Continued world financial crisis fallout

105 posts / 0 new
Last post
josh
Continued world financial crisis fallout

Perhaps a good place to chronicle the world wide worker reaction to the global financial crisis. 

Hundreds of thousands of angry and fearful French workers mounted nationwide strikes and protests Thursday to demand President Nicolas Sarkozy do far more to fight the economic crisis.

Public and private sector workers united in the protest to seek increases in salaries, greater protection for their jobs and more intensive government efforts to simulate the economy.

http://www.google.com/hostednews/ap/article/ALeqM5gHxGqBLEIin8NkBuxlqpCPPwr31AD960QDDO1

Greek farmers protesting against a slump in commodity prices lifted most of their roadblocks on Thursday after accepting a government offer, but kept border crossings to Bulgaria shut for an eleventh day.

The blockades, which have caused travel chaos across Greece and angered Bulgaria, have shaken a conservative government struggling to cope with the economic slump and recover from the worst riots in decades last month.

http://uk.reuters.com/article/worldNews/idUKTRE50S2IJ20090129

Doug

They shared their sad stories the other night at an informal gathering of Dating a Banker Anonymous, a support group founded in November to help women cope with the inevitable relationship fallout from, say, the collapse of Lehman Brothers or the Dow’s shedding 777 points in a single day, as it did on Sept. 29.

In addition to meeting once or twice weekly for brunch or drinks at a bar or restaurant, the group has a blog, billed as “free from the scrutiny of feminists,” that invites women to join “if your monthly Bergdorf’s allowance has been halved and bottle service has all but disappeared from your life.”

http://www.nytimes.com/2009/01/28/nyregion/28daba.html?ex=1390885200&en=843855e519bacaed&ei=5124

Oh the horror!

M. Spector M. Spector's picture

Quote:
Obviously the Obama administration recognizes that it needs to keep the finger of blame for the current economic collapse squarely pointed at the Bush administration, which is certainly fair in large part (though the Clinton deregulation of the banking industry played a major part in the financial crisis and its enthusiastic promotion of globalization began the massive shift of jobs overseas that has left the nation’s productive capacity hollowed out). But it also seems to recognize that it cannot tell the bitter truth, which is that our national economy will never “bounce back” to where it was in 2007.

[url=Dave">http://www.counterpunch.org/lindorff01302009.html][u]Dave Lindorff[/url]

Fidel

Taleb Says Nationalize Banks, You Can’t Trust Them  

Quote:
Jan. 29 (Bloomberg) -- Bank nationalizations are “absolutely necessary” to stop them damaging the financial system further with more losses, said Nassim Nicholas Taleb, author of the best-selling finance book “The Black Swan.”

“You cannot trust the banks in taking risks,” Taleb said in an interview with Bloomberg Television in Davos. “We have a very strange situation in which it’s the worst of capitalism and socialism, a situation in which profits were privatized and losses were socialized. We taxpayers have the worst.”

The global economy will slow close to a halt this year as more than $2 trillion of bad assets in the U.S. help sink economies from there to the U.K. and Japan, the International Monetary Fund said yesterday. Taleb echoed comments from New York University Professor Nouriel Roubini, who says the majority of U.S. banks are insolvent.

“You have to eventually nationalize U.S. banks, you have to take the problem by the horns,” Roubini told Bloomberg Television in Davos today. “In my view actually most of the U.S. banking system is insolvent.”

Doug

Banks aren't the only thing getting nationalized:

The government will nationalise recession-hit private schools by turning them into state-funded academies, ministers have confirmed.

Headteachers predict that some struggling fee-charging schools will seek to join the scheme to stave off closure, as more parents desert the private sector.

There are warnings, too, that thousands of pupils may seek places at already-stretched state schools this September if private schools fail.

http://www.guardian.co.uk/education/2009/jan/31/private-schools-nationalised-academies

That's in the UK, of course, where the financial crisis has done nasty things to the private-school parent set.

 

Doug

So much for the usual bubbly sort of investment bank report -

ML chief economist David Rosenberg has broken the D(epression)-word seal. In his most recent report "Some Inconvenient Truths" he says we are currently in a depression

http://zerohedge.blogspot.com/2009/01/merrill-lynch-analyst-says-depress...

Sadly, he gives a number of great reasons why it will be hard to get out as people make sustained changes to their economic behaviour in tough times.

Doug

The price of NFL Superbowl tickets has had to come down, there are unsold advertising spots - and won't somebody please think of the unemployed Playboy playmates, their party has been canceled.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aRFJaZUKZrHw

 

wwSwimming

more on DABA Girls

"Ain’t Messin’ With No Broke Banker"

"This whole messy ordeal has advanced my Botox start date by at least two years.  Like every other DABA girl, the economy was wreaking havoc on my relationship and youthful good looks.  Phone calls went unanswered, Hamptons invitations un-extended, plans canceled (including, but not limited to, expensive opening night tickets to the ballet, which were scalped instead of being graciously offered to me and a galpal), and so forth and so on.  Until – the horror of all horrors – my FBF lost his job, which I guess technically downgrades him to just my BF.

Overnight, he went from unavailable to downright clingy.  He wants to have dinner every night.  By dinner I mean staying in and cooking as Megu is no longer in the budget.  AND, FYI DABA girls – chopping vegetables along side your man in a hot New York sized kitchen is NOTHING like the sexy kitchen scene between Mickey Rourke and Kim Basinger in Nine and a Half Weeks.  Seriously.  It sucks.  Anyhow, he suggested I meet his parents over the holidays and he keeps commenting that half Asian babies are by far the cutest.  My take on his 180: having no steady source of income for the foreseeable future, he realized that his chances of securing another fashion industry type girl are pretty much zilch and so he is cleaving to me as the last vestige of his former high rolling lifestyle.

Thanks to the recession, I now have a completely devoted BF, which is exactly what I wanted.  So I should be happy, right?  Wrong.  I’m bored and can’t stop thinking about my perpetually unattainable Euro ex-boyfriend who is recession proof courtesy of an offshore trust account.  To be honest, I’m only with my BF because I just don’t have the heart to change my facebook status from “in a relationship” to “I ain’t saying I’m a gold digger, but I ain’t messin’ with no broke banker.”

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

http://LASIK-Flap.com ~ Health Warning about LASIK Eye Surgery

NorthReport

And we don't have to go outside of Canada to see major fuck-ups.

How Caisse's bet on quants went wrong 

http://www.theglobeandmail.com/servlet/story/RTGAM.20090130.wcover31/BNStory/National/home

M. Spector M. Spector's picture

[url=Governments">http://www.guardian.co.uk/business/2009/jan/31/global-recession-europe-p... across Europe tremble as angry people take to the streets[/url]

Jerry West

"Public and private sector workers united in the protest to seek increases in salaries, greater protection for their jobs and more intensive government efforts to simulate the economy."


 Greater job protection and a more stimulated economy may be the wrong answers.  What is needed is a new, non-growth, economic model and new jobs not based on production of goods but on environmental rehabilitations for one, and on the replacement of mechanical use of energy by human energy on the other.

 A new economic model

Fidel

Jerry West said: 

Quote:

Governments and economists push economic growth as the mechanism to create employment. There are better ways at this point in history. The bulk of new employment must come now from jobs created to repair our infrastructure and the environmental damage that we have done to the planet. The finances to pay for those jobs must come from changing how we redistribute wealth in society. Currently wealth is redistributed primarily through market mechanisms. Markets will not work well for accomplishing what we must do. We need to change our method of redistribution by increasing government control of wealth through more progressive taxation.

Exactly! Markets fail, and more economists are admitting this awful truth today. And I think there are more direct methods than taxation for  bringing the life blood of economies under democratic control, ie money creation and credit. That's another one which capitalists fought hard to bring under their exclusive control post cold war era, Jerry. As an unrepentant Marxist, I would prefer 100% control of money by democratically elected government. But I think even if we return to what existed in Canada from 1938 to 1974 with the feds creating about a quarter of the money supply as interest-free, debt-free money(government-created money as opposed to bank-created money) for special purposes, we could afford green infrastructure and vital program spending. Canadian William Krehm says there are municipalities across Canada that can not afford to repair aging infrastructure let alone build anew. And the experiment in privatization of vital infrastructure ie. water and sewers for example, has been a bust around the world where tried. 

But I also agree that if the feds simply taxed corporations and the wealthy at more progressive rates(OECD average to EU-15 average as a percentage of GDP) and actually enforced collection, then Ottawa and our various layers of sub government would have anywhere from $35B to $75 billion dollars(Mel Hurtig, The Vanishing Country: Is it too late to save Canada) more every year to finance public needs.

Doug

Denial isn't a river...in Davos:

Regret is cheap for some delegates at the World Economic Forum in Davos, Switzerland. Redemption for their role in the worst economic wreck since the Great Depression comes at a steeper cost.

“Nobody in Davos wants to get near a negative like redemption,” said Robert Dilenschneider, chief executive officer of the Dilenschneider Group, a public relations firm in New York. “But the truth is that everyone here is part of the problem, and the public will soon begin demanding a pound of flesh.”

“No banker or businessman wants to take responsibility,” said Dilenschneider, who counts 40 Davos delegates as clients, their identities shielded by confidentiality agreements. “It’s their view that everybody else did something wrong.”

 http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=abAA1ieh6wTk

Doug

Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to independent research that paints an ominous picture for the world economy.

The research was conducted for The Sunday Times over the last two months in three provinces vital to Chinese trade – Guangdong, Zhejiang and Jiangsu. It found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.

http://business.timesonline.co.uk/tol/business/economics/article5627687.ece

 

M. Spector M. Spector's picture

Jerry West wrote:

...the replacement of mechanical use of energy by human energy on the other.

What, human-powered rickshaws instead of automobiles? Humans shovelling snow off the roads instead of snow ploughs? Humans running on treadmills to recharge batteries to power their toasters?

What a horrible, reactionary dystopia. Just shoot me now.

What on earth makes you think that "human energy" comes at any lesser cost than the natural renewable sources of energy we already have? "Cheap" human labour is only cheap to the capitalist who exploits it - all he's doing is passing the cost off onto the worker and his/her family.

Get a grip, Jerry. 

Fidel

 I think Jerry is pointing out the inequalities and inefficiencies in our current system. Why should robots make cars and subway trains if people can be paid to do it? What's the hurry and drive to do away with providing employment to real human beings?

What about parking all those gasoline powered streetsweepers, and paying unemployed people a living wage to do it with brooms?

How about cutting out capitalists and giving a pay raise to hospital cleaning staff? We could afford to do things like that, if we cut out the banksters for 25% of money creation and credit, or simply raise taxes on those bastards siphoning off our oil and gas for a song.

genstrike

Fidel wrote:

 I think Jerry is pointing out the inequalities and inefficiencies in our current system. Why should robots make cars and subway trains if people can be paid to do it? What's the hurry and drive to do away with providing employment to real human beings?

What about parking all those gasoline powered streetsweepers, and paying unemployed people a living wage to do it with brooms?

I think what we should be striving for is letting the robots and mechanical devices do their thing, but instead of replacing people's jobs we should be reducing working hours (with no reduction in pay!).  Why not increase leisure time for everyone instead of creating unnecessary work?

I agree with cutting out capitalists though.  What they do is unnecessary!

Fidel

I believe robots have a purpose, like doing surgeries by remote control - bomb disposals - digging tunnels for mining - and generally any task that requires greater than human accuracy and precision.

But not for the sake of reducing labour costs and maximizing profit. And not aerial drones for murdering people villages in Pakistan with "smart bombs"

 I can see eliminating physical work by use of robots and technology at some future time when everyone is well educated and capable of doing advanced work. In the future, society may benefit from genetic engineering and things like speed learning through machine-human interfacing or some such. I think this period we're living in now will be looked back upon as the period of pre-genetic engineering and advanced medicine.

 Science and tech has had some bad press for a long time with not producing anything of real value for the human cause. I think that will change. I think the average life expectancy will be permanently altered for the better for the first time in about 50000 years. People will live longer in future, and all that they learn in time will become invaluable to economies of the future. But dont quote me.

Ward

Who ever said "employment" is something humans were designed for? Full, unemployement should be the goal! Thank goodness for recessions at least they give a few people a break.

M. Spector M. Spector's picture

Fidel wrote:

Why should robots make cars and subway trains if people can be paid to do it? What's the hurry and drive to do away with providing employment to real human beings?

Um, weren't people paid to make the robots? Doesn't all productive capacity ultimately derive from human labour?

"Providing employment" is the euphemism of the capitalist for "exploiting human labour". You make it sound as if forcing people to sell their labour power so that a handful of owners of capital can get richer by appropriating surplus value is conferring a benefit on the workers!

People don't "need jobs", as the social-democratic politicians are so fond of saying. Who "needs" to produce commodities that will be taken from them and sold by their employer to a third party?

What people "need" is a fair share of the socially-produced wealth (whether produced directly by people or indirectly by robots that were built by people) to enable them to have the time and the wherewithal to enjoy fulfilling and satisfying lives.

Let the robots make commodities, and give human workers shorter working hours and more pay. Let the workers enjoy the fruits of increased productivity, instead of allowing the capitalists to appropriate them.

30 for 40!   

 

Fidel

I think the problem with idleness in general, not to mention sedentary jobs of today, is the fact that it's not healthy. I can appreciate the former Soviet approach to work. And that was for technical workers and agricultural workers to do job sharing in order to reduce boredom. Of course in their case it was a matter of manpower shortages after the war and the need to harvest crops. 

But think of Charlie Chaplin in that movie where he worked in the factory all day six days a week doing the same repetitive tasks. That's not good for either the mind or body. Soviet era exercise scientists like Tudor Bompa realized that our bodies were designed to be in motion. Everything works better with exercise, including our minds.

Fidel

M. Spector wrote:
Fidel wrote:

Why should robots make cars and subway trains if people can be paid to do it? What's the hurry and drive to do away with providing employment to real human beings?

Um, weren't people paid to make the robots? Doesn't all productive capacity ultimately derive from human labour?

Yes, I'm not saying we need to stop making robots, just make them for appropriate purposes.

Quote:
What people "need" is a fair share of the socially-produced wealth (whether produced directly by people or indirectly by robots that were built by people) to enable them to have the time and the wherewithal to enjoy fulfilling and satisfying lives.

Why not give people a choice of what they can do to contribute to the greater good?

Quote:
Let the robots make commodities, and give human workers shorter working hours and more pay. Let the workers enjoy the fruits of increased productivity, instead of allowing the capitalists to appropriate them.

30 for 40!

Less work sounds good to me. But the capitalist idea for excess workers and surplus human beings is a waste of humanity. And I think people do want to work and contribute to something greater than themselves. The capitalist idea for  sending someone a cheque in the mail to sit at home and do nothing tends to destroy our will to live at some point. Of course, with this economy and the way it wastes human labour and energy, some environmentalists are saying we should pay people to stay home and not contribute to global warming. I can see that, too.  

NorthReport

Fidel wrote:

I think the problem with idleness in general, not to mention sedentary jobs of today, is the fact that it's not healthy. I can appreciate the former Soviet approach to work. And that was for technical workers and agricultural workers to do job sharing in order to reduce boredom. Of course in their case it was a matter of manpower shortages after the war and the need to harvest crops. 

But think of Charlie Chaplin in that movie where he worked in the factory all day six days a week doing the same repetitive tasks. That's not good for either the mind or body. Soviet era exercise scientists like Tudor Bompa realized that our bodies were designed to be in motion. Everything works better with exercise, including our minds.

Good point Fidel

Every office, as well as providing a child care, needs to provide for all its employees, a workout room complete with showers and storage areas for a change of clothes. Isn't it interesting how executives can find the funds to make their personal offices look like mini Taj Mahals, but cannot find the money for the basic every-day needs of all the staff.

 

 

Fidel

I agree, NorthReport. I think childcare should be available for anyone who does want to work while raising children. But I think, too, that if someone wants to stay at home and raise their own children, then that should be everyone's choice as well.

martin dufresne

History will show that they went on hectoring each other with 'shoulds' right down to the bottom of the abyss.

Jerry West

M. Spector wrote:

What, human-powered rickshaws instead of automobiles? Humans shovelling snow off the roads instead of snow ploughs? Humans running on treadmills to recharge batteries to power their toasters?

Sheesh.  You mean you are opposed to using bicycles instead of motor vehicles where appropriate?  Switchboard operators instead of multi-level automated machines?  Agricultural workers instead of fruit picking machines?  etc., etc.?  Not all industrial development is socially or environmentally beneficial.  Some is, some is not.

 

Quote:

What on earth makes you think that "human energy" comes at any lesser cost than the natural renewable sources of energy we already have?

For one, human energy is a natural, renewable source of energy, and although all of the other energy that we generate is natural, much of the source of the current energy is not renewable, at least in the time frame of human society.

 

Quote:

"Cheap" human labour is only cheap to the capitalist who exploits it - all he's doing is passing the cost off onto the worker and his/her family.

Who said it had to be "cheap"?  And who said that there had to be capitalists?  Are you making an argument that humans should be able to live without lifting a finger?  That would be unnatural. :)

genstrike wrote:

I think what we should be striving for is letting the robots and mechanical devices do their thing, but instead of replacing people's jobs we should be reducing working hours (with no reduction in pay!).  Why not increase leisure time for everyone instead of creating unnecessary work?

Using mechanical devices where appropriate is fine, the question is where are they appropriate.  And reduced working hours, why not?  In a society with more equitable distribution of resources working hours would probably be less.  Studies have stated that a least some hunter-gatherer societies worked a lot less than modern industrial ones.

And, my point  isn't about increasing unnecessary work, but about replacing non-renewable energy when appropriate with renewable energy, which human labour is.  It is about reducing the subsidization of (among other things) capitalism by the environment.

 

MS wrote:

What people "need" is a fair share of the socially-produced wealth (whether produced directly by people or indirectly by robots that were built by people) to enable them to have the time and the wherewithal to enjoy fulfilling and satisfying lives.

I agree.  But of course this does beg the question, what constitutes fulfilling and satisfying, and what responsibility does one have to acquire the necessities of life, and what responsibility does one have to contribute to the welfare of society.

 

 

Fidel

The struggle for democracy continues?

Another beef I have with capitalism, and I think Marx pointed it out. A corner variety store in the small town near where I grew up used to sell shoes and clothing. Unsold shoes were cleared off the shelf as an example. And instead of donating the shoes to a good cause, the store owner would cut the shoes up and send them to the landfill site so as no one would find free shoes. Businesses have done similar things with food and other commodities sooner than allow a market in free goods 

 

Doug

More people are taking the final way out of their financial difficulties by committing suicide or turning in desperation to crime.

The body count is still rising. For months on end, marked by bankruptcies, foreclosures, evictions, and layoffs, the economic meltdown has taken a heavy toll on Americans. In response, a range of extreme acts including suicide, self-inflicted injury, murder, and arson have hit the local news. By October 2008, an analysis of press reports nationwide indicated that an epidemic of tragedies spurred by the financial crisis had already spread from Pasadena, California, to Taunton, Massachusetts, from Roseville, Minnesota, to Ocala, Florida.

http://www.alternet.org/workplace/123563/the_financial_crisis_is_driving_hordes_of_americans_to_suicide/?page=entire

Ward

Stimulating humans to work is one of those unfortunate sufferings many must endure from those with the whip.

My take is that, the benefit from these "economic stimulation packages" during this rest period (read recession) will not be for the masses.

  Rather, cash will flow to the unemployed capitalist leaders, in order to maintain their lifestyles. And then when the sunspots return and we all get up and resume our feverish quest, it will be primarily to pay the whipmeisters debt. 

The best revenge is living well. 

NorthReport
Doug

That's good to know so that things might be thrown at them.

I found a website with all the bad news in one place: http://www.layoffdaily.com/

These other people may have something to do with it, however:

The average tax rate paid by the richest 400 Americans fell by a third to 17.2 percent through the first six years of the Bush administration and their average income doubled to $263.3 million, new IRS data show.

The 17.2 percent tax rate in 2006 was the lowest since the IRS began tracking the 400 largest taxpayers in 1992, although the richest 400 Americans paid more tax on an inflation-adjusted basis than any year since 2000.

The drop from 2001’s tax rate of 22.9 percent was due largely to ex-President George W. Bush’s push to cut tax rates on most capital gains to 15 percent in 2003

http://www.bloomberg.com/apps/news?pid=20601103&sid=ar5uxG_wV87A&refer=us

 

Progressive taxation? I don't think so!

NorthReport

Maybe they will fall more than that. I think we may well be many years away from any kind of rebound in housing prices. There is still a huge amount of denial out there in the press about the state of the economy.  

 

 

    House prices 'could fall 40 per cent without loan boost'

http://www.independent.co.uk/money/mortgages/house-prices-could-fall-40-per-cent-without-loan-boost-1523110.html

Doug

Japanese manufacturers cut production an unprecedented 9.6 percent last month, deepening a recession that’s expected to be the worst in the postwar era.

The drop eclipsed the previous record of 8.5 percent decline set in November, the Trade Ministry said today in Tokyo. Economists predicted a month-on-month decrease of 8.9 percent.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=as9hl9mW7oGQ

NorthReport

TSX down over 150 basis points in the first 5 minutes of trading today - another buying opportunity! Laughing

http://investdb.theglobeandmail.com/invest/investSQL/gx.index_today?pi_symbol=TSX-I&pi_action=

George Victor

Thanks "Steve", but the answer is still no.

And today my bank informs me that the line of credit interest rate is going up 0.5 per cent despite their benefitting from a drop in the bank rate of that amount.  Ah, the problems with liquidity when you are trying to keep your investors from fleeing to safer climes.

But now I'll really be nickel and diming it. Sorry, Keynes.

George Victor

Yes. Didn't hear any complaints about U.S.fiscal policy when old Gwyn was heading up EnCana , eh? Establishing U.S.markets for Canada's biggest.

But the Globe needed a Tar Patch voice. Unfortunately, it got rid of a correspondent who  apparently revealed too many internal doings in her weekly report - for jittery oilmen anyway.

Fidel

Leading Experts: Let the Banks Fail

Quote:
The government and Wall Street have endlessly repeated the statement that we have to save the banks, or the whole economy will be destroyed.

But leading experts - including the following people - say that letting the banks fail will help the economy recover:

  • The central banks' central bank, BIS

We cannot even start to recover from the depression we are in unless the free market is allowed to operate. That means that banks that made horrible business decisions have to be allowed to fail, and those that made good decisions allowed to succeed.

Islamic and Leftist Anti-imperialists unite

Beirut International Forum

Quote:
• Peoples possess the right to resistance and this right must be inalienable, supported by the whole of the international community and recognized as such in international law;
• The combat of the resistance confronting colonialism cannot be divided from the combat by revolutionaries and free men and women confronting globalized capitalism, imperialism, militarization and the elimination of the social benefits that were established by more than two hundred years of determined working-class struggles.
• The people have a sovereign right to their natural resources. The right to food, health and education must take priority over any commercial consideration;
• Each culture and all knowledge should contribute to increasing the common wealth of humanity on the basis of respecting Nature, giving priority to human needs and the democratic management of society;
• The right to democratic governance must be carried out not only at the political level but also at the economic level and is the concern of both men and women;
• The right to cultural differences and freedom of worship while rejecting any cultural and racial bias must be guaranteed

M. Spector M. Spector's picture

Quote:

The daily bleeding of thousands of jobs will soon turn our economic crisis into a political crisis. The street protests, strikes and riots that have rattled France, Turkey, Greece, Ukraine, Russia, Latvia, Lithuania, Bulgaria and Iceland will descend on us. It is only a matter of time. And not much time. When things start to go sour, when Barack Obama is exposed as a mortal waving a sword at a tidal wave, the United States could plunge into a long period of precarious social instability.

At no period in American history has our democracy been in such peril or has the possibility of totalitarianism been as real. Our way of life is over. Our profligate consumption is finished. Our children will never have the standard of living we had. And poverty and despair will sweep across the landscape like a plague. This is the bleak future. There is nothing President Obama can do to stop it. It has been decades in the making. It cannot be undone with a trillion or two trillion dollars in bailout money. Our empire is dying. Our economy has collapsed.

[url=Chris">http://www.truthdig.com/report/item/20090202_its_not_going_to_be_ok/][co... Hedges[/url]

NorthReport

More BS from the cabbage, er I mean oil patch.

Obamania's great, but Canadian prudence trumps political charisma every time

http://www.theglobeandmail.com/servlet/story/RTGAM.20090202.wragendamorgan02/BNStory/crashandrecovery/home

NorthReport

I enjoyed this response to Morgan's oil patch article in today Globe. Laughing

S Rankin from Chatham, Ontario, Canada writes: How tiresome. Another self-serving piece from Canada's clueless right-wing dragging Trudeau out of his grave yet again. How amusing that the writer failed to credit another liberal, Paul Martin for finally putting an end to 30 years of structural deficits - the single biggest factor in providing economic bragging rights to Canadians in the current debacle. Also how convenient to talk about Trudeau's contribution to the structural deficit when deficits run up under Mulroney were as great in dollar terms. What is it about the rightie mind anyway? They obviously take people for saps. A similar logic is in play in the USA: Bush and the Republican economic team that controls the SEC regulations have been in power for 8 years, the Republican Congress has either been in power or has had to power to block legislation for 13 years, the deregulation that has been traced as a cause of the crises took place on Bush's watch as well as his 3 previous predecessors ... so therefore the whole thing is Obama's fault. And here is how conservatives take responsibility for thier actions: (1) Point finger at nearest victim (2) Claim, in a loud voice, that the nearest victim is actually the culprit, and (3) Claim that you and other conservatives are simply hapless and pathetic victims of the MSM and "liberuls". Get a clue! In regard to deficit spending in the age of ZIRP (zero interest rate policy... Canada will soon be there): "There are no atheists in foxholes and there are no libertarians in financial crises." (Paul Krugman)

Doug

As with everything in China, the numbers involved in their portion of the global economic problem are staggering.

Around 20 million migrant workers have returned to the Chinese countryside after failing to find work in the cities because of the economic downturn, a senior official said today.

The figure - greater than the population of Australia - is double a previous official estimate and will heighten the concerns of the Chinese authorities about maintaining stability. It came a day after the government warned that 2009 would be "possibly the toughest year" for economic development in China since the turn of the century.

http://www.guardian.co.uk/business/2009/feb/02/china-unemployment-unrest

George Victor

As Krugman (NYTimes) says, there are no "libertarians" in financial crises.

God it's nice to see someone who understands the meaning of libertarian.

-----------------------------

And you and Sheldon Wolin have found rapport since last spring, MS (see book lounge posting and revival of his theory).

Jerry West

 Some may find this bit on the economic impact of the Pentagon of interest:

Quote:

We don't usually think of the Pentagon as a jobs-and-careers scam operation, a kind of Mega-Madoff Ponzi scheme that goes BOOM!, though it is clearly designed for the well-being of defense contractors, military officers, and congressional representatives; nor do we usually consider the "defense" budget as a giant make-work jobs racket, as arms experts Bill Hartung and Christopher Preble recently suggested, but it's never too late.

Chalmers Johnson, author of the already-classic Blowback Trilogy, including most recently Nemesis: The Last Days of the American Republic, makes vividly clear just how little the Pentagon is organized to consider the actual defense needs of the United States. In many ways, it remains a deadly organization of boys with toys that now poses a distinct economic danger to the rest of us.

Link to article

 

 

Frustrated Mess Frustrated Mess's picture

Quote:
I just want to remind you that, just a year ago, American delegates speaking from this rostrum emphasised the US economy's fundamental stability and its cloudless prospects. Today, investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months, they have posted losses exceeding the profits they made in the last 25 years. This example alone reflects the real situation better than any criticism.

Putin at Davos

NorthReport

This is great stuff, representative of the kind of discussions that need to take place - but will they ever occur in the corridors of power? It's a long article but worth reading in its entirety. It is the first time that I am able to at least partially grasp, if still not yet fully comprehend what has been  going on in with the movers and shakers in the major financial circles around the globe.   What Cooked the World's Economy?It wasn't your overdue mortgage.

http://www.villagevoice.com/2009-01-28/news/what-cooked-the-world-s-economy/

The basic story line so far is that we are all to blame, including homeowners who bit off more than they could chew, lenders who wrote absurd adjustable-rate mortgages, and greedy investment bankers.

Credit derivatives also figure heavily in the plot. Apologists say that these became so complicated that even Wall Street couldn't understand them and that they created "an unacceptable level of risk." Then these blowhards tell us that the bailout will pump hundreds of billions of dollars into the credit arteries and save the patient, which is the world's financial system. It will take time—maybe a year or so—but if everyone hangs in there, we'll be all right. No structural damage has been done, and all's well that ends well.

Sorry, but that's drivel. In fact, what we are living through is the worst financial scandal in history. It dwarfs 1929, Ponzi's scheme, Teapot Dome, the South Sea Bubble, tulip bulbs, you name it. Bernie Madoff? He's peanuts.

Credit derivatives—those securities that few have ever seen—are one reason why this crisis is so different from 1929.

Derivatives weren't initially evil. They began as insurance policies on large loans. A bank that wished to lend money to a big, but shaky, venture, like what Ford or GM have become, could hedge its bet by buying a credit derivative to cover losses if the debtor defaulted. Derivatives weren't cheap, but in the era of globalization and declining American competitiveness, they were prudent. Interestingly, the company that put the basic hardware and software together for pricing and clearing derivatives was Bloomberg. It was quite expensive for a financial institution—say, a bank—to get a Bloomberg machine and receive the specialized training required to certify analysts who would figure out the terms of the insurance. These Bloomberg terminals, originally called Market Masters, were first installed at Merrill Lynch in the late 1980s.

Subsequently, thousands of units have been placed in trading and financial institutions; they became the cornerstone of Michael Bloomberg's wealth, marrying his skills as a securities trader and an electrical engineer.

It's an open question when or if he or his company knew how they would be misused over time to devastate the world's economy.


Fast-forward to the early years of the Clinton administration. After an initial surge of regulatory behavior in favor of fair markets, especially in antitrust, that sort of behavior was abandoned, and free markets triumphed. The result was a morass of white-collar sociopathy at Archer Daniels Midland, Enron, and WorldCom, and in a host of markets ranging from oil to vitamins.

This was the beginning of the heyday of hedge funds. Unregulated investment houses were originally based on the questionable but legal practice of short-selling—selling a financial instrument you don't own in hopes of buying it back later at a lower price. That way, you hedge your bets: You cover your investment in a company in case a company's stock price falls.

But hedge funds later diversified their practices beyond that easy definition. These funds acquired a good deal of popular mystique. They made scads of money. Their notoriously high entry fees—up to 5 percent of the investment, plus as much as 36 percent of profits—served as barriers to all but the richest investors, who gave fortunes to the funds to play with. The funds boasted of having genius analysts and fabulous proprietary algorithms. Few could discern what they really did, but the returns, for those who could buy in, often seemed magical.

But it wasn't magic. It amounted to the return of the age-old scam called "bucket shops." Also sometimes known as "boiler rooms," bucket shops emerged after the Civil War. Usually, they were storefronts where people came to bet on stocks without owning them. Unlike their customers, the shops actually owned blocks of stock. If customers were betting that a stock would go up, the shops would sell it and the price would plunge; if bettors were bearish, the shops would buy. In this way, they cleaned out their customers. Frenetic bucket-shop activity caused the Panic of 1907. By 1909, New York had banned bucket shops, and every other state soon followed.

In the mid-'90s, though, the credit-derivatives industry was hitting its stride and argued vehemently for exclusion from all state and federal anti-bucket-shop regulations. On the side of the industry were Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and his deputy, Lawrence Summers. Holding the fort for the regulators was Brooksley Born, who headed the Commodity Futures Trading Commission (CFTC). The three financial titans ridiculed the virtually unknown and cloutless, but brilliant and prophetic Born, who warned that unrestricted derivatives trading would "threaten our regulated markets, or indeed, our economy, without any federal agency knowing about it." Warren Buffett also weighed in against deregulation.

NorthReport

Talk about corruption.

And what's been discovered and exposed is obviously only the tip of the giant crooked iceberg that's floating around the globe.

Rats in the Grain

The Dirty Tricks and Trials of Archer Daniels Midland

http://www.nytimes.com/books/first/l/lieber-rats.html

Not only was Whitacre busy but he appreciated the nimble, decisive can-do atmosphere at ADM. He reported directly to Mick Andreas. The huge lysine plant, with an annual output capacity of 250 million pounds, went from blue prints to production within less than a year and a half, an astonishing feat. The facility, which looked like an indoor stadium, opened in February 1991.

    At the time, lysine was selling for about $1.30 per pound. ADM started a price war in order to win market share. When the price hit 60 cents, the operation was not even paying off the building costs. According to Whitacre, "we were losing money, a few million dollars a month. Production costs were high because we were just getting started."

    This sorry state was not regarded by ADM as permanent but only as stage one. As Whitacre put it, stage two started when Mick Andreas and James Randall, the ADM president, put him in touch with Terry Wilson the president of the corn processing division. Not especially popular among employees, Wilson, a gruff, bearish man with forearms like hams, silver hair, and metallic glasses, was the subject of office rumors about price-fixing. He put Whitacre at ease about losing money and said it was time to meet with the major competitors, which were two Japanese firms, Kyowa Hakko Kogyo and Ajinomoto.

    Whitacre told his FBI handlers that Wilson previously had set up a conspiracy to fix prices in citric acid. According to Whitacre, Wilson and Mick Andreas convinced the Japanese that it was time for everyone to climb out of the red in lysine. The way to do it was by raising prices collectively and carefully dividing up the market.

    Whitacre reported that ADM even had a price-fixing motto: "The competitor is our friend and the customer is our enemy." The phrase stood modern capitalism on its head. Whitacre promised that it "turned up lots of times on the tapes" he secretly made of the meetings. "Terry used to say it, and Mick would say it. It was our philosophy.... There are tapes of Mick Andreas quoting his father as always saying this."

    From the first, the government declined all requests to release the tapes under the Freedom of Information Act, because they were evidence in an ongoing criminal investigation. ADM also early developed a militant strategy to prevent any disclosures of the tapes, but portions leaked out.

    After his exposure, Whitacre publicly recounted how he became an informant wearing a wire and at times carrying a tiny recording device implanted in his briefcase. He claimed that in 1992, when price-fixing was being discussed with the Japanese but before it actually began, lysine batches in the ADM plant came out spoiled. There was a suspicion of sabotage by engineers from the Japanese competitors, who had visited the Decatur facility. Eventually sabotage was ruled out. Before it was, Dwayne Andreas became concerned, and ADM called a contact at the CIA who referred the case to the FBI. This resulted in the invitation of Brian Shepard to the plant. Among others, Shepard approached Whitacre who allowed the FBI to tap his home phone and agreed to spy. One of the ironies of the case is that the FBI initially contacted Whitacre about matters unrelated to price-fixing.

    In 1995, Whitacre insisted that he was not threatened by the government. "The FBI never forced me to do anything." He wanted to do the right thing because "from the beginning, I wasn't comfortable with the idea of price-fixing, not only because it's illegal but because I also believe it's the wrong way to do business."

    Brian Shepard also was a significant part of the equation for Whitacre. "I don't know. I just really trusted the guy. If it were another kind of guy, I might not have told him. He was really trustworthy and I found it a real relief to talk to him.... We really hit it off well."

    For the most part, Whitacre charmed the press, which did not probe the inconsistencies in his stories. For example, Whitacre always maintained that Dwayne Andreas was in on the price-fixing scheme. If so, why did he alert the CIA about alleged sabotage and later invite the FBI on site? If the competitor truly was the friend, why would such a friend even be suspected of sabotage? Above all, why really did Whitacre cooperate with the government? No similar tugs of conscience had disturbed him during school or in prior jobs. He was not known for making ethical stands or for doing anything to put his meteoric career at risk.

    Whitacre fast was becoming a folk hero of American business. A pariah at ADM, he found himself at the center of the largest antitrust probe in American history and in the pages of the New York Times, Wall Street Journal, Time, Newsweek, and Barrons. Fortune devoted a cover piece and extensive space to Whitacre's first-person account: "My Life as a Corporate Mole for the FBI." Residents of Moweaqua, from the barber to the police chief, told television that Whitacre and his wife Ginger were model citizens, parents, and philanthropists. The couple was especially concerned with the plight of poor children. They organized toy drives and invited local kids to play on their grounds. Time described Whitacre as practically a "second son" to Dwayne Andreas. Reporters, editors, and readers warmed to the story of a man who had everything and seemingly put it all at risk as a covert operative for the FBI in order to protect free enterprise.

NorthReport

Desperate Times and Desperate Measures

On Main Street and Wall Street, people are being driven to once unthinkable extremes.

http://www.motherjones.com/commentary/tomdispatch/2009/01/desperate-times-and-desperate-measures.html

 

Going to Extremes

Across the United States, people have been reacting to dire circumstances with extreme acts, including murder, suicide and suicide attempts, self-inflicted injury, bank robberies, flights from the law, and arson, as well as resistance to eviction and armed self-defense. And yet, while various bailout schemes have been introduced and implemented for banks and giant corporations, no significant plans have been outlined or introduced into public debate, let alone implemented by Washington, to take strong measures to combat the dire circumstances affecting ordinary Americans.

There has been next to no talk of debt or mortgage forgiveness, or of an enhanced and massively bulked-up version of the Nixonian guaranteed income plan (which would pay stipends to the neediest), or of buying up and handing over the glut of homes on the market, with adequate fix-up funds, to the homeless, or of any significant gesture toward even the most modest redistributions of wealth. Until then, for many, hope will be nothing but a slogan, the body count will rise, and Americans will undoubtedly continue going to extremes.

[Note: A special bow should be offered to undervalued small-town newspapers and local television stations across the country that have done the grunt work in covering the tragic results of the global economic crisis in their own communities. They continue to offer a real service to the public by documenting how individuals in cities and towns across America are suffering and just what that suffering drives them to do. By way of a Newsweek article on the "Killer Economy?" I recently became aware of an excellent resource on some of the human fallout of the financial crisis, "Greenspan's Body Count" an ongoing feature on the W.C. Varones Blog. Since early 2008, it has provided an invaluable record of "mortgage-related suicides" and other "victims of (former Chairman of the Federal Reserve) Alan Greenspan."]

 

 

NorthReport

Down, down it goes. How far down nobody knows!

Vancouver’s low pay out of whack with home prices: tech blogger 

http://thetyee.ca/Blogs/TheHook/Labour-Industry/2009/01/30/HomePrices/

"Affordable commercial real estate is hard to come by in the city - leading in some cases to a perverse reverse-commute where urbanites must schlep out to the suburbs to their workplaces - but more importantly this discourages companies from locating here.

"Most large cities with expensive downtown cores operate as financial centres ...Vancouver does not...

"B.C.'s resource industries, the bread and butter of Vancouver for more than 150 years, are weak thanks to everything from the U.S softwood lumber tariffs to Kyoto to a number of key mining company collapses. Our province has failed to diversify its economic base...

"The advanced industries like software and aerospace that keep California sizzlin' have failed to grow in scale in this city. Investment in this area is weak," with the exceptions of alternative energy and biotech.

"The film industry...is a fickle bride" and "the profits are retained in New York and LA...."

Bell goes on to note that B.C.'s largest industry is the marijuana trade, hardly a good foundation for your basic well-regulated urban economy.

And, when it comes to greasing the wheels of commerce, the Lower Mainland's transportation system is "pathetic."

 

 

NorthReport

 "Paul Samuelson: Financial Crisis Work of 'Fiendish Monsters'"

http://economistsview.typepad.com/economistsview/2009/02/paul-samuelson-financial-crisis-work-of-fiendish-monsters.html

Another Nobel Prize winner - one who actually understands the difference between the savings equals investment identity and behavioral relationships - for fiscal stimulus. This is slightly dated, it's from October 2008, but it's not stale yet:

Paul Samuelson: Financial crisis work of 'fiendish monsters', by Kiyoshi Okonogi, Asahi Shimbun: With the financial crisis that started in the United States triggering a global recession, Asahi Shimbun Senior Staff Writer Kiyoshi Okonogi interviewed distinguished American economist Paul Samuelson for his insights on what the world can expect in the days and weeks ahead. ... Following are excerpts: 

Question: The current global financial crisis is said to be the worst since the Great Depression. What is your view?

Answer: I think it is definitely the worst crisis since the 1929-1939 Great Depression, both in America and globally, and I think it was an unnecessary breakdown as there was no need for America to have a meltdown.

When George W. Bush became president in 2001, he inherited a country with quite sound (fundamentals) from President Bill Clinton with an overbalanced budget.

Now this does not mean that there were not problems ahead ... (there had been problems) ever since 1981 when President Ronald Reagan took office.

He was not a bad movie star but he brought into power a swing to the right. This is what we call "extreme right, supply side economics." And, from 1981 we trace the acceleration of the huge yearly balance-of-payments deficit of the United States, which is still going on ... . If you come back 10 years from now we will still have a very serious problem. ... [S]ome time, whether it is eight years from now or 12 years from now, there will be probably a big run against the dollar and probably a disorderly run against the dollar. ...

Bush worst U.S. president in over 200 years

Q: How much of an impact will the global financial crisis have on the Nov. 4 elections in the United States?

A: ...George Bush will go down in the history books as the worst president that America has had in more than 200 years. And, that couldn't have happened if the voters had not moved to the right.

Now, aside from economics, which is my speciality ... President (Lyndon Baines) Johnson introduced Civil Rights ... equality in the law for black Americans. Immediately, all of the Democrats in the solid South moved to the Republican Party and that's part of the reason that for most of the last 28 years, since Ronald Reagan came to power, the Democrats have been the minority party.

I think after November that will change and it will change for two quite different reasons, both very important.

One is the Iraq war, which is a disaster. It's as bad as the Vietnam War and the Vietnam War entangled four or five presidents and there was no victory...

But the other reason is because people on Main Street in America are hurting. The reason they're hurting goes back to 1995 when Alan Greenspan, as the chairman of the Federal Reserve Board, made no efforts to curb the stock market bubble.

So the American electorate is very unhappy. Free trade and globalization add to world productivity. It also adds to the potential standard of living of many people, but unequally.

So, if Bush had been as wise as Clinton, you still would have from free trade a worsening of the situation of the lower middle-classes compared to the upper middle-classes and the very rich.

Adding to that, we had what Bush called "compassionate conservatism," which is generous to millionaires and helping to make them billionaires. The trouble is, it is ungenerous to people below the middle. ...

Fiendish Frankenstein monsters

Q: What is the major cause of the economic fiasco?

A: The whole history of capitalism has had up-bubbles in real estate and down-bubbles after something different. This time the new fiendish Frankenstein monsters of financial engineering blinded the eyes and the minds of everybody.

George Victor

 Samuelson :

"So the American electorate is very unhappy. Free trade and globalization add to world productivity. It also adds to the potential standard of living of many people, but unequally."

----------------------------------------------------------------------------------

Right. We went around denouncing globalization and the NAFTA and now they wouuld appear to be coming apart as protectionism takes over. And that is bad because people are hurting.

But wasn't that to be the future? "Change" is needed in a healthy economy. It was a sign of mental health to invite and accept change - even as people were being laid off and production went "offshore".  People were hurting. But it was slow, insidious like a cancer. And, anyway, this was becoming a "knowledge based" economy, thanks to IT. Right? (That one was challenged by the local newspaper here, in the home of RIM, for the first time a week ago as unemployment locally went above the national average, defying holy writ).

And you just had to ignore the obvious limits to growth for generations to come. The ubiquitous "they" will come up with something. For everything. And a majority of people still buy that one.

Let's face it. "Authority" rules because we haven't the foggiest what is going on in focus groups and labs where the future is being fashioned. It's not just "Frankenstein monsters of financial engineering." And ignorance is bliss.

 

Doug

Everyone in Latvia is just plain pissed off, it would seem:

Those good years took Latvia to a great height, and now it has crashed to the ground with a sickening thud. Surveys suggest that it is suffering more than any other European economy. The IMF has given huge loans and the government is trying to make massive cuts to balance the books. Wages of civil servants are to be cut by a third, some schools and hospitals are closing, VAT has been put up to 21% and more cutbacks are certain. This in part led to the riots in the middle of last month. Some see it as a very worrying moment. Latvia is used to changes of government and lively street protests, but free Latvia is not used to political violence.

http://www.bbc.co.uk/blogs/thereporters/markmardell/2009/02/riga_latvia_...

Pages

Topic locked