Archive for September 17, 2008

Chronicles Of Depression 2.0: #214

September 17, 2008

How bad? Worse than this!

This is from the Financial Times, dammit.

Panic grips credit markets

The panic in world credit markets reached historic intensity on Wednesday, prompting a flight to safety of the kind not seen since the second world war.

Barometers of financial stress hit record peaks across the world. Yields on short-term US Treasuries hit their lowest level since the London Blitz, while gold had its biggest one-day gain ever in dollar terms. Lending between banks, in effect, stopped.

Emphasis added by me.

More:

One cause for fear came when shares in a supposedly safe money market mutual fund fell below par value – or “broke the buck” – owing to losses on debt in Lehman Brothers, which filed for bankruptcy protection on Monday. This raised the risk that retail investors in other such funds could panic and pull out their money.

All thought of profit was abandoned as traders piled in to the safety of short-term Treasuries, with the yield on three-month bills falling as low as 0.02 per cent – rates that characterised the “lost decade” in Japan. The last time US Treasuries were this low was January 1941.

Emphasis added by me.

More:

A key measure of fear in the fixed-income markets – the so-called Ted spread, which tracks the difference between three-month Libor and Treasury bill rates – moved above 3 per cent, higher than the record close after the Black Monday stock market crash of 1987.

US authorities fired back with the Treasury announcing it was borrowing $40bn to give to the Fed to use for its emergency lending – in essence removing balance sheet constraints on the size of this assistance.

Emphasis added by me.

In other words: PANIC!

And, oh look, how cute. Someone has a dim clue:

Andrew Brenner, co-head of structured products and emerging markets at MF Global, said: “It feels like no one wants to take anyone’s credit … it feels like we are on a precipice.

Emphasis added by me.

The Fall is coming.

It is inevitable.

All prior Chronicles of Depression 2.0 posts. Read them before you must.

Chronicles Of Depression 2.0: #213

September 17, 2008

Two about a thing most of you probably have never heard of: the Halifax Bank of Scotland (HBOS).

HBOS – Lloyds takeover: Relief turns to fear as staff fear 40,000 job losses

Work ground to a halt as employees, regardless of their seniority, switched their computers over to news web sites after being alerted in the calls from friends and family that Lloyds TSB had emerged as a surprise saviour.

There was an audible rumble up and down the eight storey building, near London’s landmark Liverpool Street station, when the word spread that the rout of HBOS shares had been abruptly halted.

But:

As rumours spread throughout the building that the job losses could be as high as 40,000, with 1,000 branch closures, the mood of optimism evaporated completely. The emergency statement from Unite, the trade union, pleading for no compulsory redundancies only served to heighten the sense of fear permeating the company’s offices.

And the second article:

If this fails, it will take down all Britain’s banks

The wonder of financial crises is how events can move straight from impossible to inevitable, without ever passing through improbable.

Two weeks ago nobody would have imagined that, before the end of the month, the Bush Administration would have nationalised the world’s biggest insurance company, that two of the four biggest global investment banks would be out of business and that the US Government would take responsibility for three quarters of the country’s new mortgage loans.

Sadly, the events of the past two weeks may be only the prelude, not the climax, of this amazing crisis. Even the apparent rescue of Halifax Bank of Scotland may result in a bigger crisis, if the drowning HBOS drags down its rescuer, Lloyds TSB. If this happens, every big bank in Britain, except possibly HSBC, will have to be nationalised, Northern Rock-style.

Emphasis added by me.

This really bites my ass:

Two weeks ago nobody would have imagined that

Self-absorbed eejit. I’ve been imagining worse since January! Were you fucking reading?

More, and pay attention:

The same [nationalization] would become inevitable in the US if market speculators who have been richly rewarded by the US Government for taking down Fannie Mae, Lehman Brothers and AIG, turn their attention to the next group of stumbling financial institutions in the firing line: Washington Mutual, Wachovia, Bank of America, Morgan Stanley and Citibank. If any of these wounded giants collapses, the others will fall like dominoes and the entire US financial system will have to be nationalised. In a financial crisis, the impossible can become inevitable in one day, as we saw in Britain on Black Wednesday.

Emphasis added by me.

I want all of you to notice The Company That Has Not Yet Been Mentioned: Citibank (actually CitiGroup). You haven’t been hearing anything about the largest financial corporation on the entire planet, have you? When you do, it will probably already be too late.

And as for nationalizing entire banking systems? Has anyone considered the ramifications of that to other countries? What will they think of that in Germany, France, and Japan?

Here is where the column begins to veer into the Insane Zone:

To understand what could still be done to prevent this crisis turning into a true disaster, we must look dispassionately at the unintended consequences on the markets of recent government actions. This means moving away from the moralistic slogans about “greed” or “bailing out reckless bankers”.

Emphasis added by me.

Oh no it doesn’t, motherfucker! These bastards did their deeds willingly, wilfully, and brazenly. They were on the covers of newspapers, magazines, and profiled on TV as stars and celebrities and unimpeachable examples for children to grow up to be. They knew they were handling filthy, crooked mortgages — liar loans — that took advantage of people and whose terms were onerous and usurious and downright fraudulent. And these mortgages were based on home prices that had been inflated by the very dealers and brokers handling the mortgages. They knew all this filth they were handling, so they bundled it all up and sent it through the washer one, twice, thrice, by splitting them and renaming them and reselling them. They were outright criminals.

And from this point on, the guy tries to pin the blame on Paulson of the U.S. Treasury with the bizarre inversion that Paulson was actually encouraging short-selling speculators and robbing long-term investors. So I guess if Paulson had just let Freddie Mac, Fannie Mae, and A.I.G. drop dead, this guy would have said Paulson had actually looked after long-term investors?

And then he closes with:

As I write, the terms of the Lloyds-HBOS merger are unknown, but the key criterion for judging its effectiveness is clear enough – and it is exactly the opposite of the principle followed by Mr Paulson.

If the Lloyds-HBOS merger offers the enlarged bank some kind of firm government safety net – not just for depositors, but crucially also for shareholders – it will probably succeed and act as a firebreak against the financial crisis on this side of the Atlantic. If, however, the merger is presented as a “pure private sector solution”, with no government support for shareholders, market attacks against HBOS will soon be revived and redirected against the merged bank.

This will leave only one solution – nationalisation of the entire British banking system. The impossible will suddenly become inevitable.

Emphasis added by me.

You know what’s “impossible” — watching all these free market advocates suddenly advocating socialist solutions!

Isn’t it amazing how government is the solution for thembut for individual and especially hard-working and honest people who need help, those people are branded as leeches and parasites and looters?

When they cry for help, it’s “a bailout.” When everyday people asked for help, it’s “a handout” or “welfare” or “socialism.”

All prior Chronicles of Depression 2.0 posts. Read them before you must.

Chronicles Of Depression 2.0: #212

September 17, 2008

Morgan Stanley Considers Merger With Wachovia

As the wrenching shifts within the American financial industry shook world markets on Wednesday, Morgan Stanley, one of the two major Wall Street banks left standing, was considering a possible merger with the Wachovia Corporation or another bank, according to people briefed on the discussions.

A tie-up with a bank would restore Morgan Stanley to its structure during the Depression, when the firm split from the Morgan banking empire. It would also leave Goldman Sachs, long the envy of Wall Street, as the only major American investment bank left.

As Morgan Stanley’s share price came under renewed assault on Wednesday, the firm’s chief executive, John J. Mack, received a telephone call from Wachovia expressing interest in the Wall Street bank. Other banks have also expressed interest in Morgan Stanley, which is considering various options. The talks with Wachovia are preliminary and no deal may emerge.

Wachovia? Wachovia?!

I did Wachovia in several prior posts, but this is the standout one: Chronicles Of Depression 2.0: #168

A Morgan Stanley-Wachovia merger would be like two one-legged men hugging in order to try to walk with two legs!

More:

While Wall Street has gone through tough times before only to emerge bigger and stronger, some question whether the industry can rebound quickly after using high levels of leverage, or borrowed money, to binge on risky investments. Those investments have proved to be disastrous. Worldwide, financial companies have reported more than $500 billion in charges and losses stemming from the credit crisis — a figure some specialists say could eventually exceed $1 trillion.

One trillion. Which is now such a pathetically ridiculously small figure. It was revealed that Bear Stearns alone is holding thirteen trillion dollars in contracts.

Wall Street — well, what’s left of it — doesn’t think much of this possible merger:

Shares of Wachovia fell 20.76 percent, or 2.39 percent, to $9.12; Morgan Stanley declined 24.22 percent, or $6.95, to $21.75.

And they should know rotten deals when they see them — they’ve done enough of them to be experts!

Don’t breathe a sigh of relief when all these mergers are done deals by Friday.

There’s next week and the week after that too!

And I’ll state it again: This is The End. It will all fall.

All prior Chronicles of Depression 2.0 posts. Read them before you must.

Chronicles Of Depression 2.0: #211

September 17, 2008

It’s beginning to accelerate.


Click = big

Federal bank insurance fund dwindling

Banks are not the only ones struggling in the growing financial crisis. The fund established to insure their deposits is also feeling the pinch, and the taxpayer may be the lender of last resort.

The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc., the nation’s largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.

Treasury has already come to the rescue of several corporate victims of the housing and credit crunches. The government took over mortgage finance companies Fannie Mae and Freddie Mac, and helped finance the sale of investment bank Bear Stearns to J.P. Morgan Chase & Co.

Eleven federally insured banks and thrifts have failed this year, including Pasadena, Calif.-based IndyMac Bank, by far the largest shut down by regulators.

Additional failures of large banks or savings and loans companies seem likely, and that could overwhelm the FDIC’s insurance fund, said Brian Bethune, U.S. economist at consulting firm Global Insight.

“We’ve got a … retail bank run forming in this country,” said Christopher Whalen, senior vice president and managing director of Institutional Risk Analytics.

Emphasis added by me.

Pay attention:

FDIC Chairman Sheila Bair has not ruled out the possibility of going to the Treasury for a short-term loan at some point. But she has said she does not expect the FDIC to take the more drastic action of using a separate $30 billion credit line with Treasury — something that has never been done.

Emphasis added by me.

I posted earlier:

Get used to hearing that phrase — I never thought I would see anything like this in my life — because you’ll be hearing it over and over again. Some of you will be saying it!

That includes the sub-category of “it has never been done before.”

Here it gets ominous:

A Washington Mutual failure would dwarf the largest bank collapse in U.S. history — Continental Illinois National Bank in 1984, with $33.6 billion in assets.

By comparison, WaMu and its subsidiaries had assets of $309.73 billion as of June 30 and IndyMac had $32 billion when it shut down.

Emphasis added by me.

That’s a little under one-third of a trillion dollars.

Now get this:

But Whalen said the Federal Reserve, the Treasury and Congress should “immediately devise” and announce a plan to backstop the FDIC with up to $500 billion in borrowing authority to meet cash needs for closing or selling failed banks.

They’re looking for a half-trillion dollars now!

And then there is this reminder:

There were 117 banks and thrifts considered to be in trouble in the second quarter, the highest level since 2003, according to FDIC data released last month. The agency doesn’t disclose the names of institutions on its internal list of troubled banks. On average, 13 percent of banks that make the list fail.

Only 117 institutions? I’ve already posted about 300 banks possibly failing — and just this week someone forcasted one thousand.

Defend yourself: See the list of banks that are candidates for collapse.

Educate yourself.

All prior Chronicles of Depression 2.0 posts. Read them before you must.

J.K. Rowling: Harvard Commencement Speech

September 17, 2008

I didn’t know about this. I’m surprised I haven’t heard of it until now. I found it via Pasta&Vinegar.

The Fringe Benefits of Failure, and the Importance of Imagination

There’s a video (22 minutes) and the text. The text doesn’t have the ad-libs, however, so watch the video first.

Some excerpts I like:

I was convinced that the only thing I wanted to do, ever, was to write novels. However, my parents, both of whom came from impoverished backgrounds and neither of whom had been to college, took the view that my overactive imagination was an amusing personal quirk that could never pay a mortgage, or secure a pension.

Emphasis added by me.

She had The Calling.

What is more, I cannot criticise my parents for hoping that I would never experience poverty. They had been poor themselves, and I have since been poor, and I quite agree with them that it is not an ennobling experience. Poverty entails fear, and stress, and sometimes depression; it means a thousand petty humiliations and hardships. Climbing out of poverty by your own efforts, that is indeed something on which to pride yourself, but poverty itself is romanticised only by fools.

Emphasis added by me.

Damn straight. It reminds me of that little bit of dialog from the classic movie Sullivan’s Travels:

You see, sir, rich people and theorists — who are usually rich people — think of poverty in the negative, as the lack of riches — as disease might be called the lack of health. But it isn’t, sir. Poverty is not the lack of anything, but a positive plague, virulent in itself, contagious as cholera, with filth, criminality, vice and despair as only a few of its symptoms. It is to be stayed away from, even for purposes of study. It is to be shunned.

More from J.K.:

What I feared most for myself at your age was not poverty, but failure.

And:

Ultimately, we all have to decide for ourselves what constitutes failure, but the world is quite eager to give you a set of criteria if you let it. So I think it fair to say that by any conventional measure, a mere seven years after my graduation day, I had failed on an epic scale. An exceptionally short-lived marriage had imploded, and I was jobless, a lone parent, and as poor as it is possible to be in modern Britain, without being homeless. The fears my parents had had for me, and that I had had for myself, had both come to pass, and by every usual standard, I was the biggest failure I knew.

Emphasis added by me.

I must reference:

For the thing which I greatly feared is come upon me, and that which I was afraid of is come unto me.

Job 3:25

Back to J.K.:

Now, I am not going to stand here and tell you that failure is fun. That period of my life was a dark one, and I had no idea that there was going to be what the press has since represented as a kind of fairy tale resolution. I had no idea how far the tunnel extended, and for a long time, any light at the end of it was a hope rather than a reality.

So why do I talk about the benefits of failure? Simply because failure meant a stripping away of the inessential. I stopped pretending to myself that I was anything other than what I was, and began to direct all my energy into finishing the only work that mattered to me. Had I really succeeded at anything else, I might never have found the determination to succeed in the one arena I believed I truly belonged. I was set free, because my greatest fear had already been realised, and I was still alive, and I still had a daughter whom I adored, and I had an old typewriter and a big idea. And so rock bottom became the solid foundation on which I rebuilt my life.

Emphasis added by me.

That “stripping away” is coming to many, many people, by the way.

J.K. worked in the research department of Amnesty International in London:

Every day of my working week in my early 20s I was reminded how incredibly fortunate I was, to live in a country with a democratically elected government, where legal representation and a public trial were the rights of everyone.

Emphasis added by me.

There is much more. But these are the parts that I chose to highlight.

Go see the video.

Previously here:

J.K. Rowling Wins Lawsuit Against Fan
Orson Scott Card Rips J.K. Rowling
J.K. Rowling Trial Ends
J.K. Rowling Is In NYC For Her Silly Lawsuit
More About That J.K. Rowling Lawsuit
J.K. Rowling Is Wrong
Quote: J.K. Rowling
J.K. Rowling: A Year In The Life

Writer Nathan Singer Gets A Tweet

September 17, 2008

docnoir is writer Anthony Neil Smith.

And the cover of Nathan Singer’s latest novel looks like this:

Now that you see what it looks like, go buy it!

Nathan Singer blog
Nathan Singer MySpace

Previously here:

Nathan Singer’s Bravura Reading
Writer Nathan Singer Has News
Reading: Recently

Pasta&Vinegar: Things You’ve Never Seen

September 17, 2008

I haven’t been to the Pasta&Vinegar blog in a few months. It always has such very interesting things in it. Some of which are simple observations of real life.

I found these enlightening:

Attach a knob to your display

an intriguing assemblage between a touch/gestural interface and a classic laptop screen

Llamadas: mobile+human payphone

One of the most interesting service you find on the street in Peru (and I am sure you can also get it in other countries) is the “llamadas”. It’s generally women or teenagers with a bundle of mobile phones and a stop-watch who act as pay phones. They wear colorful clothes with mobile carriers brands and the “llamadas” logo (that they also shout when you pass by).

How clever!

Street typewriting in Peru: the public scribe

Another category of service you find on the street in Peru (as well as other countries) is the public scribe (in Ayaviri above and Arequipa below). Generally sat somewhere at a desk or on stairs, aided by a typewriter, he/she serve the needy illiterate to writer different things, especially administrative pieces of work.

Urban safari in modern architecture

Strange angles, fantastic cladding textures are also deeply intriguing in this night atmosphere. Lots of small details, big shapes that you discover and rediscover and stumble across a group of teenagers riding their bikes on curved shapes, old cats trying to get some food and a lost tourist sat on the beach with a laptop.

This is exciting. It’s what the future was supposed to look like when I was a kid.

Information overload in 1613
— his head would simply explode today!

FREE eBooks, Excerpts, Stories!

September 17, 2008

I’ve been meaning to do this and the mood struck me to do it today, to get me away from the financial news.

It’s a list of all the posts from the past nine months of this blog that point to freebies: entire ebooks, or print-book/eBook excerpts, or entire short stories.

I’ve checked the links. Everything should be good to go in each post. If you find a problem, leave a Comment.

If you have stuff of your own, see the last post I link to!

Free Short Story By Writer Joseph Devon
Free Book Preview: Nicholas Sparks
Six Free eBook Excerpts From Penguin Books
Free eBook: Dr. Weston A. Price
Free Crime Fiction: Plots With Guns #3
Brave Move For Happy Hour Is 9 To 5 Book
Free Crime Fiction: Hardluck Stories
Three For The Victorians
Free Book Excerpt: Xronixle
Free Short Story: The Precog Blog
Free Short Fiction: Apex Digest Online
Norm Cowie: Free Book Excerpts
Free eBook: Of The Night By Cliff Burns
Free Education Tech eBooks
Reference: Twenty Free eBook Sites
Reference: 100 Book/eBook Sites
Free eBook: Whiskey Sour
Free eBook: Publishing
Free eBook: Hal Spacejock
Free eBook: Trigger Happy (original post)
Free Webcomic: The Probability Broach
Free PDF eBook: Time Capsule Rarity
Another Free eBook
Three Free eBooks! (more than three now!)
Cliff Burns: Free Novel!
K.A. Bedford: Yeah!!
Free eBooks! (WOWIO; might be problematic)
Free Two Chapters of Harlan Coben’s New Novel
Sliding Friction: A Free PDF
FreakAngels Has Begun (Warren Ellis; 27 parts now!)
Free Short Story From Max Barry

READ THIS if you have writing on the Net as for-free or for-pay: Who’s Flogging Their Work Online?

Stop Sarah Palin! Still!

September 17, 2008

The pastor who clashed with Palin

Forget all this chatter about whether or not she knows what the Bush doctrine is. That’s trivial. The real disturbing thing about Sarah is her mind-set. It’s her underlying belief system that will influence how she responds in an international crisis, if she’s ever in that position, and has the full might of the U.S. military in her hands. She gave some indication of that thinking in her ABC interview, when she suggested how willing she would be to go to war with Russia.

Alaskans liked that certitude when she was dealing with corrupt politicians and the oil industry — and there is something admirable about it. But when you’re dealing with a complex and dangerous world as commander in chief, that’s a different story.

Emphasis added by me.

I had to come back to this one more time.

That about says it all.

Personally, I believe economically we will be in such distress that the very idea of putting McCain in the White House will be unthinkable by the majority of voters.

Atlas Shrugged 2008

September 17, 2008

In her novel, Atlas Shrugged, Ayn Rand (a short, frumpy, heavily-accented self-alienated drug-addicted madwoman) used a blackout of New York City (unthinkable at the time) to dramatize the collapse of the system.

The plane was above the peaks of the skyscrapers when suddenly, with the abruptness of a shudder, as if the ground had parted to engulf it, the city disappeared from the face of the earth. It took them a moment to realize that the panic had reached the power stations–and that the lights of New York had gone out.

Dagny gasped. “Don’t look down!” Galt ordered sharply.

She raised her eyes to his face. His face had that look of austerity with which she had always seen him meet facts.

She remembered the story Francisco had told her: “He had quit the Twentieth Century. He was living in a garret in a slum neighborhood.

He stepped to the window and pointed at the skyscrapers of the city.

He said that we had to extinguish the lights of the world, and when we would see the lights of New York go out, we would know that our job was done.”

This time, the collapse will be signaled when every ATM stops working.

Now you know.