’ve lost our salaries, we’ve lost everything and we’re in danger of losing our jobs.”

Demonstrations during a similar 48-hour strike in June left the centre of Athens convulsed by violence as rioters clashed with police on both days while deputies voted on another austerity package inside Parliament.

Piles of garbage festered on Athens street corners despite Tuesday’s government order to garbage crews to end their 17-day strike. Earlier in the week, private crews removed some trash from along the planned demonstration routes, but mounds remained on side streets, along some of the march routes and in city neighbourhoods.

Protesting civil servants have also staged rounds of sit-ins at government buildings, with some, including the Finance Ministry, under occupation for days.

Most stores in the city centre, including bakeries and kiosks were shut Wednesday. Several shop owners said they had received threats that their stores would be smashed if they attempted to open.

The measures to be voted on come after more than a year and a half of repeated spending cuts and tax increases. They include new tax hikes, further pension and salary cuts, the suspension on reduced pay of 30,000 public servants and the suspension of collective labour contracts.

A communist party-backed union has vowed to encircle Parliament Thursday in an attempt to prevent deputies from entering the building for the vote.

The reforms have been so unpopular that even some lawmakers from the governing Socialists have indicated they might vote against them.

Meanwhile, European countries are trying to work out a broad solution to the continent’s deepening debt crisis, before a weekend summit in Brussels. It became clear earlier this year that the initial bailout for Greece was not working as well as had been hoped, and European leaders agreed on a second, C109 billion ($151 billion) bailout. But key details of that rescue fund, including the participation of the private sector, remain to be worked out. Source

EU raids banks amid suspicions they colluded

Oct. 19, 2011

BRUSSELS, Belgium — The European Union’s competition watchdog said Wednesday it conducted unannounced inspections at several banks amid suspicions they may have colluded to manipulate euro interest rate derivatives.

The European Commission said it is looking into a possible cartel by companies active in the sector of derivatives linked to the Euro Interbank Offered Rate — a key interest-rate benchmark.

The Commission said the raids started on Tuesday, but didn’t name the firms whose premises it inspected.

There are trillions of euros in derivatives whose value is based on developments in the Euribor and they make up a significant slice of the profitable business of derivatives trading, which has grown exponentially in recent years.

The Euribor is set by a group of 44 banks and is based on the interest rates they charge for lending to other financial institutions.

Inspections, during which investigators collect documents that could aid their case, are an early step in EU competition probes and happen before the Commission starts an in-depth investigation into suspected cartels and other violations of EU competition law.

The inspections are another sign that competition watchdogs are stepping up their scrutiny of the financial sector as a result of the 2008 credit crunch and the European debt crisis.

Press reports earlier this year said that the U.S. Justice Department and Securities and Exchange Commission were looking into suspected manipulation of the London Interbank Offered Rate, which is a benchmark rate similar to the Euribor but used much more widely.

Earlier this year, the European Commission also opened an investigation into practices of some of the world’s largest banks in the market for credit default swaps, derivatives that act as a sort of insurance against default.Source

The US should be investigating their own banks including the Federal Reserve.

They lead to the downfall of Greece.

The International Monetary Fund is basically run by the US and other rich countries. It  is a horrid creature that should be eliminated as should the World Bank. Both are nothing more then a dictatorship that imposed massive hardship on countries. The  IMF Can Only Bring Misery.

For six decades, the World Bank and IMF have imposed policies, programs, and projects that:

  • Decimate women’s rights and devastate their lives, their families, and their communities;
  • Subjugate democratic governance and accountability to corporate profits and investment portfolios;
  • Trap countries in a cycle of indebtedness and economic domination;
  • Force governments to privatize essential services;
  • Put profits before peoples’ rights and needs;
  • Abet the devastation of the environment in the name of development and profit;
  • Institutionalize the domination of the wealthy over the impoverished – the new form of colonialism; and
  • Facilitate corporate agendas through the economic re-structuring of countries enduring conflict and occupation, such as East Timor, Afghanistan, and Iraq.

Check out what they do in Africa.

The World Bank and IMF in Africa

Privatization, Pollution and Free Trade, WTO

Greece Country Profile

If the US  can’t get you with the IMF, World Bank or Free Trade Agreements  — they send in the CIA.

One way or the other they will make your lives miserable and even kill you to get what they want. They even start wars to get what they want.

One has to wonder how many problems are still created by the CIA in other countries. They can  cause financial chaos to other countries as well. They manipulate elections in other countries and invent anything to overturn governments they do not like.

One has to wonder if those Masked folks in Greece that stir up violence, may be associated with the CIA.  The US does not like Socialism. That is one of their tactics they use often.

This fellow has a number of Videos that can be watched I recommend them all so you can get some insight into what the CIA is really like. They have not changed over the years only now everything they do is kept secret and always chalked up to National Security so no one can find out what they are up to.  Do take the time to watch as many of the Video with John in them.  Then maybe you will understand just how the US destroys other countries.

John Stockwell – CIA’s War on Humans

Feb 13, 2008

John R. Stockwell is a former CIA officer who became a critic of United States government policies after serving in the Agency for thirteen years serving seven tours of duty. After managing U.S. involvement in the Angolan Civil War as Chief of the Angola Task Force during its 1975 covert operations, he resigned and wrote In Search of Enemies, a book which remains the only detailed, insider’s account of a major CIA “covert action.”

Some things never change

More John Stockwell on the CIA and the Covert Action

John Stockwell on the Election of George H. W. Bush (1988)

This explains how they did many things as well, They had a lot of help from Israel in their horrific deeds against innocent people as well.

The CIA: Beyond Redemption and Should be Terminated

So look at the world around us today and you will notice nothing has changed only gotten worse and the US is still starting wars. They still interfere with other Governments. They still topple Governments they don’t like. Now they have more weapons like the IMF, World Bank, Free Trade, WTO etc.

I could bet a few dollars they have everything to do with the problems in Greece and many other EU countries deep in debt. Wars are also driving countries deep in debt.

Greek lawmakers vote in favour of new austerity bill

Oct. 20 2011

ATHENS, Greece — Greek lawmakers have passed a deeply resented austerity bill that has led to violent protests on the streets of Athens, despite some dissent from one Socialist lawmaker.

The new measures include pay and staff cuts in the civil service as well as pension cuts and tax hikes for all Greeks. The bill passed by majority vote in the 300-member parliament.

Former Labor Minister Louka Katseli voted against one article that scales back collective labour bargaining rights. She voted in favour of the overall bill, but Prime Minister George Papandreou expelled her from the party’s parliamentary group. The move whittles down his parliamentary majority to 153.

The vote came after violent demonstrations that left one person dead and 74 injured. Source

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Wall Street/Washington Protesters an Inspiration to Behold

Published in: on October 20, 2011 at 6:25 am  Comments Off on Violence erupts as general strike shuts down Greece  
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US Senate votes to ban big bank ‘bailouts’

May 5 2010

WASHINGTON — Spurred by deep election-year voter anger, the US Senate voted Wednesday to forbid government-funded bailouts of big banks  like those blamed for the global economic meltdown of 2008.

In their first substantive vote on the most sweeping finance industry overhaul since the Great Depression of the 1930s, the lawmakers agreed by a 96-1 margin to an amendment banning future taxpayer rescues.

The measure, crafted by Democratic Senator Barbara Boxer, aimed to prohibit vastly unpopular bailouts of so-called “too big to fail” firms that might have won government help because their collapse would cripple the economy.

Senators, who were expected to take at least two weeks to pass the overall legislation, also voted 93-5 to approve a compromise plan for “orderly liquidation” to take apart failing financial giants.

Democratic Senator Chris Dodd, chairman of the senate banking committee, announced earlier that he and the panel’s top Republican, Senator Richard Shelby, had reached a deal on that provision after months of talks.

Dodd said he had agreed to drop plans to create a 50-billion-dollar fund, drawn from Wall Street, to cover possible liquidation expenses — a proposal opposed by President Barack Obama’s administration.

The fund, which some Republicans had wrongly painted as a “bailout” fund, would be replaced by liquidating the troubled company or assessing a fee on other major financial firms.

“Because whether they pay in advance or after the fact, these costs will be paid by Wall Street and not taxpayers, I have no objection to dropping that provision,” Dodd said in a statement.

The plan puts the Federal Deposit Insurance Corporation, an independent agency, in charge of “orderly liquidation” of a big failing firm; dictates that shareholders and unsecured creditors will bear losses; and removes top executives.

Regulators will also have the power to break up a firm if it poses a serious threat to US financial stability.

US Treasury Secretary Timothy Geither praised the Senate vote, saying: “The strong bipartisan support for this provision demonstrates the growing momentum for passing comprehensive financial reform.”

The accord between Dodd and Shelby removed some obstacles to the legislation, Obama’s top domestic priority, but the two parties were expected to feud on other key provisions.

Both sides have said they want to end government bailouts to such banks — like the 700-billion-dollar Troubled Asset Relief Program approved when the financial industry seemed poised to collapse in late 2008.

The two sides were expected to feud over the creation of a new agency to protect consumers from shady finance practices and over how tightly to regulate derivatives, complex financial instruments blamed for stoking speculative fires but widely used by many companies to cope with volatile commodity prices.

Recent polls have found that the US public overwhelmingly favors tough new rules on Wall Street, leading Democrats to paint Republicans as being in the pocket of big banks.

In a sign of the partisan rancor, Democratic Senate Majority Leader Harry Reid charged at a press conference that “Republicans are having difficulty determining how they’re going to continue making love to Wall Street.  Source

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Published in: on May 6, 2010 at 5:19 am  Comments Off on US Senate votes to ban big bank ‘bailouts’  
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Banks begging for Bailouts Again Third times is a charm

UK plans new bank bailout measures

An earlier recapitalisation scheme has failed to restore confidence in UK’s banking sector Photo: AFP

Britain will unveil a package of measures in the next day or two to try to get banks to resume lending, Gordon Brown, the UK prime minister, has said.

It marks a second bailout of British banks, following the 37bn pound ($54.5bn, €41bn) recapitalisation scheme in October, which has largely failed to restore confidence in the banking sector.

Speaking in Egypt on Sunday, on the sidelines of a summit on the conflict in the Gaza Strip, Brown said: “We know the essential problem is the resumption of lending.”

The package is designed to “get lending moving in the economy” to help families and businesses hit by a freeze in the global credit markets, he said.

Government officials and bank chiefs have spent the weekend in talks to try to reach a deal.

A key part of the bailout will be a huge state insurance scheme to guarantee billions of pounds of banks’ bad assets, according to local media reports.

The Sunday Times newspaper said that among the measures, up to 100bn pounds of new lending could be guaranteed.

It said the taxpayer’s stake in banks like HBOS and Royal Bank of Scotland could rise further.

Brown’s remarks

“We have recapitalised the banks, we have injected money into the economy, at the same time we know that the essential problem that has been holding back banks internationally is the resumption of lending,” Brown said.

“That’s what we’re going to be doing tomorrow and that is what the package is about.

Brown said ‘what we want to do now is to get the resumption of lending’ Photo: AFP
“My first priority is hard-working families worried about whether they can get a mortgage, businesses who work hard every day. They need the banks to do the job they say they’re there for.”What we want to do now is to get the resumption of lending and you will see tomorrow there are measures taken that will ensure that banks and non-bank institutions are able to resume lending or expand lending and in some cases to start lending.

“What we want to do is see businesses get the money that they need to be able to create jobs and secure investment for the future.

“What I want to see is people who are mortgage holders having access to mortgages at prices they can afford.”

International exposure

The bailout announcement came a day after Brown told British banks that they must own up to the extent of their bad assets.

He said on Saturday in London that British banks’ exposure to international losses was the largest problem they faced and called for an internationally agreed solution.

“The international community has got to modernise and change and  reform and get to the roots of the problem that make us angry about  the way that the system is operating,” he said.

Shares in Royal Bank of Scotland and Barclays plunged on Friday after US giant Citigroup announced a $8.29bn fourth-quarter loss and Bank of America got a $20bn state bailout.

And recession is likely to become official in Britain this week when data is expected to show that the economy contracted for a second straight quarter in the final three months of 2008.

Source

Top U.S. banks post huge losses as Bank of America  gets aid Again

Jan 16, 2009

By Jonathan Stempel and Dan Wilchins

NEW YORK (Reuters) – The U.S. government extended $20 billion of new aid to Bank of America Corp hours before both the largest U.S. bank, and the country’s third largest, Citigroup, reported multibillion-dollar losses from the ongoing global credit crisis.

Bank of America posted its first quarterly loss in 17 years on the heels of the government’s midnight announcement that it would help the bank absorb its January 1 purchase of troubled brokerage Merrill Lynch & Co.

The U.S. Treasury will provide the new aid in exchange for preferred stock, and along with the Federal Reserve and Federal Deposit Insurance Corp, agreed to limit Bank of America’s potential losses on $118 billion in tainted assets.

Also scrambling to survive huge new losses triggered by the credit crunch was Citigroup, which unveiled plans to split in two and shed troubled assets.

The announcements came before a U.S. holiday weekend that ends on Tuesday when President-elect Barack Obama will be sworn in. Obama again said that even with a wide range of measures to pull the United States out of recession, the U.S. economy will likely worsen before it improves.

U.S. Treasury Secretary Henry Paulson, on his last full day in office, said a substantial portion of the second half of the government’s $700 billion financial rescue fund should be reserved for bank capital programs.

Top U.S. policy-makers said they are discussing setting up a government bank that would use federal funds to buy troubled assets from financial institutions to try to stem the crisis.

Paulson and FDIC Chairman Sheila Bair both said an “aggregator bank” was one of several ideas U.S. regulators had discussed.

The Treasury said it will lend Chrysler LLC’s finance arm $1.5 billion to help it make new car loans as part of a broader program to revive the U.S. auto industry.

The Treasury earlier extended a $4 billion loan to Chrysler for its automotive operations and had granted $13.4 billion in operating loans to General Motors Corp.

Shares in Bank of America and Citigroup rose in early trade after tumbling sharply on Thursday, as investors believe the government will not let the two banks fail.

But the size of the losses and need for fresh aid unsettled Wall Street. The two banks’ stocks fell and pulled down shares of their two large rivals, JPMorgan Chase & Co and Wells Fargo & Co.

“Now it’s clear that there could be more big banks coming back to the well, asking the government for money,” said Matt McCall, president of Penn Financial Group in Ridgewood, New Jersey. “When does this end and when do they say no? They just keep writing checks.”

Influential bond investor Bill Gross of Pacific Investment Management Co told Reuters that the worst harm to banks’ balance sheets may be over.

Fear of more bank losses spread to London, where shares in Barclays fell 25 percent and other bank stocks tumbled as worries about capital and write-downs resurfaced. Dealers said there was no single reason for their sharp slide.

After the market closed, Barclays reported it expects to report pre-tax year profit well ahead of analysts’ estimates of 5.3 billion pounds ($7.91 billion), and said it knows of no justification for the stock slide.

The Bank of England and Downing Street confirmed a meeting took place among Prime Minister Gordon Brown, the Bank of England governor, finance minister and securities regulator, but neither would comment on the talks.

British ministers aim to announce yet another bank lending package, a Treasury source told Reuters, while Ireland nationalized Anglo Irish Bank, its third-largest lender, to avoid a collapse.

Bank of America, Citigroup post huge losses

Citigroup, once the world’s largest bank, reported a fourth-quarter loss of $8.29 billion and recorded $28.3 billion of write-downs and credit losses. Over the past 15 months Citigroup has amassed $92 billion in losses and write-downs.

Bank of America reported a $1.79 billion quarterly loss, while losses at Merrill Lynch were a record $15.31 billion.

Citigroup stock fell more than 8.0 percent to a session low of $3.44 after Moody’s Investors Service said it may cut the bank’s credit rating.

Moody’s cut the credit ratings of Bank of America, whose shares tumbled 13.7 percent.

After the bell, Credit Suisse cut Citigroup’s price target and earnings outlook, and almost doubled its loss estimate for the bank in 2009 to 90 cents from 50 cents per share.

The news of massive new bank losses and more aid came after the U.S. Senate on Thursday cleared the release of the remaining $350 billion of emergency funds to tackle the crisis. The Bank of America aid will come from the first $350 billion package.

With economies and credit markets worldwide yet to respond to massive bailouts and deep interest rate cuts, Bank of Japan Governor Masaaki Shirakawa said financial conditions in the world’s second-biggest economy were tightening rapidly.

Conditions in France were also on the slide. The Bank of France estimated the French economy contracted sharply in the fourth quarter and its monthly survey of business managers showed they expect the downturn to deepen.

The euro zone trade balance swung from a surplus to a deficit in November as exports plunged twice as much as imports, data showed, underlining the fast pace at which the region’s economy was sliding deeper into recession.

New U.S. economic data raised the possibility of deflation. The pace of U.S. inflation slowed to a half-century low last year and industrial output fell for the first time since 2002.

The reports suggested the economy could take longer to pull out of a downturn that is on track to be the longest and possibly deepest since World War Two.

(Additional reporting by Joseph Giannone and Ellis Mnyandu in New York and Patrick Rucker, David Lawder and Lucia Mutikani in Washington, Steve Slater and Dominic Lau in London, Jan Strupczewski in Brussels; Writing by Herbert Lash; Editing by Chizu Nomiyama)

Source

I guess we are going on this roller coaster ride again.

All Banks should be audited, by outside professionals and find out exactly where all the money they got i the first Bailout went.

Seems to me there is a whole lot of fraud happening or something else.

Every penny should be accounted for. Tax payers are paying for the Banks BS. Why should they. I am really wondering how long this BS will continue on for. It certainly is one way of sending people into a panic however.

Maybe they are just stealing, tax dollars to line their own pockets with or line someone else’s…….

This is all to fishy at this point in time. Could be they are creating crisis after crisis just to mess with everyone’s mind, so we all live in fear.

Create a crisis and well it has been done before many times.

Create a Crisis , fix the crisis, become a hero, a  savior whatever..

What a scam.

Whatever the case these banks need someone running them, that is honest and actually knows how to run a bank. The ones who run these ones begging for money again obviously can’t do the job. They aren’t worth rescuing either.Just because your big doesn’t make you worth saving.

Seems to me Banks should only be owned and operated, by people within their own country anyway. Bank owned by anyone from another country shouldn’t even be allowed.

So where has all the money  GONE?  Did they ever  look.

Unusually Large U.S. Weapons Shipment to Israel: Are the US and Israel Planning a Broader Middle East War?

The State of Israel: Since its Creation

Lots of posting on this subject in the Archives.

Indexed List of all Stories in Archives

Published in: on January 19, 2009 at 3:09 am  Comments Off on Banks begging for Bailouts Again Third times is a charm  
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‘Greek Syndrome’ is catching as youth take to streets

First it was Athens. Now the Continent’s disillusioned youth is taking to the streets across Europe.

John Lichfield reports

December 20 2008

Protesters clash with police in Athens on Thursday

GETTY IMAGES

Protesters clash with police in Athens on Thursday

Europe exists, it appears. If Greek students sneeze, or catch a whiff of tear-gas, young people take to the streets in France and now Sweden. Yesterday, masked youths threw two firebombs at the French Institute in Athens. Windows were smashed but the building was not seriously damaged. Then youths spray-painted two slogans on the building. One said, “Spark in Athens. Fire in Paris. Insurrection is coming”. The other read, “France, Greece, uprising everywhere”.

It was a calculated and violent attempt to link disparate youth protest movements. Links between protests in Greece and France – and, to a lesser degree, unrest in Sweden – may seem tenuous, even non-existent. But social and political ailments and their symptoms transmit as rapidly as influenza in the television, internet and text-message age.

With Europe, and the world, pitching headlong into a deep recession, the “Greek Syndrome”, as one French official calls it, was already being monitored with great care across the European Union. The attempt to politicise and link the disputes across EU frontiers may prove to be a random act of self-dramatisation by an isolated group on the Greek far left. But it does draw attention to the similarities – and many differences – between the simultaneous outbreaks of unrest in three EU countries.

Thousands of young Greeks have been rioting on and off for almost two weeks. They are protesting against the chaotic, and often corrupt, social and political system of a country still torn between European “modernity” and a muddled Balkan past. They can be said, in that sense, to be truly revolting.

The riots began with a mostly “anarchist” protest against the killing of a 15-year-old boy by police but spread to other left-wing groups, immigrants and at times, it seemed, almost every urban Greek aged between 18 and 30. The protesters claim that they belong to a sacrificed “€600” generation, doomed to work forever for low monthly salaries. French lycée (sixth-form) students took to the street in their tens of thousands this week and last to protest against modest, proposed changes in the school system and the “natural wastage” of a handful of teaching posts. In other words, they were engaged in a typical French revolution of modern times: a conservative-left-wing revolt, not for change but against it. The lycée students are, broadly, in favour of the status quo in schools, although they admit the cumbersome French education system does not serve them well.

But behind the unrest lie three other factors: a deep disaffection from the French political system; a hostility to capitalism and “globalism” and the ever-simmering unrest in the poor, multiracial suburbs of French cities.

In Malmo on Thursday night, young people threw stones at police and set fire to cars and rubbish bins. This appears to have been mostly a local revolt by disaffected immigrant and second-generation immigrant youths, joined by leftist white youths, against the closure of an Islamic cultural centre. As in Greece and France, the Swedish authorities believe the troubles have been encouraged, and magnified, by political forces of the far left.

There may be little direct connection between the events in the three countries but they were already connected in the minds of EU governments before yesterday’s attack on the French cultural institute. The French President, Nicolas Sarkozy, forced his education minister, Xavier Darcos, to delay, then abandon his planned reform of the lycée system this week. Why the change? Largely because of the events in Greece, French officials say. There was a heated debate in the Elysée Palace last weekend. One faction of advisers and ministers wanted to push ahead with the school reforms (already much watered down). Another faction was disturbed at signs that the lycée protests, although relatively limited, were spinning out of control.

The student leaders were no longer in charge of their troops, they said. Violent elements were joining the marches from the poor, multi-racial suburbs. Far left and anarchist agitators were said to be getting involved. With the Greek riots on the TV every night, and the French economy heading into freefall, the officials feared the lycée protests could spark something much wider and more violent.

President Sarkozy agreed to give way. The lycée protests went ahead anyway. There were more students on the streets of French cities on Thursday, after the government backed down, than there were last week when the education minister insisted that he would press ahead. A few cars were burnt and overturned in Lyons and Lille and a score of protesters were arrested but the marches were mostly peaceful.

Students interviewed on the streets of Paris refused to accept that the reforms had been withdrawn. President Sarkozy was not in control, they said. He was “under orders from Brussels and Washington”. The real motive was to take money out of the French education budget to “refloat the banks”.

The Greek, French and Swedish protests do have common characteristics: a contempt for governments and business institutions, deepened by the greed-fired meltdown of the banks; a loose, uneasy alliance between mostly, white left-wing students and young second-generation immigrants; the sense of being part of a “sacrificed generation”.

Source

Seems they know what is going on maybe even better informed then some of the adult.  The financial crisis, could very possibly  take a toll on their education and futures. The see their future is at risk.

I think they know much more then most give them credit for.

Maybe everyone should be out their rallying with them.

The elite of the world should be informed that the people rule and not those who are power hungry.  Our future generation is voicing their opinion and we should listen to what they are saying.  They will become the new leaders of the world in the future. They want the best education and decent jobs with decent pay. They want to be treated fairly.

The want to be heard. So listen to what they are saying.

Seems the profiteers and those who make policies around the planet are doing a  sloppy job. They all pretend to be experts but seems they are anything but. If they were such experts the Financial Crisis would never have happened. Of course as we all know by now, it was caused by deregulation, privatization and greed.  Greed being the at the fore front of it all.

Who pays for all the mistakes of the so called experts none other then the future generations.

When it comes to pollution it is the future generations who will pay a heavy price as well.

Children deserve a better future then the legacy this generation is leaving them.

It’s time to clean up the world. We all must work together to assure future generations are left with a world that is healthy, free from war mongers, hunger and power seeking profiteers.

It can be done.

A glimps into the minds of Greek Teenagers

Published in: on December 21, 2008 at 5:19 am  Comments Off on ‘Greek Syndrome’ is catching as youth take to streets  
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Did being part of the EU protect them from the Financial Crisis

Turmoil Spurs US Plant Closures, EU Layoffs At ArcelorMittal

December 10th, 2008

By Alex MacDonald

In a sign of the severity of the economic downturn, ArcelorMittal (MT), the world’s largest steelmaker, announced plans to close two U.S. steel processing plants and lay off several hundred workers in the European Union.

ArcelorMittal plans to close its finished steel processing plant in Lackawanna, N.Y., by the end of April and plans to close its finished steel processing plant in Hennepin, Ill., sometime in the future, although no date was disclosed. The two closures will result in 545 job losses, 260 of which are located at the N.Y. plant and 285 of which are located at the Illinois plant.

Meanwhile, ArcelorMittal rolled out voluntary redundancy programs in Europe over the past week or so that would eliminate 3,550 mostly white-collar jobs through voluntary layoffs. The company is eyeing 6,000 job cuts in Europe out of 9,000 job cuts globally.

The closures and layoffs are in line with the company’s plans to cut 35% of its global steel production capacity during the fourth quarter and saving $1 billion annually by cutting 3% of its global workforce.

Both steel plants supply the auto market, where demand has slumped so dramatically that the U.S.’s three largest car manufacturers are now seeking federal government funds to avert bankruptcy.

The closures are part of ArcelorMittal’s global restructuring program to weather the economic downturn.

The decision to close ArcelorMittal Lackawanna was “purely an economic business decision based on the extraordinary economic conditions we face today,” the company said in a statement.

The Lackawanna plant has inherent disadvantages due to its location that lead to higher costs, longer customer lead times, and higher inventory levels than other ArcelorMittal finishing facilities in the US, the company said.

Meanwhile, at Hennepin, “the company had to make the tough decision to close the…facility, consolidate operations and move production to other ArcelorMittal facilities in the U.S.” in order to remain competitive.

ArcelorMittal now has announced plans to lay off 19% of its U.S. salaried workforce of 15,543 people and has announced more than half of its planned job cuts in Europe.

The United Steelworkers union and other relevant stakeholders were notified about the plant closures and job layoffs. They are now negotiating with the Luxembourg-based company to arrive at a compromise.

Jim Robinson, the director of USW’s District 7 said the union was aware that ArcelorMittal faced operational issues at the two plants but was surprised by the company’s decision to close the plants.

“They called us before they announced but we did not know this specifically” beforehand, he said.

Robinson dismissed views that ArcelorMittal has underinvested in the plants. “I don’t think the issue is lack of investment over time, I think it’s an issue of the company’s overall strategy.” He declined to elaborate further.

ArcelorMittal is one of many steelmakers globally that have announced production cuts and layoffs. U.S. Steel Corporation (X), the world’s tenth-largest steelmaker by volume, announced last week it would temporarily idle an iron ore mining facility and two steel works. The move will affect 3,500 employees.

Corus, Europe’s second largest steelmaker by volume and the European arm of India-based Tata Steel Ltd (500470.BY) has cut production by 30% and has shed about 500 jobs from the U.K.

In Europe, ArcelorMittal is seeking voluntary redundancies equal to 1,400 jobs in France, 800 in Belgium, 750 in Germany, and 600 in Spain. Most of them are white collar jobs. ArcelorMittal’s American depositary shares recently traded up 8.9% to $25.99 on the New York Stock Exchange.

Company Web site: http://www.arcelormittal.com

Source

EU businesses expect 1 million job losses in 2009

Brussels – European Union businesses called Monday for a cut in interest rates amid predictions that the bloc’s economic slowdown could lead to more than 1 million jobs being lost in 2009.

BusinessEurope, which groups national business federations from 34 European countries, also called on governments to ensure a continued flow of credit and to approve structural reforms aimed at improving the continent’s competitiveness.

According to its latest Economic Outlook, EU gross domestic product (GDP) is predicted to grow by just 0.4 per cent in 2009, compared to 1.4 per cent this year, with exports, imports and private consumption levels all slowing.

Unemployment is predicted to increase from 7 per cent to 7.8 per cent, with the loss of 1.1 million jobs, compared to a net job creation of more than 2 million in 2008.

“The most fundamental preoccupation of the business community is obviously the way in which the impact of the financial market turmoil will play out,” the paper said.

“Even though a fully-fledged credit crunch has not yet appeared in Europe, uncertainty about the impact for companies and consumer markets has increased tremendously.”

Source

SEMI Europe calls for investment to avoid mass job losses in semiconductor industry

December 10 2008

During the third SEMI Brussels forum, SEMI Europe declared that the decline in the European semiconductor industry could potentially put half a million European jobs at risk. SEMI Europe presented its White Paper to EU officials and urgently appealed for the EU and national policymakers to invest to support the European semiconductor industry citing the industries importance to the health and global competitiveness of the EU economy.

The equipment/materials producers and the semiconductor device manufacturers contribute around €29 billion to the EU economy and provide around 215,000 jobs. The European semiconductor industry is also a significant contributor to the GDP in EU countries such as France, Germany, Ireland, the Netherlands and the UK.

“If semiconductor manufacturers leave Europe, indigenous equipment & materials producers will face an uncertain future”, said Franz Richter, Chairman of the SEMI European Advisory Board. “The current economic crisis and rising unemployment underscore the urgent need to safeguard jobs in the European semiconductor industry. Supporting a robust and competitive semiconductor industry in Europe is critical to keeping jobs in Europe across all industries and supporting key European economies.”

The decline of the market share even during the increase in total volumes sold reflects that manufacturing is changing and moving away from Europe because of the unfavourable global level playing field conditions. The European equipment and materials manufacturers that supply the semiconductor industry with machinery and parts are for the most part small or medium-sized European businesses that heavily rely on the future European semiconductor industry to guarantee their own future and the 105,000 jobs they embody.

Further information on the Brussels forum is available here.

Source

Spanish auto sector highly exposed to global crisis

December 11 2008

By Robert Hetz

MADRID,

Spain’s car industry, which became Europe’s third largest, thanks to a cheap workforce, has lost cost advantage and could shrink as companies slash costs at foreign plants and save politically-sensitive jobs at home.

As executives at multinational manufacturers weigh up Spain’s ageing factories, relatively high wage costs and weak competitiveness against their own domestic markets and cheaper alternatives, the country’s plants are clear targets as the credit crunch saps demand all over the world.

“The big decisions are being taken abroad, not here, and managers in London, Paris and Detroit prefer to close a plant here and not in their home market,” said the director of one Spanish parts plant, who asked not to be named.

Unlike Germany, France or Italy, Spain’s auto industry has no nationally-owned car maker and little control over decisions on the future of its 18 foreign-owned plants, which employ around 70,000 people.

And unlike the case of Britain, Spain’s plants are older and less productive, and the country lacks a more skilled workforce or much tradition of home-grown research and development.

Global car makers, also including Peugeot, Opel and Volkswagen, built most of their Spanish plants in the 1970s when Spain was a low-cost backwater, well placed to serve Northern European markets.

Since the 70s, Spain has lost its price advantage as living standards have caught up with the European average. In 2007, per capita income overtook that of Italy. At the same time, new competitors have emerged as low-cost manufacturing centres.

Spain’s auto-sector salaries averaged 22.83 euros ($29.64) an hour last year, above the European average and around three times the 6.93 euros in Poland and 8.83 euros in the Czech Republic, Europe’s new manufacturing hubs, alongside North Africa.

NORTH AFRICA PASSES SPAIN FOR RENAULT

Renault plans to make 200,000 cars at its plants in North Africa in 2010 and double that within a couple of years, overtaking production from its Spanish operations.

The global credit crunch has hurt demand for new cars across Europe, with new car registrations in November falling 36.8 percent in the UK, 18 percent in Germany, 30 percent in Italy and 50 percent in Spain.

With some 84 percent of cars built in Spanish plants for export, manufacturers are finding fewer financial or political reasons for remaining in the country as international competition rises.

Spanish plants are ideal candidates for the inevitable cuts across Europe, head of Ford Espana Jose Manuel Machado said, as salaries rise and productivity fails to rise at a similar rate.

Machado’s comments came before the U.S. company announced production cuts of 120,000 units at its Almussafes plant in Valencia, and the temporary layoff of 5,200 workers.

Job cuts are expected from most of the major manufacturers, with more than 60 filings listing potential layoffs by private companies made to the government, which may affect up to 40,000 workers, Spain’s main union UGT said.

As Spain’s unemployment rate soars to the highest in the European Union and the economy nears recession, the government is keen to keep the industry, which accounts for around 5 percent of gross domestic product, in the country.

Spain has earmarked 800 million euros for the sector as part of measures worth a total of around 50 billion euros to stimulate the economy.

But this aid may not be enough.

“It’s a good gesture from the government, but obviously the amount of money is insufficient. It would be less than 80 million euros per manufacturer,” said Jose Antonio Bueno of consultancy Europraxis.

The sharp fall in new car sales in Spain has also affected the manufacturers’ showrooms and spare parts centres throughout the country.

Concessions for new and second-hand cars and garages employ around 278,000 people in Spain, and 16,000 of those jobs are at risk, the association for the sector, Ganvam, estimates.

“Four years ago we sold two or three cars a day, but now its not even two a week,” said Adela Benito, who has worked in a Madrid-based Renault showroom for 20 years. (Reporting by Robert Hetz; Additional reporting by Tomas Gonzalez; Writing by Paul Day; Editing by Rupert Winchester)

Source

Swedes want government bailout for Volvo

In a new survey just released, 68 percent of Swedes want to see the Swedish government bail out its beleaguered carmaker Volvo. Although Volvo is owned by US carmaker Ford, Swedes would like its government to temporarily take control of the nation’s iconic firm, as many residents fear Volvo may disappear entirely from Sweden in the near future.

The Local newspaper reports that support for government intervention is piling in from all sides of the political arena. Some 65 percent of those polled who support the bailout side with one of the governing Alliance parties, and 73 percent of all left bloc voters approve of a government bailout.

Peter Larsson of the Swedish Association of Graduate Engineers points out that Volvo’s current crisis is not minor. “One thing is certain, there are no dollars on their way over the Atlantic,” Larsson said, referring to the massive problems currently faced by the “Big Three” US carmakers – Ford, Chrysler, and (Saab-owner) General Motors.

Rolf Wolff, dean of the school of business at Gothenburg University, told The Local: “If Volvo Cars disappears as a base for industrial knowledge and skills, then Sweden will never again be a part of the auto industry. All the knowledge and skills would be lost, and with it all future associated development potential would be gone.”

Maud Olofsson, Sweden’s minister of trade and industry, has expressed doubts whether the government would be able to better manage Volvo than the car firm itself. For now, the issue has been placed on the political back burner, but the crisis at Volvo and Ford goes on.

Source

This is just the tip of the iceburg.  Seems no one is safe from the Financial Crisis. Not even EU members.

There are 27 member of the European Union.

austria 1. Austria
belgium 2. Belgium
UK 3. UK
denmark 4. Denmark
germany 5. Germany
greece 6. Greece
ireland 7. Ireland
spain 8. Spain
italy 9. Italy
luxembourg 10. Luxembourg
netherlands 11. Netherlands
portugal 12. Portugal
finland 13. Finland
france 14. France
sweden 15. Sweden
cyprus 16. Cyprus
czech 17. Czech Republic
estonia 18. Estonia
hungary 19. Hungary
latvia 20. Latvia
lithuania 21. Lithuania
malta 22. Malta
poland 23. Poland
slovakia 24. Slovakia
slovenia 25. Slovenia
bulgaria 26. Bulgaria
romania 27. Romania

EU members and when they joined.

1952 Belgium, France, Germany, Italy, Luxembourg, Netherlands

1973 Denmark, Ireland, United Kingdom

1981 Greece

1986 Portugal, Spain

1995 Austria, Finland, Sweden

2004 Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia

2007 Bulgaria, Romania

Source

Hungary’s Letter of Intent to the IMF

World Bank lends to Bulgaria to tackle poverty, jobless

Latvia mulling IMF loan as crisis sweeps Nordic region

EU, Iceland, Canada Suffering Fall Out, Caused By US Crisis

Europeans Angry at their Money being Used for Bailouts

The £2trillion question for British economy

Europe catches America’s financial disease

How Britain’s banks will never be the same again

Economist, deregulation and loose fiscal policies lead to Meltdown

World Leaders Must Roll Back Radical WTO Financial Service Deregulation

Ryanair to appeal EU’s ‘corrupt’ support of Alitalia takeover

Ashley Mote Revealing European Union Corruption

The EU budget is necessarily corrupt

EU leaders tear up rules of Eurozone

Starting to remind me of the Corruption in the US where the Crisis started.

Banking on Bloodshed: UK high street banks’ complicity in the arms trade

Banks, Corporations and Conflict

The arms trade provides the destructive hardware used in conflicts across the world. It undermines development, contributing to the poverty and suffering of millions.

A new report by War on Want, Banking on Bloodshed: UK high street banks’ complicity in the arms trade has exposed, for the first time, the extent to which the five main British high street banks are funding this violent trade.

Banking on Bloodshed

High street banks are using our money to fund companies that sell arms used against civilians in wars across the world, including the conflicts in Iraq and Afghanistan. They are financing an industry that sells arms to countries committing human rights abuses such as Israel, Colombia and Saudi Arabia.

Money from our savings and current accounts is being used to fund companies that produce pernicious weapons like depleted uranium and cluster bombs.

As a result of the financial crisis there are now unprecedented calls for regulation of the banking sector.

War on Want is calling on the government to ensure that all banks are made to publish the full details of their loans, holdings and other banking services to the arms trade. The government must also introduce regulation which prevents high street banks from supporting the arms trade.

Download report

Download report:
Download a PDF version of Banking on Bloodshed.

Source

Who profits from WAR?

Published in: on December 5, 2008 at 11:51 am  Comments Off on Banking on Bloodshed: UK high street banks’ complicity in the arms trade  
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Citigroup flop exposes folly of empire-building

November 26 2008

FLORIDA:

Sandy Weill never dreamed Citigroup would end up as a ward of the government. When he merged Citicorp and Travelers Group in 1998, Weill envisioned the ultimate financial-services empire — peddling checking accounts, stock brokerage, investment banking and commercial loans around the world.

Today, five years into his retirement as chief executive officer, Citigroup has collapsed under the weight of massive bad market bets.

After the company’s stock closed November 21 at $3.77, down 87 percent for the year, the US government threw more aid at the giant to prevent a run on the bank by customers.

The Feds agreed to back up $306 billion in Citigroup bad debt, covering 90% of losses after the bank absorbed the first $29 billion. The government also infused $20 billion into the bank with a purchase of preferred stock. That was in addition to the $25 billion of Citigroup preferred shares it bought last month as part of a plan to recapitalise US banks.

Citigroup’s failure undercuts the strategy of many US businesses. Bigger is better, CEOs argue. Only the big survive in a cutthroat world. What they don’t say is, I get paid more if my company gets larger. In the years 2000 through 2005, Sanford I Weill took $83 million in bonuses for his work at Citigroup.

Weill and his successor, Charles Prince, might argue that they had bad luck. No one predicted the collapse of the credit markets that followed the excesses of the US mortgage business. Still, wasn’t the Citigroup financial powerhouse built to survive any crisis?

Better that they should acknowledge the colossus was a bad idea, and their own poor management. Citigroup’s $66 billion in write-offs for bad loans proves a reckless approach to investments. On Weill’s watch, Citigroup issued fraudulent reports on stocks and paid billions of dollars to settle charges it misled bond buyers.

The government may have let current Citigroup CEO Vikram Pandit remain at the helm because he has been in charge only since December — leaving most of the blame to Weill and Prince. Citigroup shares on Monday rallied along with the rest of the stock market after the company’s second bailout, climbing to $5.95. The Standard & Poor’s 500 Index rose 6.5%.

US taxpayers can only hope this latest government move is the answer to the credit-market woes. If banks start trusting each other again, losses on the bad-loan deal with Citigroup might be minimal.

There’s also a chance the government will earn a little money for its efforts. For the new $20 billion in cash, it gets $27 billion in Citigroup preferred stock, paying an 8% dividend. The Feds also get an option to buy a 4.5% stake in Citigroup common stock.

As part of the earlier deal, the government owns $25 billion of Citigroup preferred, paying 5% the first five years and 9% after, plus warrants to buy common shares equal to 15% of that preferred investment.

Weill’s Citigroup stock prospered for a time after his merger, topping $50 on occasion. But the shares began falling steadily in the spring of 2007. Citigroup’s best strategy now may be to undo what Weill wrought and Prince tried to manage.

“We should be thinking about breaking this company up and redistributing the assets into stronger hands,” says Christopher Whalen of Institutional Risk Analytics, a research firm in Torrance, California.

Let’s hope Bank of America CEO Kenneth Lewis is paying attention. Lewis bought Countrywide Financial to beef up in mortgages, and is buying Merrill Lynch to add stock-brokerage and investment-banking assets. Does he really want to mimic Citigroup?

Source

There is a very old saying “The Bigger they are the Harder they Fall”.

Major US banks have a credibility problem

Citibank Bailout May Leave You Holding the Bag in More Ways Than One

US Banks Will be Begging at the Tax Payers Door Again Soon

Banks Ripping off Credit Card Customers

Wall Streeters are just Welfare Recipiants in Disguise

Published in: on November 25, 2008 at 11:01 pm  Comments Off on Citigroup flop exposes folly of empire-building  
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Major US banks have a credibility problem

November 25 2008

Citigroup Inc’s repeated assurances that it did not need additional capital, followed by its quick about-face in accepting billions of dollars in aid from the US Treasury, has many investors wondering what other banks are hiding.

“The biggest question is what, as the owner of bank stocks, do you really own?” said Timothy Ghriskey, chief investment officer at Solaris Group. “It’s tough to say this won’t happen again.”

He added, “Financial institutions are leveraged companies, and any time you have a highly leveraged situation, it is based on faith and trust.”

After long insisting it was strong enough to weather plunging markets, Citigroup agreed on Sunday to its second U.S. government bailout package in two months. The bank is selling $20 billion of preferred stock, slashing its dividend and granting warrants.

Citigroup will unload most of the potential losses from $306 billion of risky assets to taxpayers.

One immediate result of Washington’s bailout was a relief rally on Wall Street. The Dow Jones industrial average climbed nearly 5 percent on Monday. Shares of Citibank, which plunged 60 percent last week, climbed 58 percent on Monday to end at $5.95 on the New York Stock Exchange.

“Obviously, our stock price was under a lot of pressure last week, and we wanted to try to address that,” Citi Chief Financial Officer Gary Crittenden told Reuters in an interview on Monday.

Yet the flip-flop is the latest in a series by U.S. banks this year, whose assurances of safety and soundness have been followed soon after by bailouts and rescue financing.

These episodes cast further doubt on statements made by banking executives and, investors said, could hurt the next financier that finds itself under the gun.

MORE CHINKS IN CONFIDENCE

“Each time the government or companies admits to a problem, it creates further chinks in what confidence is left,” said David Dietze, who manages money at Point View Financial Services in Summit, New Jersey.

Back in March, Bear Stearns CEO Alan Schwartz and other executives insisted the No. 5 securities firm had ample capital and liquidity, only to see hedge funds drain the firm’s cash in a matter of days. Bear ultimately was sold to JPMorgan Chase at a fire-sale price of $1.5 billion and a $29 billion government backstop.

Lehman Brothers CEO Dick Fuld and other executives contended the No. 4 Wall Street bank had plenty of capital and solid assets, waging a war of words with critics who accused it of inflating the value of its illiquid assets. By mid-September, the firm lost the confidence of trading partners and collapsed into bankruptcy

Likewise, Merrill Lynch chief John Thain repeatedly said the big brokerage had raised more capital than it needed, yet Lehman’s woes showed the vulnerability of a balance sheet burdened by mortgages and other hard-to-trade debt. Merrill rushed into the arms of Bank of America Corp.

Even survivors such as Goldman Sachs CEO Lloyd Blankfein and Morgan Stanley chief John Mack have offered rosy forecasts about the economy and financial markets that proved premature.

Michael Holland of New York money management firm Holland & Co said there are too many legal and regulatory penalties to think executives would willfully misstate their condition.

Even so, most investors said the market conditions have changed so rapidly, and deteriorated in such surprising ways, that executives cannot always be blamed for getting it wrong.

“The facts have been changing very rapidly in these institutions,” Holland said. “When we get a comment from a CEO, we don’t know what the markets will be like tomorrow.”

Not that it makes investors, who have seen their stakes wiped out, feel any better as they look ahead.

Point View’s Dietze observed it was only six weeks ago that the FDIC signed off on a proposed Citi takeover of Wachovia Corp, a struggling regional bank. Yet in that short period of time, Citi went from being a consolidator and rescuer to one of the rescued.

“If the government and the company missed it,” Dietze said, “to what degree can we investors be assured they now have their arms around the problems?”

Source

Citibank Bailout May Leave You Holding the Bag in More Ways Than One

Published in: on November 25, 2008 at 9:04 pm  Comments Off on Major US banks have a credibility problem  
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Billions here, billions there: A look at where it’s going

Billions here, billions there: A look at where it’s going

November 24 2008

Wars. Bailouts. Unemployment aid. Automakers. Washington has opened the tap on big spending and money is gushing down the pipeline.

The national debt now stands at $10.6 trillion, compared with about $5.7 trillion in 2000 before George W. Bush took office. Buckle up, because that figure is going to climb.

Here’s where some of the big bucks are going:

Iraq war Various estimates put the total cost of the military operation since 2003 at about $600 billion.

Bailout — The Troubled Assets Relief Program (TARP), signed on Oct. 3, provides $700 billion in financial relief. Of that amount, the Treasury Department has committed about $270 billion in cash injections for banks and another $40 billion for the insurer American International Group.

Economic stimulusEarlier this year, Bush signed into law a $168 billion stimulus package that included rebates for households and tax breaks for businesses. President-elect Barack Obama is preparing another stimulus plan, and Democratic lawmakers say they expect the package could total between $500 billion and $700 billion.

Detroit General Motors, Ford, Chrysler and their suppliers have been authorized $25 billion by Congress to retool their assembly lines for making more fuel-efficient cars. Now, the Big Three want an additional $25 billion to ensure they will have the funds to operate through spring. Congress could act on it in December.

Housing In July, Bush signed a housing bill that included $300 billion in new loan authority for the government to guarantee cheaper mortgages for troubled homeowners. In September, the Treasury took over mortgage giants Fannie Mae and Freddie Mac, pledging up to $200 billion to back their assets.

Jobless aid Congress last week approved an extension of up to three months for expiring unemployment benefits. The cost is nearly $6 billion.

Federal Reserve In the past year the Fed has increased its lending and purchases of debt by $900 billion, to almost $2.2 trillion.

The federal deficitIt’s the difference between what the government received from taxes and other revenue and what it spent. In fiscal 2008, which ended Sept. 30, the budget deficit was $455 billion, quite a difference from 2007’s $161.5 billion. Just one month into fiscal 2009, the budget deficit had already reached $232 billion, including $115 billion going directly on the deficit ledger for bank stock purchases as part of the financial bailout. The deficit for fiscal 2009 could reach $1 trillion.

Source

Millionaires reap farm payments; Nobody checking incomes

Investigators say the problem will get worse

By LARRY MARGASAK
THE ASSOCIATED PRESS

WASHINGTON — A sports team owner, a financial firm executive and residents of Hong Kong and Saudi Arabia were among 2,702 millionaire recipients of farm payments from 2003 to 2006 — and it’s not even clear they were legitimate farmers, congressional investigators reported Monday.

They probably were ineligible, but the Agriculture Department can’t confirm that, since officials never checked their incomes, the Government Accountability Office said.

The Agriculture Department cried foul: It said the investigators had access to Internal Revenue Service information on individuals that the department is not permitted to see.

John Johnson, deputy administrator in the department’s Farm Service Agency, said officials there are in touch with the IRS to devise a system for including tax information in its sampling program to determine eligibility.

He added that 2,702 recipients cited by the GAO was a small percentage of the 1.8 million recipients of farm payments from 2003 through 2006.

The investigators said the problem will only get worse, because the payments they cited covered only the 2002 farm bill subsidies.

The 2008 farm legislation has provisions that could allow even more people to receive improper payments without effective checks, they said.

There are three main types of payments: direct subsidies based on a farmer’s production history; countercyclical payments that kick in when prices are low and disappear when they recover; and a loan program that allows repayment in money or crops.

The 2002 farm bill required an income test for the first time.

An individual or farm entity was ineligible if average adjusted gross income exceeded $2.5 million over three years — unless 75 percent or more of that income came from farming, ranching and forestry.

According to the report, the 2,702 recipients exceeded the $2.5 million and got less than 75 percent of their income from these activities.

The payments to them totaled more than $49 million.

“USDA has relied principally on individuals’ one-time self-certifications that they do not exceed income eligibility caps, and their commitment that they will notify USDA of any changes that cause them to exceed these caps,” the GAO said.

The report said Agriculture field offices have been able to request that recipients submit tax returns for review.

But the administrator in charge of the payment programs, Teresa Lasseter, told the GAO, “Requiring three years of tax returns initially from over 2 million program participants was not a viable option or cost-effective alternative.”

The GAO said 78 percent of the recipients resided in or near a metropolitan area, while the remaining 22 percent resided in large towns, small towns and rural areas.

Further, the investigators said the Agriculture Department should have known that 87 of the 2,702 recipients were ineligible because it had noted in its own databases that they exceeded the income caps.

The GAO said it was prevented by law from identifying individuals cited in its report, but the investigators offered these examples of likely improper payments:

A founder and former executive of an insurance company received more than $300,000 in farm program payments in 2003, 2004, 2005 and 2006 that should have been subject to the income limits.

An individual with ownership interest in a professional sports franchise received more than $200,000 for those same years that should have been barred by the income limits.

A person residing outside the United States received more than $80,000 for 2003, 2005 and 2006 on the basis of the individual’s ownership interest in two farming entities.

A top executive of a major financial services firm received more than $60,000 in farm program payments in 2003.

A former executive of a technology company received about $20,000 in years 2003, 2004, 2005 and 2006 that were covered by the income limits.

This individual also received more than $900,000 in farm program payments that were not subject to those limitations.

The investigators also found nine recipients resided outside the United States — in Hong Kong, Saudi Arabia and the United Kingdom, for example.

The remainder resided in 49 of the 50 states, the District of Columbia and the Virgin Islands.

Five states — Arizona, California, Florida, Illinois and Texas — accounted for 36 percent of the recipients and 43 percent of the $49.4 million in farm program payments.

Source

We must also remember that $2.3 Trillion they admitted to losing on September 10, the day before 9/11 still hasn’t been found either.

One has to wonder how much money, has been lost in other areas as well?

“Accountability” is not something the Bush Administration took to seriously.

Bush accountability is gone: just a reminder

June 7, 2007

Somebody owes me a Diet Coke.

That’s what was at stake in a wager a gentleman and I made over dinner at a restaurant in Baton Rouge. He had asked if I didn’t agree that Attorney General Alberto Gonzales, then, as now, under fire in the scandal over the alleged politically motivated firing of nine U.S. attorneys, would soon be forced to step down. I said no. He said Gonzales would not last six weeks. We made a bet on it.

This was 11 weeks ago. Gonzales, of course, is still in office. In fact, President Bush last month reiterated his support for his embattled friend, who faces a possible Senate no-confidence vote later this month.

I wish I could say that in wagering on Gonzales’ political survival, I relied upon some insider knowledge, some astute reading of the tea leaves based on long years of watching the political scene. Truth is, what I relied on is a belief in the utter shamelessness of George W. Bush’s administration.

No, Team Bush does not own the patent on shamelessness. Some of us thought it bespoke an alarming imperviousness to embarrassment when Bill Clinton, caught lying about being serviced by a young intern in the Oval Office, chose to brazen his way through the resulting furor rather than resign.

But if the Bush people did not invent shamelessness, they have refined it to a level that once seemed impossible. So much so that this shamelessness, this indifference to perception, this abysmal lack of what Thomas Jefferson called “a decent respect to the opinions of mankind” may prove to be the administration’s defining characteristic, its calling card in matters both grand and small. Granted, shamelessness will have to battle hubris and incompetence to earn that distinction, but still …

No administration in living memory has shown Team Bush’s ability to reverse itself so blithely, to deny the obvious so serenely, to ignore precedent, propriety and responsibility with such placid unconcern for consequences or public perception.

Weapons of mass destruction not found where you once guaranteed they would be? Pretend you invaded Iraq for other reasons.

“Stay the course” proving an ever more threadbare strategy? Deny it was ever your strategy at all.

FEMA director presides over a botched disaster relief effort that costs hundreds of American lives? Praise him for doing “a heckuva job.”

CIA director presides over intelligence gathering failures that cost thousands of American lives? Give him a Medal of Freedom.

And so on.

If you’re looking for accountability, you’re looking in the wrong White House. Or as Bush once put it, “We had an accountability moment, and that’s called the 2004 elections.” In other words, if you win the election you can do whatever you want and it doesn’t matter what anyone else thinks.

So I am not surprised that, despite growing evidence he allowed the Justice Department to become a wholly owned subsidiary of the Republican Party, Alberto Gonzales still has a job with the federal government. To be honest, I am more surprised that Donald Rumsfeld, Paul Wolfowitz and former FEMA chief Michael Brown do not.

And ain’t that a kick in the head? We have reached a pass where one is almost shocked to see people held to answer for scandal and ineptitude. Where one is taken aback at the notion that failure carries a price. And where tough talk and a “What, me worry?” smugness now routinely pass for iron resolve and moral clarity.

If you had told me in 2001 that this would be the state of things six years later, I’d have laughed in your face.

I’d have lost a lot of Diet Cokes on that.

Source

GAO: Labor Dept. Misled Congress

By Carol D. Leonnig

November 25, 2008

The Labor Department gave Congress inaccurate and unreliable numbers that understated the expense of contracting out its employees’ work to private firms, according to a Government Accountability Office report released yesterday.

The department’s decisions in allowing contractors to compete for bureaucrats’ work — known as “competitive sourcing” — also demoralized workers, according to most of the 60 agency employees interviewed by the GAO.

“DOL’s savings reports are not reliable: a sample of three reports contained inaccuracies, and others used projections when actual numbers were available, which sometimes resulted in overstated savings,” the GAO report said. “Because of these and other weaknesses, DOL is hindered in its ability to determine if services are being provided more efficiently as a result of competitive sourcing.”

Labor Secretary Elaine L. Chao began having some agency workers compete for their jobs in 2004, but since then few employees have actually lost their jobs and had their pay cut as a result of the privatizing effort, GAO found. Of the 314 federal workers who had a job change as a result of competitions with private firms, 263, or 84 percent, were either reassigned to positions with the same title and pay or were promoted. Of the 16 workers who were demoted, 14 kept their same professional grade or pay.

Twenty-two employees were demoted or laid off, and all were African American. An additional 29 employees left voluntarily.

Sen. Tom Harkin (D-Iowa) and Rep. David Obey (D-Wis.), chairmen of their chambers’ appropriations subcommittees with jurisdiction over the Labor Department, asked for the report and urged Congress not to fund the competition program until the GAO provided the answers. They issued a statement yesterday saying the review documented “the negative impact the Bush Administration’s failed policies have had” on the agency.

“Under the direction of this White House, the Department of Labor has increasingly attempted to move work performed by Federal employees to private contractors” and, in so doing, hurt workers’ morale and “grossly overstated savings,” they wrote. “We look forward to working with the Obama Administration to strengthen the Department of Labor as it undertakes the critical missions of making sure our workplaces are safe; protecting employee pensions, health benefits and rights; and providing workers with the skills they need to compete successfully in the 21st century economy.”

Patrick Pizzella, an assistant secretary who oversees competitive sourcing, told the GAO in a letter last month that the department agrees tracking costs and performance more systematically would give the agency a more accurate picture of the usefulness of competitive sourcing. “As the GAO report indicates, DOL has made progress developing a system to assess the performance of winning service providers in our competitive sourcing program, and DOL’s competitions rarely resulted in lost jobs or salary reductions for DOL employees,” he said yesterday.

Pizzella said the Office of Management and Budget does not require that fuller counting; the GAO urged the OMB to require agencies to do so.
Source

Will the lies ever end?

Lessons learned in Icelandic crisis

November 24, 2008,

A city council finance chief has admitted people have questioned their own roles in the Icelandic bank saga which has seen £42m of council cash frozen overseas.

John Beevers, head of financial projects at Nottingham City Council, said lessons are being learned about credit ratings after the authority ploughed vast sums of money into Landsbanki, Glitnir and Heritable just months before they ran into trouble.

Mr Beevers told the council’s Overview and Scrutiny Committee: “It [the Icelandic banks crisis] has provided more focus around the impact of credit ratings and what they show and whether they have been sufficient.

“There is a number of people that, as things come out, are looking at whether their role in it has been appropriate.

“I think we are taking on board the lessons we are learning.”

He also said there had been changes in some of the banks’ credit ratings around the time the investments were made.

“There had been some negative rating outlook changes on some of the banks,” he told the meeting. “That has not developed through to a complete meltdown of the bank itself.”

He later added: “Our actions are reinforced by over 100 other institutions. If the message were so loud and clear we would have been a number of two or three.”

The meeting heard the council was continuing to use the same credit rating agency, Butlers.

Deputy chief executive Carole Mills-Evans said an update on recovering the money was expected in the next “couple of weeks”.

She claimed that it would have been “almost impossible” for the council to get its money back before the end of its agreement with the banks.

“There is some talk that some councils have exit clauses. We have yet to find one council that that applies to.”

Source


UK anti terror laws right move against Icelandic banks?

“Not all conversations concerning this matter have been made public . . . When the matter is investigated, other conversations will have to be made public. I am aware of what they are about and I am aware of what in fact determined the position of the UK authorities,” the Financial Times quotes Icelandic central bank chairman David Oddsson as saying.

The implication, the article continues, is that the UK was right to use anti terror laws to freeze Icelandic assets at the beginning of the banking crisis in October. Furthermore, the FT states that any such revelations could damage any potential lawsuit filed against the British government by Reykjavik. The Icelandic government has hired Lovells, a UK law firm to investigate whether London acted illegally and significantly and unnecessarily worsened the economic crisis already unfolding.

Oddsson’s comments were made during a speech to the Iceland Chamber of Commerce late last week. As a former long-standing Prime Minister, current head of the central bank and prominent Independence Party figure, Oddsson is seen as a close ally of PM Geir Haarde, who once served as his minister of finance.

Oddsson and Haarde, among others, are credited with liberalising the Icelandic financial sector and also blamed by many for allowing the current crisis to unfold. As many as 90 percent of people now want Oddsson replaced, and a Frettabladid poll this weekend revealed that 70 percent of respondents no longer support the current government.

David Oddsson protests his innocence however; stating in his speech that he had been warning the government on the state of the banks for 18 months and was repeatedly ignored.

He also described the inquiry recently announced by the government as “a whitewash”.

“The investigation . . . is in all respects unsuitable and insufficient. It is almost laughable to see the posturing in the entire organised propaganda campaign which has been carried out by those who bear the prime responsibility,” he said.

Source

Related

Who Could Have Predicted Revolution in Iceland?

Iceland’s Economic Meltdown is a big Flashing Warning Sign


Iceland isn’t the only one needing help: Point of Interest.

The United States has asked four oil-rich Gulf states for close to 300 billion dollars to help it curb the global financial meltdown, Kuwait’s daily Al-Seyassah reported Thursday.

Quoting “highly informed” sources, the daily said Washington has asked Saudi Arabia for 120 billion dollars, the United Arab Emirates for 70 billion dollars, Qatar for 60 billion dollars and was seeking 40 billion dollars from Kuwait…….

Seems Because of Capitalism we have a planet full of beggars.

The lesson to be learned from all of this is “Capitalism” SUCKS.

Simple and to the point.

A Lesson the Entire would should have learned by now.

Published in: on November 25, 2008 at 3:13 am  Comments Off on Lessons learned in Icelandic crisis  
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Citigroup shares plunge 18% as board meets

Shares in Citigroup fell by nearly 18 per cent in early trading as the US bank called a board meeting to discuss its future stability, including whether to find a merger partner or sell-off some of its assets.The company, once America’s largest bank, saw its stock fall a further 18 per cent today, to $3.86, in early trading following a catastrophic week on the stock market which has seen the lender’s market value more than halve.The board may decide to sell parts of the bank or even the entire business, the Wall Street Journal reported, adding that Morgan Stanley, a rumoured partner, is not considering a bid.

Citigroup has insisted it has “a very strong capital and liquidity position and a unique global franchise”. Yesterday, Saudi Prince Alwaleed bin Talal said the shares were “dramatically undervalued” and said he plans to increase his stake to 5 per cent, from less than 4 per cent.

But this failed to assuage concerns that Citigroup would need to raise fresh capital to staunch further losses. One analyst said: “Investors right now aren’t convinced that we’re done seeing dead bodies on the Citigroup balance sheet.”

The board, under chairman Win Bischoff and lead independent director Richard Parsons, will meet at Citigroup’s New York headquarters. There has been speculation that some insiders are unhappy about Mr Bischoff’s handling of the crisis and want him replaced by Mr Parsons, though this has been strongly denied by the bank.

Earlier this week, Citigroup announced 52,000 job losses around the world, with the City of London bearing much of the brunt. The bank refused to comment on today’s meeting.

Overall, the Dow Jones industrial average rose by 29.94 points to 7,582.23 after falling 444.99 to 7,552.29 yesterday. The S&P 500 index made a small 6.05 gain in early trading, to 758.5 after plunging to its lowest point since 1997 yesterday.

In London, the FTSE 100 ended the week at a five-year low after earlier gains were reversed.

The FTSE closed 2.4 per cent, or 94 points, lower at 3780.96.

Source

They received $25 billion from the US tax payers.

Of course this will spread around the world yet again. They are their own problem.

Unfortunately because of World Trade they are in many countries now.

Does anyone else have a problem with this?

Seems World Trade is also playing a great part in the World Financial Crisis.
What bailed-out banks spend on lobbying

US Banks Will be Begging at the Tax Payers Door Again Soon

Published in: on November 21, 2008 at 9:43 pm  Comments Off on Citigroup shares plunge 18% as board meets  
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US Banks Will be Begging at the Tax Payers Door Again Soon

November 20 2008

By ERIC DASH and LOUISE STORY

For months, the nation’s largest banks have struggled to regain investors’ trust. In the center of the vortex is Citigroup, whose precipitous stock-market plunge accelerated on Thursday, sending shock waves through the financial world.

The shares slumped 26 percent Thursday; the bank has lost half its value in just four days. The chief executive, Vikram S. Pandit, will hold a meeting for senior managers Friday to update them on the bank’s condition.

Investors and analysts have long pressured the bank to consider ways to lift its stock price, including splitting the company or selling pieces. While a few also say the company should consider selling itself outright, there is no certainty that any change would happen soon. Senior executives say the company is financially strong and has ample financing options. Moreover, there are few buyers who would be willing to pay a price that Citigroup would want for its most valuable assets.

Citigroup executives are seeking to stabilize the stock price, but at this point they are not actively exploring selling or splitting up the company, according to two people with direct knowledge of the discussions.

The bank has posted four consecutive quarters of losses, caused by billions in write-downs. Nine of its investment funds have cratered this year. And now the bank could face a tsunami of new losses in its once-lucrative consumer loan business as the global economy weakens.

Within the bank’s Manhattan offices, television screens have stopped displaying the company’s stock price. Traders have begun making jokes comparing Citigroup to the Titanic.

But there is a wide gap between what Wall Street investors and Citigroup’s executives believe about the company’s financial condition. Senior executives feel that Mr. Pandit has followed through on plans to aggressively shrink the company and control costs. The bank has sold tens of billions of dollars’ worth of risky assets, improved its capital position and announced plans to eliminate 52,000 jobs by next June. “We are entering 2009 in a strong position, much stronger than we entered in 2008,” Mr. Pandit said in a speech to employees this week. “We will be a long-term winner in this industry.”

Yet as the drumbeat of bad news about the bank grows louder, investors remain unconvinced. Even a decision by Prince Walid bin Talal of Saudi Arabia, who bailed out Citicorp in the 1990s, to raise his stake to 5 percent Thursday failed to restore confidence in the bank. Two senior Citigroup executives said the bank had not approached him about raising his investment. The Saudi prince’s initial investment soared as Citigroup turned out record profits, only to evaporate over the last year.

“The earnings power is there,” said Charles Peabody, a financial services analyst at Portales Partners. “It’s a question of getting through the credit issues.”

Other big banks, like Bank of America and JPMorgan Chase, also tumbled Thursday as the broad stock market sank again, wiping out more than a decade’s worth of gains. And Goldman Sachs, once the most sterling American investment bank, fell below the $53 price at which it went public in 1999.

Investors have long feared that the bad news for banks will get worse as the economy slows. But this latest rout in financial shares, which are now plumbing their lowest depths since the economic crisis broke out, reflects growing concern that banks like Citigroup will require vast sums of additional capital, possibly from the government, to cope with the pain to come.

Home mortgages, credit card loans, commercial real estate debt — all are likely to deteriorate further now that a recession is at hand. Banks that have already lost billions of dollars could lose billions more.

“All the danger signs are flashing red,” said Simon Johnson, a professor at the Sloan School of Management at the Massachusetts Institute of Technology.

Much of the fear centers on the unknowable. It is unclear just how bad banks’ losses on consumer loans, credit cards and mortgages will be as the economy weakens. Commercial real estate loans are deteriorating, and it is unclear whether banks have sold the worst of their holdings. Then there are all the investments that lurk off of banks’ balance sheets, in the so-called shadow banking system. And a new uncertainty has leapt to the forefront as the automotive industry teeters, sending investors scrambling to calculate how much banks are exposed to these loans.

Several big banks hit record lows. Bank of America fell 13.86 percent to $11.25, JPMorgan slid 17.88 percent to $23.38 and Goldman Sachs slumped 5.76 percent to close at $52. Morgan Stanley neared a record low, closing down 10.24 percent at $9.20, while Wells Fargo fell 7.66 percent to $22.53.

In a bid to calm nerves, Citigroup officials are meeting with other large shareholders. Last week, Citigroup’s chairman, Winfried Bischoff, traveled to Dubai and met with Sheik Ahmed bin Zayed al-Nahyan, the director of the Abu Dhabi Investment Authority, according to two executives briefed on the situation.

The renewed assault on financial stocks led the Financial Services Roundtable, an influential lobby group for the industry, to press regulators Thursday for another ban on short-selling, a strategy in which investors bet against declines in a share price.

The current rout appeared to have gained momentum after Treasury Secretary Henry M. Paulson Jr. announced last week that the government would abandon its original plan to purchase troubled bank assets. That sent prices of commercial mortgage bonds and other loans into a nosedive. Mr. Paulson also said the Treasury would let the incoming administration determine how to deploy the remaining $350 billion left in the program.

Yet investors have grown increasingly nervous about the appearance of a leadership vacuum in Washington as the financial markets burn, and some have begun saying that President-elect Barack Obama should move more rapidly to release a plan.

“We really need somebody to step in and show leadership,” said Wilbur L. Ross Jr., chairman of WL Ross and Company, an investment firm that has been looking for bargains in the banking sector. “Every day that’s wasted and that we stay in freefall is going to make the recession that much deeper and longer.”

That has workers in the financial industry bracing for more pain.

“Major financial institutions have been taking write-downs all year, and what do you do next? You lay people off, and that decreases your need for office space,” said Harold Bordwin of the real estate group at KPMG Corporate Finance. “It’s very scary.”

Source

They will be begging the tax payers, yet again to help them out.

They created their own mess and got handed a Bailout on a silver platter.

They lobbied the Government to give them the ability to, totally destroy the world financial markets.

They have accomplished that in living color. Their incompetence is obvious.

I see yet another Pity Party coming soon.

Are they really worth saving?

I wouldn’t invest in any one of them either. Seems they can’t be trusted.

Barack Obama should come up with a plan to fix what the Banks and The Bush Administration” created, should he?

Well now I think the Banks should be cleaning up their own dirty laundry.  They are after all responsible for the disastrous, financial crisis. All in the name of Greed and profiteering.

.

Published in: on November 21, 2008 at 9:27 am  Comments Off on US Banks Will be Begging at the Tax Payers Door Again Soon  
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Icelanders Take to Streets to Protest Government’s IMF Loan Failure

By Tasneem Brogger and Helga Kristin Einarsdottir

November  14 2008

Icelanders will take to the streets in their thousands tomorrow to protest the government’s failure to clinch a $6 billion International Monetary Fund-led loan while countries in less dire economic straits jump the IMF queue.

Weekly protests in downtown Reykjavik may swell to 20,000 soon, or 6 percent of the population, said Andres Magnusson, chief executive of the Icelandic Federation of Trade and Services. The islanders are venting their anger on politicians as prices soar, the krona collapses and the economy goes into reverse.

“Enormous mistakes were made, but those who made them are still in the same place,” said Hildigunnur Runarsdottir, a music composer who has attended five protests since the country’s banking system collapsed last month. “They don’t seem to be doing anything at all about the situation.”

The Atlantic island, which had the fifth-highest per capita income in the world last year, needs the money to finance imports and revive the banking system. Central bank forecasts that the economy will contract 8.3 percent next year may prove optimistic if the loan isn’t approved soon, said Lars Christensen, chief analyst at Danske Bank A/S in Copenhagen.

This “isn’t sustainable,” Christensen said. “You can’t starve the economy, and that’s what the government’s doing at the moment. Every day that passes makes the economic outlook worse.”

`Depressed’

Many retailers are relying on credit from their suppliers to keep their shops stocked.

“I have a long-standing relationship with suppliers, who have given me 30-60 days credit,” said Gudrun Steingrimsdottir, who runs a lingerie store in central Reykjavik. “If the situation persists another month, I don’t know what is going to happen.”

Trouble is, neither does anyone else.

“The main thing that is creating unrest is that the government doesn’t come forward and inform the public what is on the agenda,” Magnussen said. “Nobody can get any information.”

As the currency fell and imports shrank, the inflation rate reached an 18-year high of 15.9 percent in October. Delays in sealing a loan package mean the central bank can’t return the currency to free float. The bank now holds daily krona auctions, with the currency trading for 178 against the euro on Nov. 12, compared with about 90 kronur per euro at the start of the year. The traded volume at that auction was 13.8 million euros.

“What I notice is how depressed people have become,” said Steingrimsdottir. “We know nothing. People seem to have lost all hope.”

IMF Rescue

The IMF is withholding approval of its $2.1 billion loan until other lenders agree to fulfill their commitments to a wider bailout, Fund spokesman Bill Murray said on Nov. 11.

Norway has pledged 500 million euros ($635 million), the Faroe Islands 300 million kronor ($50 million) and Poland $200 million. That leaves Iceland well short of the $6 billion it says it needs.

Complicating talks are U.K. and Dutch demands that the government repay depositors at the Internet unit of Iceland’s collapsed Landsbanki Island hf. Those debts may amount to as much as 5.5 billion pounds ($8.2 billion), the size of Iceland’s economy, according to a report by Jon Danielsson, an economist at the London School of Economics.

“By comparison, the total amount of reparations payments demanded of Germany following World War I was around 85 percent of GDP,” Danielsson said.

Iceland’s government has accepted it will have to reach a negotiated solution to the dispute with the U.K. and the Netherlands to get the IMF loan, the newspaper Morgunbladid said yesterday, without saying where it got the information.

Envy

Icelanders are shooting envious glances at Eastern Europe where Hungary and Ukraine received loans from the IMF within two weeks of asking. Iceland has little to show for its efforts, six weeks after its banking system started to collapse.

“It’s worrying enough that they’re not getting the $6 billion they’re talking about, but the fact they’re not even getting the $2 billion is very worrying,” Christensen said. “It’s amazing that Ukraine is able to get a $16 billion loan, one of the most corrupt countries in the world, and Iceland is not able to pull it off.”

Ukraine had its $16.4 billion loan from the IMF approved on Nov. 6. Hungary said on Nov. 11 it’s already drawn on the first 4.9 billion euro ($6.16 billion) tranche of its IMF-led 20 billion-euro loan.

While the IMF loans to Hungary and Ukraine make up less than 20 percent of those countries’ gross domestic products, Iceland needs loans worth more than its entire GDP to repay debts built up through five years of economic boom.

“We should have turned the music down when the party got out of hand,” Runarsdottir said.

Source

Bottom line, it all started in the US.

Iceland has be hit extremely hard and things don’t seem to be improving.

Protests against Crisis in Iceland Get out of Hand
November 10 2008

People ganged up on police during the latest in a series of protests outside Iceland’s Althingi parliament in central Reykjavík on Saturday. Police were having problems with keeping the situation under control and one man was arrested.

From the protests on Saturday, November 8. Copyright: Icelandic Photo Agency.

Demonstrators were demanding actions to improve the economic situation, Fréttabladid reports.

“There is nothing wrong with people protesting in a democratic society but one also has to differentiate between legal peaceful demonstrations and riots,” Prime Minister Geir H. Haarde told Morgunbladid. “A demonstration is in real danger of becoming a riot when the parliament building is pelted with stones.”

Among actions undertaken by protestors was raising the Bónus supermarket-chain flag (a pink piggybank on a yellow background), from the parliament building roof.

Haarde said his government was trying to inform the public on the status of the situation as quickly as possible—lack of information is one of the issues angering demonstrators—with regular press conferences, via the websites of the ministries and elsewhere.

“People who ask for information should be able to receive it,” Haarde stated.

Source

More on Protests

One problem leads to yet another.

Iceland Cuts Funds to Foreign Aid

Iceland’s Foreign Minister Ingibjörg Sólrún Gísladóttir presented yesterday a strategy for limiting expenses at her ministry in light of the economic depression, including cutting funds to development assistance.

Well you do what you have to do.

By Alex Elliott
November 13 2008

Ingibjorg Solrun Gisladottir, Icelandic Foreign Minister, says she is hopeful the negotiations currently underway in Brussels to work out a satisfactory settlement with the British and Dutch governments over Icesave compensation can be completed tonight or tomorrow, MBL.is reports.

Stod 2 television news reported this evening that the Icelandic delegation has adjourned the meeting until midnight, when their conclusions may be delivered. According to sources, the British government is reported to be demanding the equivalent of ISK 600 billion (USD 4.7 billion) to pay British Icesave customers up to the EUR 20,000 state guarantee. If an agreement is reached, it is thought Iceland will be free to take control of Landsbanki’s UK assets and sell them – generating crucial revenue. The burden on the Icelandic tax payer will likely be less than feared.

The Foreign Minister said in an interview with the Icelandic state broadcaster RÚV, that the government has received a very clear message on just how important it is to resolve the Icesave issue with the Dutch and British. It is important for the entire European economy. A lot is at stake if the issue is not successfully resolved very soon, she said.

Source

Published in: on November 14, 2008 at 6:02 am  Comments Off on Icelanders Take to Streets to Protest Government’s IMF Loan Failure  
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Ottawa to buy $50B in mortgages, hopes to spur loans

November 12 2008

The federal government is purchasing another $50 billion in residential mortgages to further stabilize the lending industry and encourage lower interest rates, Finance Minister Jim Flaherty announced Wednesday.

The Canadian economy has stalled and is on the brink of a recession. The government hopes that its cash injection will keep consumers spending and keep businesses afloat.

The announcement follows a similar move last month in which Ottawa bought $25 billion in mortgages.

The combined mortgage debt, both purchased through the Canadian Mortgage and Housing Corp. (CMHC), will bring the maximum value of bought securities to $75 billion.

“At a time of considerable uncertainty in global financial markets, this action will provide Canada’s financial institutions with significant and stable access to longer-term funding,” Flaherty said at a press conference in Toronto.

“This extension of the program to purchase insured mortgages will further support the availability of credit, which will benefit Canadian households, businesses and the economy.

“In addition, it will earn a modest rate of return for the Government with no additional risk to the taxpayer.”

Flaherty said the government “will not allow Canada’s financial system, which has been ranked as the soundest in the world, to be put at risk by global events.”

Patrick Grady of Global Economics LTD told CTV News, “the banking system would weather this storm whether the government provided assistance or not. But what it would do is cut back on loans it made.”

Will the move help average Canadians?

It is hoped that the announcement will be a boon to entrepreneurs like Joseph Saikely, the owner of an upscale hair salon in Ottawa.

He said despite the economic downtown, business at his salon, Byblos, is booming.

Saikely says he wants to expand his operation, but can’t get a loan from the banks.

“We have been trying to expand for the last few months, even trickling it down to a minor renovation and there is just not one dollar to be given out or lent,” he told CTV News.

Flaherty says that the $50 billion in mortgage purchases should allow banks to start lending again with greater ease.

“It is up to private sector lenders to keep on doing their jobs, making loans to credit worthy people and enterprises of all sizes,” he said.

But Saikely isn’t hopeful that the banks will start passing on the loans anytime soon.

“Put it in the hands of people that will do something with it, the banks are doing absolutely nothing will it,” he said.

Last month, Canada’s big banks lowered their prime lending rates following the announcement about the $25 billion buyout.

Not a bailout, gov’t says

The Tories have been quick to indicate that the deal to buy mortgages is an asset swap, not a bailout.

The idea is that banks can take good assets, in this case the mortgages, and turn them into cash — which can then be made available to people seeking mortgages or to small business.

The “high-quality” assets are already guaranteed by the Canadian government, Flaherty said.

“It is an efficient, cost-effective and safe way to support lending in Canada at a time of extraordinary strain in global credit markets,” he said.

Despite the global financial crisis, Flaherty said he still expects to report a budget surplus.

“We’re still on track for a small, and I emphasize small, surplus in the current fiscal year,” he said.

Meanwhile, the Bank of Canada said Wednesday it will inject an added $8 billion into Canada’s tight money markets.

The Bank said it plans to introduce a Canadian Dollar Term Loan Facility (TLF) in four auctions of $2 billion each in the coming weeks.

Under the plan, qualifying financial institutions will be able to offer non-mortgage loans as collateral — meaning they can offer most loans currently on their books.

Finance Minister Jim Flaherty announces that Ottawa will be purchasing another 50 billion dollars in residential mortgages. View Video

Source

Paulson has shelved the original plan

By Greg Ro

November 12, 2008

WASHINGTON

Treasury Secretary Henry Paulson laid out details for the next stage of the government’s financial-market rescue package Wednesday, announcing that he has shelved the original plan to buy troubled mortgage assets while turning his attention to nonbank financial institutions and consumer finance.

In a broad and deep review of the controversial $700 billion effort, Paulson defended the steps taken to date, but in the same breath said that financial markets remain fragile and that the focus must remain on “recovery and repair.” See MarketWatch First Take commentary.

“I believe we have taken the necessary steps to prevent a broad systemic event. Both at home and around the world, we have already seen signs of improvement,” Paulson said in a speech at the Treasury Department. See the full text.

But in a striking admission, Paulson said that buying up mortgage assets “is not the most effective way” to use government funding.
Purchasing these so-called “toxic” assets was once the cornerstone of the rescue plan for financial markets and was almost the entire focus of Congress when the package was being debated before its enactment. But almost as soon as Treasury received the money, it decided that giving capital to banks in return for preferred stock was a better use of the funds.
Paulson said that he was “still comfortable” with the $700 billion price tag for the rescue plan and that he didn’t need to go to Congress for additional funds: “I still am comfortable that with the $700 billion we have what we need.”
The Treasury Secretary said he met with members of President-elect Barack Obama’s economic team to discuss the rescue package earlier this week.
Some of the money saved from not buying mortgage assets will now be used to shore up the market for credit-card receivables, auto loans and student loans, according to Paulson.
“This market, which is vital for lending and growth, has for all practical purposes ground to a halt. With the Federal Reserve, we are exploring the development of a potential liquidity facility for highly-rated AAA asset-backed securities,” he said.
The plan to shore-up asset back securities is not ready yet, he added. “This will take weeks to design and then it will take longer to get up and going.”
Paulson declined to say how much it would cost, saying only that “it would need to be significant in size to make a difference.”
Alex Merk, president of Palo Alto Calif.-based Merk Investments, a mutual-fund firm, said that market participants were frustrated with Paulson’s communication skills and changing tactics.
“He’s been flip-flopping on every plan and it doesn’t look like he has a plan,” Merk said in an interview.
According to Merk, the rescue plan is failing to get banks to lend money, and that holders of mortgage assets who had been hoping to sell to the government at a good price have now seen these hopes dashed.
Earlier Wednesday, federal bank regulators issued a joint statement jawboning banks to start lending money to consumers. But Merk said that there are many factors that are making banks hoard capital.
“They don’t trust their own balance sheets, and why lend to consumers when the consumer sector is going down the drain?” he commented.
Markets are also looking beyond Paulson to the Obama administration, which is likely to be much more focused on helping consumers and homeowners — putting some of Paulson’s plans at risk, Merk added.
Brian Bethune, U.S. economist at HIS Global Insight, said that Paulson’s Treasury remains “behind the curve in the sense of understanding the systemic risk.”
The Treasury would also consider giving some capital to nonbank financial institutions, following completion of bank funding. Banks that are publicly traded have until Friday to request government assistance.
At a sensitive stage
“Although the financial system has stabilized, both banks and nonbanks may well need more capital, given their troubled asset holdings, projections for continued high rates of foreclosures and stagnant U.S. and world economic conditions,” Paulson said.
Paulson only described nonbank financial institutions in general terms, saying they “provide credit that is essential to U.S. businesses and consumers.”
However, many are not directly regulated and are active in a wide range of businesses, and taxpayer protections in a program of this sort would be more difficult to achieve,” he commented.
Bethune of HIS Global Insight said that insurance companies and the financial arms of the auto companies were the likely candidates for government assistance.
Economists said the plan would not stem the sharp drop in consumer spending.
“I doubt this is going to have a big offset to the really dramatic fall in consumer spending that we’re going to see in the coming year,” said Martin Feldstein, an economics professor at Harvard University.
Meanwhile, sweeping proposals to modify mortgages remain on the table, Paulson said. The cost of these programs will be substantial and don’t belong under this rescue package, he added.
On a related matter, the Treasury secretary pointed out that funding for the U.S. auto industry should not come out of the financial-market rescue plan. Congress has other vehicles to use to fund for the troubled sector, he said, adding that the key to any program for the industry was “long-term viability.”
G20 summit
Over the weekend, leaders of 20 countries will gather in Washington to discuss how to improve cooperation to foster stability in the global financial system.
Paulson took a cautious line on the meeting. “To adequately reform our system, we must make sure we fully understand the nature of the problem, which will not be possible until we are confident it is behind us.”
The White House won’t support a plan under which the International Monetary Fund would be responsible for devising a strategy to solve the problems, “unless member nations all see that they have a shared interest in a solution.”
Paulson said that the U.S. had a major role in the global crisis but wasn’t the only culprit. Global trade imbalances — the high U.S. deficit between imports and exports as well as matching surpluses in Asia — also played a role, along with Europe’s rigid structural regimes.
“Those excesses cannot be attributed to any single nation,” he remarked.

Figuring out oversight issues won’t be enough. “If we only address regulatory issues — as critical as they are — without addressing the global imbalances that fueled recent excesses, we will have missed an opportunity to dramatically improve the foundation for global markets and economic vitality going forward,” according to Paulson.

Should the US Experts be trusted?

Can Anyone Halt The Mortgage Meltdown?

Wall Street and Washington come together to help troubled mortgage borrowers. Too late?

Fifteen months into the worst credit crisis in decades, major banks and the federal government are coming together on a solution for struggling mortgage borrowers.

The goal is to hasten the process for renegotiating hundreds of thousands of delinquent loans, either those held by major banks or held by Fannie Mae and Freddie Mac , the mortgage finance giants that faltered and were taken over by the government this summer.

Renegotiating loans for struggling homeowners has taken on more urgency as jobless claims rise and the economy declines. Housing prices continue to fall, leaving many with mortgages greater than the value of their homes, and banks continue to suffer major credit losses as a result.

Citigroup , JPMorgan Chase and Bank of America have separately announced plans to help ailing borrowers. On Tuesday, the Federal Housing Finance Agency, the regulator for Fannie and Freddie, announced its own sweeping plan.

The agency is targeting delinquent borrowers who haven’t filed for bankruptcy. The goal is to modify mortgages for borrowers who can support payments but make sure those payments don’t make up more than 38% of income.

James Lockhart, head of the agency, urged U.S. mortgage servicing firms–companies that process payments of loans rather than owning them outright–to adopt the plan as a national standard.

For the government, halting the steady slide in housing prices is the holy grail of all of its big plans to prop up the ailing banking system. It is throwing trillions of dollars at shoring-up banks caught in the housing mess, but nothing has, so far, put a floor under the plunging housing prices at the heart of the credit crisis. Going at the problem from the perspective of a borrower is yet another way to achieve that end.

The government studied the Federal Deposit Insurance Corp.’s approach to modifying loans of failed IndyMac Bank and used that as the model for this broader program.

Neel Kashkari, the Assistant Treasury Secretary in charge of the department’s $700 billion Troubled Asset Relief Program, said the plan will take pressure off mortgage servicing companies, “helping ensure that borrowers do not fall through the cracks because servicers aren’t able to get to them.”

Earlier on Tuesday, Citigroup announced its loan modification plan. The bank is stopping foreclosures for borrowers who live in their own homes and have enough income to stand a chance at repaying a renegotiated loan. It will also expand the program to include mortgages for which the bank collects payments but does not own.

Over the next six months, Citi will contact 500,000 borrowers who are not currently delinquent but close to falling behind to see if those loans could be modified.

Two weeks ago, JPMorgan said it would expand its mortgage modification program to an estimated $70 billion in loans, representing 400,000 borrowers. That is on top of the $40 billion in mortgages JPMorgan has rewritten since early 2007.

Bank of America will begin next month modifying 400,000 loans held by Countrywide Financial, the troubled lender it acquired this year. The plan, which starts Dec. 1, is part of an $8.4 billion legal settlement with 11 states.

Loan modifications have been complicated by the way the banking industry has approached mortgage lending in recent years, selling their loans off to other banks that bundle and resell them as securities rather than holding all loans separately.

For the banks, modification plans are self-preservation. Virtually no bank has been left untouched by the credit crisis, and Citi, JPMorgan, Bank of America and others will undoubtedly have rising credit costs for the next few quarters. Any plan to blunt those costs would be welcomed.

Source

Well I don’t really have a lot of faith in these guys. They are in great part the cause.  These very banks are the ones that had to get bailouts and now they are going to fix it are they?

Trusting them is a lot like letting the fox guard the chickens coup.

The domino effect: Road to recession

It began with the banks. Then house prices began to tumble. In the months that followed, the shock waves spread, engulfing first high streets, then factories – and thousands of jobs. In this gripping account, Paul Vallely travels across Britain to meet the people whose lives – and livelihoods – have fallen victim to the domino effect that left a nation broken

November 12 2008

We could begin with Peter Sastawnyuk. The 53-year-old businessman filled his £370,000 detached home with petrol canisters, sealed the locks, set tripwires and threatened to set the place alight. More than 40 of his neighbours were evacuated from the posh cul-de-sac on the edge of the Pennines from which Sastawnyuk sent his children to be educated at private school. But the cradle of his dreams imploded, in the end, as the scene of a five-hour police siege. The trigger for it all, a court in Rochdale was told last month, was that he had lost his job, got into debt and had had his home repossessed.

Or we could start with Karl Harrison. The father-of-two was found hanging in his garden shed in Anglesey. The 40-year-old surveyor had lost his job when the housing market began to turn down. He fell behind with his payments on his home loan and was being harassed by a firm called Oakwood Homeloans to pay the arrears, the recent inquest was told. Harrison’s widow has now put the house on the market.

But we do not need melodrama or tragedy to tell this story. So, instead, let us begin with what is becoming a more everyday misfortune.

It was an ordinary Thursday morning in early October when Jackie Horn, a 43-year-old IT worker, left her neat little Edwardian town house behind Stockport Grammar School to make the short journey to work. Her destination was the Vauxhall Industrial Estate in which the largest site was occupied by the company for which she had worked for the past 16 years – Chemix, which manufactured the compounds from which uPVC window frames and cladding are made.

She looked back casually at the house, with its handsome stained-glass windows, and got in her car, a small silver Peugeot. She had bought the house 12 years ago and, though she lived alone, her mortgage was nicely manageable. She had had the car for two years and it was all paid for. At Chemix, she had risen from being a receptionist to being a computer programmer. She was better paid now. Hers was a settled life.

She had had an inkling that things were not quite right at work. She noticed from her IT processing that orders for resin, Chemix’s incoming raw material, had been down for a while. So were orders for the compounds the firm produced as the nation’s door-to-door salesmen found ever-larger numbers of people saying no to the idea of having their windows replaced.

Then, about four weeks earlier, the management had told the workforce that it might have to move to only three or four days’ working each week. The workers had rejected the idea in a ballot and a couple of weeks later were told there might have to be selective redundancies. But letters had gone out a few days before saying that jobs in sales and IT were safe.

When she arrived at the little factory, “a lot of blokes in suits” had appeared. A meeting of the whole workforce was called. The firm was in administration, the bankruptcy accountants told them. They had all lost their jobs. They should leave immediately.

“It was a real shock,” she says. “One day I was receiving a letter telling me my job was safe; the next it had gone. The mood was bad. Everyone was saying goodbye. They were hugging and shaking hands.” She was told she would be kept on for an extra two weeks to help with the shutdown. “I couldn’t look the men in the eye.” Now she, too, sits idle at home.

The Domino Effect

The chain of events – which began with salesmen on commission wildly dishing out sub-prime mortgages (to poor people the United States who did not even have to prove they had the earnings to repay them) and ended with Jackie Horn losing her job – is a long one.

I have spent the past few weeks tracing each link in that chain through the stories of a series of people:

The fall-off in demand for Chemix’s products was the result of decisions such as the one made by a Birmingham newsagent, whose domestic economies included not having his windows removed and replaced with uPVC frames because his cigarette sales were down.

Cigarette sales at the newsagent’s had fallen because staff at the nearby Range Rover production plant had had their hours cut.

Range Rover sales are down because a wide variety of businesses are now tightening their belts; not replacing company cars is an obvious money saver.

Among the businesses not replacing company cars as part of general cost cutting are the shop-fitting, sign-writing and advertising firms employed by retail giant Marks & Spencer, which has had two-thirds wiped from the value of its shares this year.

Trade in shops is down because consumer confidence has fallen in line with catastrophic drops in the prices of shares.

Share market volatility was provoked by the sudden refusal of the banks to lend money to anyone, including each other.

The crisis of confidence within the banks was fed by the dramatic multi-billion dollar collapse of the investment bank Lehman Brothers, which was the biggest bankruptcy the world has ever seen.

To make sense of this complex saga, I set out to travel around the United Kingdom to speak to individuals who had played a key part in each stage of the tumbling of the economic dominoes. There were repeated surprises along the way. Encounters with the real world are like that. Not everything turns out as you might expect.

Northern Rock – Panic Begins

The giant tower of the new Northern Rock building stands empty, like a monument to the folly of the years of reckless capitalism. It has never been occupied. Out at Gosforth, on the northern edge of Newcastle, it is the place where the first rumblings of the seismic shakeout that is now gripping the globe were first detected in the UK.

Today, the yellow-brick buildings that surround it are still staffed, but by managers and employees humbled by the events of the past 12 months which have turned them from freebooting buccaneers of a banking world – in which the possibilities of growth seemed unlimited – to servants of a nationalised service industry. Even the bricks seem symbolic, for the yellow brick road in The Wizard of Oz led to a gleaming city with a giant fraud at its heart.

The man who is driving me round the once-mighty complex is Dennis Grainger. He was once a senior employee of the firm and is now the leading light in the Northern Rock Shareholders Action Group. The combination makes him uniquely placed to tell the story of the building society that turned bank after Margaret Thatcher’s deregulation of the financial sector and which last year provoked the first run on a British bank since the Victorian era.

“Northern Rock was not involved in dodgy sub-prime lending,” says Grainger, 61, of Cramlington, Northumberland. “Our loans were good, safe lending to people who could afford to repay. The Rock was very strict in asking whether people could afford to borrow that amount.” He knows this because one of his jobs was to manage the people checking the paperwork.

“After the crisis broke, the media said the problem was that Northern Rock lent people more than they needed to buy their homes. And it is true that we did offer 125 per cent loans, to cover the house purchase and additional expenses. But the rates of default on those were just half the national average.”

What did for Northern Rock was that so much of the money it lent did not come from depositors but was borrowed by the bank on the international money markets. That is what had turned a provincial building society into the UK’s fifth largest mortgage lender – and a FTSE 100 company. “Some 80 per cent of the mortgages we gave out had been borrowed in this way,” Grainger says. ” I know I used to sign the documents for millions of transfers each month.”

The problem came when, on 9 August 2007, one of France’s three biggest banks, BNP Paribas, told investors that they could not take money out of two of its funds because it was unable to value the assets in them. This was because the financial world had created complex financial packages out of the sub-prime debt and sold them on to other investors. It was like pass the parcel; investors had, in effect, bought blind because the deals had so many layers that no one knew what lay at their heart.

The crunch came when some investors wanted their money back and Paribas realised it did not know whether it had the money to pay out. It was, in the words of Northern Rock’s former chief executive Adam Applegarth, “the day the world changed”. Money markets across the globe shut down because they did not know which banks would remove the final wrapper from the “credit default swaps” – and find they were holding a booby prize.

When the money stopped flowing, banks like Northern Rock – which had, in the jargon, “borrowed short-term to lend long-term” – could not get hold of the cash to finance their next day’s business. On 13 September 2007 the BBC’s business editor, Robert Peston, revealed that Northern Rock had asked for emergency support from the Bank of England. But there was no danger of the bank going bust, he added, so customers need not panic.

“It had the same effect that Corporal Jones does in Dad’s Army,” observes Grainger wryly. “When you shout, ‘Don’t panic! Don’t panic!!” people do exactly the opposite. Peston should have known that.” Outside Northern Rock’s branches, massive queues formed of savers demanding to withdraw their money.

But, if there was compassion for savers, there was scant sympathy for those running Northern Rock, whose chairman was a non-banker – the local oddball free-market environmentalist aristocrat Matt Ridley – and whose risk committee was chaired by Sir Derek Wanless, who had previously been ousted from NatWest with a reported £3m payoff. It was they who had endorsed the aggressive growth strategy of bullish chief executive Applegarth and, in the words of the financial journalist Alex Brummer, author of The Crunch: the scandal of Northern Rock and the Escalating Credit Crisis, “allowed him to run riot, without checks and balances”.

The people most often forgotten in all this are the shareholders. “People assume all the shares were held by big institutions and greedy hedge funds,” says Grainger, “but a quarter of the shares are held by little folk.” Again, he knows because he has met 2,000 of them in the streets where he sets up his Shareholders Action Group stall. Another 4,000 have emailed him.

“These people are not speculators or gamblers. They are people in their seventies, eighties and nineties living on very small incomes who received a few hundred shares in the original demutualisation. Many are old ladies keeping their shares to pay for their funeral arrangements and who I’ve seen crying in the streets, saying they will now be a burden to their family. They are Mr and Mrs Shipyardworker who put their savings, with pride, into the local bank.”

Again, this is not academic to Dennis Grainger. Every month for 10 years he put £250 of his salary into the Northern Rock employees’ Share and Save scheme. It was to be his retirement pot. At one point it was worth £114,000. Today it is utterly worthless. “The real losers in all this are the small investors who worked for Northern Rock or savers who bought shares and remained loyal to the bank,” he concludes. “The treatment they have suffered is very unfair.”

It is not the only consequence. To accelerate the payback to the taxpayer, the new management at the now-nationalised company is pursuing an aggressive policy of repossessing the homes of borrowers who get into arrears. Northern Rock’s rate of repossessions is currently running at around double the industry average. And leaked documents from inside the bank reveal that it is set to double numbers in its debt collection arm.

There is a quiet indignation in Grainger’s conclusion. “We have been treated very badly by the Government,” he says. “Northern Rock was illiquid, not insolvent. When there was a run on the bank they wouldn’t lend us £2.7bn, but they’ve had to stump up £400bn to prop up other banks since. We should have been given the same terms as other banks were subsequently given.”

But there was one other bank not included in the rescue deal. When Lehman Brothers investment bank folded it provoked the biggest corporate bankruptcy ever seen.

Lehman – The Untouchables?

Until recently, Andrew Gowers had an office on the 30th floor of a tower in Canary Wharf which offered a stunning panorama of the City of London. It seemed an appropriate location for the UK arm of an investment bank that was one of the big five beasts of Wall Street. If there was any institution whose members might fall prey to the hubris of believing that they truly were Masters of the Universe – as top City traders described themselves with an irony which depreciated with the passing years – then the men at the top of Lehman Brothers might be among their number. The air indeed seemed rarefied at that height. The shame was that nobody bothered to pack the oxygen.

For the past month, Gowers, a former editor of the Financial Times – and now a former director of communications at the 150-year-old US investment bank which had begun life in the 1850s as a cotton-trading partnership – has sequestered himself away in a far less public place, having quit the bank just before it collapsed. He has had a month “watching the autumn go by” in the south of France.

Northern Rock was the prequel to the concatenation of events which has seen £3,000bn wiped off the value of the world’s shares. It has also seen taxpayers across the globe spend double that amount to prop up the world’s banks. But it was the collapse of Lehman Brothers – and the sight of well-paid bankers carrying their belongings from their Canary Wharf offices in black sacks and cardboard boxes – which first suggested that something was going on that might have ripples that moved beyond the United States, or indeed, the Northumbrian fastness of Northern Rock.

But for Andrew Gowers, the writing had been on the Wharf for a good deal longer.

“There was a general awareness of difficulties,” he says, “from August 2007 onwards.” Lehman was a very large borrower, with, according to some estimates, around $130bn in debt, much of it in sub-prime. “But the feeling was that we weren’t as badly exposed as some and there appeared to be some good and clever hedging strategies in place, Gowers says. So 2007 ended as a record year with bumper revenues and the balance sheet grew in the first quarter of 2008 – “which a lot of people, after the fact, found pretty incomprehensible.”

There was no excuse for this complacency. In March, a smaller investment bank, Bear Stearns, had collapsed. In response, Lehman’s share price fell 48 per cent in less than a morning. “But the Lehman management told itself that we were different from Bear Stearns,” Gowers recalls, “because we weren’t so reliant on short-term borrowing and we had large amounts of liquidity.” Anyway, the US Federal Reserve – America’s equivalent of the Bank of England – had stepped in to save Bear Stearns. Perhaps the top people at Lehman – a far bigger bank – believed they would have a state safety net, too.

Even so, says Andrew Gowers, “it all scared the living daylights out of the top management and some major effort was made to shrink the balance sheet, to cut the borrowing and get rid of some of the problem assets.”

The trouble was that other banks were doing the same thing at exactly the same time. As a result, the prices of the assets they wanted to sell fell at a shockingly fast pace. Lehman began to run out of time. It could not offload enough of the dodgy sub-prime debts. To make matters worse, the “good and clever hedging strategies” began to come unstuck. Indeed, instead of offsetting losses, some of the hedges magnified them.

“From April, I became aware of quite a sizeable loss accumulating. Nobody was quite sure how big it was going to be.” In June, executives at Lehman’s money management subsidiary, Neuberger Berman, sent emails to the top managers at Lehman Brothers suggesting that they forgo bonuses – to “send a strong message to both employees and investors that management is not shirking accountability for recent performance.” Lehman’s executive committee dismissed the idea out of hand.

When the news of the first loss ever in Lehman’s independent history came out the market was shocked. Senior managers, including the chief executive, Dick Fuld, didn’t seem to get the measure of the problem. Gowers recalls: “They just thought: we’re not in a catastrophic place, we’ve suffered some buffeting from abnormal developments in the market, but we have a plan to get out of it.”

The market did not agree and the Lehman share price continued to plummet. “That caused jaws to drop, says Gowers and the bank’s chief financial officer Erin Callan and its president Joe Gregory, who had been Dick Fuld’s right-hand man for 34 years, resigned.

But it was not enough. “Eventually, at one minute before midnight, they came out with an explanation of what had gone wrong and what they planned to do,” Gowers recalls. “But it was too late.”

In the end, what did for Lehman was that its executives failed to understand that the politics had changed. On 7 September, America’s biggest mortgage providers, Fannie Mae and Freddie Mac, had to be rescued by the US government. It was one of the largest bailouts in US history. “A feeling grew in Congress that there had to be a limit,” Gowers says.

Lehman Brothers became that limit. “At quite a few points in the downward spiral Lehman’s could have been bought, but Dick Fuld was too proud to accept that,” Gowers adjudges. The result was the largest corporate bankruptcy in history.

Andrew Gowers got out just before the collapse, having concluded that his job had become untenable. The evening that I interviewed him, he had just returned from a relaxed day at the market in Cahors. There would be sea bream for dinner that night. But things looked a little more bleak for some of his former colleagues.

Investment bankers rank fairly low on the public sympathy index. Gowers acknowledges that, yet warns against broadbrush judgements. “There were a lot of people in Lehman’s who took 80 per cent of their pay in shares which were deferred for five years and a relatively low salary,” he says. Many borrowed against those shares and are now hiding away and licking their wounds.

“It had been rolling along in a fantastic way for so long that everybody really did began to think there was no way it was going to end. They applied that to their own personal finances, as well as the way they ran the firms, borrowing against tomorrow.”

But now, grimly, tomorrow has become today.

Blame it on the young guns

The seats are of the kind of red plush velvet that speaks not of your local Indian restaurant but of discreet wealth. The menu offers seared Isle of Skye scallops with pork belly squares and cauliflower purée. With the chateaubriand of Aberdeen Angus, served with a béarnaise sauce, I suspect that Duncan Glassey’s eye might alight at a £58 bottle of 1975 Château Cantenac Brown. But I am wrong. He is happy, he says, with an Australian shiraz, the cheapest on the list of bin ends in the smart Circus Wine Bar & Grill in the austere Georgian elegance of Edinburgh’s New Town.

“How did the world’s cleverest financiers get into this almighty mess?,” I ask him.

There is a lot about Duncan Glassey which is not what you might expect. The child chess prodigy who turned professional runs a wealth planning consultancy for the mediumly-rich. It grew out of his experience of working with lottery winners at the accountant Ernst & Young in the mid-Nineties. His firm Wealthflow LLP now specialises in clients with between £1m and £5m to invest.

For all that, he is modest in his own lifestyle. So much so that in the past he has been told that he lost business from new clients after turning up for the initial interview in a car which they decided was insufficiently grand. There is something about him of the solidity of old money. His client list includes aristocrats as well as advocates. Like those whose money he manages, his bias is towards the conservative and away from the febrile psychology of “active management” where, he insists, over-activity can sometimes substitute for solid long-term investment.

Glassey has some interesting thoughts on the generational conflicts that have tipped the world into financial crisis and to the brink of recession: “The people who made the strategy in the banks are of the baby-boomer generation born from 1945 onwards. They are a generation of grand visions, optimism and high ideals about combining individual empowerment with social values. They are the big talkers and the people with the vision and mission statements.”

By contrast, the generation who have managed us into the present situation have a very different set of attitudes and values. Generation X are the children of the Thatcher era. “They are at home with globalisation and the information revolution,” he says. “Change is normal, as is the idea of lifelong learning. They are not scared of failure.

“What’s important to them is individualism, choice, self-reliance and immediate gratification. They are thrill seekers.” They can be pessimists, cynics and selfish.

But the younger generation who created sophisticated financial products which have so dramatically imploded – the “masters of the universe” – are different again, Glassey says. “They are Generation Y, born from 1985 onwards. They are the generation who have not known a world without the internet. They are highly techno-savvy and street smart but information overload has made them hugely naive in many other ways. They are the Facebook and Bebo generation – networkers who live in a world where divorce and geographical dispersion has broken down the family. They are self-obsessed and close-focused.

“The belief systems of the three groups – the strategists, the managers and the traders – are entirely different,” concludes Glassey. “They don’t really understand one another at all. And they didn’t know what each other really wanted or expected out of the complex financial architecture they created.

“Everybody was locked into the Nick Leeson scenario; no one asked questions so long as everyone was making money.”

The shaven-headed Glassey, aged 39, characterises himself as on the cusp between generations X and Y but his values hark back to what he calls “the old days when banks were trustworthy and on your side, before they became out-and-out sales organisations”. His approach is to keep his clients away from financial fads and fashions and “commission-based products which are deliberately made so complex that clients can’t understand them”. Glassey was always suspicious of the world of credit-swap derivates which he saw as a parade of emperor’s new clothes. “I view all that as speculation. I’m not paid to make huge money for my clients; I’m paid to diversify risk.”

But his clients, Glassey acknowledges, will not be the ones to suffer. “Their portfolios may be down 15 per cent where others are down 35 per cent or more. But their homes and jobs are not as risk.” So whose jobs and homes are in peril? And why? The trail pointed away from the world of pure finance and into that of the stock market.

The trillion-dollar wipeout

They are still selling oysters and champagne in the great courtyard of the Royal Exchange which was founded in 1565 as the centre of commerce for the City of London. In the 17th century, stockbrokers were not allowed within its elegant portals because of their rude manners, but today it is no longer a stock market. Instead, it is a luxury shopping centre whose pillared and marbled atrium is lined with discreet boutiques bearing names like De Beers, Hermès, Tiffany, Bulgari and Cartier. A couple of lattes in its magnificent courtyard will set you back the price on an entire lunch for two in Bury market, of which more later.

I was there to meet Richard Hunter, head of British equities at the fund manager Hargreaves Lansdown – which manages £11bn in shares for its small investor clients. I wanted to find out why the alarm over bank shares that gripped the stock market then infected other areas. After the collapse of Lehman Brothers, it was not just banking shares that fell; equities plummeted in a wide range of companies that had no connections with the financial services industry.

“Credit is the oil in the machinery of the business world,” he says. Every business needs to borrow to finance the gap between buying its raw materials and the income arriving for what it sells. “The money that used to be available to do that just isn’t there any more because the banks have stopped lending to one another. All that has been impacted by the credit squeeze. That’s why share prices fell first in certain sectors – the banks and financial services companies – but soon spread to other areas.”

But there were a collection of other forces in the real economy that accelerated the speed with which prices fell.

“It was a cocktail of factors,” he says. “After the sub-prime crisis broke in the US and after the collapse of Northern Rock here, some people became more cautious and started to spend less.” Then came the global rise in food prices which raised the cost of bread, rice and other staples in the supermarkets; in April, rice prices were double what they had been seven months earlier. Next followed the international hike in the price of oil – it rose as high as $147 a barrel in July, almost treble what it had been a couple of years earlier. And that massively increased both domestic fuel bills and petrol prices.

“If it costs you an extra £10 a week to fill your car and you’re on a budget,” he says, “you have to find that £10 by cutting back somewhere. If you’re paying more for your gas and electricity you have to cut back on something else.”

Then, on top of all that, house prices had started to fall. The fall-off began slowly, last November. By April this year, house prices were lower than they had been a year before. It was the first time an annual drop had been recorded for 12 years. The number of new houses being built fell to the lowest level for 60 years. The building industry, after 13 years of unprecedented growth, faced a major slump; in July the housebuilder Taylor Wimpey asked shareholders for an extra £500m and failed to raise it. Mortgage lending crawled to a near standstill in August as approvals for new homes hit a record low. By September, house prices across the country had fallen by about 10 per cent. Repossessions rose to triple their previous level. In the worst hit areas, such as the centre of Manchester where thousands of buy-to-let apartments had been made in converted inner city warehouses, prices fell by more than 20 per cent.

Half the flats in one prestigious block, Albion Mill – a converted Victorian biscuit factory with double-height living rooms and stunning views across to the Pennines – were repossessed. One woman, Jeanette Leach, 31, got off the plane at Manchester Airport after a holiday in Tenerife and received a text message saying her home had been repossessed; she went straight into the toilets at Terminal Two and hanged herself with the cord from her tracksuit bottoms.

The majority of those falling into difficulties as result of the credit crunch were not driven to such extremes. But, says Richard Hunter, “the stock market tries to discount the falls in value that will come over the next nine to 12 months.” As soon as the banking system was pulled back from what the head of the International Monetary Fund called “brink of systemic meltdown”, investors began to consider what might be the short-to-medium term implications for the real economy. House prices were a key indicator.

And further contraction was obviously on the cards. Some 1.2 million homeowners in the UK are now faced with the prospect of negative equity because the prices of their properties have fallen below what they paid for them. Another 1.4 million households are due to come off short-term fixed-rate mortgage deals by the end of 2008. The credit crunch on the wholesale markets was making mortgages harder to come by. It contributed to a growing “feel-bad” factor on the markets. “With shares and house prices you don’t crystallise your loss till you sell, but you feel poorer because of all the bad news,” says Hunter, “and so your behaviour begins to change. Everyone cuts back.”

Some people do more than that. They panic.

“People who have been in the city 40 years are telling me that they’ve never seen this degree of volatility before,” Hunter says. “Panic overtakes logic. Just a few people running round like headless chickens can infect others because people look at the headless chickens and say: What do they know that I don’t? In the past they used to say that the market was driven by one prevailing emotion – greed or fear; this time it’s a cocktail of both.”

The result was an orgy of frenzied selling in which £2.7 trillion was wiped off the value of shares globally in a single week of extraordinary financial mayhem in October. This was when a crisis that had for months seemed confined to the world of banking began to ripple out into the real world.

Source

The Federal Reserve Defies Transparency Aim in Refusal to Identify Bank Loans

By Mark Pittman, Bob Ivry and Alison Fitzgerald

November 10 2008

The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

“The collateral is not being adequately disclosed, and that’s a big problem,” said Dan Fuss, vice chairman of Boston- based Loomis Sayles & Co., where he co-manages $17 billion in bonds. “In a liquid market, this wouldn’t matter, but we’re not. The market is very nervous and very thin.”

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.

“It’s your money; it’s not the Fed’s money,” said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. “Of course there should be transparency.”

Federal Reserve spokeswoman Michelle Smith declined to comment on the loans or the Bloomberg lawsuit. Treasury spokeswoman Michele Davis didn’t respond to a phone call and an e-mail seeking comment.

The Fed’s lending is significant because the central bank has stepped into a rescue role that was also the purpose of the $700 billion Troubled Asset Relief Program, or TARP, bailout plan — without safeguards put into the TARP legislation by Congress.

$2 Trillion

Total Fed lending topped $2 trillion for the first time last week and has risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank’s purchase of Fannie Mae and Freddie Mac bonds.

Before Sept. 14, the Fed accepted mostly top-rated government and asset-backed securities as collateral. After that date, the central bank widened standards to accept other kinds of securities, some with lower ratings. The Fed collects interest on all its loans.

The plan to purchase distressed securities through TARP called for buying at the “lowest price that the secretary (of the Treasury) determines to be consistent with the purposes of this Act,” according to the Emergency Economic Stabilization Act of 2008, the law that covers TARP.

`We Need Transparency’

The legislation didn’t require any specific method for the purchases beyond saying mechanisms such as auctions or reverse auctions should be used “when appropriate.” In a reverse auction, bidders offer to sell securities at successively lower prices, helping to ensure that the Fed would pay less. The measure also included a five-member oversight board that includes Paulson and Bernanke.

At a Sept. 23 Senate Banking Committee hearing in Washington, Paulson called for transparency in the purchase of distressed assets under the TARP program.

“We need oversight,” Paulson told lawmakers. “We need protection. We need transparency. I want it. We all want it.”

At a joint House-Senate hearing the next day, Bernanke also stressed the importance of openness in the program. “Transparency is a big issue,” he said.

Banks Resist Disclosure

The Fed lent cash and government bonds to banks, which gave the Fed collateral in the form of equities and debt, including subprime and structured securities such as collateralized debt obligations, according to the Fed web site. The borrowers have included the now-bankrupt Lehman Brothers Holdings Inc., Citigroup Inc. and JPMorgan Chase & Co.

Banks oppose any release of information because it might signal weakness and spur short-selling or a run by depositors, said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a Washington trade group.

“You have to balance the need for transparency with protecting the public interest,” Talbott said. “Taxpayers have a right to know where their tax dollars are going, but one piece of information standing alone could undermine public confidence in the system.”

Frank Backs Fed

The nation’s biggest banks, Citigroup, Bank of America Corp., JPMorgan Chase, Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley, declined to comment on whether they have borrowed money from the Fed. They received $120 billion in capital from the TARP, which was signed into law Oct. 3.

In an interview Nov. 6, House Financial Services Committee Chairman Barney Frank said the Fed’s disclosure is sufficient and that the risk the central bank is taking on is appropriate in the current economic climate. Frank said he has discussed the program with Timothy F. Geithner, president and chief executive officer of the Federal Reserve Bank of New York and a possible candidate to succeed Paulson as Treasury secretary.

“I talk to Geithner and he was pretty sure that they’re OK,” said Frank, a Massachusetts Democrat. “If the risk is that the Fed takes a little bit of a haircut, well that’s regrettable.” Such losses would be acceptable, he said, if the program helps revive the economy.

Frank said the Fed shouldn’t reveal the assets it holds or how it values them because of “delicacy with respect to pricing.” He said such disclosure would “give people clues to what your pricing is and what they might be able to sell us and what your estimates are.” He wouldn’t say why he thought that information would be problematic.

`Unclog the Market’

Revealing how the Fed values collateral could help thaw frozen credit markets, said Ron D’Vari, chief executive officer of NewOak Capital LLC in New York and the former head of structured finance at BlackRock Inc.

“I’d love to hear the methodology, how the Fed priced the assets,” D’Vari said. “That would unclog the market very quickly.”

TARP’s $700 billion so far is being used to buy preferred shares in banks to shore up their capital. The program was originally intended to hold banks’ troubled assets while markets were frozen.

The Bloomberg lawsuit argues that the collateral lists “are central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression.”

AIG Lending

The Fed has lent at least $81 billion to American International Group Inc., the world’s largest insurer, so that it can pay obligations to banks. The central bank is also responsible for losses on a $26.8 billion portfolio guaranteed after Bear Stearns Cos. was bought by JPMorgan.

“As a taxpayer, it is absolutely important that we know how they’re lending money and who they’re lending it to,” said Lucy Dalglish, executive director of the Arlington, Virginia- based Reporters Committee for Freedom of the Press.

Ultimately, the Fed will have to remove some securities held as collateral from some programs because the central bank’s rules call for instruments rated below investment grade to be taken back by the borrower and marked down in value. Losses on those assets could then be written off, partly through the capital recently injected into those banks by the Treasury.

Moody’s Investors Service alone has cut its ratings on 926 mortgage-backed securities worth $42 billion to junk from investment grade since Sept. 14, making them ineligible for collateral on some Fed loans.

The Fed’s collateral “absolutely should be made public,” said Mark Cuban, an activist investor, the owner of the Dallas Mavericks professional basketball team and the creator of the Web site BailoutSleuth.com, which focuses on the secrecy shrouding the Fed’s moves.

Source

The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Well my take on this is the taxpayers have every right to know where their money is going.

They have the right to know every detail and they have to the right know where every bit of it is going right down to the last penny.

The Federal Reserve in my opinion should be eliminated pure and simple. This type of action re-enforces that thought.

I wouldn’t trust the Federal Reserve as far as I could throw them.

They are just a Private Profiteering Bank. Who I might add were in part responsible for the crisis in the first place.

Considering the “world wide crisis” they above all should be transparent.

So now we all have to wonder about their dirty secrets. They should be forced to divulge this information. Where is the accountability?

The Bush Legacy lives on.

I don’t know about the rest of the World but I for one want to know the truth.

Counties around the World are now being forced to get loans from the IMF or The World Bank which in my opinion aren’t to be trusted either.

The federal Reserve care nothing about the tax payers obviously or who they have hurt.

Their lobby groups were in great part also responsible for the problems now facing many countries as well as the American people.

Dutch, British block IMF loan to Iceland – NRC


November 7 2008

The Netherlands and Britain are blocking a €2.1bn loan from the International Monetary Fund to Iceland pending agreement on compensation for Dutch and British savers, the NRC reports on Friday.

The paper says Icelandic MPs were told at a meeting in Brussels that the loan would not be approved until the financial aspects of compensating hundreds of thousands of savers has been worked out.

Sources at the Dutch finance ministry have confirmed the veto off the record but refuse to comment officially. Nor would British officials comment, the paper says.

Yesterday, Iceland’s prime minister Geir Haarde said that the IMF loan and the repayment agreement were ‘two separate issues which should not be linked,’ the paper said.

Dutch savers have some €1.6bn on deposit at Icesave which they cannot access.

Meanwhile, the conflict between the government, the province of Noord-Holland and 22 local councils over their claims against Iceland escalated on Friday. In total, local governments have some €400m in Icesave.

Finance mnister Wouter Bos and the queen’s commissioner in Noord-Holland have been embroiled in a public spat over the province’s determination to go it alone in trying to recover its money.

On Friday home affairs minister Guusje ter Horst said the government had used a royal decree to annul local government claims to Landsbanki property abroad. ‘Their behaviour is hindering the difficult and complex discussions with the Icelandic government,’ she said.

Source

Maybe Iceland should just declare bankruptcy.

Seems all the way around things just are getting more ridiculous.

All the banks have being going through the same thing but it seems Iceland is really being hung out to dry.

Of course I have little or no trust when it comes to the IMF at any rate.

Maybe not getting a loan from them is a “good thing”.

There certainly seems to be a lot of manipulation going on when it comes to Iceland.

A few tid bits.

Iceland to Receive Unexpected Loan from Poland

Norwegian loan to Iceland confirmed

Iceland lifts interest rates to record 18% to secure IMF $2bn loan

Iceland Registers Complaint about Britain to NATO

Unbowed Icelandic PM sends a strong message to UK

Iceland ‘working day and night’

UK Government ‘ignored Iceland warning’/ Charities may lose

The worst of all was being treated as a Terrorist country.

Browns actions have not helped in any way.

Prime Minister Gordon Brown has condemned Iceland’

Published in: on November 10, 2008 at 5:17 am  Comments Off on Dutch, British block IMF loan to Iceland – NRC  
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What bailed-out banks spend on lobbying

By Matt Kelley


WASHINGTON

Nineteen banks taking taxpayer money from the Treasury Department have spent $32.4 million lobbying the federal government during the first nine months of this year, their lobbying disclosure reports show.

Combined, the Treasury is investing in the banks $159 billion from the $700 billion financial rescue package approved by Congress last month. None of the banks has indicated it plans to stop lobbying.

Lobbying by the financial industry before and during the financial crisis has come under criticism from consumer groups, members of Congress and President-elect Barack Obama.

“It’s ridiculous that the perpetrators of this mess should be the people dictating to Congress how to get out of it,” says Kathleen Day of the non-profit Center for Responsible Lending.

Sen. Dianne Feinstein, D-Calif., began drafting a bill to ban recipients of government help from lobbying with taxpayer funds after learning that insurance giant American International Group continued to lobby after it received $123 billion in government-backed loans. AIG suspended its lobbying Oct. 20, company spokesman Joe Norton says.

In a statement, Feinstein said “it would be unconscionable for these companies to misuse taxpayer dollars” on lobbying. Although federal law prohibits federal loan, grant or contract money from being used for lobbying, Feinstein wants to ensure that ban also applies to the investments, loan guarantees and other emergency help offered to financial firms, Feinstein spokesman Gil Duran said.

Financial industry lobbyist Scott Talbott says such restrictions are unnecessary.

“Washington is watching. The world is watching. Companies will be able to show how they’re using the money,” said Talbott, a senior vice president of the Financial Services Roundtable, a trade group that represents 21 large banks getting government investments. “Lobbyist money will come out of other income.”

Feinstein and others criticized AIG last month for sending executives on a $440,000 retreat after getting government help. AIG so far has spent $9.5 million on lobbying this year, records show.

Norton said AIG stopped working to influence legislation and regulations, but its lobbyists “continue to monitor policy and have general discussions” with lawmakers and regulators. He said AIG has no plans to fire its lobbyists or lobbying firms.

THE BALANCE OF INFLUENCE

Lobbying expenses for first 9 months of 2008
By banks receiving government help:

Company

Lobbying amount

Government investment

Merrill Lynch{*}

$4.6 million

$25 billion

Bank of America{*}

$4.7 million

$25 billion

Citigroup

$5.6 million

$25 billion

JPMorgan Chase

$5 million

$25 billion

Wells Fargo

$2 million

$25 billion

Goldman Sachs

$4.2 million

$10 billion

Morgan Stanley

$2.4 million

$10 billion

PNC Bank

$320,000

$7.7 billion

U.S. Bancorp

$290,000

$6.6 billion

Capital One

$920,000

$3.6 billion

* — Merrill Lynch is being taken over by Bank of America, and the merged bank will receive $25 billion

Sources: Lobbying disclosure reports, U.S. Senate Office of Public Records, Financial Services Roundtable

Source

Despite crisis, Merrill Lynch still lobbying

By Matt Kelley

WASHINGTON

Brokerage giant Merrill Lynch, a victim of the financial crisis, is merging with Bank of America and expects to share in the $25 billion the Treasury Department is spending to help the merged bank.

Despite its crumbling financial foundation and organizational upheaval, one thing at Merrill hasn’t changing: It has continued to lobby the federal government, including on the $700 billion financial rescue package that provided the money for the government investments in Merrill and other major banks.

President-elect Barack Obama and members of Congress have blamed lobbying by the financial industry in part for the current financial crisis. Last month, Obama said the crisis developed “when speculators gamed the system, regulators looked the other way, and lobbyists bought their way into our government.”

Jeff Peck, a lobbyist whose clients include Merrill Lynch, says financial companies will “take their lumps” before a skeptical Congress but have a right to lobby Washington policymakers.

Merrill Lynch hired the firm April 1 and paid it $160,000 through September to lobby Congress on a “blueprint for regulatory and mortgage reform,” the firm’s disclosure reports say. Merrill Lynch has spent $4.6 million in lobbying in the first nine months of the year, records show.

“When you have this kind of scrutiny and this kind of seismic change happening … everyone wants to make sure they’re part of the process that affects their business,” Peck said.

Bank of America also has no plans to quit lobbying, spokesman Scott Silvestri said.

“We continue to talk to Congress and regulators about issues of interest and concern to our company,” Silvestri said.

Lobbyists play a key role in keeping lawmakers and government decision-makers informed about how their decisions affect the lobbyists’ clients, says Scott Talbott of the Financial Services Roundtable, a group representing large banks, insurance companies and other financial institutions.

“Lobbyists provide information, and that role is more important than ever right now,” Talbott says. “You have a very complicated industry, and we’re trying to find the best solutions. … Now is not the time to be cutting back on information flow.”

Banks and other financial firms lobbied Congress for the financial rescue package, but the idea for direct government investment in financial institutions came from the Treasury Department. The American Bankers Association wrote to Treasury Secretary Henry Paulson last week to complain that healthy banks without toxic debt on their books were being pressured to take part.

“This is not a program the banking industry sought,” wrote Ed Yingling, CEO of the bankers’ group. He said some banks are worried that being coerced into taking government money will make them appear to be financially weak and that the government may decide to restrict dividend payments to shareholders.

Unlike the banks, in which the government is buying minority stakes, the feds completely took over Fannie Mae and Freddie Mac, the giant home mortgage financing companies brought down by the foreclosure crisis.

Fannie Mae and Freddie Mac spent $14.3 million on lobbying before the government halted it in September after taking over the companies at a cost of as much as $200 billion.

Lobbying by Fannie and Freddie has been bipartisan. Freddie Mac’s internal lobbyists included Kirsten Johnson-Obey, the daughter-in-law of House Appropriations Committee Chairman Dave Obey, D-Wis. Fannie Mae paid $115,000 in lobbying fees this year to a lobbying firm headed by Steve Farber, the co-chairman of the host committee for Democratic Party convention held in August in Denver.

On the Republican side, Freddie Mac paid $260,000 this year to Timmons & Co. — a lobbying firm founded by Bill Timmons, who worked in the Nixon and Ford administrations and was a top campaign aide or adviser to every presidential candidate since Richard Nixon.

Kathleen Day of the Center for Responsible Lending says financial companies’ clout should be on the decline because their mistakes led to the current crisis.

“It shouldn’t be the industry getting its way all the time,” Day said. “Look where that got us.”

Source

Published in: on November 8, 2008 at 6:38 am  Comments Off on What bailed-out banks spend on lobbying  
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Iceland to Receive Unexpected Loan from Poland

November 7 2008

Polish authorities will participate in the International Monetary Fund (IMF) economic stabilization program for Iceland, which has yet to be accepted by the IMF board, by granting Iceland a USD 200 million (EUR 155 million) loan.

This was confirmed by Magdalena Kobos, a spokesperson from the Polish Ministry of Finance, to Bloomberg news agency.

According to Bloomberg, Iceland is likely to receive an IMF-led emergency loan of around USD 6 billion (EUR 4.7 billion). In addition to Poland, the Scandinavian countries, Britain and the Netherlands will participate in granting the loan to Iceland.

According to late-breaking news from visir.is, Icelandic Prime Minister Geir H. Haarde announced at a governmental meeting this morning that he had not been made aware of Poland’s intentions to offer Iceland a USD 200 million loan.

Source

Published in: on November 8, 2008 at 3:13 am  Comments Off on Iceland to Receive Unexpected Loan from Poland  
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World Bank lends to Bulgaria to tackle poverty, jobless

November 5 2008

SOFIA,

The World Bank has approved two loans to Bulgaria worth 142 million euros, aimed at raising employment, productivity and living standards in the European Union newcomer, the lender said on Wednesday.

The Balkan country, which joined the EU in 2007, is the bloc’s poorest member with the lowest incomes per capita and has one of the lowest productivity rates.

The global financial crisis is expected to hit Bulgaria’s so far booming economy and possibly raise jobless rates as foreign investments and a domestic credit expansion, which supported growth in the past few years, are slowing.

The World Bank said in a statement that one of the loans worth 102 million euros will support Bulgaria’s reform agenda in the areas of health, education, and social protection.

‘Maintaining the momentum of reforms has become more urgent at this time of turbulence in the global financial markets, and the support of the Bank to the reform agenda … has gained additional significance,’ the statement said.

The bank’s project will support policies to increase employment, lay the foundations for long-term productivity growth by providing incentives for job creation and improving quality of education and promote fiscal sustainability, it said.

The second loan of 40 million euros is designed to stimulate social inclusion by helping low-income and marginalised families educate their children and reduce early drop-outs.

Economists and ratings agencies have warned that Bulgaria’s dependence on foreign cash to fund its huge current account deficit and foreign debt make the country vulnerable in times of tight global liquidity and credit conditions.

Sofia’s debts to the World Bank stood at 573.3 million euros at the end of September and account for 17.7 percent of the state public foreign debt, finance ministry data showed.

(Reporting by Irina Ivanova; Editing by Toby Chopra)

Source


Published in: on November 6, 2008 at 9:10 pm  Comments Off on World Bank lends to Bulgaria to tackle poverty, jobless  
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Throwdown: Bank of America vs. JPMorgan

By Morgan Housel

November 6, 2008

Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM).

They’re both huge. They’ll both be survivors. Both received a $25 billion investment from the Treasury. One picked up Countrywide when it looked ready to fail, the other picked up WaMu when it did fail. One bought Merrill Lynch (NYSE: MER) before a pending disaster, the other bought Bear Stearns after a historic disaster.

I smell a fight brewin’. Let’s watch these two go head-to-head and crown the king of the megabanks.

A year to forget
JPMorgan has certainly fared better than B of A in the past year: Shares are down 13% and 56%, respectively. Even so, if you compare the two on a variety of different metrics, you’ll be hard-pressed to find a clear front-runner. Both companies are well capitalized — especially after Hank Paulson’s early Christmas gift — and have ample reserves to cover future losses, and both have kept nonperforming loans and net charge-offs at levels that shouldn’t keep you from losing too much sleep, which is about all you can ask for these days.

While the similarities abound, shareholders have to grapple with a huge wild card to assess the quality of these two: the impact of mammoth acquisitions made in the past year. Comparing past results seems irrelevant, since the B of A and JPMorgan of next year will be completely different beasts than the B of A and JPMorgan of this year.

Everything must go!
Both banks shocked the financial world with four monster deals this year: Countrywide, Bear Stearns, WaMu, and Merrill Lynch (pending). The deals are serious game-changers, since they give B of A and JPMorgan the chance to close the investment-banking gap with Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS), and the real-estate gap with Wells Fargo (NYSE: WFC) — especially in light of its pending Wachovia (NYSE: WB) acquisition.

Better yet, all of these deals were made with companies that either had, or likely would have, failed. It only makes sense, then, that they were struck at fire-sale prices … which most were. Countrywide was bought for about $4 billion — one-third of its tangible book value at the time. JPMorgan paid no more than what Bear Stearns’ New York office building was valued at, and has the government backing some of Bear’s riskiest assets. WaMu was acquired from the FDIC for a token amount just five months after JPMorgan originally offered $8 per share.

The one exception to this bargain-bin rampage? Bank of America’s pending $50 billion acquisition of Merrill Lynch.

Whereas JPMorgan was practically handed Bear Stearns, B of A actually paid a premium to Merrill’s book value — and did it without any government help. Why’d it pay up? Your guess is as good as mine. You’d think a deal struck at a time when Merrill likely would have failed without a partner would have been done at terms B of A would be salivating over, yet Merrill Lynch appeared to come out with the bargaining power on this one.

Now — without comparing the differences between Bear Stearns and Merrill Lynch — we have something material to distinguish B of A from JPMorgan: Merrill Lynch could easily end up being a $50-billion blunder for B of A, especially if the economy continues to upend the finance world as we know it. JPMorgan’s deal with Bear Stearns, on the other hand, will likely go down as “the deal of the century” even if Wall Street continues to flounder, simply because it paid so little for it. That fact alone shifts the probability of success in the coming years comfortably into JPMorgan’s corner.

The verdict
Two great banks. Two survivors in a hollowed-out industry. Two stocks that will likely look like bargains five or 10 years down the road when — dare I say it — the credit crunch could be long gone.

But since so much of B of A’s future is now hinged on the moot assumption that the $50 billion offered for Merrill will eventually bear fruit, I’d put the odds of big returns in the coming years leaning more toward JPMorgan Chase.

Source


A Crisis Made in the Oval Office

Economist explains how conservatives engineered financial free-fall

Wall Streeters are just Welfare Recipiants in Disguise

Stock Market, History,Causes and Affects


Published in: on November 6, 2008 at 8:58 pm  Comments Off on Throwdown: Bank of America vs. JPMorgan  
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Lithuania Central Bank cuts reserve ratio for banks

VILNIUS,

November 6 2008

Lithuania’s central bank said on Thursday it had decided to cut the obligatory reserve ratio for commercial banks to 4 percent from 6 percent to boost liquidity, the first reserve ratio cut for six years.

A spokesman for the central bank said the move would free up about 1 billion litas ($372.4 million) of funds for banks.

Like other financial markets, the small Lithuanian money market has also suffered a liquidity squeeze during the global financial crisis and banks had urged the central bank to cut reserve requirements to free up funds.

(Reporting by Nerijus Adomaitis, writing by Patrick Lannin, editing by Mike Peacock)

VILNIUS,

November 6 2008

Lithuania’s central bank on Thursday cut reserve requirements for banks as the global credit squeeze finally made itself felt in the Baltic states’ small financial sector.

Analysts say that Latvia, Estonia and Lithuania, with high current account deficits and consumer debts, could be vulnerable to the kind of crisis which has forced Hungary to turn to the IMF, though Baltic leaders have played down this probability.

None of the three former Soviet states has had to launch a bank bailout or feed liquidity to its institutions like bigger nations in western Europe, but local money market rates have steadily risen and liquidity has dried up.

Lithuania’s central bank responded to the problem by reducing its obligatory reserve ratio for commercial banks to 4 percent from 6 percent to boost liquidity, the first reserve ratio cut for six years.

A spokesman for the central bank said the move would free up about 1 billion litas ($372.4 million) of funds for banks. Latvia’s central bank has also said that it will continue to cut reserve requirements for banks.

The bank sectors in Lithuania, Estonia and Latvia are dominated by Nordic groups such as SEB, Swedbank , Nordea and DNB NOR as well as a sprinkling of local banks such as Parex in Latvia and Snoras and Sialiu in Lithuania.

‘The central bank decision shows there are liquidity problems in the banking system,’ said Stasys Jakeliunas, a Lithuanian independent financial analyst.

He said this was also reflected in the fact that local overnight rates had risen from 4.6 percent on October 22 to 8 percent on Thursday. The six-month rate had risen 70 basis points from Wednesday to 9.2 percent today.

‘That indicates a sort of pre-crisis situation…The central bank’s decision to unfreeze some assets could help fix liquidity in the short run, but may not be enough in the longer term,’ Jakeliunas said.

A similar money market trend has been seen in Latvia.

There, the overnight rate has eased to about 3 percent from the 8 percent seen in mid-October, but the 6-month rate has spiked to 12.5 percent from 8 percent at the start of October, meaning long-term local financing is hard to come by.
The Latvian government this week said it would make available state guarantees for loans taken out by local banks, saying this was similar to measures taken by other EU nations to support their financial sectors.

The Latvian central bank has also been selling euros and buying lats in recent weeks as the lat currency has been stuck at the weak end of its 1 percent band against the euro.

(Reporting by Nerijus Adomaitis, writing by Patrick Lannin, editing by Patrick Graham)

Source

Published in: on November 6, 2008 at 1:01 pm  Comments Off on Lithuania Central Bank cuts reserve ratio for banks  
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Not all are pleased with IMF loan

By Robert Hodgson

November 4 2008

The leader of the main opposition party Fidesz last week slammed the government for turning to the IMF to bolster the shaky economy. Viktor Orban said the move compromises Hungary’s sovereignty and reduce its room for financial manoeuvre. “It is shameful and painful that Hungary has to give up a part of its sovereign decisions because it has plunged into a crisis,” he said.

Orbán was not the only dissenting voice. “May God save Hungary from drawing the EUR 20 billion loan that is to be jointly provided by the IMF, the EU and the World Bank,” said property tycoon Sándor Demján, one of Hungary’s richest citizens and head of a national employers and entrepreneurs lobby group. “What Hungary really needs is to start structural reforms of its bloated public administration, pension, education and taxation systems and put an end to overspending. We must start saving; we cannot build a welfare state on loans,” he told the left-wing daily Népszabadság last Wednesday. He added that, under the circumstances, the issue of tax cuts can be set aside for six months.

Also less than ecstatic about the IMF bailout proposal was István Éger, head of the Hungarian Chamber of Physicians. Fearing that underpaid public health workers will be at the sharp end of the cutbacks that the IMF is demanding as a condition for the loan, he turned to President László Sólyom and Hungarian Academy of Sciences chairman József Pálinkás, asking for an independent study into whether such drastic cutbacks are necessary. The planned cancellation of the “thirteenth-month” bonus salary payment and other compulsory honorariums would create labour shortages that endanger patient care, Éger said last Wednesday.

Only last September, Éger had called for the government to raise doctors’ salaries to at least 70% of the EU average by 2013. Doctors’ wages vary from hospital to hospital, for example at Budapest Szent János Hospital, the average basic gross wage was HUF 331,000 (EUR 1,284) a month in March this year, while at the Szent Imre Hospital it is a mere HUF 237,000 (EUR 919). “The liberal economics mindset that created this crisis has suffered a global defeat, while at the same time the leaders of this country are preparing to accept terms dictated by the same mindset,” Éger added.

Last Friday, Finance Minister János Veres said the government will put a bill before Parliament within two weeks which, if passed, would allow the authorities to draw down on the IMF loan and channel money into the banking sector if required.

Source

The financial crisis and the opposition

By Vision Consulting

November 6 2008

Opposition needs to appear to be constructive rather than contrary as tough decisions loom

The most important issues in Hungarian politics at the moment are still management of the crisis, the HUF 375 billion (EUR 1.44 billion) spending cut announced by the government and the USD 25 billion (EUR 19.51 billion) loan granted by the International Monetary Fund, the World Bank and the European Union. The position of Prime Minister Ferenc Gyurcsány as “crisis manager” is likely to strengthen in the short-term. The opposition is still trying to find its feet in this new scenario.

MDF: stand on our own

At the national summit the Hungarian Democratic Forum (MDF) proposed a spending cut of approximately HUF 1 trillion (EUR 3.85 billion), considerably more than the government. The Forum’s criticism of the IMF agreement is related to this. According to its party leaders, the crisis should be managed from the state’s “own resources” through a spending cut, and the loan amount should on no account be spent on day-to-day matters . The latter is rational, but the government itself is not planning to spend the USD 25 billion, so the MDF’s tough approach does not really pose a challenge to the Hungarian Socialist Party (MSZP) minority government.

In reality it is a question of the considerably weakened MDF trying to become the favoured party among influential economic figures by taking a stance in favour of a larger spending cut. Despite its rhetorical attacks the Forum is in fact closer to the MSZP than the other parliamentary parties in terms of the budget.

SZDSZ: in line, & in the shadows

The Alliance of Free Democrats (SZDSZ) since leaving the coalition has not managed to adopt a new position as a decisive opposition party, nor as a political force capable of bringing down the prime minister and setting up a government of experts.

It has given in to pressure and is negotiating with the MSZP on significant policies, and has lost political weight. The “crisis-managing” prime minister has adopted the liberals’ proposal of a law putting a ceiling on spending and is reducing the deficit. The SZDSZ is incapable of triumphing in these questions, and has faded into the background beside Gyurcsány’s words and actions.

The liberals’ ultimate condition for rejoining the coalition is a tax-reform timetable, and that has not been fulfilled. The prime minister has made vague promises on this issue, but in the current situation his hands are tied.

The tax reform fund proposed by the SZDSZ is the guarantee for starting to reduce taxes, but not now: the money potentially saved in 2009 would be collected in this fund, which in the second half of 2009 at the earliest could be used as a basis for reducing taxes, and it is not yet known how much money can be collected. Overall we can say that the SZDSZ’s tough-sounding rhetoric is designed to obscure the fact that they have moved closer to the government.

Fidesz: Hungary shamed

Fidesz’s situation is also difficult: the consistency of the party’s communications has lessened, despite the fact that for a long time this has been one of its main strengths. Aside from the fundamental contradiction that Fidesz wishes to introduce immediate radical tax reductions without cutting spending, the party also took a unique stance in connection with the role of the IMF.

The party first stressed that negotiations should have been launched with the EU, and not the IMF. Next deputy chairman Mihály Varga expressed disappointment at the EU’s unresponsiveness: “It makes me question whether it’s worth being a member of the European Union.” With this statement he indirectly justified the government’s decision to turn to the IMF: if the EU is not willing to help, then the government has to look elsewhere. The government finally signed a joint loan guarantee agreement with the World Bank, the International Monetary Fund and the European Union.

Next Fidesz used its last remaining argument that Hungary has been shamed as the only EU country to have need to seek such assistance. Raising the question of responsibility is undoubtedly important. However at the time of crisis management, seeking a solution can compete with the issue of responsibility, and in the former respect the prime minister had the advantage.

A different game now

Just as swift crisis management has offered the prime minister a chance to strengthen his position, the prolonged real economy crisis could offer Fidesz a similar political opportunity. The next year of the Gyurcsány government could be spent in an ever-deepening crisis. That will make the MSZP’s already problematic situation extremely difficult. At this stage, however, we know little about whether the crisis will change voters’ expectations of political figures in the long-term, and whether, for example, Fidesz will be forced to adopt a less-confrontational style of politics. If that is the case then the outcome of the next elections will also depend on Fidesz’s ability to adapt.

Source

IMF approves $16.5 billion Ukraine loan

By Lesley Wroughton and Sabina Zawadzki

November 6 2008

The International Monetary Fund approved a $16.5 billion (10.4 billion pound) loan program for Ukraine that includes monetary and exchange rate policy shifts to ease strains from the global financial crisis.

The IMF, in a statement issued late Wednesday, said it would immediately disburse $4.5 billion to the government under the two-year loan agreement.

“The authorities’ program is designed to help stabilise the domestic financial system against a backdrop of global deleveraging and a domestic crisis of confidence, and to facilitate adjustment of the economy to a large terms-of-trade shock,” the Fund said.

“The authorities’ plan incorporates monetary and exchange rate policy shifts, banking recapitalization, and fiscal and incomes policy adjustments.”

In Kiev, President Viktor Yushchenko welcomed the decision, taken after Ukraine’s fractious parliament approved enabling legislation. He said it provided a “signal to the international community to boost the rating of trust in our country.”

“The economy is getting a powerful resource to develop priority sectors and guarantee the liquidity of the banking system,” he said in a statement on the presidential Web site.

Prime Minister Yulia Tymoshenko, the president’s former ally turned rival, described the loan as a “great victory” and said it would “allow us to stabilise completely the financial situation in Ukraine.”

The IMF decision was issued along with forecast indicators predicting that Ukraine would sink into recession next year, with a 3 percent fall against 6 percent growth this year.

In a statement, Murilo Portugal, IMF deputy managing director, said Ukraine’s economy, especially its banking system, was under severe stress, caused by a drop in global steel prices, the country’s main export, and global financial turmoil.

INTERVENTION, RECAPITALISATION

He said Ukraine’s program would seek to restore financial and economic stability through a more flexible exchange rate regime with targeted interventions, so-called ‘pre-emptive’ recapitalisation of banks, and tighter monetary policy.

“The flexible exchange rate regime, backed by an appropriate monetary policy and foreign exchange intervention, will help absorb external shocks and avoid disorderly exchange market developments,” Portugal said.

“The recent unification of official and market exchange rates should increase clarity about the regime.”

Exchange controls recently imposed, he said, would be phased out as confidence returns to the economy.

Ukraine’s central bank has been intervening since early October to lift the hryvnia currency from record lows last week. It began offering buy-sell rates for currencies this week after previously only selling or buying a currency.

Portugal said as credit pressures abate, tighter monetary policy will be needed to guard against inflation.

He said the government’s target of a balanced 2009 budget would be reviewed, although it could be achieved through expenditure restraint and a phased increase in energy tariffs.

Portugal said recapitalisation efforts for banks would ease liquidity pressures that could prolong an economic downturn.

“Decisive measures that have been taken to allocate public funds to recapitalise banks and to facilitate bank resolution processes will ensure that problems can be dealt with promptly,” he said.

“A proactive strategy to resolve corporate and household debt problems will also be essential to reduce banking sector vulnerabilities.”

(Editing by Andy Bruce)

Source
Key facts on Ukraine’s finances and politics
The International Monetary Fund approved a $16.5 billion (10.5 billion pound) loan programme for Ukraine late on Wednesday that includes monetary and exchange rate policy shifts to ease strains from the global financial crisis.

Following are key facts about why Ukraine is vulnerable to heightened risk aversion among international investors.

POLITICS

* Ukraine has been plagued by political turbulence since “Orange Revolution” protests in 2004 brought to power President Viktor Yushchenko and a team committed to moving closer to the West and joining NATO and the European Union.

Rows pitting Yushchenko against his former ally Yulia Tymoshenko, who twice served as his prime minister, undermined the “orange” camp and brought down governments.

Although the president dissolved parliament last month and called a December parliamentary election, he has since suspended that decree and a vote this year now seems unlikely.

* Upheaval — and trouble forming a stable ruling coalition — reflect Ukraine’s longstanding division into the nationalist west and centre, which looks to the EU and United States, and the Russian-speaking east and south, friendlier towards Moscow.

* Relations with Russia, bumpy throughout the post-Soviet period, have sunk to unprecedented lows over Yushchenko’s denunciation of Moscow’s military intervention in Georgia. Ukraine depends heavily on Moscow for energy supplies.

* The hryvnia currency hit an all-time low of 7.2 to the dollar on October 29, weakened by growing global risk aversion and regional tensions after Russia’s conflict with Georgia.

* Authorities have said they will formulate a new mechanism which would unify the market, cash and official rates.

* In mid-2008, the hryvnia had strengthened as far as 4.5/$, after the central bank abandoned a policy of keeping it in a corridor of 5.00-5.06 per dollar within a 4.95-5.25 band.

FINANCES

* Foreign exchange reserves fell to $33 billion at the end of October from $37.5 billion end-September, when they covered 3.7 months of imports.

* The current account deficit more than quadrupled in the first nine months of this year compared with the same period last year to $8.4 billion, or 5.8 percent of GDP.

* Analysts based outside Ukraine forecast its current account deficit at $21-25 billion, or 10-12 percent of gross domestic product, by year-end; Ukraine-based analysts give lower forecasts of about 6 percent of GDP.

* Prices for Ukraine’s steel exports are dropping, while Russia’s Gazprom has suggested next year’s price for gas imports could soar to $400 per 1,000 cubic metres from $179.50 now.

* The central bank risks encouraging imports and further widening the trade gap if it supports the hryvnia. However, letting it float would remove an important anchor for domestic and foreign businesses in Ukraine’s export-driven economy.

* Many people hold debt in foreign currency and would have to pay more to service it if the hryvnia weakened.

* Consumers are extremely sensitive to currency movements — they lost savings when the Soviet Union collapsed and again through hyper inflation and a currency crisis in the 1990s that more than halved the hryvnia’s value to about 4/$ and beyond.

* Ukraine was forced to restructure its debts in 2000 and made the final payments on that restructuring just last year.

FOREIGN DEBT

Ukraine’s foreign debt totalled just over $100 billion as of July 1, of which about $15 billion was government debt.

* Analysts estimate Ukraine’s 2009 external financing requirement to be $55-66 billion, of which $32-40 billion is in the private sector. Foreign banks own 40-42 percent of total banking assets and 25 percent of short-term banking debt is owed to parent banks.

(Compiled by Sabina Zawadzki)

Source

Big deficits may force Turkey towards IMF

By Selcuk Gokoluk

ANKARA

Turkey will face a balance of
payments problem next year that could snuff out growth if the
government does not overcome its reticence to join the queue of
emerging countries seeking International Monetary Fund help.

Politicians are loath to ask for IMF help before municipal
elections next year given the public backlash against the six
years of fiscal austerity demanded by the IMF in return for
helping Turkey through a financial and economic crisis in 2001.

However, economists say its $70 billion foreign exchange
reserve is not a large enough buffer given the current account
deficit is seen rising to $50.4 billion in 2009 and the funding
need of the private sector is estimated at around $90 billion.

Turkey’s business community has therefore been calling for
an IMF loan deal to limit the fallout from a global financial
crisis which has already forced Ukraine, Hungary, Iceland and Serbia to seek IMF help.

Such aid comes with strings attached and while the
government is reluctant to accept big spending curbs and other
painful steps that might exacerbate the economic slowdown,
economists say IMF credit may be the only source of credit if
Turkey finds itself in a balance of payments difficulties.

“Turkey is not an EU member with access to the European
Central Bank credit lines that have been made available, nor
does it have a swap line with the (United States’) Fed as do a
few other emerging markets now to boost dollar liquidity,”
Kristin Lindow, Moody’s Investors lead sovereign analyst for
Turkey, told Reuters.

Turkey is carrying out accession negotiations with the
European Union, but is not expected to join the 27-members bloc
for several years at the earliest.

FINANCING NEEDS
Turkey’ economy is in much better shape than it was in 2001,
when it had a severe crisis and signed one of the biggest ever
IMF bailouts but some economists say the Treasury may not be
able to maintain its current cash holding.

Government spending is expected to pick up in coming months
and appetite for Turkish bonds has faded as investors favour
safe-heaven U.S. dollar assets.

Analysts say Ankara needs $15-$20 billion IMF credit to meet
its short-term financing needs, even if such help is made
contingent on measures such as cutting spending, raising taxes,
accelerating privatisation, and increasing interest rates to
correct fiscal and external imbalances and control inflation.

“For the first time in a couple of years, the balance of
payment will be a binding concern for Turkey in the sense that
Turkish corporates might have to cut back their borrowing from
international markets,” said Reinhard Cluse, economist at UBS.

It is estimated the non-bank corporate sector will roll over
roughly $20 billion in debt in the coming months.

Curbs on firms’ ability to borrow will dampen economic
activity, which has already weakened.

The economy expanded by 1.9 percent in the second quarter, a
a sharp slowdown from 6.7 percent in the first quarter, and some
economists expect it will grow by only 2-3 percent next year.

Turkish banks have strong loan/deposit and capital adequacy
ratios compared with their western peers and are tightly
regulated, but this is not the case for manufacturing firms.

“I don’t think banks will have a problem rolling over their
debt. The unknown factors are more in the non-financial sectors.
The non-financial sector firms borrowed $18 billion in the first
eight months. This is a very high figure,” said JP Morgan Chase
senior economist Yarkin Cebeci said.

“An IMF deal will cut the size of the shock waves even if it
can’t stop the financial volatility. More importantly is that an
IMF deal will comfort both the financial and non-bank corporate
sectors,” Cebeci added.

An IMF deal would also help shore up financial market
sentiment, economists said. Global financial turmoil has hit
Turkish markets in the last two months, with the lira losing one
third of its value and stocks halving in value.

“An IMF deal will ensure a gradual and softer fall. If the
market attempts to make a correction on their own, the fall will
be sharper and faster…I mean further slowdown of growth and
more lira weakening,” Merrill Lynch EMEA economist Turker
Hamzaoglu said.

(Editing by Swaha Pattanaik)

Source

Iceland had to raise their interest rates up to 18 per cent to get their loan from the
IMF

Published in: on November 6, 2008 at 11:27 am  Comments Off on Big deficits may force Turkey towards IMF  
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Iceland lifts interest rates to record 18% to secure IMF $2bn loan

By David Ibison in Stockholm

Published: October 29 2008

Iceland raised interest rates to a record 18 per cent from 12 per cent yesterday as a “condition of a proposed $2bn loan from the International Monetary Fund” to help rescue the stricken island.

Iceland applied to the Washington-based organisation for the emergency loan after its banking system collapsed and is seeking another $4bn (€3.2bn, £2.6bn) from some Nordic and other central banks.

The application will be presented to the IMF’s board tomorrow and the central bank said a condition attached to the loan was for a rate rise to 18 per cent.

The move reversed a 3.5 per cent rate cut announced just two weeks ago by David Oddsson, central bank governor, underlining the influence the IMF now has over policymaking in Iceland.

Brian Coulton, managing director at Fitch Ratings, the credit rating agency, said Iceland’s central bank had “no choice but to work very closely with the fund”.

Following the collapse of the banking system, the Icelandic economy is expected to contract by up to 10 per cent, unemployment to rise at about 8 per cent and inflation to hit 20 per cent or more, economists say.

“Putting up interest rates means they are going to go through the mother of all recessions, but the key is stability,” Mr Coulton said.

The IMF-led rescue represents an important breakthrough for Iceland as it strives to stabilise its economy by clearing the way for other countries to come to its aid. But it has come at the price of agreeing to the organisation’s demands.

The IMF conditions at-tached to the loan are to restore confidence in the economy and stabilise the Icelandic krona, restore fiscal sustainability, and reestablish a viable banking system. Yesterday’s rate rise was an important first step towards boosting the credibility of the Icelandic krona, which lost 70 per cent of its value during the crisis before trading dried up amid the uncertainty.

The IMF and Icelandic government have agreed that the currency should refloat within a matter of weeks, regarded as a vital step in restoring Iceland’s international credibility and helping the international payment system to restart.

“It is of overarching importance to restore stability in the foreign exchange market and support the exchange rate of the crown,” Sedlabanki, the central bank, said in a statement.

The huge interest rate rise came as Iceland continued to try to rally international sup-port for multi-billiondollar loans to bolster its foreign exchange re-serves, a move that should also help support its currency once it resumes trading.

The office of Geir Haarde, prime minister, told the Financial Times yesterday Iceland had sent an application for funds to the US Federal Reserve and the European Central Bank and had also been in contact with the Bank of Japan via its embassy in Tokyo.

The Icelandic krona is expected to be floated again as soon as is practical, possibly within the next two weeks, once the IMF’s board has approved the $2bn loan.

Source

The interest rate increase is way out of line with any logic. That is one of the reasons I don’t trust the IMF. Their Conditions. They dictate to those in need. 18% is ridiculous. This is helping Iceland how?

That kind of interest rate is insanity.

Nordic nations work on Iceland bail-out
By David Ibison in Stockholm

November 5 2008

Officials from four Nordic central banks and finance ministries held a private meeting in Stockholm on Wednesday to discuss their contributions to a $6bn rescue package for Iceland.

The gathering at the Ministry of Finance was a strong sign that Denmark, Sweden and Finland are drawing closer to announcing a multibillion euro package of loans after Norway agreed a €500m ($648m, £405m) advance last week.

Iceland hopes to be told on Thursday or Friday that its application to the International Monetary Fund for a $2bn (€1.54bn, £1.25bn) loan to support its economic revival has been approved.

Once official approval of the IMF loan has been secured, the way is clear for the Nordic countries to start considering how much they are prepared to offer, central banking officials said.

Iceland is seeking a total of about $6bn, which it will use to bolster its foreign exchange reserves to try to restore the credibility of its currency after its banking system collapsed last month.

The island’s government has also sent an application for funds to the US Federal Reserve and the European Central Bank and has been in contact with the Bank of Japan through its embassy in Tokyo, it said.

The four Nordic nations have said they are willing to support Iceland but only after it agreed to design and implement an economic stabilisation plan in association with the IMF. That plan was agreed in late October and comprises stabilising the Icelandic krona, restoring fiscal sustainability and re-establishing a viable banking system. It should also be approved by the IMF on Thursday or Friday.

The meeting at the finance ministry was attended by Ingimundur Fridriksson, one of three governors of Iceland’s central bank; Audun Gronn, the head of the international department at Norway’s central bank; Barbro Wickman-Parak, deputy governor of Sweden’s Riksbank; and similar level representatives from the central bank and finance ministries of Finland and Denmark.

Any commitment by the Nordic nations to support Iceland alongside the IMF would be an important development as the island strives to stabilise its economy. But securing approval for the loans does not mean that Iceland will have immediate access to the funds. Norway’s loan requires approval from parliament, as would others.

Following the collapse of Iceland’s banking system, its economy is expected to contract up to 10 per cent, unemployment is forecast to spike to about 8 per cent and inflation is set to reach 20 per cent or more, according to economists.

Iceland raised interest rates last week from 12 per cent to a record 18 per cent.

Source

Some European Union member states are said to be of the opinion that Iceland should not be granted a loan from the International Monetary Fund (IMF) until an agreement with Britain in regards to the deposits of Icelandic banks has been reached.

These same EU member states allegedly also believe that Iceland should not be granted a loan from the union’s emergency fund until the dispute surrounding the deposit accounts has been solved, Fréttabladid reports.

Icelandic Committee Members of Parliament of the European Free Trade Association (EFTA) Countries (CMP) said they had been given a clear message in that regard from EU officials during a meeting in Brussels earlier this week.

“I believe that extortion is involved,” said MP for the Left-Greens Árni Thór Sigurdsson, who is on the CMP. “[EU officials] said that a loan from the IMF would not happen unless we reached an agreement with Britain. They have influence in the fund and can set terms like that, which is known as extortion.”

Katrín Júlíusdóttir, an MP for the Social Democrats and chairman for the Icelandic division of the CMP, said Iceland’s representatives on the CMP had pointed out that Iceland intended to respect laws and regulations but that they disagreed with Britain on the interpretation of some legal issues.

Júlíusdóttir said Iceland’s representatives in the committee had also pointed out that there should not be a connection between international financial aid and a dispute on insurance for deposits.

British authorities have offered a loan to the Icelandic state so that Icelandic authorities can honor their obligations to Landsbanki account holders in the UK. However, a prerequisite for such a loan is an agreement with the IMF.

According to Fréttabladid, British Chancellor of the Exchequer Alistair Darling emphasized that a loan to Iceland would not be granted otherwise in an interview with the Dow Jones news agency on Monday.

Icelandic banks Landsbanki and Kaupthing, both of which have now been nationalized, accepted deposits through their subsidiaries in some European countries, primarily in the UK and the Netherlands. Landsbanki’s Icesave is an example of such a subsidiary.

Click here to read more about the potential IMF loan and here to read more about the development of the Iceland-Britain dispute.

Source


Published in: on November 6, 2008 at 10:07 am  Comments Off on Iceland lifts interest rates to record 18% to secure IMF $2bn loan  
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