Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin.
Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers.
Crossposted at Daily Kos. If you choose to recommend it there, the Rec Button may have been pushed to the bottom after the last diary comment made.
THE WEEK IN EDITORIAL CARTOONS
This weekly diary takes a look at the past week's important news stories from the perspective of our leading editorial cartoonists (including a few foreign ones) with analysis and commentary added in by me.
When evaluating a cartoon, ask yourself these questions:
1. Does a cartoon add to my existing knowledge base and help crystallize my thinking about the issue depicted?
2. Does the cartoonist have any obvious biases that distort reality?
3. Is the cartoonist reflecting prevailing public opinion or trying to shape it?
The answers will help determine the effectiveness of the cartoonist's message.
:: ::
Chris Britt, see reader comments in the State Journal-Register (Springfield, IL)
Maybe the Internet is the only way to get the ear of a banking corporation so deaf and so greedy that it cannot hear my screaming and thinks it can do whatever it wants with my money. Maybe even this diary won't work to open their ears and pierce their conscience and cause them to release the money. Maybe Bank of America pwns all of us. I hope it doesn't, but I suspect it does.
This diary is about my interaction today with B of A. And it's about why my son cannot get my hands on $4,019 of his own money until after 5 pm on December 7. This diary is being written because, guess what, he needs the $$ before then. It's his, isn't it? Well, maybe not. Not until after 5 pm on 12/7.
Moody's released a report that would be headlines in the financial news media of any country that wasn't in bed with Wall Street.
The average maturities of new debt issuance by Moody's-rated banks around the world fell from 7.2 years to 4.7 years over the last five years - the shortest average maturity on record.
So how much is that in raw numbers? Banks will face $7 Trillion in maturing debt before the end of 2012, and $10 Trillion by the end of 2015.
Those are staggering numbers, but it doesn't end there.
Gee, it's a good thing the governments rode to the rescue with billions of dollars in Corporate Welfare for the lying cheating fucktards who screwed everything up, no?
Otherwise, gosh, we would have had people not being able to buy bread, power shut off to everyone, riots in the streets ...
No, we would have had the banks nationalized. Which is what should have happened in the first place.
But here with the 1-year anniversary of the collapse, we are having a ridiculous level of retroactive propagandizing BY the criminals who fucked everything up in the first place. The same people who STILL haven't had any new regulations to control their activities, the same people who STILL haven't faced any repercussions for nearly destroying the economy of the western world, are now expecting us to BELIEVE their bullshit about how they managed to dodge the bullet and keep us all from anarchy and starvation ...
This begs the question for me -- why haven't we had a run on the banks? Who in their right mind would continue keeping their money in banks? How stupid are people? Wait, I already know the answer to that.
"Hey, I know we almost destroyed the world economy, and took every dollar you owned with it, but hey, it's all good now! Trust us!"
Oct. 7 (Bloomberg) -- A year ago today, Royal Bank of Scotland Group Plc and HBOS Plc were close to collapse, causing a chain reaction that could have ended with riots in U.K. cities, security analysts and economists said.
Bank failures would have forced the government to cancel police leave and deploy troops as the breakdown of the financial payments system threatened the ability of utilities to provide essential services, said David Livingstone, a fellow at the Royal Institute for International Affairs in London, a former adviser to the government's Cobra crisis response committee.
"You are talking about a situation with mass disorder and panic," the former Royal Navy officer said in an interview. There would be "riots, pandemonium, everyone fending for themselves."
Chancellor of the Exchequer Alistair Darling, Bank of England Governor Mervyn King and Financial Services Authority Chairman Adair Turner met at 5 p.m. on Oct. 7, 2008, and readied a 250 billion-pound ($398 billion) rescue for the banks in the 16 hours before they opened for business the following day. In response to a Freedom of Information Act request from Bloomberg News one year on, the Treasury declined to say if it had a contingency plan for the two banks, then or now.
Releasing such information would probably "have a destabilizing effect on financial markets," damage the government decision-making process and cause commercial harm to the banks involved, the Treasury said in a letter.
"In the current economic climate, economic perception, even if totally misconceived, is important and has the capacity to alter market behavior," the government said. "To confirm or deny whether or not the information is held, either in relation to the banks mentioned in your request or more generally" would hurt the banks and the U.K.'s economic interests.
'Catastrophic' Costs
The crisis last year was the worst Britain had faced in peacetime, Darling told the British Broadcasting Corp. last month. The two banks were not "confident they could get to the end of the day," on Oct. 7, King told the same program.
"You would have had unmitigated panic and a bank run," said Tom Kirchmaier, a fellow at the London School of Economics. "People would not have been able to buy bread. The cost to the economy would have been catastrophic."
RBS and HBOS, then in talks to be taken over by Lloyds TSB Group Plc, had more than 35 million business and individual customers with 475 billion pounds of deposits, 22 percent of the U.K. total, held at about 3,250 branches.
'Contagious Effects'
"If RBS hadn't been propped up as it was, in practice it would have been nationalized the following week," former Bank of England deputy governor John Gieve said in a Bloomberg Television interview. "If RBS, HBOS, Lloyds had gone down, that would have had huge contagious effects throughout the rest of the world."
The failure of Edinburgh-based RBS and HBOS would have had a domino-effect with customers seeking to take out their deposits from other lenders and causing a wider run on U.K. banks, said Vicky Redwood, an economist at Capital Economics Ltd.
"Trust in the banking system would have completely collapsed" and would have generated civil unrest, said Redwood. "People would have been rushing to take their money out of the other banks and you would have been heading back to the depression era."
I just read this over at http://www.cryptogon.com, which is a great site. He doesn't tell you who wrote it either, but he links to it. It's succinct but covers the bases, and is brutally to the point.
In short, it might be the best thing I've read regarding the current disastrous situation in this country.
It's titled "Common Sense 2009"
The American government -- which we once called our government -- has been taken over by Wall Street, the mega-corporations and the super-rich. They are the ones who decide our fate. It is this group of powerful elites, the people President Franklin D. Roosevelt called "economic royalists," who choose our elected officials -- indeed, our very form of government. Both Democrats and Republicans dance to the tune of their corporate masters. In America, corporations do not control the government. In America, corporations are the government.
This was never more obvious than with the Wall Street bailout, whereby the very corporations that caused the collapse of our economy were rewarded with taxpayer dollars. So arrogant, so smug were they that, without a moment's hesitation, they took our money -- yours and mine -- to pay their executives multimillion-dollar bonuses, something they continue doing to this very day. They have no shame. They don't care what you and I think about them. Henry Kissinger refers to us as "useless eaters."
But, you say, we have elected a candidate of change. To which I respond: Do these words of President Obama sound like change?
"A culture of irresponsibility took root, from Wall Street to Washington to Main Street."
There it is. Right there. We are Main Street. We must, according to our president, share the blame. He went on to say: "And a regulatory regime basically crafted in the wake of a 20th-century economic crisis -- the Great Depression -- was overwhelmed by the speed, scope and sophistication of a 21st-century global economy."
This is nonsense.
The reason Wall Street was able to game the system the way it did -- knowing that they would become rich at the expense of the American people (oh, yes, they most certainly knew that) -- was because the financial elite had bribed our legislators to roll back the protections enacted after the Stock Market Crash of 1929.
Congress gutted the Glass-Steagall Act, which separated commercial lending banks from investment banks, and passed the Commodity Futures Modernization Act, which allowed for self-regulation with no oversight. The Securities and Exchange Commission subsequently revised its rules to allow for even less oversight -- and we've all seen how well that worked out. To date, no serious legislation has been offered by the Obama administration to correct these problems.
From Reuters today we read that bonuses paid out by banks exceeded total revenue.
What?! you say?.
Bonuses paid to executives at nine banks that received U.S. government bailout money in 2008 were greater than net income at some of the banks, the office of New York Attorney General Andrew Cuomo said on Thursday.
For all of us who are (ahem) less than satisfied with the vigor of the US Federal Government's prosecution and enforcement of banking laws against large financial institutions, the US Supreme Court on Monday bucked 145 years of tradition to deliver an important and far reaching opinion that falls squarely on the side of greater accountability.
In Cuomo v. Clearing House Association (PDF), the court struck down a regulation by the US Treasury Department's Office of the Comptroller of the Currency (OCC) that prohibited enforcement of state banking laws against national banks.
The case involved an attempt by former New York Atty. Gen. Eliot Spitzer in 2005 to investigate bank lending practices, such as whether a disproportionately large percentage of high-interest mortgages were made to minorities.
After Spitzer sent letters of inquiry to national banks, including Wells Fargo & Co., Citibank and JP Morgan Chase & Co., a bank consortium called the Clearing House Assn. filed suit to stop the investigation.
The Treasury Department's Office of the Comptroller of the Currency, which regulates national banks, also filed suit, arguing that Spitzer was improperly encroaching on its rule under an 1864 law that it was the only entity with the "visitorial power" to examine such banks. The suits were combined and upheld by lower courts.
But Spitzer's successor, Andrew Cuomo, appealed to the Supreme Court, arguing in part that the federal agency's interpretation in effect shielded national banks from states' enforcing their own laws to protect consumers and prohibit discrimination.
The Jurassic Senate of the GOPosaurs and DINOsaurs is a fucking disgrace. Don't blame Obama, blame these craven, weak kneed traitors to their nation.
I only discount Ted Kennedy and Al Franken for obvious reasons, as well as Bernie Sanders, who votes more like I would than any other Senator. If you think your senator should get a pass here give me a good reason why,.
The rest of the Senate can go fuck itself.
That's right. The Senate has sold out to the banks, the insurance companies, the special interests, anybody with a dollar gets their time.
40 GOPosauars who say "No No!" , 55 DINOsaurs who say "Not Now!", Arlen Specter trying to remember which side he is on today and whatever the hell Joe Lieberman is skittering across the wall.
The Conservative status quo sets the tone in Washington and in the MSM. The GOP sets the obstruction agenda, plain and simple, and I hope you are with me when I say I have had enough.
(P.S. - thank you Buhdy for putting this on the FP, when I saw the words
There is a lot of talk about the way which we need to go in order to fix our current very serious problems in the financial sector and the economy in general. There can be very little doubt one of the major causes of our crisis is the repeal of the Glass-Steagall Act in 1999. Now the Dog knows that some of his reader's eyes are going to glaze over when the old hound starts to talk about economic policy, but he promises not to make it too dry and boring. Besides, none of us can really have an informed opinion if we don't wade through this stuff.
A black hole gravitationally sucks in everything that comes near it, and nothing can return from the other side of the event horizon once sucked in.
Banks lending money is one of the major, if not THE major way they produce revenue and profit. In any business, when sales are down you do everything you can do to increase sales revenue - or you go bust - UNLESS you can produce revenue another way.
Yet the real message coming through is that the banks BANKERS seem to have decided that they do not want to increase revenue in any other way than simply taking it from taxpayers instead of lending to generate revenue.
This leads me to suspect that they have no intention of returning to providing the "product" they have always provided to generate revenue, but instead have decided to simply and openly steal it, and that the current economic crisis is not something the government is trying to correct but is instead actively a partner in intentionally manufacturing.
With government help. With Geithner's help. With the presidents help.
We have a big problem. The problem is not the economic crisis.
What is "government"?
"Very simply, it is an agency of coercion. Of course, there are other agencies of coercion -- such as the Mafia. So to be more precise, government is the agency of coercion that has flags in front of its offices."
--Harry Browne
Thomas Ferguson is an American political scientist and author who studies and writes on politics and economics, often within an historical perspective. He is a political science professor at the University of Massachusetts Boston. He obtained his Ph.D. from Princeton University. He is also a contributing editor for The Nation.
Today Ferguson talks with Real News CEO Paul Jay about the banking crisis and the black hole at the center of the crisis, the Obama administrations response so far to it, and about something he thinks really needs to be done that is not being done.
Real News - March 25, 2009 - 12 minutes 25 seconds
Obama should save the banks, not the bankers Tom Ferguson: Stimulus package is dangerously small; plan for toxic assets shovels money to bankers
Unbe-fraking-leavable! Just when you think you know what the hell is going on and have some idea what it will take to get things back in shape, a new shite storm comes sailing along to bring you a new life-time supply of manure. What has the Dog so spun up this afternoon? Well, are you sitting down, gentle reader (duh of course you are, you're on the internet)? The FDIC is going asking to be able to borrow $500 billion (as in five hundred thousand million) dollars, because it is does not have enough money to do the heavy lifting of taking over a bank like Citi or B of A.
No one likes to admit that they were wrong. This seems doubly true on here on the great inter-toobs, but the fact is that the Dog was wrong. It is only in one case (at least he is only going to cop to one case right now!) but it is a pretty major issue that we face right now. What is this issue? It is the case for nationalizing failing Banks. When this was first discussed, the Dog perhaps like a lot of others, assumed that we were talking about a complete and total take over of the banking system by the Federal Government. That would be something akin to the Venezuelan government taking over their oil industry.
The dozen banks receiving the biggest rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers over the past six years for positions that included senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. The average annual salary for those jobs was $90,721, nearly twice the median income for all American households.
The figures are significant because they show that the bailed-out banks, being kept afloat with U.S. taxpayer money, actively sought to hire foreign workers instead of American workers. As the economic collapse worsened last year - with huge numbers of bank employees laid off - the numbers of visas sought by the dozen banks in AP's analysis increased by nearly one-third, from 3,258 in fiscal 2007 to 4,163 in fiscal 2008.
Man oh man, if there ever was a prime example of a revelation of the greatest flaw in libertarian economic theory, it had to be Alan Greenspan's speech. For those not in the know, the former Federal Reserve Chairman spoke before a Congressional committee yesterday. Long one of the grand proponents of laissez fair capitalism, his decisions, ironically, probably has lead to the complete discrediting of such economics.
Everyone, almost, is in a complete Rage at what is happening, and has been allowed to happen by not only soft regulation but the ease on any regulation in the Banking Industry, Morgage Industry, Wall Street, and in a Rage you should be.
But want a better picture of the who got us here any why, leave your computer and go to the nearest mirror and take a Good Hard Long Look at the reflection coming back, Yep Folks, it's most of you, and the rest of the shit hasn't yet hit the fan, but it's quickly coming!
Remember the clowns you hire to represent you in Washington, and local and state, are your clowns, you pay them.
For anyone whose read my pieces in the past, knows that I hold a certain disdain towards former Reagan White House OMB Associate Director/conservative-libertarian Ayn Rand acolyte Larry Kudlow. It's nothing personal against the guy, it's his ideas and economic policy objectives that I find fault with. For the past couple of months, he's been going on about this is the "Goldilocks economy." Essentially, that we're worrying about nothing because one bad economic indicator is being offset by a good one (mind you, he's often just used productivity as that one). Well today, despite his claims that all is almost well, we got some news that just proves Larry Kudlow wrong!
Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis.
Such a move would involve the use of public funds to shore up the market in a key financial instrument and restore confidence by ending the current vicious circle of forced sales, falling prices and weakening balance sheets.
There are more details in that article (including about disagreements between the Fed and the ECB on when the package should be put in place), but two things stand out:
1) the financial crisis is now acknowledged as bad enough to require public intervention;
2) that intervention will require significant injection of public money in bank's balance sheets.
Reform Immigration -
March on Washington
