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Here’s an idea: nationalise the banks

Suggestions to organise a massive bailout of the banks are being floated by central bankers this week-end:

Central banks float rescue ideas

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.

Inflation or deflation? We live in interesting times

The western financial system is caught in a trap. On the one hand, there is an urgent need for clearing prices to be established for impaired assets to restore confidence; on the other hand, if this is done in a mark-to-market world, there is a risk that some banks will run out of capital.

(Gillian Tett, Financial Times)

Bank bankruptcies are a realistic prospect in the coming months. And yet, this is not even the worst…

The global economy is facing twin shocks. Natural resource markets are delivering a supply shock of 1970s dimensions, while the financial system is delivering a shock comparable to the bank and thrift crises of the 1988-1993 period.

(Tim Bonds, Barclays Capital, in the Financial Times)

Petition against Tony Blair as President of Europe

Over the past 2 days, we’ve been pretty busy over at the European Tribune, launching a petition against the possible nomination of Tony Blair as Chairman of the European Council (or, as the job is likely to be known by the lazy media, “President of Europe”).

His name has been floated by French president Nicolas Sarkozy and the campaign to support him seems to have picked up strength lately. As this is a prospect that fills us with dread, some eurotribbers have decided to take action and to launch a petition to make clear that citizens across Europe are opposed to such an idea.

This is where the amazing power of blog communities comes into play: thanks to uncoordinated volunteer effort, transparently happening over various threads on ET, a text was drafted, edited, translated into 11 other languages and a website (Stop Blair!) was set up literally overnight (thanks to linca). The effort was somehow picked up by a first paper (as it were, the Financial Times, my favourite source of material to comment upon on ET) and is now getting 50-100 signatures per hour.

The full text of the petition is below. And you can help!  


That graph was posted alongside this article in the NYT, and it pretty much captures the unprecedented nature of the credit crisis we’re going through this autumn. In several sectors of the financial world, lending quite simply stopped. Leveraged buy-outs, the big story of the past 18 months, no longer exist. Asset-backed paper is seen as “toxic waste”, and no longer provided – it continues to exist in so far as banks would rather roll over paper that cannot be repaid rather than make all the underlying losses appear in plain sight.

As lending prior to that had been extravagantly exuberant, this is not having an immediate impact for many companies, which have sound balance sheets and advantageous existing credit lines, but as it drags on, the real economy will start to feel the pinch as it needs to finance or refinance its normal activities, let alone investment.

Anglo Disease: Black Friday Blues

Now that the economy is heading south, worries are being increasingly expressed about the great unwinding, and one sees increasingly frantic attempts to rewrite the economic history of the past few years.

On the eve of the famous Black Friday, one of, or the busiest shopping day in the year, I’d like to point out a column written in the Financial Times, Europe’s main English language business paper, which attempts to spin current worries about the economy on a grand scale. As the author, John Plender, explicitly writes about the “Anglo economies”, I feel it is appropriate to incorporate that in my “Anglo Disease” series (see the links at the bottom for earlier instalments).

This was posted on DailyKos yesterday, but may be worth a read for those of you that have not seen it. It was originally posted on European Tribune.

Shocking: Dem candidates have leftist economic ideas!

the Financial Times (Europe’s main English-language business paper), writing about the US presidential campaign,  is shocked – shocked! – that leftwing politicians in the US _dare_ have leftwing programmes:

The grab for a job: Democrats turn protectionist in a drift to the left

Does this mean the Democratic party, which is generally (although not universally) anticipated to be heading to both congressional and presidential victory next year, is abandoning the centrist economic legacy of the Bill Clinton years? The rhetoric, if not always the fine print of the various plans that the candidates have rolled out, would suggest that it is.

Ooh. Abandoning centrism. That’s a criticism hurled at the right all the frigging time right?

CATO libertarians say energy deregulation does not work

In an Op-Ed that was published in the Wall Street Journal last month (and is available in full to non-subscribers on CATO’s website) two CATO economists specialised in deregulation and energy markets provide a breath of fresh air in the debates on energy.

Their point is to criticize the poorly thought out deregulation in various US States over the past 15 years, and they explain clearly how energy markets work (something which is rare enough in the mainstream media), and what the consequences of various bits of deregulation are on market behavior and thus on electricity prices.

Their conclusions are so unexpected that other libertarians felt compelled to criticize them violently (and the authors felt the need to defend their libertarian credentials… Follow me below the fold for the gory details.

No civil war when the troops leave

This is worth yelling louder:

Iraqis say Basra quieter after British troop pullout

BASRA, Iraq (Reuters) – Residents of Iraq’s southern city of Basra have begun strolling riverfront streets again after four years of fear, their city much quieter since British troops withdrew from the grand Saddam Hussein-era Basra Palace.

Political assassinations and sectarian violence continue, some city officials say, but on a much smaller scale than at any time since British troops moved into the city after the 2003 U.S.-led invasion.

An insight on US strategic thinking – why so much cowering fear?

Earlier last week, I wrote a diary (What the west means and what roles NATO plays therein) that used a recent Financial Times editorial as a springboard for a discussion on what the “West” was, and what the use of NATO was – questions that  left-of-center Europeans tend to see quite differently from most Americans, including left-of-center ones.

The editorial, by a well-respected British pundit, was insightful and interesting, and led me to conclude what many on the European Tribune have long suspected: that NATO is simply an instrument for Europe to support US strategic priorities, and that the “West” exists only when Europe (and in particular France) aligns itself unconditionally on US positions. The UK, as per that senior British commentator, has as its main role that of disrupting and dividing Europe when it is insufficiently respectful of US interests.

Since I’m French, you may be tempted to conclude that this is just sour grapes by a citizen of a supposedly declining country; however, what I found more interesting in that article was the dominant tone of fear – about the west being under siege, and needing security against various threats – in the form of coordinated military power and little else. It was a narrow, downcast, closed vision of the world, with little about values, progress or hope.

The comment thread is worth reading too, and one of the last comments, by Loefing, pointed me to another article on the same topic, this time by a graduate of the US Naval War College, Tony Corn. The article, (The Revolution in Transatlantic Affairs, has the same dominant tone of fear, but a much more detailed examination of the world. Given the credentials of its author, it is likely to have serious influence on the thinking of the strategists in the Pentagon, and it is thus worth deconstructing.

Emmanuel Todd: ‘Iran is not dangerous’ (but Sarkozy is)

In yet another fascinating interview, demographer Emmanuel Tood (best known for his prediction – based on demographic trends – of the Soviet Union collapse, and his more recent predictions of the “end of the US empire“) discusses Iran at length, and suggests that demographic trends in the Muslim world, and in particular in Iran, suggest a massive weakening of the influence of religion over their populations, rather than the opposite.

Bringing you one of our famous bilingual two-column diaries from the European Tribune

on Armando and civility

The topic has been rehashed to death already, but these diaries, written over the past 2 years, are still pretty much relevant:

Armando is a kind, gentle, caring person
Ultimate meta: civility, dKos ecology and the reclist
Meta: How to discuss constructively with a smart brash kossack

Beyond the text below, I’d like to note one thing: there is nothing that will frustrate a bully more than unflailing civility in the face of continuous aggressivity. Civility actually is very satisfying in fights.

(Bubbles) Greenspan: “Oops”

Greenspan alert on US house prices

US house prices are likely to fall significantly from their present levels, Alan Greenspan has told the Financial Times, admitting that there was a bubble in the US housing market.

Now he tells us! Now that, after encouraging the bubble, blowing it out of proportion, and claiming that it was not possible to tell if there was a bubble, said bubble is blowing in our faces as many observers have predicted for a number of years now, he claims that it was obvious all along.

What a lying piece of shit.

Exclusive to DD!