World financial crisis deepens

Submitted by NorthReport on February 13, 2009 - 11:56pm.

Imagine going to your bank after working hard for years saving your money to find the place padlocked. If this keeps up we could well see bloodshed in the streets.

Four U.S. Banks Seized, Bringing Total for Year to 13

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDvuCGKfCGeM&refer=home

Banks in Florida, Illinois, Nebraska and Oregon were shut by state regulators, boosting the toll of failed institutions to 13, as a worsening economy and slumping housing market pushes home foreclosures to records.

Submitted by M. Spector on February 16, 2009 - 11:32am.

North Report, why did you have to start another thread on this topic when you already knew about the existence of this one?

Submitted by NorthReport on February 16, 2009 - 12:53pm.

Because I did a search and it did not show up. Have it closed out if you wish.

Submitted by NorthReport on February 16, 2009 - 2:37pm.

Well we seem to know about what George Bush's legacy has done to the USA, and where the USA is headed, but the more important question is what is going to happen to the rest of us mere citizens on the rest of the planet? Our Canadian leaders for some time now have been doing a good job of basically trying to merge Canada with the USA, and this appraoach hardly seems to be in Canadians' best interests.

Decade at Bernie’s

http://www.nytimes.com/2009/02/16/opinion/16krugman.html?_r=1

Quote:

Yet until very recently Americans believed they were getting richer, because they received statements saying that their houses and stock portfolios were appreciating in value faster than their debts were increasing. And if the belief of many Americans that they could count on capital gains forever sounds naïve, it’s worth remembering just how many influential voices — notably in right-leaning publications like The Wall Street Journal, Forbes and National Review — promoted that belief, and ridiculed those who worried about low savings and high levels of debt.

Then reality struck, and it turned out that the worriers had been right all along. The surge in asset values had been an illusion — but the surge in debt had been all too real.

So now we’re in trouble — deeper trouble, I think, than most people realize even now. And I’m not just talking about the dwindling band of forecasters who still insist that the economy will snap back any day now.

For this is a broad-based mess. Everyone talks about the problems of the banks, which are indeed in even worse shape than the rest of the system. But the banks aren’t the only players with too much debt and too few assets; the same description applies to the private sector as a whole.

Submitted by Frustrated Mess on February 16, 2009 - 5:33pm.

Eastern Europe is About to Blow

Quote:

Eastern Europe is about to blow. If it does, it could take much of the EU with it. It's an emergency situation but there are no easy solutions. The IMF doesn't have the resources for a bailout of this size and the recession is spreading faster than relief efforts can be organized. Finance ministers and central bankers are running in circles trying to put out one fire after another. Its only a matter of time before they are overtaken by events. If one country is allowed to default, the dominoes could begin to tumble through the whole region. This could trigger dramatic changes in the political landscape. The rise of fascism is no longer out of the question.

The UK Telegraph's economics editor Edmund Conway sums it up like this:

"A 'second wave' of countries will fall victim to the economic crisis and face being bailed out by the International Monetary Fund, its chief warned at the G7 summit in Rome....But with some countries' economies effectively dwarfed by the size of their banking sector and its financial liabilities, there are fears they could fall victim to balance of payments and currency crises, much as Iceland did before receiving emergency assistance from the IMF last year." (UK Telegraph)

Submitted by Frustrated Mess on February 16, 2009 - 5:38pm.

Ireland could default

Quote:

FEARS are mounting that Ireland could default on its soaring national debt pile, amid continuing worries about its troubled banking sector.

The cost of buying insurance against Irish government bonds rose to record highs on Friday, having almost tripled in a week. Debt-market investors now rank Ireland as the most troubled economy in Europe.

Submitted by NorthReport on February 17, 2009 - 12:34am.

Things must be a lot worse in financial circles than most of us realize. I never thought I would see this kind of article being written in the Washington Post.

Imagine being so concerned with government ownership of their banks, some Americans would rather go bankrupct than be be called social democrats. Idiots.

Nationalize the Banks! We're all Swedes Now

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/12/AR2009021201602.html?sid=ST2009021203365&s_pos&s_pos=

Quote:

The U.S. banking system is close to being insolvent, and unless we want to become like Japan in the 1990s -- or the United States in the 1930s -- the only way to save it is to nationalize it.

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Quote:

Nationalization -- call it "receivership" if that sounds more palatable -- won't be easy, but here is a set of principles for the government to go by:

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

Quote:

Basically, we're all Swedes now. We have used all our bullets, and the boogeyman is still coming. Let's pull out the bazooka and be done with it.

Submitted by NorthReport on February 17, 2009 - 12:05pm.

A lot of people are hoping the big investors are sitting on the sidelines waiting for things to hit bottom, but are they, and will they? This oil price could spell financial disaster for Alberta and Canada as well.

Oil Falls Below $35 as Deepening Recession Cuts Fuel Demand

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0IBqjpMXnns&refer=home [10]

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Gold at seven-month high, up 3% on flight to safetyCopper contract plunges amid macro-level demand worries

http://www.marketwatch.com/news/story/gold-hits-7-month-high-above/story.aspx?guid=20A5EE6E-B892-4639-ABF8-540A566F0187 [11]

Submitted by Doug on February 17, 2009 - 1:38pm.

Japan’s central bank took too long to fight deflation; its fiscal stimulus was cut off too quickly with an ill-judged tax increase in 1997; and it did not begin to clean up and recapitalise its banks until 1998, almost a decade after the bubble had burst. But the history of bank failures suggests that Japan’s slump was not only the result of policy errors. Its problems were deeper-rooted than those in countries that recovered more quickly. Today’s mess in America is as big as Japan’s—and in some ways harder to fix.

http://www.economist.com/finance/displaystory.cfm?story_id=13110352

Submitted by Fidel on February 17, 2009 - 3:24pm.

Finance Capitalism Hits a Wall The Oligarchs’ Escape Plan – at the Treasury’s Expense >Michael Hudson

Quote:

The financial “wealth creation” game is over. Economies emerged from World War II relatively free of debt, but the 60-year global run-up has run its course. Finance capitalism is in a state of collapse, and marginal palliatives cannot revive it. The U.S. economy cannot “inflate its way out of debt,” because this would collapse the dollar and end its dreams of global empire by forcing foreign countries to go their own way. There is too little manufacturing to make the economy more “competitive,” given its high housing costs, transportation, debt and tax overhead. A quarter to a third of U.S. real estate has fallen into Negative Equity, so no banks will lend to them. The economy has hit a debt wall and is falling into Negative Equity, where it may remain for as far as the eye can see until there is a debt write-down. . .

Today it is easier to see that the Western economies cannot go on the way they have been. They have reached the point where the debts exceed the ability to pay. Instead of recognizing this fact and scaling debts back into line with the ability to pay, the Obama-Geithner plan is to bail out the big banks and hedge funds, keeping the volume of debt in place and indeed, growing once again through the “magic of compound interest.” The result can only be an increasingly extractive economy, until households, real estate and industrial companies, states and cities, and the national government itself is driven into debt peonage.

Wall Streeters have taken over resource allocation and economic planning in neofeudal America.

Submitted by NorthReport on February 17, 2009 - 3:45pm.

Some analysts say it is the last hour of trading on Wall Street that counts - well we're close to that now and prices are beginning to recover. Let's see what happens.

Submitted by NorthReport on February 17, 2009 - 5:48pm.

And the TSX was down 300 points as well - that is our pension plan folks!

U.S. Stocks Tumble on Recession Concern; Citigroup, GM Fall

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3VqcI4keryE&refer=home [16]

U.S. stocks [17] tumbled to a three-month low, extending a global slump, as a record contraction in New York manufacturing spurred concern the government’s stimulus package won’t be enough to curb the deepening recession.

Submitted by NorthReport on February 17, 2009 - 5:50pm.

I'm so surprised!

Texas financier charged with 'massive' fraud

http://business.theglobeandmail.com/servlet/story/RTGAM.20090217.wstanford0217/BNStory/Business/home

Submitted by Doug on February 17, 2009 - 7:27pm.

Sofia, a 34-year-old Frenchwoman, moved here a year ago to take a job in advertising, so confident about Dubai’s fast-growing economy that she bought an apartment for almost $300,000 with a 15-year mortgage.

Now, like many of the foreign workers who make up 90 percent of the population here, she has been laid off and faces the prospect of being forced to leave this Persian Gulf city — or worse.

“I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld because she is still hunting for a new job. “If I can’t pay it off, I was told I could end up in debtors’ prison.”

http://www.nytimes.com/2009/02/12/world/middleeast/12dubai.html?_r=1 [20]

Submitted by Doug on February 17, 2009 - 8:12pm.

GM to cut 47,000 jobs:

General Motors Corp., presenting a dire outlook for the future, said today it may need US$30 billion in total government financing to survive the recession and would cut 47,000 jobs around the world and close five more U.S. factories in a massive restructuring plan.

The battered automaker is already surviving on $13.4 billion in federal loans and said in a plan submitted to the U.S. Treasury Department that it would seek an additional $16.6 billion if economic conditions worsen, but it could achieve profitability in two years and fully repay its loans by 2017.

http://www.thestar.com/business/article/588828

Submitted by Fidel on February 17, 2009 - 8:02pm.

“If I can’t pay it off, I was told I could end up in debtors’ prison.”

Unfreakin-believable! They need a revolution.

Submitted by NorthReport on February 17, 2009 - 8:46pm.

Fidel

Where's Charles Dickens when we need him!

Harper would probably like to legislate that policy in Canada. Except for the wealthy business executives of course.

Submitted by NorthReport on February 17, 2009 - 8:49pm.

Doesn't look good!

Japan Stocks Drop on Recession Fear; Topix Falls to 25-Year Low

http://www.bloomberg.com/apps/news?pid=20601087&sid=aE.k0E8R_KQk&refer=home

Submitted by Fidel on February 18, 2009 - 2:05am.

NorthReport wrote:

Fidel

Where's Charles Dickens when we need him!

Harper would probably like to legislate that policy in Canada. Except for the wealthy business executives of course.

I can picture people peeling rope in workhouses, and children selling ham sandwiches and themselves in the streets.

Submitted by Doug on February 18, 2009 - 12:52am.

Long regarded in the US as a folly of Europeans, nationalisation is gaining rapid acceptance among Washington opinion-formers – and not just with Alan Greenspan, former Federal Reserve chairman. Perhaps stranger still, many of those talking about nationalising banks are Republicans.

Lindsey Graham, the Republican senator for South Carolina, says that many of his colleagues, including John McCain, the defeated presidential candidate, agree with his view that nationalisation of some banks should be “on the table”.

http://www.ft.com/cms/s/0/2ad3b750-fd27-11dd-a103-000077b07658.html

Submitted by ElizaQ on February 18, 2009 - 1:56am.

Doug wrote:

http://www.ft.com/cms/s/0/2ad3b750-fd27-11dd-a103-000077b07658.html

I think I just saw a pig flying past my window....

Submitted by NorthReport on February 18, 2009 - 3:27am.

Gold hits record against euro on fear of Zimbabwean-style response to bank crisis

Gold has surged to an all-time high against the euro, sterling, and a string of Asian currencies on mounting concerns that global authorities are embarking on a "Zimbabwe-style" debasement of the international monetary system.

http://www.telegraph.co.uk/finance/4682554/Gold-hits-record-against-euro-on-fear-of-Zimbabwean-style-response-to-bank-crisis.html

One analyst said the spectacle of central banks slashing rates to zero across the world and buying government debt as if there was no tomorrow feels like the "beginning of the 'Zimbabwe-isation' of the global economy".

Gold bugs have been emboldened by news that Russia has accumulated 90 tonnes over the last 15 months.

"We are buying gold," said Alexei Ulyukayev, deputy head of Russia's central bank. The bank is under orders from the Kremlin to raise the gold share of foreign reserves to 10pc.

Submitted by KenS on February 18, 2009 - 10:51am.

Totally predictable.

Investors have been on the hunt for two years for relatively safe havens that do not pay zero return.

They all flocked to oil and drove that price up- which had to come down as the economic crises slashed consumption. [duh]

The majority investors with lots of cash to park now accept zero returns. But some don't and some don't need the investment to be very liquid. Thay can still dump gold if that starts to look like its going down.

And Russia isn't buying gold as a hedge. The number one producer is putting it in reserves to help push the price up.

All of this makes buying gold at least for the time being a no brainer. Folks can always get out, and giving the lack of alternative investments they probably won't have to for at least some time [for at least as long as they all are looking for].

I think its more a sign of volatility and uncertainty rather than panic. It may sound counter-intuitive, but the real measure of people being scared is increase in the purchases of zero return US government T bills.

Submitted by George Victor on February 18, 2009 - 11:40am.

"I think its more a sign of volatility and uncertainty rather than panic. It may sound counter-intuitive, but the real measure of people being scared is increase in the purchases of zero return US government T bills."

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A year back, some folks hereabouts were in a fog about the meaning of investments for (to use a useful U.S. term that's come to stay) "mainstreet" They felt that should only be a concern of the "capitalists" of "Wall Street".

One of the very interesting developments over that year has been the evidence of a steepening learning curve on the subject of "market" ,and the need to know about it in order to get beyond the comfortable but irrelevant old spitball tossing that passed for left criticism.

Submitted by NorthReport on February 18, 2009 - 12:17pm.

TSX down another 200 points so far today, at, or below its 2009 low for the year - another buying opportunity!

Submitted by Doug on February 19, 2009 - 1:32am.

It's managed to divert the interest of the US intelligence community away from terrorism for a moment or two.

Around the world, unemployment is rising and incomes are falling, and it isn't clear how long the recession will last or how deep it will get. The global economic situation is so serious that the head of U.S. intelligence agencies now says it has surpassed terrorism as the top threat to national security.

http://www.npr.org/templates/story/story.php?storyId=100781975

Submitted by Doug on February 19, 2009 - 5:50pm.

High-end shops are having to treat middle-class shoppers like human beings!

It's nothing personal. A former employee of the Yves Saint Laurent shop on Madison Avenue once confided that it is a common and effective practice to size up a customer by looking at two simple things: his watch and his shoes. If the accessories are not expensive, he is not worth the effort of even a simple hello.

But the recession has quickly transformed the attitude of the Madison Avenue work force from impenetrable to inviting, seemingly overnight. Salesclerks, haunted by the papered-over windows of stores next door, are being trained to exude a level of customer service rivaling that of Disney.

http://www.iht.com/articles/2009/02/18/style/18shopping.php

Submitted by Lard Tunderin Jeezus on February 19, 2009 - 6:00pm.

George Victor wrote:

I know you think you've said something profound here, but I sure as hell can't figure out what you meant (other than yet another standard backhanded insult for the 'knowledge' the left have of 'the market').

Submitted by M. Spector on February 19, 2009 - 8:56pm.

Eastern Europe is About to Blow
by Mike Whitney

Quote:

East Europe is about to blow. If it does, it could take much of the EU with it. It's an emergency situation but there are no easy solutions. The IMF doesn't have the resources for a bailout of this size and the recession is spreading faster than relief efforts can be organized. Finance ministers and central bankers are running in circles trying to put out one fire after another. It's only a matter of time before they are overtaken by events. If one country is allowed to default, the dominoes could begin to tumble through the whole region. This could trigger dramatic changes in the political landscape. The rise of fascism is no longer out of the question.

The UK Telegraph's economics editor Edmund Conway sums it up like this:

Quote:

A "second wave" of countries will fall victim to the economic crisis and face being bailed out by the International Monetary Fund, its chief warned at the G7 summit in Rome. . . . But with some countries' economies effectively dwarfed by the size of their banking sector and its financial liabilities, there are fears they could fall victim to balance of payments and currency crises, much as Iceland did before receiving emergency assistance from the IMF last year.

Foreign capital is fleeing at an alarming rate. Nearly two-thirds gone in matter of months. Deflation is pushing down asset prices, increasing unemployment, and compounding the debt-burden of financial institutions. It's the same everywhere. The economies are being hollowed out and stripped of capital. Ukraine is teetering on the brink of bankruptcy. Poland, Latvia, Lithuania, Hungary have all slipped into a low-grade depression. The countries that followed Washington's economic regimen have suffered the most. They bet that debt-fueled growth and exports would lead to prosperity. That dream has been shattered. They haven't developed their consumer markets, so demand is weak. Capital is scarce and businesses are being forced to deleverage to avoid default. All of Eastern Europe has gotten a margin call....

An economic crisis is quickly turning into a political crisis. Riots have broken out in capitals across Eastern Europe. Mr. Geithner had better be paying attention. The prospects for political upheaval are growing. Public anxiety can spill out onto the streets at a moments notice. Governments must act quickly and with resolve. These countries need hard currency and guarantees of support. If they don't get help, the simmering public fury will turn into something much more lethal.

UK Telegraph's economics correspondent Ambrose Evans-Pritchard:

Quote:

"Global banks have so far written down half the $2,200bn losses estimated by the IMF. On top of this, EU banks have $1,600bn of exposure to Eastern Europe - increasingly viewed as Europe's subprime debacle, and EU corporate debts are 95pc of GDP compared to 50pc in the US, a mounting concern as default rates surge.

Submitted by George Victor on February 19, 2009 - 10:23pm.

Look around you, LTJ. You don't see any difference in the amount and degree of concern about what is happening to us all? Look back (as far as you can ) in the threads. You don't see a growing sophistication?

Not looking for profundity, LTJ. Not even serious introspection. My world is moved, however, by observation, and that is what I have observed. I see it as progress. You're saying there never was a problem.

Right.

But I think this is something you would not have seen a year back, or, at least, seen it accepted so readily :

Why would you leave out the quote that gives context to what someone has said?

Submitted by Lard Tunderin Jeezus on February 19, 2009 - 10:19pm.

Actually, the babblers I've learned the most from don't show up very often these days. There was a time when the profound was not unknown - or even uncommon.

There is an ebb and flow; I don't see high tide currently.

Submitted by George Victor on February 19, 2009 - 10:27pm.

Well try to understand the flotsam and jetsam, are just trying to meet your critical level, LTJ.

Until the second coming.

Submitted by NorthReport on February 20, 2009 - 12:09am.

Forget the TSX and the Dow Jones. Instead take a look at this S & P 500, 5 year chart, which closed at 778.9 today. It's scary out there.

http://investdb.theglobeandmail.com/invest/investSQL/gx.show_chart?pl_comp_id=&pl_errmsg=&iaction=Chart&pl_primary_listing=SPX-I&iaction=Chart&pl_additional_listing=0&pl_period=60M&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0

Submitted by Fidel on February 20, 2009 - 2:06am.

European bank bail-out could push EU into crisis

A bail-out of the toxic assets held by European banks' could plunge the European Union into crisis, according to a confidential Brussels document

Quote:

“Estimates of total expected asset write-downs suggest that the budgetary costs – actual and contingent - of asset relief could be very large both in absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned.

"It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems.”

The secret 17-page paper was discussed by finance ministers, including the Chancellor Alistair Darling on Tuesday.

National leaders and EU officials share fears that a second bank bail-out in Europe will raise government borrowing at a time when investors - particularly those who lend money to European governments - have growing doubts over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back. . .

In line with the risk, and the weak performance of some EU economies compared to others, investors are demanding increasingly higher interest to lend to countries such as Italy instead of Germany. Ministers and officials fear that the process could lead to vicious spiral that threatens to tear both the euro and the EU apart.

Give Us Back Our F****** Money [41]

Submitted by NorthReport on February 20, 2009 - 10:20am.

Gold is close to $1,000. an ounce!

http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

Submitted by LeighT on February 20, 2009 - 12:42pm.

China goes shopping this week on oil deals with various countries.

http://www.nytimes.com/2009/02/21/business/worldbusiness/21yuan.html?hp [44]

so oil extraction and development is conceived as rescuing the world from an economic crisis?

politically, it still looks like whoever gets the on-and-offshore petrofuels, wins. this goes for Eastern Europe too, where in Ukraine for example there have been reports this week over US (Bermuda-based) companies vying for offshore Black Sea deposits, vs. keeping them under Ukraine's public control. Yesterday, in Ukraine, the Rada (parliament) voted not to privatize state assets. meanwhile they've got their currency and banking issues, getting torn apart as usual. a poll on the www.ukranews.com [45] site asks whether they should borrow from the US, Russia, the EU, or China or expropriate the oligarchs.

and on it goes. tugs of war over resources, Afghanistan too.

so i guess we're hoping for what, a complete restructuring of the financial system after the EU meets end of month, and after China gets its say at the G20?

that's obviously not going to satisfy the world's peoples, nor the other creatures on the planet if it's based on fossil fuel and other resource extraction.

Submitted by NorthReport on February 20, 2009 - 2:31pm.

Dow Jones - Lowest level in 11 years

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYODWCqOneCY&refer=home

Submitted by George Victor on February 20, 2009 - 2:43pm.

LT:

"that's obviously not going to satisfy the world's peoples, nor the other creatures on the planet if it's based on fossil fuel and other resource extraction. "

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Right on, LT. We need to be able to satisfy both environmental and economic concerns.

For a third of a century now, since Charles Taylor first posited the thought, this reader has been waiting for things to get bad enough that all can come together to do what has to be done to satisfy both camps...for they are still in two camps (although "tree hugger" is now an out of fashion epithet.).

And as we've seen, environment has given way to eonomy. We knew our Stephen was only mouthing politically necessary platitudes, but pres. Obama sounded sorta serious ...at first.

Perhaps you'd care to take a shot at speculating at what point, realization might break through, Taylor's "moment of truth" be realized, and move to what sort of international forum for resolution?

Maybe in a new thread?

Submitted by LeighT on February 20, 2009 - 3:26pm.

thanks for the questions George Victor, but i'm a lousy speculator.

my dad says he has to teach me how to bet. whatever.

wasn't Charles Taylor a renegade in Libya? who also consorted with the Bush gang? you've referring to another, i imagine. nb. i have no background in politics, and exceedingly little in history. trying to catch up in these areas, but it takes time, in short supply.

um, on the realizations, obviously pretty widespread, it's just too slow.

even after Obama's visit here, there was still the 'dialogue' around green electric grid, which would be nice, done publicly. i'm torn between thinking Obama is being diplomatic ( incrementalist) vs. just another lackey. hoping its the former. but again, of course everyone wants things to change faster. it's been too long already.

fora? all of the above. ie) every forum that exists, and more created. ultimately the fora that will bring the most energy will be those which meet people's direct basic needs, and which are clearest in upholding basic needs.

Submitted by NorthReport on February 20, 2009 - 3:37pm.

In aApril the BBC is going to host a debate on whether or not we can afford to consider the environment with the economic situation so bad.

Submitted by LeighT on February 20, 2009 - 6:59pm.

yesterday Obama mentioned Copenhagen in the press conference.

here's the Copenhagen site- UN Climate Conference in Dec. of this year:

http://en.cop15.dk/

the main page also has an article posted today on China telling Clinton upon her arrival in Beijing that it won't let the economy get in the way of dealing with climate change, that it wants to work with the US.

hopefully this means tax and cap and not just stupid sequestering. though how serious can they be when they're buying up the world's oil fields. as it has been mentioned elsewhere, pushing ahead on further oil field development can ditch better job creators especially when polluter taxes and caps are disproportionally applied to oil users rather than extractors and processors. but maybe they aren't too worried about good job creation.

in any case, they've got lots of sun and could do very well with alternatives. i really don't understand why rich people are so competitive- they seem to think they have to beat everyone else out of everything - control ALL the main energy sources- and be on top of the pile. or maybe they're thinking they're doing it for 'self-defense' to keep the 'other bad guys' from getting an upper hand.

so this is where people have to keep telling them that these oil games need to stop, period. leave the oil in the ground. use fair transition strategies for unionized labour to shift to recycling materials rather than infinite mining, to renewables and jobs in conservation rather than fossil fuels. we know all this. just a matter of keeping at it.

Submitted by George Victor on February 20, 2009 - 9:04pm.

LT:

"so this is where people have to keep telling them that these oil games need to stop, period. leave the oil in the ground. use fair transition strategies for unionized labour to shift to recycling materials rather than infinite mining, to renewables and jobs in conservation rather than fossil fuels. we know all this. just a matter of keeping at it."

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

Right on. Now to see when things get so bad that this becomes the universal understanding (Charles Taylor, Canada's leading moral philosopher, 2007 (or was it 2008) winner of the Templeton award... in a paper in the winter of '74-75 he called it the emergence of the "Spirit of Dunkirk" when all would pull together...like oars...n'stuff. )

Appreciate your "stream of consciousness" reasoning. Straight up stuff. Please do not adulterate reasoning with study of politics.

Submitted by Doug on February 20, 2009 - 11:16pm.

The Senate Banking Committee chair is mulling nationalization:

Senate Banking Committee Chairman Christopher Dodd [53] said banks may have to be nationalized for “a short time” to help lenders such as Citigroup Inc. [54]Bank of America Corp. [55] survive the worst economic slump in 75 years. and

“I don’t welcome that at all, but I could see how it’s possible it may happen,” Dodd said today on Bloomberg Television’s “Political Capital with Al Hunt [56]” to be broadcast this weekend. “I’m concerned that we may end up having to do that, at least for a short time.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=a402k68PAWUA&refer=h... [57]

I guess that's how this is going to go. They didn't want to but felt they had to.

It's also worth listening to what Yves Smith of Naked Capitalism [58] has to say about it:

http://www.cnbc.com/id/15840232?video=1041773905 [59]

Submitted by NorthReport on February 21, 2009 - 12:51am.

How does one define world depression.

What was unthinkable one month ago is now happening - are you and your co-workers going to have to take a pay cut to hold onto your jobs? I think that is coming soon to a location near you.

Gold is over $1,000. an ounce, the S&P is down another 10 points today.

I think we will see the rise of facism soon. Obviously with two world depressions, and many recessions, to its credit now, capitalism has failed the vast majority of our planet's inhabitants.

Soros sees no bottom for world financial "collapse"

http://uk.reuters.com/article/businessNews/idUKTRE51K0AV20090221

Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.

Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker said.

Submitted by LeighT on February 21, 2009 - 10:18am.

thanks George Victor. i appreciate that you and others have seen the kind of shift that needs to happen vis a vis eco & eco, for some time.

maybe you'd like to start a thread on that?

Submitted by George Victor on February 21, 2009 - 1:59pm.

Gotta ponder that for a bit. I was being a chicken in suggesting that you lead off.

Do we create a socio-economic situation some years down the road and imagine a gathering under UN auspices and what they would have to propose? And how decisions would be enforced?

I tremble at thoughts of the reaction, hereabouts.

They're nicer to Newbies...for a day or two.

Submitted by LeighT on February 21, 2009 - 2:42pm.

well, i sort of carried the theme forward below, in the second comment at the link below.

i tend to be more comfortable working from the ground, in more ways than one, while keeping an eye on other levels, so i've stuck with looking at the 'eco-eco' crunch here from a grassroots and water level, seeing how that intersects with the new Harper/Iggy budget implementation bill.

http://www.progressive-economics.ca/2009/02/14/the-devil-is-in-the-budge...

Submitted by George Victor on February 21, 2009 - 3:42pm.

Okay

Lets move to the quieter corner, "rabble news features" under a thread titled "eco and eco".

See what happens....

Submitted by NorthReport on February 21, 2009 - 5:23pm.

Who knew!

The MSM Is Currently Feeding Us Dog Crap

http://thehousingbubbleblog.com/?p=5281 [66]

-----

HousingPANIC - The Housing Bubble Blog with an Attitude Problem, 2005 - 2008

A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

http://thehousingbubbleblog.com/?p=5281 [66]

Trillions have been lost. Lives have been ruined. Future generations will be forced to pick up our tab. And empty and unwanted homes litter the land.

Yet the thieves have not been arrested. Laws are not enforced. Realtors practice their lies, restraint of trade, and deceit. And around the world, home prices are still falling and will keep falling until they make economic sense again.

Submitted by NorthReport on February 21, 2009 - 5:58pm.

How are Canadians going to react if they find out the value of their homes are worth only 50% of what they think they are worth?

http://www.doctorhousingbubble.com/ [68]

The Southern California housing situation is deteriorating even further with the recent report showing that the median price is now back to $250,000; at this level we would have to go back to February of 2002 which means we have erased 6 years of price gains. And we are not far from 2000 price levels. The median price of a Southern California home on January of 2000 was $209,000. Many doubted that we would face a lost decade but here in California we are certainly going to have our lost housing decade similar to what Japan faced in their overall economy. [69]In this report, I’m going to put to rest some misconceptions floating around and once again, we hear the bottom callers out in full force but their conviction is weaker since they have been proven wrong over and over again.

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

So this notion of decoupling is proven false. What other proof do you want? Take a look at the global stock markets and they are in tatters. The last time we had such synchronized global wealth destruction was during the Great Depression [70]. People forget that the Great Depression was global in reach and wasn’t only isolated to the 1929 Crash on Wall Street. It was much larger and more complex than the Fed simply not stepping in. We had conflicts in Europe with Germany drowning in war reparations. You had a collapsing commodities market. You had rising unemployment in supposedly stable countries. So all these things entered into a perfect storm. It took us nearly a century to come back to something similar to that time and here we are again.

Submitted by Stanley10 on February 21, 2009 - 6:51pm.

GM now wants 6 billion dollars from the Canadian taxpayer.

I guess it's too simple to just give the 12,000 workers 500,000 dollars each (tax free), or better, a sum based on a sliding scale according to senority. They could pay off their mortgage, retire, or move on to an enviro-sustainable line of work. May help us "decouple" from the US a bit too.

Submitted by NorthReport on February 21, 2009 - 7:13pm.

Stanley 10

You don't understand.

The only way the elites are able to maintain their lifestyle of exotic vacations, yachts, multiple homes and vehicles, servants, etc., particularly in this economic crisis, is to ensure that the working person's wages are keep low, very low.

Submitted by Stanley10 on February 21, 2009 - 7:17pm.

"You don't understand."

Yes, never have...but I keep my torch handy in case we all decide to storm the castle. I liked the recent Icelandic drums. I wonder what the Irish will use.

Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone.
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'.

Bob Dylan

Submitted by George Victor on February 21, 2009 - 9:10pm.

The 100,000 who marched in Dublin today were not singing that one, from what I could hear.

Submitted by NorthReport on February 22, 2009 - 9:40am.

Finally

Soros Says Financial Crisis Marks End of a Free-Market Model

http://www.bloomberg.com/apps/news?pid=20601087&sid=ay0FPxGdth_k&refer=home [76]

Billionaire investor George Soros [77] said the current economic crisis has its roots in the financial deregulation of the 1980s and marks the end of a free-market model that has since dominated capitalist countries.

Liberalization of the financial industry begun by the Reagan administration has led to a series of breakdowns forcing government intervention, Soros told economists and bankers last night at a private dinner at Columbia University in New York. The global recession, triggered by the collapse of the U.S. housing market, has “damaged the financial system itself,” he said.

Regulators are in part to blame because they “abrogated” their responsibilities, Soros, 78, said. The philosophy of “market-fundamentalism” was now under question as financial markets have proved to be inefficient and affected by biases rather than driven by all the available information, he said.

“We’re in a crisis I think that’s really the most serious since the 1930s and is different from all the other crises we have experienced in our lifetime,” Soros said.

Soros, founder of New York-based hedge-fund firm Soros Fund Management LLC, said last month at the World Economic Forum in Davos, Switzerland, that the Obama administration’s plan to buy toxic assets from U.S. banks won’t be enough to get financial institutions to start lending again.

A more effective approach for restarting the economy would be to inject capital directly into the banks and cut minimum capital requirements, Soros, whose firm oversees $21 billion, has said.

Soros’s Quantum Endowment Fund returned 8 percent last year. That compared with an average loss of 18 percent by hedge funds, according to data compiled by Hedge Fund Research Inc. of Chicago.

Submitted by Doug on February 22, 2009 - 5:34pm.

A second government has become a casualty:

Latvian Prime Minister Ivars Godmanis and his centre-right government have resigned, amid turmoil triggered by economic crisis in the Baltic state....The president said he would hold talks on Monday on a new coalition with leaders from all of the country's political parties.

Correspondents say the new administration will have a difficult task reviving the economy of the country of 2.4 million people.

http://news.bbc.co.uk/2/hi/europe/7901902.stm

Submitted by Fidel on February 23, 2009 - 12:00am.

Brown: World needs 'global New Deal'

Quote:

BERLIN, Germany (CNN) -- The world needs a "global New Deal" to haul it out of the economic crisis it faces, Prime Minister Gordon Brown of the United Kingdom said Sunday.

"We need a global New Deal -- a grand bargain between the countries and continents of this world -- so that the world economy can not only recover but... so the banking system can be based on... best principles," he said, referring to the 1930s American plan to fight the Great Depression.

Brown was speaking as the leaders of Europe's biggest economies met to try to forge a common position on the global financial crisis ahead of a major summit in London in April.

French President Nicolas Sarkozy [80] said the world's response to the global financial meltdown had to be profound and long-lasting, not just tinkering around the edges.

"Europe wants to see an overhaul of the system. We all agree on that. We're not talking about superficial measures now or transitional measures -- we're talking about structural measure, which need to be taken," he said.

"No more replastering, the structure is rotten!" - Paris 1968

Submitted by janfromthebruce on February 23, 2009 - 12:22am.

NorthReport wrote:

Finally

Soros Says Financial Crisis Marks End of a Free-Market Model

http://www.bloomberg.com/apps/news?pid=20601087&sid=ay0FPxGdth_k&refer=home [76]

I guess it is like eating your young - good for them!

______________________________________________________________________________________ Our kids live together and play together in their communities, let's have them learn together too!

Submitted by NorthReport on February 23, 2009 - 10:00am.

Japan's Bernie Madoff

Has Kazutsugi Nami downed his last beer as a free man?

http://www.forbes.com/2009/02/22/dispatch-japan-fraud-markets_0223_tokyo_dispatch.html

Submitted by NorthReport on February 23, 2009 - 10:03am.

Regulator Faces Fresh Scrutiny Over Trading Inquiry at Lehman

http://www.nytimes.com/2009/02/23/business/23hedge.html?ref=business

Submitted by Doug on February 23, 2009 - 2:00pm.

Canadians who are suddenly worried about whether they can afford to retire or pay for their child's education have no qualms about telling their investment manager what's really on their minds, unloading their fears, frustrations - and even hostility - on their adviser's lap.

It's creating major stress across the industry, according to a Toronto-based adviser whose clients have resorted to angry calls and insults, while colleagues have been personally blamed for their clients' losses.

http://www.theglobeandmail.com/servlet/story/RTGAM.20090223.wladvisor23/...

Submitted by NorthReport on February 23, 2009 - 3:42pm.

More good news:

Wall St. lowest in almost 12 years

http://business.theglobeandmail.com/servlet/story/RTGAM.20090223.wwallstreet0223/BNStory/Business/home

Submitted by Doug on February 23, 2009 - 3:57pm.

London's Metropolitan Police are preparing themselves for a "summer of rage":

Supt Hartshorn, who heads the Metropolitan Police's public order branch, said he feared there could be "mass protest" at rising unemployment, failing financial institutions and the downturn in the economy.

http://www.telegraph.co.uk/news/newstopics/politics/lawandorder/4784934/Police-bracing-themselves-for-summer-of-rage-against-economic-crisis.html

Submitted by NorthReport on February 23, 2009 - 5:43pm.

What do they mean could? One share one vote - it's the ole capitalist way, isn't it? Why is this even an issue that the gov't who bails them out get voting rights or don't they believe in free enterprise!

In Latest Plan for Banks, U.S. Could Demand Voting Stake

http://www.nytimes.com/2009/02/24/business/24bank.html?_r=1&hp

Submitted by NorthReport on February 23, 2009 - 5:47pm.

Banking on the Brink

http://www.nytimes.com/2009/02/23/opinion/23krugman.html

Comrade Greenspan wants us to seize the economy’s commanding heights.

O.K., not exactly. What Alan Greenspan, the former Federal Reserve chairman — and a staunch defender of free markets — actually said was, “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.” I agree.

Submitted by Doug on February 23, 2009 - 7:20pm.

NorthReport wrote:

More good news:

Wall St. lowest in almost 12 years

http://business.theglobeandmail.com/servlet/story/RTGAM.20090223.wwallstreet0223/BNStory/Business/home

Submitted by Fidel on February 23, 2009 - 9:23pm.

Neolibwellian Doublethink: "Nationalize the banks." "Free Markets." The language of deception

Quote:

Today’s clash of civilization is not really with the Orient; it is with our own past, with the Enlightenment itself and its evolution into classical political economy and Progressive Era social reforms aimed at freeing society from the surviving trammels of European feudalism. What we are seeing is propaganda designed to deceive, to distract attention from economic reality so as to promote the property and financial interests from whose predatory grasp classical economists set out to free the world. What is being attempted is nothing less than an attempt to destroy the intellectual and moral edifice of what took Western civilization eight centuries to develop, from the 12th century Schoolmen discussing Just Price through 19th and 20th century classical economic value theory.

Any idea of "socialism from above," in the sense of "socializing the risk," is old-fashioned oligarchy – kleptocratic statism from above. Real nationalization occurs when governments act in the public interest to take over private property. The 19th-century program to nationalize the land (it was the first plank of the Communist Manifesto) did not mean anything remotely like the government taking over estates, paying off their mortgages at public expense and then giving it back to the former landlords free and clear of encumbrances and taxes. It meant taking the land and its rental income into the public domain, and leasing it out at a user fee ranging from actual operating cost to a subsidized rate or even freely as in the case of streets and roads.

Another good essay from professor Michael Hudson

Submitted by Doug on February 24, 2009 - 3:42am.

American Express says to leave home without it!

American Express Co., the largest U.S. credit-card company by purchases, is paying some cardholders $300 each to close accounts so the lender can reduce the risk of defaults as the recession deepens. People who got the offer to “simplify” their finances must pay off their entire credit-card balance by April 30, according to New York-based American Express.

http://www.bloomberg.com/apps/news?pid=20601213&sid=a32RTgL8bFSw&refer=h... [92]

Submitted by NorthReport on February 24, 2009 - 10:02am.

At least a few people out there are telling it like it is:

'There will be blood'

Harvard financial guru Niall Ferguson predicts prolonged financial hardship, even civil war, before the ‘Great Recession' ends

http://www.theglobeandmail.com/servlet/story/RTGAM.20090223.wferguson0223/BNStory/crashandrecovery/home

Submitted by George Victor on February 24, 2009 - 10:28am.

Ferguson on China's riole (saving the U.S.economy):

Niall Ferguson: As you know, Chimerica – the fusion of China and America – is one of my big ideas. It's really the key to how the global financial system works, and has been now for about a decade. At the end of The Ascent of Money, I speculate about whether or not that relationship will survive. If it breaks down, then all bets are off, for the U.S. and indeed for Asia. I think that's really the key point. Both sides stand to lose from a breakdown of Chimerica, which is why both sides are affirming a commitment to it.”

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

He's sure Chimerica is a sound concept.

I think it's a chimera.

Submitted by LeighT on February 24, 2009 - 11:10am.

how desperate will Big Pharma get?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aiqmSoL6sVbk&refer=home

Submitted by NorthReport on February 24, 2009 - 12:09pm.

How long is it going to be before we begin to see the same pattern in Canada? Not too much longer I reckon, as more and more people lose their jobs and/or have their wages cut.

Housing Prices in 20 U.S. Cities Fall a Record 18.5% (Update2

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3ArfwXFeZJM&refer=home [97]

Home prices in 20 U.S. cities declined 18.5 percent in December from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank.

The decrease in the S&P/Case-Shiller index [98] was more than forecast and followed an 18.2 percent drop in November. The gauge has fallen every month since January 2007, and year-over-year records began in 2001. Separately, the Federal Housing Finance Board said prices in 2008 fell a record 8.2 percent.

Record foreclosures are contributing to declining property values and household wealth, crippling the consumer spending [99] that makes up about 70 percent of the economy. The Obama administration has pledged to spend $275 billion to help stabilize the housing market, including $75 billion to bring down mortgage rates and encourage loan modifications.

“The massive inventory overhang in the market and the surge in foreclosures mean prices will continue to fall rapidly,” Ian Shepherdson [100], chief U.S. economist at High Frequency Economics in Valhalla, New York, said today in a note to clients. “The administration’s rescue plan will, in time, slow the rate of decline, but it won’t happen immediately.”

Economists forecast the 20-city index would fall 18.3 percent from a year earlier, according to the median of 28 estimates in a Bloomberg News survey. Projections ranged from declines of 17.4 percent to 19 percent.

Quarterly Figures

Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in December, led by a 34 percent drop in Phoenix, a 33 percent slide in Las Vegas and a 31 percent decline in San Francisco.

S&P/Case-Shiller also released quarterly figures for home prices nationally. That measure showed an 18.2 percent drop in the three months through December from the same period in 2007, compared with a 16.6 percent year-over-year decline in last year’s third quarter.

“The broad downturn in the residential real-estate market continues,” David Blitzer [101], chairman of the index committee at S&P, said in a statement. “There are very few, if any, pockets of turnaround that one can see in the data.”

Submitted by Doug on February 24, 2009 - 3:03pm.

AIG wants more money!

American Insurance Group, the insurance giant that is 80-percent owned by the US government, is in discussions with the government to secure additional funds so it can keep operating after next Monday, when it will report the largest loss in U.S. corporate history, CNBC has learned.

Sources close to the company said the loss will be near $60 billion due to writedowns on a variety of assets including commercial real estate.

http://www.cnbc.com/id/29353282

Submitted by Doug on February 25, 2009 - 1:12am.

Japanese exports plummet by nearly half! Imports are down by nearly a third - not good for BC!

Japan’s exports plunged 45.7 percent in January from a year earlier, resulting in a record trade deficit, as recessions in the U.S. and Europe smothered demand for the country’s cars and electronics.

The shortfall widened to 952.6 billion yen ($9.9 billion), the biggest since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The drop in shipments abroad eclipsed a record 35 percent decline set the previous month.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aTCZ_f77WEqw&refer=h... [104]

Submitted by M. Spector on February 25, 2009 - 1:53am.

Quote:

A few months ago it was clear that we were in the worst crisis since the Great Depression. Now the question is: Will the Great Financial Crisis of today, which has already generated a new depression, lead to a situation as bad as the Great Depression or even worse? No one knows the answer yet. But the fact that the issue is commonly being posed in this way is significant. The one thing that is fairly clear is that, when the devalorization of capital has taken its course and recovery begins, it is unlikely to turn into a full recovery. That is, the conditions of deep economic stagnation are likely to set in, since there is nothing to propel the economy now that financialization has weakened. This was the main economic problem of the 1930s: the persistence of stagnation, until the coming of the Second World War which finally lifted the economy out of depression.

John Bellamy Foster

Submitted by George Victor on February 25, 2009 - 10:07am.

Looking for the observation that companies struggling to compete for investor dollars are partly what brought us to this pickle in the first place. The sight of ever more public money being spent to shore of companies so that they are again viable on THE MARKET is a spectacle to behold.

That's what my (and everyone else's) bank is doing - by raising the cost of credit. Getting profitable And that is no answer to our collective dilemma.

(just love that Gable cartoon from the much-hated Globe, where the PM is inviting a steady stream of suits to Parliament Hill with the greeting :"Welcome to the nation's capital" under the cartoon heading "CAPITALISM".

Submitted by George Victor on February 25, 2009 - 10:14am.

"how desperate will Big Pharma get?" Just read your link accompanying that posting, LT.

Submitted by NorthReport on February 25, 2009 - 4:11pm.

I find it interesting that in the USA there are articles about housing prices almost every day, whereas in Canada basically there is silence in the press.

U.S. Existing Home Sales, Prices Slumped in January (Update1)

http://www.bloomberg.com/apps/news?pid=20601087&sid=acdWmjTuKCCg&refer=home [109]

Sales of previously owned U.S. homes unexpectedly declined in January even as falling prices made them more affordable, signaling that the housing slump is further from a bottom than previously estimated.

Purchases [110] fell 5.3 percent to an annual rate of 4.49 million, the fewest since 1997, the National Association of Realtors said today in Washington. The median price dropped 15 percent from a year ago to a six-year low of $170,300. Distressed properties accounted for 45 percent of all sales.

“This is actually a very disappointing set of numbers,” Ethan Harris [111], co-head of economic research at Barclays Capital Inc., said in a Bloomberg Television interview. “We’re still in this phase of the recession where it’s really kind of a dramatic pulling back” in purchases of big-ticket items, due to a “tremendous loss of confidence in the economy.”

Submitted by Doug on February 25, 2009 - 10:05pm.

It's being mentioned (see: http://business.theglobeandmail.com/servlet/story/RTGAM.20090225.wscotiareal0225/BNStory/Business/home ) - but it's not yet the disaster in Canada that it is for many places in the US. Prices are only down 10%.

Submitted by Frustrated Mess on February 25, 2009 - 10:24pm.

True but the Americans are just ahead of us on the same road.

Submitted by gulcher on February 26, 2009 - 5:41am.

It's been interesting reading this thread...things certainly have gotten pretty scary out there. But I have to take issue a little with the assertion that free market capitalism is what got us into this mess.

I think an overly-centralized, over-regulated economy is partly responsible. I also think we are mistaken to have a system running on fiat currencies, i.e. money that has no intrinsic value, and that can be created at will by government whether the savings or real wealth are there or not.

And I think it's time to admit that fractionalized reserve banking doesn't work. Allowing banks to multiply the amount of money you deposit into a new larger number without the physical holdings to back it up, and then using that invented money to set rates and to lend it out at interest (either back to you or to other lenders) is pure insanity, and exponentially inflates the debt bubble.

And no wonder the bubble got so big, and that it's bursting has been hurting so much...it's the undoing of decades and decades of crazy economic policy enacted by bureaucrats who really had no clue about economics to begin with. And this pretty much describes the bureaucrats we have running things today!

If I were religious at all, I'd be praying.

Submitted by It's Me D on February 26, 2009 - 11:44am.

gulcher wrote:

So governments need to rein in banks?

gulcher wrote:

So banks need to rein in governments?

I'm having trouble with your post, I think that facts are getting in the way of your ideology... you may have to dispense with them if you're serious about blaming over-regulation by governments for the failure of private greed.

Submitted by gulcher on February 26, 2009 - 1:04pm.

gulcher wrote:

Quote:

So governments need to rein in banks?

No definitely not...for the most part I think the banking system is over-regulated. And deposit insurance is wasteful. The banks are large bureaucracies that cost the average consumer more money than they should to operate. There are too many managers, accountants, auditors, committees, etc all making sizable incomes without providing real value to the consumer.

However, what little regulation I would keep for banks, I would ensure that all banks maintain a high percentage, if not 100% of their reserve requirements for every transaction they process.

I feel it's a much sounder alternative to the current system of multiplying deposits by a centrally-planned number, and using that new false amount to in turn lend to consumers and other institutions. A bank that must have most or all of the money in its physical possession before it can lend that same amount out is much safer, and less wasteful. And there'd be no need for deposit insurance.

Of course, that idea wouldn't work without getting our currency back onto a precious metal standard of some sort. Right now our money has no intrinsic value, and that makes it far too easy to print and spend whenever it's deemed necessary or convenient, whether the government has the savings to back it up, or not. That isn't responsible policy, in my opinion and leads to the creation of debt bubbles...like the one we're currently dealing with.

gulcher wrote:

Quote:

So banks need to rein in governments?

Yes, government should be limited...limited in terms of size and mandate. We're currently seeing the market react to years and years of over-sized governments and the massive overhead they carry with them. For decades governments have grown into large bureaucratic entities that cost an awful lot of money to run.

Private greed isn't the problem, the problem is that private companies for too long have been run in collusion with western governments. They've co-existed nearly as one plundering body that has managed - through top-heavy management, nepotism, and endless regulation - to take most of the wealth away from the constituents/consumers who are supposed to be calling the shots, and placed it in the hands of the few at the top of the pyramid.

Free market capitalism would allow more people access to wealth creation if that system were allowed to work, but instead of that we've had generations of corporatocracy...where large companies have become one with government encapturing the average citizen in a life of perennial debt, and abject serfdom.

Submitted by It's Me D on February 26, 2009 - 1:15pm.

I don't know where to start on that post, here's a couple quick comments.

gulcher wrote:

whether the government has the savings to back it up, or not

We are their savings.

gulcher wrote:

the problem is that private companies for too long have been run in collusion with western governments

Well I agree with you on this sentence fragment!

Submitted by gulcher on February 26, 2009 - 1:56pm.

gulcher wrote:

whether the government has the savings to back it up, or not

Quote:

We are their savings.

And you would think this would restrict government spending to only what they take from their constituents, in reality though, the government skips the inconvenient step of having to "save up" for big expenditures, and instead jumps right into borrowing and spending.

The government will run a deficit to pay for things it doesn't have enough revenue to afford...and they borrow that money at interest either from the private banks who create the money out of reserves they don't actually have, or foreign creditors who agree to buy our treasuries.

And now we're seeing governments around the world borrowing money/creating debt in order to "stimulate" their economies, and attempt to mitigate the effects of having a massive debt-load. It's ridiculous.

Submitted by Fidel on February 26, 2009 - 3:40pm.

gulcher wrote:

Canada ranks 25th out of 30 capitalist countries for social spending. The US, Canada and Brazil have racked up some of the largest national debts in world history from the 1970s through today.

Why would Ottawa borrow money from superrich people and private banks near and abroad at usurous rates of interest, instead of financing program spending needs by our nationalised Bank of Canada at less than one percent rate of interest?

Submitted by Jacob Two-Two on February 26, 2009 - 5:19pm.

How did too much regulation funnel money to the top of the pyramid? That makes no sense at all. You are labouring under the delusion of a pure, mathematical, Adam Smith-esque version of capitalism that doesn't exist in the real world. There is no level playing field and there never will be, unless we create it ourselves.

I read an article a while back about one of those World-Of-Warcraft type games and how the designers tried to create a functioning economy for their virtual universe. Being good nerds, used to thinking in terms of abstract systems, they wanted to set up a perfect unregulated capitalist model and just let it run wild. They were so sure it would work like a charm, but instead it was a huge failure. What happened was utterly predictable to anyone not sucked in by the delusions of capitalist ideology. A select few players got a leg up on the others early on, and kept pressing their advantage to keep taking all the wealth for themselves. Very quickly a small handful of characters were super-wealthy and the rest were miserably poor, with little opportunity to change their circumstances since the rich characters were so much more powerful than everyone else. The designers had to start intervening in a big way to even out their economy so that people would have money to spend and it would actually function.

This is how capitalism works in the real world, (and apparently in virtual simulations). Capital accumulates. That's the whole logic of it. If this weren't true there would be no point to the whole thing. I use my money to make more money and I use the power this gives me to destroy your ability to make money because that leaves more market share for me to make money in. I drive your business under and then buy it so that you work for me, and all the profit that used to be yours is now mine. You want unregulated capitalism? It ends with you working 14 hour days with no weekends or vacations, and you still wind up selling me your children as slaves just to buy some food.

Yes, the essential problem is that all the wealth has been funnelled upwards. Too much money is in too few hands. But it is the lack of regulation that has caused this, and a presence of regulation that prevents it. Why do you think the rich are always pushing to de-regulate the system? Not because they're scared of accumulating too much wealth, I can tell you that! They want to de-regulate precisely because it allows them to get richer and richer and richer, sucking all the wealth that the system creates to themselves.

Learn a little history and you'll find that the general trend is that high regulation accompanies prosperity (60's 70's) and low regulation leads to collapse (now). The facts are in. The jury's out. You're just plain wrong. Capitalism is not a sustainable system. Without intense regulation and constant oversight, it can't even keep upright, which just goes to show that there's no reason to keep it around at all.

Submitted by Merowe on February 26, 2009 - 7:33pm.

yeah, really, Gulcher, how in all the current mess have you managed to miss all the analysis that points to deregulation starting with Reagan as being the root of the current problem? Regulations introduced after '29 to curb the sort of speculative frenzy that has got us into the current debacle.

It was deregulation that allowed banks to leverage their capital up to 42 times over - so when the bubble bursts as it is doing now, that one real dollar pulls down 42 more with it.

The financialization process took off around the time the real economy started stagnating and clearly reflected the triumph of the greed of a particular class over the reality which is now returning. I've read suggestions that something like 70 TRILLION dollars needs to be wiped out of the world economy to recalibrate actual value to the 'real' economy, to real production, etc.

Look at the last thirty years: the upper 10 per cent see their wealth increase many times over while the middle class shrinks and the poor fall off the bottom of the map. It's just been a criminal racket to squeeze the foundation of the real economy and the readjustment has been long overdue.

Free market capitalism is a self-serving fiction and belongs on the shelf with witch-burning and a flat earth. With the massive bank bailouts we are just seeing an economic elite, which has thoroughly penetrated our 'democratic' political system, helping themselves to the public trough one last time before it all collapses: entirely in character.

On the BBC today they're running the story of the RBC chairman who is defending his entitlement to a 650,000/pa British Sterling pension, now to be paid for as part of a multi-billion dollar taxpayer bailout.

He is a criminal parasite and typical of his class. For his contribution to running that bank into the ground, wiping out thousands of working people's savings, he should get nothing more than one bullet, with the bill for it sent to his wretched family.

Submitted by Fidel on February 26, 2009 - 8:27pm.

Merowe wrote:

Well that's pretty mean spirited. I think the state might afford the cost of a bullet. No state burial though. Have to draw the line somewhere.

Submitted by George Victor on February 26, 2009 - 10:27pm.

Gulcher:

"And now we're seeing governments around the world borrowing money/creating debt in order to "stimulate" their economies, and attempt to mitigate the effects of having a massive debt-load. It's ridiculous. "

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"Ridiculous" Gulch, doesn't quite register on the analytical meter.

It's an electorate with your gullibility that allowed the neo-con to take us here. Or did this not begin with Reagan and take final shape with lower-taxes, huge deficits Dubya? Where ya bin', Bonzo?

Submitted by ElizaQ on February 26, 2009 - 10:35pm.

Gulcher do you and have you paid for everything you need to enable you live on and I assuming to work, upfront and in cash?

Submitted by M. Spector on February 27, 2009 - 2:02am.

Pity the poor Toronto-Dominion Bank. The Great Depression II has hit it hard.

The bank's profits for the first quarter of the banking year (November to January) were down 27% from a year earlier. During those three months they "earned" only about $8 million a day (7 days a week) in profit.

I think this calls for a bailout.

Submitted by Fidel on February 27, 2009 - 2:35am.

The "Great Financial Crisis": A whole new kind of struggle is emerging Interview with John Bellamy Foster

Quote:

MW: The financial crisis is quickly turning into a political crisis. Already governments in Iceland and Latvia have collapsed and the global slump is just beginning to accelerate. Riots and street violence have broken out in Greece, Latvia and Lithuania and worker-led protests have become commonplace throughout the EU. As unemployment skyrockets and economic activity stalls, countries are likely to experience greater social instability. How does one take deep-seated discontent and rage and shape it into a political movement for structural change?

JBF: The first thing to recognize is that we are suddenly in a different historical period. One of my favorite quotes comes from Gillo Pontecorvo’s 1969 film Burn!, where the main character, William Walker (played by Marlon Brando) states: “Very often between one historical period and another, ten years suddenly might be enough to reveal the contradictions of an entire century.” We are living in such a period; not only because of the Great Financial Crisis and what the IMF is now calling a depression in the advanced capitalist economies, but also because of the global ecological crisis that during the last decade has accelerated out of control under business as usual, and due to the reappearance of “naked imperialism.” What made sense ten years ago is nonsense now. New dangers and new possibilities are opening up. A whole different kind of struggle is emerging

Submitted by NorthReport on February 27, 2009 - 3:28am.

These are exciting times we live in.

Climate of Change

http://www.nytimes.com/2009/02/27/opinion/27krugman.html?_r=1

Elections have consequences. President Obama’s new budget represents a huge break, not just with the policies of the past eight years, but with policy trends over the past 30 years. If he can get anything like the plan he announced on Thursday through Congress, he will set America on a fundamentally new course.

The budget will, among other things, come as a huge relief to Democrats who were starting to feel a bit of postpartisan depression. The stimulus bill that Congress passed may have been too weak and too focused on tax cuts. The administration’s refusal to get tough on the banks may be deeply disappointing. But fears that Mr. Obama would sacrifice progressive priorities in his budget plans, and satisfy himself with fiddling around the edges of the tax system, have now been banished.

Submitted by M. Spector on February 27, 2009 - 4:20am.

Well, guess who's drunk the Obama koolaid.

Submitted by Slumberjack on February 27, 2009 - 7:39am.

A whole new kind of struggle is emerging

“Very often between one historical period and another, ten years suddenly might be enough to reveal the contradictions of an entire century.”

Submitted by josh on February 27, 2009 - 12:17pm.

U.S. decline in GDP in fourth quarter of '08 worst in over a quarter of a century:

"What a ghastly report," said John Ryding, chief economist at RDQ Economics. "Since the recession started in December 2007, this will almost certainly be the longest postwar recession, and now potentially the deepest one as well."

Output fell 6.2 percent at an annualized rate in the fourth quarter of 2008, revised downward from a previous estimate of a 3.8 percent decline. The drop was even steeper than many economists had feared - the consensus estimate had been a 5.4 percent decline - and was much lower than the 0.5 percent contraction from the previous quarter.

http://www.nytimes.com/2009/02/28/business/economy/28econ.html?ref=busin...

Submitted by contrarianna on February 27, 2009 - 1:09pm.

Obama is either too clueless, too rightwing, or too scared of negative propaganda to do the absolutely necessary thing--nationalize the banks.

The "taxpayer handouts, not ownership" promoters are warning against the scary boogie man, literally, in the form of "Zombie Banks" :

Wall St spooked by 'zombie' banks

Posted Wed Feb 25, 2009 6:01pm AEDT
There are unconfirmed reports that the US Government could take a 40 per cent stake in Citigroup.

Speculation in the United States that some American banks were going to be nationalised sent stocks on Wall Street to a 12-year low yesterday.

The major indexes have recovered today, thanks to Federal Reserve chairman Ben Bernanke, who says the authorities just want to make sure the banks are solvent.

"We don't have to take them over to do that, we've always worked with banks to make sure that they're healthy and stable, and we're going to work with them," he said...."

....yep, "always worked with banks".... and done a bang up job, yes sir!

http://www.abc.net.au/news/stories/2009/02/25/2501427.htm?section=featur...

Coming to a theatre near you:

Night of the Living Taxpayer Ownership

Submitted by LeighT on February 27, 2009 - 1:33pm.

"Night of the Living Taxpayer Ownership "

[laughs out loud!]

Submitted by saga on February 27, 2009 - 2:19pm.

Arsonists Torch Berlin Porsches, BMWs on Economic Woe (Update1)

By Brett Neely

Feb. 27 (Bloomberg) -- When Berlin resident Simone Klostermann returned from vacation and couldn’t find her Mercedes SLK, she thought it had been towed. Police told her the 35,000- euro ($45,000) car had been torched.

more ...

http://www.bloomberg.com/apps/news?pid=20601109&sid=auZeM63nrgzo&refer=home

The people are 'speaking' ... lol

Submitted by George Victor on February 27, 2009 - 2:38pm.

Germany has always produced its firebrands.

Only when the Parisian paving stones fly, however, do we know it's serious.

Submitted by Fidel on February 27, 2009 - 3:09pm.

Just imagine all the socialism they wont be able to afford after trying gallantly to put Humpty back on the wall.

Submitted by Jacob Two-Two on February 27, 2009 - 5:35pm.

My friends, this is just the beginning. What we are looking down the barrel of is some very, very hard times indeed. The terrible thing is that it could all be over tomorrow if the elites who run the world suddenly woke up and realised that they can't keep robbing everyone and expect things to keep functioning.

After all, the entire problem is all on paper. Nothing's really wrong with the world (not yet, anyway). The workers can still work, the resources are still there, the need for goods and services is unchanged. The real problem is that the gangsters with their hands on the tillers created a lot of fake wealth in order to enrich themselves, and now that the bill is due they don't want to give it up. They'll kick and moan and do everything in their power to make us pay for their bad debts instead of giving up the phoney money without a fight like sane people might do. This means poverty, violence and death on a very large scale. It remains to be seen how long the people will take it before they forcibly remove the bastards from the halls of power and give the world back to its people. Hopefully this happens before the energy and climate crisises get into full swing, because if not...

Submitted by George Victor on February 28, 2009 - 10:40am.

Please define "full swing", Jacob.

Submitted by Fidel on February 28, 2009 - 11:31pm.

The U.S. Economy: Designed to Fail

Quote:

Yes, it’s that bad. The day after the speech the Dow-Jones dropped to 7,271, almost 50 percent off its October 2007 high, with no bottom in sight. According to the Washington Post, the Big Three automakers are now facing a “bottom-up” collapse of their component supply lines if their vast network of suppliers doesn’t receive new federal loans within a week. Worldwide the situation is just as bad. The U.N.’s International Labour Organization reports:

“What began as a crisis in finance markets has rapidly become a global jobs crisis. Unemployment is rising. The number of working poor is increasing. Businesses are going under.”

President Obama’s speech was long on resolve but short on substance. He assured the nation:

“We will rebuild, we will recover, and the United States of America will emerge stronger than before.”

But neither President Obama, nor his Democratic supporters or Republican antagonists, should feel badly about what is happening. This is because the system they have been given to work with was designed to fail. The U.S. was saddled long ago with a debt-based monetary system, whereby the only way money can be introduced into circulation is through bank lending. It was the system that was instituted in 1913 when Congress gave away its constitutional power over money creation to the private banking industry by passing the Federal Reserve Act.

It was then that the catastrophe we are now facing became inevitable. It took nearly a century to get here but it finally happened. We should have known it was coming when Federal Reserve-created bubbles replaced economic growth from our disappearing heavy industry, starting with the recession of 1979-83. We could have seen it coming when the dot.com bubble collapsed in 2000-2001, and Fed Chairman Alan Greenspan worked with the George W. Bush administration to substitute the housing bubble for a real recovery.

The day of reckoning is here. So don’t worry, Mr. President. It’s not your fault. When the collapse takes place the international bankers who will take over might even let you keep your job.

105th post eh. What is this, the beginning of a thread bubble?

Submitted by Michelle on March 4, 2009 - 9:27pm.

Sorry, Fidel. :) Continue in a new one.

World financial crisis deepens

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