September 15, 2008 archive

The Fed uses Wall Street ‘shock’ as cover for deregulation

The Financial Times first reported in news that Wall Street banks are fighting for life early this morning that the U.S. Federal Reserve was making “it easier for financial institutions to access Fed liquidity by easing terms on its borrowing facilities and accepting a much wider range of assets as collateral.”

The Fed likely figured the shock of bank failure today was an excellent time to sneak in a regulatory change. The Fed “widened the set of assets eligible as collateral for loans of Treasuries to include all investment grade paper, and raised the size of these Treasury loans to $200bn.”

The Fed also suspended rules that prohibit banks from using deposits to fund their investment banking subsidiaries.

The NY Times reports that the Fed loosens standards on emergency loans. Not just loosen, but “dramatically loosen” their standards.

In an obscure but highly important announcement late Sunday evening, the Fed said it would let Wall Street firms post as collateral much riskier assets – including equities, junk bonds, subprime mortgage-backed securities and even whole mortgages – in exchange for emergency loans through the Primary Dealer Credit Facility.

The Fed created the emergency loan program in March, at the same time that it engineered the shotgun marriage of Bear Stearns by JPMorgan. In itself, the program marked a historic expansion of the Fed’s lending to cover investment banks rather than only commercial banks.

Four at Four

  1. An update on our two wars. Starting with the most recent, Patrick Cockburn of The Indpendent reports Iraq Violence is down – but not because of America’s ‘surge’

    Ongoing violence is down, but Iraq is still the most dangerous country in the world. On Friday a car bomb exploded in the Shia market town of Dujail, north of Baghdad, killing 32 people and wounding 43 others. “The smoke filled my house and the shrapnel broke some of the windows,” said Hussein al-Dujaili. “I went outside the house and saw two dead bodies at the gate which had been thrown there by the explosion. Some people were in panic and others were crying.”

    Playing down such killings, the Iraqi government and the US have launched a largely successful propaganda campaign to convince the world that “things are better” in Iraq and that life is returning to normal. One Iraqi journalist recorded his fury at watching newspapers around the world pick up a story that the world’s largest Ferris wheel was to be built in Baghdad, a city where there is usually only two hours of electricity a day…

    The perception in the US that the tide has turned in Iraq is in part because of a change in the attitude of the foreign, largely American, media. The war in Iraq has now been going on for five years, longer than the First World War, and the world is bored with it. US television networks maintain expensive bureaux in Baghdad, but little of what they produce gets on the air. When it does, viewers turn off. US newspaper bureaux are being cut in size. The result of all this is that the American voter hears less of violence in Iraq and can suppose that America’s military adventure there is finally coming good.

    And Afghanistan is in its worst shape since 2001, reports the International Herald Tribune.

    One of the most experienced Western envoys in Afghanistan delivered a depressing review Sunday of the situation there, calling it the worst since 2001 and urging concerted American and foreign action even before a new U.S. administration takes office to avoid “a very hot winter for all of us.”

    Francesc Vendrell, who has just stepped down as European Union envoy in Afghanistan and has eight years of experience in the country, in particular criticized the growing number of civilian deaths in attacks by U.S. and international forces. These have created “a great deal of antipathy,” and helped widen the growing distance between the Afghan government and its citizens, he said…

    Bluntly, Vendrell traced what he called a long series of foreign mistakes in Afghanistan, and recommended action to ensure that the local Afghan authorities and foreign agencies followed up any military successes against the Taliban with concrete assistance to local citizens, to convince them that Westerners and the Kabul government can deliver security and some minimal well-being…

    It was a mistake by the United Nations to limit the mandate of foreign soldiers to Kabul, and for the world to get distracted by the war in Iraq, Vendrell said.

    Just thought somebody would be interested…

Four at Four continues with warning shots from Pakistan at U.S. troops, Hurricane Ike’s aftermath, and growing doubts about Georgia’s version concerning South Ossetia.

Sheer Incompetence

Yeah, they know how to run a dirty, dishonest, lie-filled campaign….but what else can they do?

The Republicans can’t run the economy, they can’t run a war, they STILL can’t run a competent disaster response what can they do?

Really, what?


The Tumbrils Roll at Dawn

Original article by Mike Whitney, subtitled Lehman Gone; Merrill Lynch Swallowed Up; AIG Going… Who’s Next for Madam Defarge?, via

Bank of America is buying Merrill Lynch for $45 billion, AIG needs an emergency $40 billion bail-out from Uncle Sam to stay afloat, and Lehman Bros is kaput. Whew! The financial world has been turned upside-down overnight. It’ll be a rough day of trading ahead.”

Palin Violated Law To Defeat Ballot Measure

Alaskans recently had a charged public debate over whether mining companies should be able to discharge toxic waste into drinking water supplies. The issue was submitted to the voters with a ballot measure. Polling by supporters showed public strongly favored the measure, even obtaining the support of persons who never supported environmental measures because this issue also affected the livelihood of fishermen. The tide then quickly changed days before the election when Palin violated state law by advocating for the defeat of the measure. Working within the rules of the system, a complaint was filed, and a state agency found that both the state regulators and Palin had violated the law. However, the damage was already done and the measure was defeated. A win by any means at any cost. Is this what lies ahead for our presidential election?

Political Fraud: Selling America a Bill of Goods

It’s beginning to sound more and more like a Palin vs. Obama Presidential race.  My biggest fear is that conservative and independent voters around the country will wake up on November 5 and find out, much to their surprise, that it’s John McCain that won the office of President of the United States and only then will they wake from their stupor and see, and regret the silliness of what they’ve accomplished.

Talk about a bill of goods.  The sales pitch that the Republican supporters swallowed hook, line and sinker is something to behold.

The Democrats used their meeting to tell a richer, more expansive national story, one more or less in tune with the party’s platform and aspirations. In contrast, as we go to press, the Republicans are staging an elaborate fraud, the purpose of which is to divert the public’s attention from their disastrous mismanagement of government and to deceive voters about their agenda. Rick Davis, John McCain’s campaign manager, admitted as much when he said, “This election is not about issues. This election is about a composite view of what people take away from these candidates.” (The Nation Editorial Board – 8/3/08)

They are once again getting snookered by the pandering politicos who run the radical right.  Evangelicals, ever the willing suckers, are getting sucked in yet again.  Same thing with rednecks, soccer moms, and erstwhile social conservatives of all stripes.  “Join us again, [wink, wink].  We’ll string you along for another four years!”

Secret Kurdish Report – US Wants to Topple al-Maliki

The New York Times, on 10 September, published this story about the Iraq Government canceling oil field development contracts with Exxon-Mobil, Chevron, Shell, Total and BP.

While not particularly lucrative by industry standards, the contracts were valued for providing a foothold in Iraq at a time when oil companies are being shut out of energy-rich countries around the world.

“Not particularly lucrative” might well be interpreted to mean, they were not production sharing agreements in which the contractors, the oil companies, get ownership of a share of the oil. Rather than a share of the oil the agreements were technical service contracts in which the oil companies would be paid set fees for their services. This is the usual contractual format for services used in the other oil rich countries in the Persian Gulf Region.

Open Thread


World Series of Thread ~ No-Limit Comments

Pony up!

Waking Up Is Hard To Do

Tim Hardin – Simple Song Of Freedom

Docudharma Times Monday September 15

The Bush Deregulation, No Holds-Barred, Who Needs Oversight

Economy  Begins Circling The Drain And

Its Not Funny

Monday’s Headlines:

Cheney Shielded Bush From Crisis

Georgia war sparks political battle in Ukraine

Murder in Italy: Sex, lies and justice

£1bn aid in the balance as west waits to gauge change in Zimbabwe

 Vilified at home and abroad, Thabo Mbeki may be missed when he is gone

Thaksin Shinawatra brother-in-law nominated as new Thai premier

Indian Police Hunt for Bombers

In Iran, Barbie seen as cultural invader

 Al-Qaida intensifies its stranglehold in the world’s most dangerous city

Bolivia death toll rises

After Frantic Day, Wall St. Banks Falter  

This article was reported by Jenny Anderson, Eric Dash and Andrew Ross Sorkin and was written by Mr. Sorkin.


Published: September 14, 2008  

In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, said it would seek bankruptcy protection and hurtled toward liquidation after it failed to find a buyer.

The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.  

New phase of disaster plagues Ike’s survivors

Texas shelters grow crowded after nearly 2,000 rescued; death toll at 28

Associated Press

GALVESTON, Texas – As teams continued the biggest search and rescue operation in Texas history, a new phase of the disaster wrought by Hurricane Ike was only beginning as thousands of people faced long stays in crowded shelters because their homes were damaged or destroyed.

The death toll from Ike rose to 28, but many of those were far to the north of the Gulf Coast as the storm slogged across the nation’s midsection, leaving a trail of flooding and destruction. Glass-strewn Houston was placed under a weeklong curfew, and millions of people in the storm’s path remained in the dark.


Spike in jobless rate for women is worst in more than 33 years


 By Tony Pugh | McClatchy Newspapers  

WASHINGTON – A sharp monthly rise in unemployment for women could be a sign that the economic slowdown has begun to hit working women with a force not seen in decades.

When the unemployment rate for women went from 4.6 percent in July to 5.3 percent in August, it was the largest one-month spike in the jobless rate for women in more than 33 years.

Black women were hit even harder, as their unemployment rate jumped 21 percent, from 7.5 percent in July to 9.1 percent in August.

Among single mothers and women with families, unemployment climbed to 9.6 percent in August – the highest level in 15 years.

“Who is Sarah Palin?” – The Ed Schultz Show!

Today at  High Noon Eastern Time we can hear from many of the people right in Alaska about Sarah.

As we’ve already found out if anyone really knew much about her, and her so called executive experience, they kept it under wraps, plenty of wraps, and than tried to sneak her by the American People who do the hiring and want the resumes!

My thoughts, with all that’s come to light, they were calling her a rising political star on personality only, as John McCains daughter says, PERIOD!

Another Financial Storm May Be Brewing

Buried in the sound and fury of the current financial storm, including the bankruptcy of Lehman Brothers, sale of Merrill Lynch to Bank of America, and the rumored imminent meltdown of insurance giant A.I.G. is something which I consider far more dangerous:

The alert have taken note that the failure of Washington Mutual, which looks increasingly likely, would consume the FDICs reserves and, as in the savings and loan crisis, force the agency to go hat in hand to Congress for more money.

But this is comparatively early in our burgeoning banking crisis for the bulwark of commercial banks to be tested. Worse, the concern is that uninsured depositors will flee weak banks, and in process, push more over the edge.

The scale of the problem?

Washington Mutual – the sixth largest bank in the US – has lost more than a third of its market value recently as investors fear it lacks liquidity and capital to survive the credit crisis…

The FDIC is respected for its operational effectiveness. But its $45bn deposit insurance fund is underfunded according to its own guidelines, at 1.01 per cent of insured deposits…

…analysts fear it may have to draw on its $70bn Treasury credit lines. Alan Avery, a partner at Arnold and Porter, said a single failure – if big enough – “would cause the FDIC to immediately draw on the Treasury credit”.

Washington Mutual had $143bn in insured deposits on June 30 – about three times the size of the deposit insurance fund, but less than half of its $307bn assets.

Emphasis added.

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