"End of Wall Street Boom" - Must-read history

[nathan28]

vig, you say above no one wants to get caught holding bonds--maybe (i mean, right now is a good time not to have any paper wealth), but look at GM. Senior bondholders are getting paid out, everyone else's contracts, shares, pensions are getting trashed. At what point does regular bankruptcy become flat-out looting? That rumbling about a sales tax sounds like it'd fit, too--what better way to pay senior bondholders than to institute regressive taxes that hit the people who buy bonds the least hard?

[Gouda]

A). President Bernanke Warns Deficits Threaten Financial Stability

Federal Reserve Chairman Ben S. Bernanke said large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall.

“Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,” Bernanke said in testimony to lawmakers today. “Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance.”

The Fed chief said in his remarks to the House Budget Committee that deficit concerns are already influencing the prices of long-term Treasuries.

“Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation,” Bernanke said in response to a question. “The Federal Reserve will not monetize the debt.”

B). Secretary Obama outlines health care plan for all

Covering 50 million uninsured Americans could cost as much as $1.5 trillion over a decade, and cost is emerging as a major sticking point. Obama didn't offer new solutions to that problem in his letter Wednesday but did say he'd like to squeeze an additional $200 billion to $300 billion over 10 years from the Medicare and Medicaid government insurance programs for the elderly, disabled and poor.

He said he'd do it through such measures as better managing chronic diseases and avoiding unnecessary tests and hospital readmissions. Savings from such measures are uncertain.

Medicare benefits cost the federal government about $450 billion a year and Medicaid about $200 billion. Obama already has targeted the programs for some $300 billion in cuts over 10 years in the 2010 budget he released in February.

He also said he's open to congressional proposals to let an independent commission identify cuts to Medicare which would take effect unless Congress rejected them all at once, similar to how military base closures are handled.

...

The letter didn't address the issue of taxing health care benefits. Obama opposed that during his campaign but Congress is now considering it, and Obama hasn't shut the door on it.

[smiths]

ok, this one is not quite federal reserve related, but its still big corporate money and crime related and i know everyone loves a good Kroll connection,

i dont think either of these financial journos really understand what kroll is,
that or they dare not go any deeper for fear of smear ...

Allen Stanford’s many lives

The clock is still ticking on what would appear to be an inevitable indictment for disgraced Texas financier R. Allen Stanford ...

At first blush, it’s hard to fathom why it should take this long for prosecutors to file charges, given that Stanford and two of his top associates were the subject of a civil action by the Securities and Exchange Commission nearly three months ago. One of those associates, Laura Pendergest-Holt, has even been indicted on federal obstruction of justice charges. But still nothing on Stanford.

Bryan Burroughs, in the most recent issue of Vanity Fair, does a good job detailing how just about every US investigative agency was on Stanford’s tail for more than 15 years. But whether it was allegations of money laundering, or fleecing investors with the sale of dubious CDs, no one was ever able to get the goods on Stanford.

http://blogs.reuters.com/commentaries/2 ... any-lives/

Behind the scenes, Stanford was even more aggressive. as the company grew, he became renowned within law-enforcement circles for aggressive counter-intelligence. Stanford’s security chief was a former head of the FBI’s Miami office. But his greatest asset may have been a top security firm, Kroll associates, whose Miami office worked with Stanford for years. “Stanford was spending millions of dollars a year trying to figure out who was looking at him, and aggressively combating whoever it was,” recalls the former FBI agent. “Kroll was essentially running a propaganda campaign in defense of Stanford’s good name.

Kroll’s role in defending Stanford’s reputation, in both law-enforcement circles and the wider banking community, was an example of a controversial practice known within the private-security world as “reputational self-due diligence,” that is, vouching for a client’s good name… “It is, by all accounts, an exceedingly lucrative business… It is controversial, even inside the firm. Kroll is considered—how to say this nicely—well, they’re willing to take more controversial clients for this type of service.”

Kroll worked for Stanford for over a decade, and if it does turn out that they were running a regulator-quashing operation, this could turn out to be extremely bad for their reputation.

http://seekingalpha.com/article/141423- ... -operation

[beeline]

Posted on Wed, Jun. 10, 2009

As debt grows, desperate car owners turn to fraud


DAISY NGUYEN and BREE FOWLER

The Associated Press

LOS ANGELES - Driven to desperation, a growing number of financially strapped car owners are torching, sinking or ditching their vehicles and then reporting them stolen to cash in on the insurance.

SUVs have been found ablaze in the Nevada desert, cars have been dumped in a Miami canal and a BMW was discovered buried in a field in Texas. Some vehicles have been parked in the path of a hurricane.

Known as owner give-ups, the scams have increased even as auto thefts dropped nationally , a sign that the deepening recession is pushing the trend.

Authorities say most of the false claims are filed by first-time offenders looking for a quick financial fix with little regard for the consequences.

"We see people doing this kind of crime who ordinarily wouldn't steal candy from a store," said Tom Reilly, a sheriff's investigator in Dallas County, Texas.

[snip, more at link:]

http://www.philly.com/philly/business/20090610_ap_asdebtgrowsdesperatecarownersturntofraud.html?cmpid=16339736

[vigilant]

vig, you say above no one wants to get caught holding bonds--maybe (i mean, right now is a good time not to have any paper wealth), but look at GM. Senior bondholders are getting paid out, everyone else's contracts, shares, pensions are getting trashed. At what point does regular bankruptcy become flat-out looting? That rumbling about a sales tax sounds like it'd fit, too--what better way to pay senior bondholders than to institute regressive taxes that hit the people who buy bonds the least hard?

OLD MCDONALD HAD A FARM, EEII EEII OHHHHH


nathan28 I know that you personally don't need a response of this magnitude because you understand the game. But considering that its been a while since I have written anything financially related I decided to do an in depth explanation in answer to your question for forum readers that need and appreciate the 'finance for dummies' or 'cliff note' version. What I wrote is not complicated by financial jargon. Its written in alley language that we can all understand.

Very salient points, and what is happening at GM is looting. GM isn't going bankrupt, its being taken over by the biggest players on the block, and you know they will get paid no matter what they have to take from whomever. These people are big enough in the game, and control enough of the game, that they can direct these bailout funds to a "first in first out" status.

Regardless of what "should be", as you astutely know, these (sic) bailout investments can be tiered in any way the big players see fit, much like preferred and common stock. Preferred stock gets honored first, and the pension holders with common stock will get screwed if there isn't enough money left in the game. These people have no intention of putting themselves in a position to lose a single dime because they simply don't have to.

Looting was the intention from the beginning, and looting they have been doing from the first note of the first dance. They fully intend to load their books with every industry and business they want, such as GM, and have the bill paid by our future labor, us taxpayers.

The problem that could still arise for some of the players is the possibility that the biggest players are not through screwing the smaller players, the bag holders, the chumps, the Bernie Madoff's in the game. Every time a Bernie gets chumped, it directly extrapolates itself into the common man's pocket too through pension funds, stock holdings, municipal bonds that institutions were holding, etc...whatever...But it isn't the common man that is my focus of these thoughts in this writing.

A lot of people got burned when they pimped Bernie Madoff, because Bernie had pimped a lot of people out of their money under false pretenses. I haven't checked it diligently, but it appears that most of the people that got pimped by Bernie were still smaller players that were bilking the public through the ownership of charities, and other dubious enterprises.

Some were simply regular citizens with enough money to give Bernie, but it seems that the bulk may have been people that are not in a position to complain too loudly, like the people that were skimming charities. Its sort of like stealing money from a drug dealer, knowing that he can't complain too loudly, because if he does, the people that looted him will bust him and put him in jail.

Bernie was considered a 'new rich pest' that had no blue blood. Search Bloomburg Financial's site for an article that includes both Madoff and Rothschild. Read the touted esteemed write up of Rothschild's glowing 250 year history, as they compare it to Bernie's piker short term little piggy ass. The jest of the article is, over and over, "Bernie is a new rich slug with no bloodline, and Rothschild is an esteemed family of hundreds of years history that funded the Battle of Waterloo, etc..." Gives you a perspective of how this game is played.

Bernie was the guy at the parties, that had enough money to get in the door, but that nobody wanted to stand around and talk to because he was irritating. He had the right clothes and shoes, but you could just tell that he had tried too hard. Too trendy, and didn't have that old blood dignity, so to speak. He spent too much time hamming it up talking about "how we wealthy people do things"...blah...blah...blah...He tried too hard to fit in and equate himself with the true blue blood wealth instead of being quiet and humble, and in subtle manner letting the blue bloods know that he was inferior to them, and thanking them for letting him participate. He was the guy at the party that the truly wealthy blue bloods would say about, "i'll be damn glad when the bag he's holding hits the floor so we can get rid of his irritating ass because he is on my last nerve"...

As far as the shaky feelings for bond holders goes, the reason I alluded to that is because the yield curve has been close to having its back broken. The bond market was choking on that last load of bonds they were unloading. We have seen the biggest gap in the bond market in history. Too much too quick. This heist is unprecedented in all of history and some of the smaller "investors" also known as looters, in the chain are scared, and rightly so. This is a once in a hundred year reloading, and when that happens, anybody's fan can get hit with shit if they are not the biggest shark in the tank.

I use the word "smaller" as if 100 billion isn't a lot of money but we know it is. Maybe 'control" would be a better word. Smaller players have no control, and if they get chumped its OVER FOR THEIR ASS IN A BIG WAY. Not only are they broke, but since they were so easily disregarded and used up, they have to fear getting busted and end up in jail too. If the control guys are willing to bankrupt them, obviously they are only unrespected griss for the mill, and have no certainty that they won't end up in the worst possible position, if the game also needs a fall guy.

They realize that this situation has been pushed to its limit. Essentially, its all about selling the future labor and productivity of 'us' the taxpayer to whomever will buy the debt. These bankers only own and control the world by loaning a "promise that the mules in the field will produce", and generate a certain Gross Domestic Product. In the U.S. the bankers have approximately 300 million mules in the field. These mules, according to average statistics, will each generate X amount of dollars in X amount of time. Were they standing around talking, the conversation would be such as...literally too. We're "plowshares", and the incentive we receive, whether we know from whence the pain comes or not, is called the "sword"...

"What have you been up to lately?"
"not much, just driving swords into plow shares, you know how it is"
"which section of the herd are you going to buy next?"
"not sure yet, but I have some cowpokes checking the stock"

Owning debt is the most coveted place in the financial hierarchy. The more you own, the more interest on the debt that comes your way. Even more valuable, are the taxes that will be collected through the labor this debt represents. Taxes equal labor credits, energy, force, work, in practically endless supply. For the biggest players, its free money, because they are not loaning anything at all of value that they own, other than our labor. They can sell this future labor to buyers for a lump sum right now. These buyers are mostly buying this future labor with "nothing" too, because the Chinese Government is printing money too, its only paper. It literally is a 'slave trade' and nothing more.

We enter into it voluntarily because we need food, so we need those bank note dollars. It is legal to pay workers with "money" but a man just got arrested for doing so. Legally these bank notes we carry around are not money. Gold and silver coin are indeed money, and the man that got busted paid his workers in gold coin, real money. He paid them at the rate of the face value of the coin, which is of course worth a lot more than face value, and according to the constitution that is legal money.

The grocery business, like the car and housing industries, is being bought by the same people. Large independent farmers were paid not to grow food. Remember Willie Nelson and farm aid? Now it is down to the small yard plot gardener growing a few veggies in his back yard. They just passed laws to regulate that too, because of course, you're too dumb to grow food and might hurt yourself with it, so it needs to be inspected. If you transport it, even a basket of tomatoes that you are taking to your Aunt, it is subject to reporting, tracking, and inspection. Slowly, the requirements to even grow a tomato plant will become so stringent, and the seed cost so high, they plan to drive the backyard gardener out of business too. You won't be able to save seeds from last years plants because seeds are being rendered "ungerminable" before shipment. So...seeds will become scarce.

A lot of our asses are now working for the Chinese, Russians, French, or whoever will fork over something of value to get their hands on our future labor. Instead of being put on a ship and taken overseas like the old days, electronic transactions and transfers of items of real value are used due to the fact that we now have cargo planes to collect the ransom for our labor quickly. Slave traders get to keep the slaves, sell their labor, while also making them buy their goods from the company store, which increases the value of a slave to its owner. Anything the slave can be enticed or forced to buy or borrow is extra revenue. The old days of having to buy from the "Company Store" are just around the corner...again.

Some of these guys have gotten so big, that the U.S. is only one pasture in a much bigger farm. This makes the game much more dangerous if you have no control because it makes it much harder to understand how much debt has been sold from the farm. Pastures are countries, and there are farms with several pastures tended by the same farmer (banker, or small group of bankers) Rothschild's wife didn't allude to him as a "gentlemen farmer" for nothing ya know. Farmer of men...Old McDonald had a farm, eeii eeii ohhhh. Means more than ya think. Fe Fi Fo Fum, I smell the blood of an Englishman...means more than ya think.

These deals are structured in all kinds of crazy ways, and the words "bond market" covers it for the most part, and aside from, and in addition to that, the sorts of deals they swing that we never know about are as many and as creative as they can think up. They might take a goldmine in trade for our asses. Just like all those CDO's that stand as an untraceable front for the hidden companies behind them that are buying the GM's, and etc...We never know. This future labor is being sold off, and the bulk of it is being kept by our owners for themselves, because it is their lifeblood, and without it, the whole house of cards falls tomorrow. They are forcing us to borrow money, and also forcing us to work our asses off to pay the interest on what we borrow, and forcing us to pay taxes on the worthless paper they run through our hands.

This paper, to these bankers, only represents one thing, and that is a "labor credit". If they can get us to work for these pieces of paper, and then force us to give a lot of it back to them, they can in turn give it back to us, and have us do whatever they want us to do for them. We have to have it, for one reason, and that is because that is what the bankers demand that we pay taxes with. Since it is what we have to pay taxes with, we must scramble around and get us some of it. That is what makes it valuable as a trading unit between us, the common folk, too. If we didn't need it for taxes, we would barter and trade amongst ourselves, because we wouldn't need their little pieces of paper. We might use a lot of it, but we wouldn't have to have it.

Each dollar represents a certain amount of labor from a school teacher, plumber, engineer, etc...THE TRUE BEAUTY IS, THAT THEY CAN STORE THESE LABOR CREDITS, INDEFINITELY, AND THEY CAN BE CONVERTED INTO ANYTHING THESE BANKERS LITTLE HEARTS DESIRE. ]

A plumber pays taxes, but right now they don't need plumbing done. No problem. They store his labor in a jar or a piggy bank. In a couple of days they need a soldier to go kill some folks that wear turbons. No problem, they take the plumbers labor, simply convert it into a soldier, by giving the soldier the plumbers labor, in the form of his tax money. A teacher's labor can be magically converted into an airplane, or the services of an engineer. These labor credits don't spoil, and like true magic, they become whatever these people desire. Now thats magic...

If they shove too many trillions in taxpayer debt down our throats, more than we can work off in a reasonable amount of time, the people that fork over something of value to buy it, and expect a return, will get screwed because too much debt was sold, and there are not enough of our little mulie asses to work it off. These people that get screwed could be anybody from hedgefunds run by rich kids that inherited a trust fund, to some foreign government, but it damn well won't be the international bankers that own us and run this side of the show.

Anything that gets left holding the bag, if it squeaks and causes trouble, will be eaten. Plain and simple....

Question is, truly, how much debt have they sold? How much do they plan to keep for themselves? Are they selling way too much, with full intention of eating some squeakers, because they know they can screw them out of some valuables in the process?

Probably...Folks that have enough money to play this game could end up with that little Troll Doll you win at the carnival, with long blue wooly hair in trade for their valuables. Some already have...

I'm not sure if that is what these rumors of a run on the Comex Gold Exchange are about or not. Of course Comex doesn't have the bullion to back the worthless paper receipts they have written. They have sold tons upon tons of gold that does not exist, also known as "paper gold". John Brown buys gold from Comex, but of course most of the time John Brown does not take physical delivery of the gold. Like a stock purchase, he accepts a piece of paper that says, "John Brown own 1 million in gold".

This is the oldest game in town, and is how fractional reserve banking was initially born. Just like the fictional money we think we have in the bank, that is not there, neither is the gold in the Comex Gold Exchange. Like a bank seldom if ever suffers a rush of people wanting their money all at once, call a "run", neither does the Comex suffer a "run" from people all suddenly showing up demanding their gold.

The biggest players are not stupid, and they don't buy paper gold. If they buy gold, they have it delivered to the doorstep COD. The rest of the people that buy gold, almost never take physical delivery of it. The people that do are usually the incredibly small buyers that think its nifty to have two gold coins under the bed, or the smart people. Most people are not smart enough to demand physical delivery.
Comex has a lots of folks goodies held at ransom though...

[smiths]

on bonds

What's happening in bond land? The latest US govt bond auction was for $110 billion. Two years ago the average monthly bond auction total was $5 billion, $10 billion, numbers like that. The US govt finances its debt with bonds. A $2 trillion deficit means $2 trillion in new bonds needs to be issued. Approx. $200 billion a month.
While that action may be in the pipeline, as of today the ACTIONS taken in the bond market by the players are what is important. And those actions, believe it or not, are to buy bonds. Money is starting to come out of general equities, aka the stock market, and into bonds. Money is not coming out of bonds, it's going in. This is what the chartists don't understand. Money isn't just trickling in, it's pouring in. But it's not enough to meet the govt's skyrocketing demand for money!

http://www.greenenergyinvestors.com/ind ... 0&p=110721

on the COMEX and precious metals

My reaction: The strange activity in precious metals includes:

1) A surprisingly small amount of gold contracts were delivered, especially when compared to silver. Only 16% of June gold contracts standing for delivery on Thursday were delivered compared to 94% of June silver contracts.

2) The open interest numbers for Friday's big up day in both gold and silver unexpectedly/unexplainably fell. If shorts had actually been covering their positions, Friday's price activity would have been much more spectacular to the upside. This suggest that perhaps there were more deliveries than reported.

3) There has been record breaking volume of contracts traded in both gold and silver in the last few weeks.

4) There have been large strange fluctuation in COMEX’s reported silver inventories.

My Suspicions:

Delivery requests are being understated. There is only one thing that can make open interest go up: someone sells new contracts to short gold. However, there are two things that can cause open interest to decrease:

1) Short covering—Shorts buy back contracts they sold.
2) Deliveries—Shorts delivery gold to settle contracts.

I believe open interest for gold fell on Friday because of deliveries that were, for some reason, not reported. As for what is happening with COMEX’s silver inventory or the eye-popping volumes being traded, I have no idea, but it is strange.

http://www.marketskeptics.com/2009/06/m ... etals.html

[smiths]

they call it 'thinking the unthinkable', we would call it 'mainstream acknowledgment of the obvious'

what if ... individuals across the world start dumping U.S. dollar notes, i.e., U.S. dollar bills?
We have heard that “rogue” states, like Iran, Venezuela, Nicaragua, Bolivia, as well as not-so-rogue states like China, Brazil, Argentina, Russia, etc., have been discussing a way to go from a dollar pattern for multilateral trade to another country’s or a combination of countries’ currencies in order to achieve independence from U.S. monetary policy decisions.
While these attempts, or at least the noise they produce in the media, have increased during the last year or so, my biggest concern is not with what these countries may do, but what individuals across the world may do if they believe the U.S. dollar is in trouble. Why?
Because one of the advantages the U.S. Federal Reserve has over almost all of the rest of the world’s central banks is that there seems to be an almost infinite demand for U.S. dollars in the world, which has made the Federal Reserve’s job a lot easier than that of other central banks, even those from developed countries. Furthermore, approximately three-fourths of U.S. dollar bills are in foreign hands or foreign safe deposit boxes or mattresses, and an about-face by individuals across the world regarding these holdings of U.S. currency could be a huge blow to the value of the U.S. dollar, U.S. debt and the Federal Reserve’s monetary policy. Why?
Because all those holdings of U.S. dollar bills are basically a free loan from foreigners to the U.S. government, and if there is a massive run against the U.S. dollar across the world then the Federal Reserve will have to sell U.S. Treasuries to exchange for those U.S. dollars being returned to the country, which means that the U.S. Federal debt and interest payments on that debt will increase further.
This means that we will go from paying nothing on our “currency” loans to having to pay interest on those U.S. Treasuries that will be used to sterilize the massive influx of U.S. dollar bills into the U.S. economy, putting further pressure on interest rates.

1 Year UST - 1 Yr LIBOR inversion
The US Treasury market had one of the most interesting price action days on Friday 5th June 2009, and reveals a significant shift in the global monetary forces.
What Happened?
The 2 and 3 year part of the curve widened by 35-40bp, whereas the long end (10yr+) sold off a more modest c.10bp. With a 25-30bp bear market curve flattening (2/10’s).
Positioning
All of the hot money (levered) in the bond market has been sitting very long the front end of the UST curve earning the steep roll down, and short the long end. Friday’s price action would have gone through a significant number of stop levels, triggering the first wave of deleveraging on this trade (yes there is more to come).
What has the Market Realized?
It has realized that the US Treasury market and the USD Libor markets are about to massively unhinge, or at least have the potential to unhinge without a “new” form of Fed/Central bank policy intervention.
Why the Fear Now?
Green shoots…..no….. But if you are highly levered investor and the trade is really crowded (UST curve Bull Market Steepening) it would only take one freak (non-trend friendly) monthly/quarterly number to completely to push through your stop level.
What Does All this Mean?
The price action will be very rocky as we will see a series of rapid deleveraging events in the price action.
the start of the “unhinging” of the UST market is causing a rush to risk assets. Market bears please realize this – its not because risk assets are suddenly looking so much better that prices are rising, but rather that the only massive, liquid alternative is looking less well now.

http://zerohedge.blogspot.com/

[smiths]

and the DTCC has been talked about here a few times, so here is some ongoing information on it,

CDS and option traders love to hate and hate to love the Depository Trust & Clearing Corporation (DTCC). But few aside from those who trade derivatives over-the-counter care about the DTCC. Here is a reason why you should: "Last year DTCC settled $1.88 quadrillion in securities transactions across multiple asset classes. We essentially turnover the equivalent of the U.S. GDP every three days."

Below I present DTCC's full testimony before the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises titled "Effective Regulation of the Over-the-Counter Derivatives Markets."

Also if you have never heard of DTCC before you are excused. Taken from the testimony:

Now, many of you may not have heard of DTCC before. That’s purposeful. We have traditionally kept a low profile, given the critical nature of the role we play in U.S. financial markets.

DTCC’s depository is the largest securities depository in the world, providing custody and asset servicing for 3.5 million securities issues from the United States and 110 other countries and territories valued at $30 trillion.

Additionally if you care as to who, if anyone, has insight into the dealings of the DTCC:

We are regulated by the SEC, the Federal Reserve Board of Governors and the New York State Banking Department for many of our activities.

Oh, the same Federal Reserve that is a dead end in terms of accountability? How convenient. (We won't even touch on the SEC's effectiveness as a regulator, and have never even heard of the last guys). Wouldn't make sense to have someone actually transparent regulating this most critical of financial enterprises, would it.

So what does the DTCC do:

At its core, DTCC is a huge data processing business, involving the safe transfer of securities ownership and settlement of trillions of dollars in trade obligations, under tight deadlines every day. At the same time, DTCC’s primary mission is to protect and mitigate risk for its members and to safeguard the integrity of the U.S. financial system. Mitigating risk means we not only have the capacity to handle unpredictable spikes in trading volume, but that we have the business continuity and resiliency to withstand both the “unthinkable” –and even the “unknowable.”

But according to Obama, Bernanke and Geithner the unthinkable, and even the unknowable, will never show their faces again? Am I wrong? But, I guess the DTCC is clutch - here is why:

I’d submit to you Mr. Chairman, and Members of the Subcommittee, that had DTCC not had the foresight to create this Trade Information Warehouse and load the Warehouse with all these records of CDS trades in 2007, we might still be sitting here today in 2009 trying to sort out the total exposure of trading obligations following the Lehman bankruptcy, i.e., who traded with whom, at what point in time and at what price?

Oh yeah right, the same database that one is able to download and play with only if one has an advanced degree in computer hacking.

Zero Hedge will write much more on DTCC in the coming days. However, for now it makes sense to get acquainted with this organization: after all, in their own words, without them, not even Goldman Sachs would likely exist. Much more to come.

http://zerohedge.blogspot.com/2009/06/b ... -have.html

[smiths]

thye ninja is as always well worth reading as well

http://benbittrolff.blogspot.com/2009/0 ... t-and.html

[seemslikeadream]

http://news.bbc.co.uk/2/hi/business/8095702.stm

World Bank sees even worse slump

The world economy will shrink by much more than previously thought, according to the World Bank.

The world economy will contract by 3% this year, far more than the 1.75% drop it predicted earlier this year.

"Most developing country economies will contract this year and face increasingly bleak prospects," World Bank president Robert Zoellick said.

The gloomier forecast comes despite recent signs that the worst of the recession is over.

This year is likely to be the first global recession since World War II.

'Aftershocks'

The revised figure brings it closer in line with the OECD, which represents rich nations, who predicted that the world economy will shrink by 2.7%.

The World Bank's sister institution, International Monetary Fund (IMF), said in April the world economy will shrink by 1.3% this year.

However, the forecasts are broadly compatible as the World Bank methodology gives a smaller weight to China, still the world's fastest growing large economy.

Mr Zoellick still predicted a recovery next year.

"Although growth is expected to revive during the course of 2010, the pace of the recovery is uncertain and the poor in many developing countries will continue to be buffeted by the aftershocks," he said.

The World Bank said the International Development Association (IDA), a division of the World Bank that focuses on the 78 poorest countries, had received a record number of pleas for help.

For the year to 30 June, the number of grants and interest-free loans are expected to be $13bn, the most ever. In the previous year, the figure was $11.2bn.

The World Bank forecast comes before a meeting of the finance ministers from the Group of Eight richest nations on Friday in Lecce, Italy.

[chiggerbit]

http://www.atimes.com/atimes/China_Busi ... 9Cb01.html

US moves into back seat

[stefano]

Judge narrows scope of AIG case

A judge in an AIG civil trial involving Hank Greenberg, the insurer’s former CEO, imposed strict curbs on the scope of the federal court hearing on Monday. The public bail-out of AIG and the furore over its controversial bonuses cannot be discussed in a trial over a $4.3bn lawsuit involving Greenberg; neither can investigations into accounting practices that led to the departure of Greenberg from AIG in 2005, said judge Jed Rakoff.
_____________
Jed Rakoff has previously found in favour of the Recording Industry Association of America in a suit against mp3.com, and has dismissed a suit brought in a US court by class of Ecuadoreans, including several indigenous tribes, claiming that Texaco caused extensive destruction to the Oriente rainforest.

[smiths]

New rules put Fed in hot seat

By Krishna Guha in Washington

Published: June 16 2009 20:39 | Last updated: June 16 2009 23:02

President Barack Obama will reveal plans on Wednesday for a new system of US financial regulation that gives the Federal Reserve primary responsibility for averting future financial crises.

Mr Obama will also announce plans for the creation of a council of regulators and a new consumer protection regulator. He is expected to call for the elimination of the Office of Thrift Supervision, one of the nation’s bank regulators.

But the administration will not attempt a more far-reaching consolidation of regulators due to the political difficulties involved. Instead, the plan proposes rule changes to limit the capacity of institutions to choose their regulator.

Mr Obama will propose giving the Fed powers to address the build-up of risks that threaten the system as a whole, with a focus on core institutions and financial markets. It will not require that the Fed seek approval from the council of regulators to act against systemic risks. The new systemic risk powers for the Fed will be accompanied by tougher capital requirements for banks – particularly the most important banks – and moves to strengthen the infrastructure of core financial markets.

The US president aims to curb excessive risk-taking through reform of securitisation markets and changes to compensation practices, including “say on pay” for shareholders and assessment by regulators of compensation-induced risks.

The Fed will retain day-to-day supervision of the largest bank holding companies – which the Bush administration had proposed taking away – and may become sole regulator. The Fed will also directly supervise non-bank financial companies that reach a size and complexity comparable to these banks.

The US central bank is also likely to be given the final word on bank capital requirements, including a surcharge for the systemically important financial institutions. However, not all systemic risk powers will be concentrated in the Fed. Mr Obama will propose giving the Federal Deposit Insurance Corporation special resolution powers to wind down important financial institutions.

These powers will extend its capacity to manage the orderly failure of a complex financial company, which policymakers hope will mitigate the moral hazard created by recent bail-outs. Nonetheless, the plan represents a big bet on the Fed and this is likely to prove controversial in Congress, with critics charging that the US central bank failed to exert its existing regulatory powers over banks and mortgage lending.

Within the central bank, officials have mixed feelings. Fed chairman Ben Bernanke believes that systemic risk powers – also known as “macroprudential” powers – may allow a central bank to limit credit and asset price bubbles not easily addressed with interest rates.

But some current and former Fed officials worry that the central bank is setting itself up for failure, and that the exercise of systemic risk powers will entangle it in political fights that will undermine its ability to operate an independent monetary policy. The wider regulatory reform plan has already attracted criticism from bankers who say it will add to the cost of capital.

Writing in the Financial Times on Wednesday, George Soros, the investor, says a requirement for lenders selling loans on as securities to retain 5 per cent exposure “is more symbolic than substantive”.

http://www.ft.com/cms/s/0/36b5409e-5aaa ... ck_check=1

[seemslikeadream]

http://www.guardian.co.uk/business/2009 ... s-payments

Goldman to make record bonus payoutSurviving banks accused of undermining stability



Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.

A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.

Staff in London were briefed last week on the banking and securities company's prospects and told they could look forward to bumper bonuses if, as predicted, it completed its most profitable year ever. Figures next month detailing the firm's second-quarter earnings are expected to show a further jump in profits. Warren Buffett, who bought $5bn of the company's shares in January, has already made a $1bn gain on his investment.

Goldman is expected to be the biggest winner in the race for revenues that, in 2006, reached £186bn across the entire industry. While this figure is expected to fall to £160bn in 2009, it will be split among a smaller number of firms.

Barclays Capital, Credit Suisse and Deutsche Bank are among the European firms expected to register bumper profits, along with US banks JP Morgan and Morgan Stanley following the near collapse and government rescue of major trading houses including Citigroup, Merrill Lynch, UBS and Royal Bank of Scotland.




http://www.boston.com/news/world/europe ... _each_day/

1 billion people going hungry each day - “A hungry world is a dangerous world,’’

ROME - The global financial meltdown has pushed the ranks of the world’s hungry to a record 1 billion, a grim milestone that poses a threat to peace and security, UN food officials said yesterday.


Because of war, drought, political instability, high food prices, and poverty, hunger now affects 1 in 6 people, by the UN estimate.

The financial meltdown has compounded the crisis in what the head of the United Nations Food and Agriculture Organization called a “devastating combination for the world’s most vulnerable.’’

Compared with last year, there are 100 million more people who are hungry, meaning they consume fewer than 1,800 calories a day, the agency said.

“No part of the world is immune,’’ said Jacques Diouf, the UN agency’s director general. “All world regions have been affected by the rise of food insecurity.’’

The crisis is a humanitarian one, but also a political issue.

Officials sought to stress the link between hunger and instability, noting that soaring prices for staples, such as rice, triggered riots in the developing world last year.

Josette Sheeran of the World Food Program, another UN food agency based in Rome, said hungry people rioted in at least 30 countries last year. Most notably, soaring food prices led to deadly riots in Haiti and the overthrow of the prime minister.

“A hungry world is a dangerous world,’’ Sheeran said. “Without food, people have only three options: They riot, they emigrate, or they die. None of these are acceptable options

[chiggerbit]

http://www.washingtonpost.com/wp-dyn/co ... 59_pf.html

Recovery's Missing Ingredient: New Jobs
Experts Warn of A Long Dry Spell




http://online.wsj.com/article/SB1245624 ... ts_news_us

Numbers On Welfare See Sharp Increase