So right-wingers are going to criticise these prisioners being released after their right-wing policies caused these overcrowded prisons in the first place. Go figure.
Cash crisis forces California to free 55,000 prisoners
The debt-ridden state can no longer afford to keep inmates in an expensive and bloated penal system
Götterdämmerung. What will people do when money can no longer be their God. Failure to save East Europe will lead to worldwide meltdown
The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.
If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.
Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.
"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.
The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.
Mr Pröll tried to drum up support for his rescue package from EU finance ministers in Brussels last week. The idea was scotched by Germany's Peer Steinbrück. Not our problem, he said. We'll see about that.
Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.
Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble.
"This is the largest run on a currency in history," said Mr Jen.
In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.
The 2008 World Economic Crisis: Global Shifts and Faultlines
In its November 2008 report, Global Trends 2025: A Transformed World, the US National Intelligence Council alerted that ’The international system as constructed following the Second World War will be almost unrecognisable by 2025 owing to the rise of emerging powers, a globalizing economy, and historic transfer of relative wealth and economic power from West to East, and the growing influence of nonstate actors.’(82)Thanks to its capital controls, its huge saving surplus and its publicly owned and state-controlled banking system, China seems to be well shielded from the Western financial crisis. China has already become a major actor in world currency and financial markets. The country holds $1.8 trillion in foreign exchange reserves. In particular, China’s dollar holdings are a source of considerable financial leverage in the global financial markets. China has an especially effective financial system, which seems to be well positioned to finance the next phase in its economic expansion. Many observers also agree that the Chinese economy has a much bigger margin of maneuver, because its exposure to those speculative toxic assets, which lay at the root of the recent financial crisis, is much lower than the exposure of the American and West European economies. In a way, China faces the global crisis from a position of strength.(83)
An interesting essay.
Iceland, now Ireland. Whose's next? Ireland ‘could default on debt’
http://business.timesonline.co.uk/tol/business/economics/article5733723.ece
Pledges made by Ireland to support its banking sector amount to 220% of the country’s annual economic output. The total loans held in Irish banks are more than 11 times the size of the economy.
Following the scandal at Anglo Irish Bank over undisclosed loans, the market fears there are more hidden problems that could ultimately fall to the state to resolve.
With Ireland set to borrow an additional €15 billion (£13.4 billion) this year, the national debt pile will hit €70 billion.
The cost of insuring Irish debt hit 350 basis points on Friday, meaning that for every £100 of debt it would cost £3.50 to insure against default. A year ago it would have cost 10p to insure every £100 of Irish debt.
One possible solution would see Germany buy billions of euros of Irish government debt through a fund set up by the European Central Bank.
