Archive for October 4th, 2008


Major bank failure in Germany

Hypo Real Estate, the second largest real estate lender in Germany, is circling the drain after an emergency rescue failed. They are about the size of Lehman.

The financial system cannot take another body blow of this magnitude. The authorities had better patch this one up over the weekend, or we face even more credit market panic on Monday.

Worse, this could apparently have profound effects on the Euro itself.

Could we just get through one weekend without the collapse of yet another major financial institution? Guess not…

No Comments »

Lehman failure craters Iceland bank, maybe their economy too


(Icelandic salted cod. From Flickr.)

The US financial crisis is causing an implosion in Iceland, which is forcing a cascade into the European financial system.

Serious talk of a bank holiday and food hoarding has been heard.

Head of largest oil company says oil imports may cease because of lack of US dollars.

Glitnir, a large bank in Iceland, was way overextended on now-toxic real estate. They were already in trouble when Lehman, their primary line of credit, went under. They had no back up financing and soon could not pay bills. The government was forced to take over the bank, but now no one wants to deal with any Iceland bank. And they don’t want their currency, the krona, either. It has dropped 14% since Sept. 29 against the euro.

Hey, maybe we can go back to barter - frozen or salted cod for wheat and red wine. Worked in the 1930s.

The decision by Paulson and Bernanke to let Lehman die has, in retrospect, turned out to be a serious mistake. The unintended consequences have been huge. Iceland is but one example. Financial institutions have money in the billions they can not access because of the bankruptcy proceedings plus there are enormous amounts of shadow banking system transactions (CDOs, CDSs) that Lehman was a party to that are also frozen and may never be transacted.

2 Comments »

Bad business plan. Maybe illegal too

“We called them ‘foreclosure loans‘ because they were doomed to fail,” said the [real estate] agent, who didn’t want to be identified because she’s still in the industry. “The lender expected the borrower to lose the house and the bank would resell it for its higher appreciated value. But the market dropped and they got caught with their pants down.”

So they made loans with no due diligence that they knew would fail? Seems to me laws could have been broken here. Criminal as well as civil investigations are called for, because fraud may have indeed occurred.

No Comments »

Are the bailouts socialist?


A conservative economist says yes.

And just the other day, I talked to another prominent conservative economist who suggested a somewhat similar plan. I asked whether all these plans didn’t smell of socialism. The economist’s answer: “I think that bridge has already been crossed.”

Actual socialists have been hollering that these plans are not socialist at all, but bailouts for the wealthy. Well, maybe some of them are. But Fannie and Freddie, who own 50% of the mortgages in the US, have effectively been nationalized by the federal government, as has AIG, the biggest insurance company in the world. And that is, without question, socialist.

But the bridge has been crossed. The credit markets have seized up, as witness California saying it may need a short-term federal loan because it can’t access the credit markets. That’s where we’re at now. Their can’t be a plan because, as a British banker said recently, “No one has experience with failure on this scale. No one.”

So, rightfully or wrongfully, the government will do whatever it deem necessary to unfreeze the credit markets, as if part of it is socialist, then so be it.

6 Comments »

Whatever happened To Black Power?

In this essay, John Wight talks about Black Power and the leaders who led it in the 60’s. They had huge impact but now “the very idea of Black liberation, would appear to be extinct.”

What happened? I think it was a lot of things. Some Blacks did move into the middle class (and higher, look at Oprah.) Rage does get tempered when one’s living conditions demonstrably improve. This hardly happened to all Blacks, but hey, back in the 60’s who would have thought that, four decades later,there would be Black billionaires and quite probably a Black president. No one, that’s who. But for too many, conditions seem scarcely improved. Just look at New Orleans and Katrina.

Saul Alinksy was right when, in the 60’s, he said it was idiocy for the Panthers to say all power grows out of the barrel of a gun when the other side has all the guns. If you yell “Off the pigs” long enough, law enforcement will probably take you way more seriously than you might have supposed.

The Black Power movement had a major influence on the political world at large, one that is still echoing. They brought millions to radical political consciousness, and for a while, the whole world was watching. Their legacy is still with us.

Whatever happened To Black Power?

When analyzing and comparing the ferment of the US political landscape during the sixties and seventies, the years of the anti-Vietnam war and Black civil rights movements, to the political landscape in the US today, perhaps the most striking thing is the absence of Black militant voices calling not only for integration into the political system but a change in the system itself.

At certain periods of the sixties and seventies it seemed as if the US was on the verge of a social explosion which threatened to overturn and bring down at long last a white establishment which had held the levers of economic and political power since the nation was founded.

A Black liberation movement arose in tandem with the civil rights and antiwar movements, comprising those who believed that the non-violent and reformist civil rights movement, led by Dr Martin Luther King, would effect no meaningful social change in the plight of America’s Black population, which at that time numbered around 22 million (11 percent of the population). Blacks occupied the bottom rung of the economic ladder, as they had done since slavery was formally abolished in 1865; they comprised the majority of the nation’s prison population, occupied the worst housing, comprised the lowest number of college graduates, had the lowest life expectancy, the highest rate of infant mortality - in general scored worst in every social indicator.

Today, in the year 2008, the Black population of the United States is around 35 million (13 percent of the population). Blacks occupy the bottom rung of the economic ladder, as they have done since slavery was formally abolished in 1865; they comprise the majority of the nation’s prison population, occupy the worst housing, comprise the lowest number of college graduates, have the lowest life expectancy, the highest rate of infant mortality – in general Blacks in America today score worst in every social indicator (The Poor In Developed Countries – 2007).

Yet, whilst the social conditions of Blacks in America remains virtually the same today as a generation ago, no militant Black movement has grown in response. In fact, to all intents and purposes the Black liberation movement, indeed the very idea of Black liberation, would appear to be extinct.
Continue Reading »

2 Comments »

Because it’s time for a giggle

http://www.thewebsiteisdown.com/

1 Comment »