Tag: credit

  Slowly, painfully, the world is coming to grips with the realization that the Euro, as we know it, is entering its last days, and what consequences we are likely to see.

 As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.

  A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

  Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest.

  Many people, especially those that trade stocks, have been having trouble believing that the Euro will die. After all, just a few years ago the Euro was considered the alternative reserve currency of the world. So much work and money has been spent on this unproven endeavor, not to mention the complete lack of a “Plan B”, that few could picture its demise.

  Yet, just like the inability of so many to foresee the end of the housing bubble, reality is intruding again. The farther we get down the road of failure, the more clear the picture becomes.

Mississippi Governor Haley Barbour was recently interviewed by the conservative Washington Times and stated his opinion on a variety of current events.  Barbour’s name has been floated as a potential 2012 Republican Presidential nominee and he appeals strongly to the party’s conservative base.  The most interesting portion of the interview focuses on federal government spending versus state government spending.  Barbour’s reply also reveals how quickly we have forgotten the problems of our past.  Those who advance a states’ rights agenda and hold up the Tenth Amendment as justification often forget the massive problems this country faced when we focused more on individual states at the expense of Washington, DC.  While placing more control in a centralized system of government has created some problems, they are nothing compared to way it was when the reverse was true.  

We have been told that Wall Street Investment firms are “Too big to Fail” — But that does NOT Mean they are “Too Big for Accountability”!

The Question boils down to,

Who Does the Congress Represent anyways —

The American People, or the Global Bankers (and their Lobbyists) ?

And Will the People bother to care about Wall Street Regulation this time around?

Since I’m assuming we will, here’s some essential background on the Wall Street Meltdown mess:

Credit Default Swap (CDS)

What Does Credit Default Swap (CDS) Mean?

A swap designed to transfer the credit exposure of fixed income products between parties.

http://www.investopedia.com/te…

CDS’s are an easy way to transfer Credit Risk — Check!

Way back in March of 2009, Rachel explained the “Highway Robbery” which happened on Wall Street, using a few simple word-pictures. (ie. simple Frames).  These perhaps deserve a quick review …

Rachel Maddow – Cops and Robbers

Link to Rachel’s very humorous  Clip

Great Framing Rachel! … I love it, when Progressive Talkers, make learning FUN! The simpler the Word-Pictures, the better the Frame!

“Is our childrens learning?” as George W. used to ask.  

Could be, … Maybe we just needed to “Turn the Page” …

Elizabeth Warren was appointed chair of a newly created Congressional Oversight Panel (COP), which is charged with keeping tabs on the $700 billion bailout of the financial sector – including Troubled Assets Relief Program (TARP).

Warren however, has had some “Trouble” getting straight forward answers … as she explained to the Boston Globe:

I’m not an economist and the only real numbers I crunch are my personal expenses and when bidding construction jobs putting together those costs and percentages which in these latter years of my life, preferring more to do the work, I have done very little of, except while doing the work to bring a better quality for hopefully a bit cheaper cost in material and professional skill.

Watching what is now taking place in banking and the dream new capitalist economy that’s been sold for a number of years isn’t really a big surprise to this common man, many were forecasting exactly what would happen if we followed the sales pitch.

Dealing in Debt!!

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.

Can’t sleep, been thinking about the price of oil, worrying about it to be honest. Now you may be thinking “Venom, what are you crazy? A putz? A drop in the price of oil is a good thing!”  And I would reply, yes, under normal circumstances it is.  But these days, things ain’t so normal.  Actually, right now, oil is up since yesterday, but it’s been in a slide for the past week or so.

It’s refreshing to see that some businesses are doing well in today’s economy.  Perhaps the most successful venture going today is the pawn shop.  From Peoria to Pasadena,  pawn shops are seeing a boom in clients.

Says Doug Robinson, a pawn shop owner in Pasadena,

We’ve been on a continuous uphill run for a number of months.  I don’t see anything that will stop it.

Worse even than the paycheck advance loans, a pawn shop loan typically involves an annual interest rate in excess of 50%.  Yes, that is fifty percent per year.  In Mississippi, the cap is 25% per month, which is 300% per year (if not compounded monthly).  

Given that credit card debt is often 18% or higher, it is incredibly sad to imagine the poor soul who pawns an object at 50% interest to pay that very same object off on the 18% credit card debt.  

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.