Gekko on toast update

Let’s see how the world has fared since this morning. Well, the swashbuckling Morgan Stanley hasn’t gone Chinese but 20 % Japanese, to the sobers-side Mitsubishi, so no more swash, while Nomura picks up other flying bits of Lehman’s. So on the big picture, whadidatellyez?

“Banks May Stifle U.S. Growth, Extend Slowdown…. The London-New York tug-of-war for bragging rights as the world’s pre-eminent financial centre is now a race to the bottom. `New York, up until a month ago, seemed to be recovering more quickly than London, but we have to wait and see what sort of fallout the more recent turmoil will generate.”

The market value of London’s publicly traded financial firms has dropped by 99.4 billion pounds ($182.3 billion) in the past 12 months, cutting their worth by about 25 percent. Their counterparts in New York have lost $477 billion in market capitalisation, or 37 percent.

“We won’t see the big Christmas parties this year,”

Slugger comment is at its best in the earlier thread, real deep analysis of the trends and background and irreverent comments shall we say, about the Great White Knight, US Treasury Secretary and President of the United States (virtually) Hank Poulson. Meanwhile Robert Peston has an historic overview of what the banking revolution means. The Daily Telegraph as a Satanic line about Brown – costs have gone up by 666 per head in a year. After the Chancellor’s Presbyterian drone, commentators aren’t entirely sure (i.e. me) if taxes are going up and public spending down. The Guardian: “Alistair Darling hints at future tax rises or spending cuts” . The Times: “Alistair Darling promises not to increase taxes”. I wouldn’t take bets on which one is right.

  • bfb

    NINJA

    NoIncomeNoJobsAssetts…..

    Socialist NINJA loans what caused the crisis…..

    Since they replaced economics with multicultural gender studies in public education these poor wee socialist shills didn’t know they had to PAY IT BACK….

    Anyhoooooo….. get those milktoast, God lovin’, gun totin’ desperate bastards in the middle of the country to payup and shutup….

    I’m voting twice like most of the acorn recruits.

  • BfB
  • Wilde Rover

    BfB,

    “these poor wee socialist shills didn’t know they had to PAY IT BACK….”

    Right Bob. Because the oligarchs walking away with the huge chunk of the taxpayer’s money are not to blame at all.

    “Dems want $50 billion stimulus on top of $700 billion bailout”

    Effin’ blowhard thieves.”

    As long as people still believe the fairy tale that there is any fundamental difference between the two parties the taxpayer will be screwed every time.

    But who knows, maybe it’s already too late.

  • Comrade Stalin

    Anyhoooooo….. get those milktoast, God lovin’, gun totin’ desperate bastards in the middle of the country to payup and shutup….

    The richest states in the USA (California and New York) are also the most Democratic (funny that .. economic success tends to be associated with Democrats) and they are the largest contributors of tax to the federal government.

    Not that this makes any difference to the argument. The proposals on the table do not get anyone out of having to pay their loan off, and they do not give anyone a free house. The loans are merely being transferred from the banks to the government. The government will assume the liability and, in a few years time, reap the profits that the banks (and their shareholders) are presently too afraid to contemplate.

  • Greenflag

    CS

    ‘The government will assume the liability and, in a few years time, reap the profits that the banks (and their shareholders) are presently too afraid to contemplate.’

    You ‘assume ‘ too much. Many Americans are recoiling from this 700 billion bailout precisely because they recall electing a bunch of bozos as their Government and not a Chief Speculator .

    They also remember the consequences ( 10 billion dollars a month ) of rushing to war in Iraq.

    What would /should normally take months to discuss -President Paulson is attempting to drive through by the end of this week ?

    Paulson’s plan is an effort to stop the bleeding -that’s all – there is no guarantee that it will ‘restore’ the health of the economy .

    The American ‘voters’ have decided by a margin of 2 to 1 that this ‘mess’ is largely a result of this incompetent administration . As they head for the polls in a few weeks you can be sure that they will hold the Bush quasi presidency responsible and vote accordingly .

  • Wilde Rover

    Greenflag,

    “The American ‘voters’ have decided by a margin of 2 to 1 that this ‘mess’ is largely a result of this incompetent administration .”

    Once more around the merry go round, eh Greenflag?

    Let’s face it, it’s a rigged carnie game, and when people like Lincoln and Kennedy come along and threaten the financial status quo they get taken out. It’s as simple as that.

    And who knows, maybe you’re right. Maybe Obama will turn around an bite the hand that feeds him, and maybe he won’t get taken out.

    But the smart money would be on him getting whacked.

    Because that’s what happens when you threaten to kill the goose that lays the golden eggs.

    At the end of the day, it’s all about the ratio of outrage to apathy.

    And if the balance lies with the latter then the blame lies entirely with the so-called “good” people.

  • Greenflag

    ‘Embezzlement is the most interesting of crimes . Alone among the various forms of larceny it has a time parameter . Weeks , months or years may elapse between the commission of the crime and it’s discovery. This is a period ,incidentally when the embezzler has his gain and the man who has been embezzled ,oddly enough feels no loss. There is overall a net increase in ‘psychic ‘ wealth . ‘

    Excerpt from ‘The Great Crash 1929 ‘ -J.K Galbraith .

    What’s happening now across the USA is a huge net ‘decrease’ not just in ‘psychic ‘ wealth but in actual wealth . This ‘bail out’ may save a few banks but it will not save ‘middle America ‘ and will save ‘lower income ‘ America even less .

    For a real sense of deja vu in the present crisis one only has to go back to 1930 when the ‘last word ‘ on the policy of reassurance was said by Simon D Fess the Chairman of the Republican National Committee

    ‘Persons high in Republican circles are beginning to believe there is some concerted effort on foot to utilise the stock market crisis as a method of discrediting this Administration. Everytime an Administration official gives out an optimistic statement about business conditions the market immediately drops ‘

    Fast forward to 2008 and John McCain’s the economy is strong blooper. The Republicans are having the same problem with ‘credibility ‘ in 2008 that they had back in 1932 . Plus ca change etc .

    ‘Once more around the merry go round’

    It’s no longer merry and it may take a few more rounds before people can finally get off .

    America’s present problems have nothing to do with the colour of Obama’s skin or it’s 12 million illegal immigrants or it’s property meltdown .

  • Dave

    I think you’re very close to the mark about the myth of change by changing government, Wilde Rover. There is very little difference between the two parties on substantive policies beyond a general qualitative sense of leaning to either the left or right of an imaginary centre dividing line, with the Democrats leaning toward a people-first agenda and the Republicans leaning toward a business-first agenda. In reality, both parties are pro-business (as they should be) and both try to strike a balance between the competing interests of the two as they translate in America between the rich/poor divide.

    Few people defend America’s tax system. It needs substantial reforms in order to remove the codes that distort the free market. In 2005, President Bush established the bipartisan Advisory Panel on Federal Tax Reform to recommend options for reform of our tax code.

    This committee states that “Not only is our tax system maddeningly complex, it penalizes work, discourages saving and investment, and hinders the competitiveness of American businesses. The tax code is riddled with tax provisions that treat similarly situated taxpayers differently and create perceptions of unfairness.”

    “Increasingly, Americans are looking to experts for help navigating this complexity, with over 60 percent using a paid preparer to compute their taxes. This complexity is costing the U.S. economy about $140 billion per year.”

    It wants an overhaul of America’s tax system, quoting Milton Friedman who said that “our tax system as a blackboard that has been filled up with so much writing that the slate must be wiped clean.”

    It notes that “the wave of tax reform in developed countries around the world during the past two decades reflects the view that low-rate, broad-based, progressive systems are fairer and more efficient than tax codes laden with special provisions that must be subsidized by higher rates on all taxpayers.” This is true, and it is good that the US is observing the Irish model of low taxation as opposed to the EU model where the proposed tax harmonisation will elliminate competition between EU countries on tax policies aimed at securing inward investment, thereby leading to higher taxation levels to fund wasteful EU over-regulation and crackpot wastes of the public’s money such as the CAP.

    http://www.taxreformpanel.gov/

    So, although fundamental change of the system will not happen by a change of president (as Obama continues to falsely claim), there is a bipartisan process already underway to bring about that change.

    In regard to the root cause of the current woes in the financial markets, this is again the fault of government intervention in that market which forces private companies to act as government agencies. Fannie Mae was created by President Franklin D. Roosevelt in 1938 “at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America.” Although it became a private, shareholder-owned company in 1968, it operates under “a charter from Congress requiring the company to support the housing finance system” and the US President directly appoints five directors to the board of a private company.

    http://www.fanniemae.com/faq/index.jhtml?p=FAQ

    Freddie Mac is another government distortion of the free market:

    “Freddie Mac is a stockholder – owned corporation chartered by Congress to increase the supply of funds that mortgage lenders, such as commercial banks, mortgage bankers, savings institutions and credit unions, can make available to homebuyers and multifamily investors.

    Since Freddie Mac was created in 1970, we have pursued the purpose our Congressional founders set out for us: to provide a continuous and low – cost source of credit to finance America’s housing. We achieve this purpose by

    1. Making mortgage funds available whenever and wherever Americans need them by linking the worldwide capital markets to the U.S. mortgage markets.
    2. Providing a continuous, reliable and low – cost flow of mortgage capital to finance housing for the nation’s homebuyers and renters.
    3. Bringing the benefits of the market in which we operate – the secondary mortgage market – to families and communities across the nation.

    Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities – guaranteed by Freddie Mac – to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. Just as stock and bond markets have put investor capital to work for corporations, the secondary mortgage market puts private investor capital to work for homebuyers and apartment owners, providing a continuous flow of affordable funds for home financing.”

    http://www.freddiemac.com/corporate/company_profile/faqs/

  • Dave

    [b]Continued[/b]

    Lastly, in regard to Obama versus McCain. McCain was one of three sponsors of the Federal Housing Enterprise Regulatory Reform Act of 2005 which would have reformed Freddie Mac and Fannie Mae. The Democrats opposed that reform – and Obama received a $105,849 payment from Fannie Mae and Freddie Mac. Obama has been bought and paid for. Even now, as the crisis unfolds, Obama is revealed as a silent mouthpiece with a script to read on a teleprompter. He has no solutions to offer now, and will have no solutions to offer if folks are dumb enough to elect his bagman for vested interests.

  • Dave

    Typo: “Even now, as the crisis unfolds, Obama is revealed as a silent mouthpiece [b]without[/b] a script to read on a teleprompter.”

  • susan

    Three consecutive posts on one thread Dave, and yet you don’t mention that John McCain’s campaign manager and top advisor Rick Davis was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations.

    http://www.nytimes.com/2008/09/22/us/politics/22mccain.html?_r=1&oref=slogin&ref=politics&pagewanted=print

    Even George F. Will, the thinking conservative’s conservative — and there are legions of thinking and thoughtful conservatives, that isn’t meant as a dig — writes in the Washington Post of his grave doubts at McCain’s conduct during this ongoing financial meltdown. He still has doubts about Obama’s lack of experience, but gives the distinct impression his doubts about McCain’s temperment are even graver.

    http://www.washingtonpost.com/wp-dyn/content/article/2008/09/22/AR2008092202583.html

  • Greenflag

    News just in ‘

    Sen. John McCain has spent much of his two decades in Congress pushing deregulation, but the Republican presidential nominee is continuing his election year migration toward more government control of the economy as the nation faces one of its greatest financial crises since the Great Depression.

    So the economy was not so sound after all ?

    ‘Sen. John McCain strikes a populist tone during a campaign stop in Media, Pennsylvania, on Monday.

    “I want the people in Ohio here to know that I have not forgotten the economy on Main Street,” McCain said during a campaign stop in Strongsville, Ohio, on Tuesday. “Not Wall Street, not Washington, D.C., but Main Street is the focus of our attention and our efforts.”

    You bet especially with most Americans laying the immediate blame for this crisis on Bush’s hands off policy on the economy . No other President since Reagan has spent so much time on vacation than Bush junior .

    McCain’s latest populist message comes as Congress weighs a $700 billion bailout plan to prop up struggling financial firms beset by bad mortgages and head off a severe credit crunch.

    McCain expressed doubts about the bailout during a campaign stop in Media, Pennsylvania, on Monday, in an attempt to help distance himself from the unpopular president.

    This week just serves to confirm that this election will be about the economy .

    McCain’s only hope now rests in dragging out Karl Rove and his backroom boys to help spin a subliminal ‘racist’ campaign as their last best hope to hold on to the White House which by now given the ’embarassment ‘ of the past week or more should be renamed the ‘Red House ‘ and I don’t mean in the socialist sense 😉

  • susan

    “Media” Pennsylvania, Greenflag. I love that. WOnder what they call the football team. The Media Titans? Media Barons? The Shameless Media Whores?

    Yeah, I’ll stop. :o) Michael Tomasky in “Comment is Free” today is worth reading for his links alone, although this election has been so freakish it’s hard to agree Rick Davis’s unmasking is as big a bombshell as TOmasky thinks it is:

    From the Guardian:

    “Mark this day down. Today – last night, actually – the New York Times and Roll Call reported (it’s hard to see who was first) what may be the biggest political story of the campaign. How big? John McCain might have to fire his campaign manager. Big enough?

    The story is this. The lobbying firm of Rick Davis, the manager, was being paid $15,000 a month by Freddie Mac until last month. That fact is a direct contradiction of words McCain had spoken Sunday night. At that time, responding to a Times story being prepared for Monday’s paper revealing that Davis had been the head of a lobbying consortium led by Freddie Mac and Fannie Mae until 2005, McCain said Davis had done no further work for either mortgage giant.

    Someone’s lying – either Davis to McCain, or McCain to the public. I trust you see the problem here.

    The stories are here, by David Kirkpatrick (whose reporting on this topic has been leading the way) and Jackie Calmes of the Times, and here, by Tory Newmeyer of Roll Call. You should definitely read every word of both. I think after you do you’ll agree that, depending on how big the pick-up is today and how hard the Obama camp presses this, it’s pretty difficult to see how Davis can stay on as campaign manager.”

    http://www.guardian.co.uk/commentisfree/michaeltomasky/2008/sep/24/johnmccain.congress