There is a big shock wave coming and come Monday, I just cannot see how the stock market can avoid admitting that the wage slaves and unemployed of America with all their debt and taxation can support the profits necessary to justify the stock prices.

The Barry Ritholtz blog entry "Here Comes the Half Trillion Dollar Fannie/Freddie Bailout!"- http://bigpicture.typepad.com/comments/2008/09/here-comes-the.html#comments has 126 comments and it would put people at a place to enjoy the show that is coming if they read them. We don't make jack shit outside of money and munitions and we don't have anything to export to pay for this oil.

Treason is a betrayal of trust. Monday is showtime.

http://www.nytimes.com/2008/09/07/business/07fannie.html?_r=1&hp&oref=slogin
====================

The government’s planned takeover of Fannie Mae and Freddie Mac, expected to be announced on Sunday, came together after advisers poring over the companies’ books for the Treasury Department concluded that Freddie’s accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter.

The proposal to place both companies, which own or back $5.3 trillion in mortgages, into a government-run conservatorship also grew out of deep concern among foreign investors that the companies’ debt might not be repaid. Falling home prices, which are expected to lead to more defaults among the mortgages held or guaranteed by Fannie and Freddie, contributed to the urgency, regulators said.

Investors who own the companies’ common and preferred stock will suffer. Holders of debt, including many foreign central banks, are expected to receive government backing. Top executives of both companies will be pushed out, according to those briefed on the plan.

The cost of the government’s intervention could rise into tens of billions of dollars and will probably be among the most expensive rescues ever financed by taxpayers.

Both presidential nominees expressed support for the government’s plans. Senator Barack Obama, Democrat of Illinois, said as he campaigned in Indiana that not acting could place the housing market in further distress.

Senator John McCain’s running mate, Gov. Sarah Palin, said at a rally in Colorado Springs that Fannie Mae and Freddie Mac have become too big and too expensive .

The takeover comes on the heels of a rescue of the investment bank Bear Stearns, which was sold to JPMorgan Chase in a deal backed by taxpayers. Already, the housing crisis has cost investors and consumers hundreds of billions of dollars.

The big question now is whether the federal government’s move to take over Fannie and Freddie will restore investor confidence in the nation’s credit markets, help stabilize the stock market and keep loans flowing to creditworthy borrowers.

<snipped>

I think a lot of other state governments are going to wake up in the same boat today and a lot of people are going to find out that their pension funds aren't worth the paper they were printed on.



Lehman bankruptcy to weigh on Florida

September 16, 2008

TALLAHASSEE — The state of Florida could lose more than tens of millions of dollars as Wall Street icon Lehman Brothers heads into bankruptcy.

And the financial trouble might not end there.

At the end of August, the State Board of Administration held more than $8-billion of investments in other troubled companies. The group includes investment firm Merrill Lynch, insurance company AIG, savings and loan Washington Mutual and government-backed mortgage lenders Freddie Mac and Fannie Mae, many of which continued to drop in value this past week.

SBA officials and financial experts say it's too early to tell how those investments will hold up in coming months or what impact Lehman Brothers' historic downfall will have on state finances.

"It's pure speculation at this point what the value of any securities would be,'' said Joel H. Levitin, a bankruptcy lawyer with New York-based Cahill Gordon & Reindel. "I don't know how anybody could have enough information to put a meaningful value on the equities or the bonds at this point."

Florida owns more half a billion dollars worth of stocks and bonds in Lehman Brothers, spread throughout Citizens Property Insurance Corp. and the Florida Treasury and funds managed by the State Board of Administration, or SBA.

Florida's Retirement System has the most Lehman Brothers stocks and bonds, which topped $300-million on Sept. 10. That's less than 1 percent of the pension plan's total of $125-billion, according to SBA records. Most of the Lehman Brothers investments are fixed income securities, including bonds, which typically get priority over stocks in bankruptcy proceedings.

http://www.tampabay.com/news/politics/state/article813035.ece

Russia authorities halted trading on the country’s stock exchange on Tuesday after it plunged 17 per cent in a broad-based sell-off.

At 1700 local time, the rouble-denominated Micex index had fallen 17.5 per cent to 881.17 and the RTS index dropped 12 per cent to 1,131.120 as the falling oil price, margin calls on local investors and a broader sell-off in emerging markets stocks drove shares down.

“This is a good old-fashioned panic”, said Steven Dashevsky, head of research at Unicredit in Moscow. “It doesn’t feel like there is anyone domestically that can put the brakes on.”

Oil stocks tracked the price of Brent crude, used as a benchmark for Russian oil sales, as it sank below $90 a barrel. Gas giant Gazprom fell 8.3 per cent to Rbs98 and Lukoil dropped 12 per cent to Rbs1,355.51.

http://www.ft.com/cms/s/0/6ff9306c-83f1-11dd-bf00-000077b07658.html

There was no way that the US was going to let the stock market go down again today. Bush is demanding all the tricksters keep things afloat while he is pResident. It will be like the Russians attacking German machine guns with pitchforks, except it will the American taxpayer and their heirs that are being sacrificed.

Make the tax cuts permanent. Death to the death taxes for the wealthy bastards that have gamed the system. They have victory and spoils are theirs. Remember when people used to say "B O" for body odor. Well, the American people are going to see that you can only be as good as you can afford to be and I am guessing that "F O" for "Fuck Off" becomes a common expression as people enslaved by debt are not the least bit interested in doing anything for anyone or hearing yet another hard luck story.

=========

Bloomberg's MICEX 10 INDEX - http://www.bloomberg.com/apps/quote?ticker=MICEX10:IND

The people that print the money take over.

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

AIG May Get $85 Billion Loan, Cede Control, NYT Says (Update1)

By Hugh Son

Sept. 16 (Bloomberg) -- American International Group Inc., the biggest U.S. insurer by assets, may get an $85 billion bridge loan from the Federal Reserve and cede an 80 percent stake, the New York Times reported, citing unnamed people briefed on the negotiations.

Banks led by Goldman Sachs Group Inc. and JPMorgan Chase & Co. couldn't arrange emergency funding by today, resulting in the planned U.S. intervention, the Times said.

AIG is trying to stave off a collapse after its credit ratings were cut yesterday and shares plunged 79 percent since Sept. 11. A failure of New York-based AIG could result in $180 billion of losses to financial institutions, according to RBC Capital Markets analyst Hank Calenti.

``There's a systemic risk if AIG isn't saved,'' Benoit de Broissia, an equity analyst at Richelieu Finance in Paris, said in a Bloomberg Television interview. Richelieu has about $6.2 billion under management.

AIG is pursuing ``alternatives to increase short-term liquidity, the company said today in a statement.

Former CEO Maurice ``Hank'' Greenberg said the company needs a bridge loan rather than conservatorship, which could put the company under government control.

``Why would you want to wipe out shareholders when you just need a bridge loan?'' Greenberg said in an interview. ``It doesn't make any sense.''

<snipped>

Yep, I think you are right on this one. Bush is ordering the markets be propped up at all cost. They saw what happened when Lehman was aloud to implode, and the resulting damage to McCain's image as a result. (And sun of a gun, Obama actually went on the offensive - sort of.) They will not, dare not let AIG go too, or any thing else for that mater.

But this too will backfire. The ink isn't even dry on the under-the-table deal when their is renewed talk about inflation. Bush just pulled the hyper inflation trigger, if he hopes to bail out every one to save his image.

its spooky. As the bundes rats printed the currency in to oblivion;
communists returned all banking to state ownership
and stalin was once again happy on his throne.

Bubble bubble bubble smoking that inflation weed :bong:

This has a very good interactive map showing the loss of capitalization of firms in the financial sector. The interactive part does not work when transfering images.

=================
http://www.nytimes.com/interactive/2008/09/15/business/20080916-treemap-graphic.html

A year ago, financial companies were flying high. But as problems in the mortgage and credit markets have grown, the stocks of many Wall Street firms have been hard hit. Some of the biggest companies have been bought out, taken over by the government or gone bankrupt.

http://www.techcrunch.com/wp-content/uploads/2008/09/nyt-financials-2007.png

http://www.techcrunch.com/wp-content/uploads/2008/09/nyt-financials-2008.png

http://bigpicture.typepad.com/comments/2008/09/aig-bailout-85b.html

Remember all these yahoos wanted to privatize everything? They sure are quick to take the corporate welfare when they get into trouble.

http://link.brightcove.com/services/link/bcpid1137692012/bctid1799063691

Given the political understatement of his profession,
he's pretty much predicting a new great depression.

This is a global crisis of confidence - people are preparing for bank failures;
and we're 2 inches away from a global run on banks. This harsh climate
leaves only goldman and morgan standing firm-independent on the sell side:

Goldman, Morgan Stanley defend models

By Greg Farrell in New York and Francesco Guerrera in London

Published: September 16 2008 13:54 | Last updated: September 17 2008 00:36
Goldman Sachs and Morgan Stanley on Tuesday said that they were not interested in pairing with a commercial bank, arguing that they had the financial strength to survive as the last two remaining large stand-alone investment banks.

Goldman, which reported the biggest quarterly earnings drop since it went public in 1999, and Morgan Stanley, which brought forward third-quarter results in an attempt to allay investors’ fears, mounted a robust defence of their business models.
http://www.ft.com/cms/s/0/be8ccff6-83e5-11dd-bf00-000077b07658.html

As i reprint this PR article telling customers not to run goldman and chase;
their stock is tanking down goldman down 18% and Morganstanley 28% on the day.
The wolves are short selling them. They might have the resiliency to survive a
normal event, but this is the 100 year storm.

Think of the past 30 years like a roller coaster, where we've been boringly, slowly
click, click, click up the incline to the very top -> 30 years up on top of a printed
mountain of numbers and bullshit so thick and deep that nobody understands the big
picture of what it means anymore.... and we've just tipped over the top and the
people in the roller coaster are starting to scream and barf. Hold your hands up
and laugh - its been a long wait, why spoil the ride. Be prepared for your bank
to collapse - keep cash on hand.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aIRza4.azeC4
=================

Russian Markets Halted as Emergency Funding Fails to Halt Rout

By Alex Nicholson and William Mauldin
Enlarge Image/Details

Sept. 17 (Bloomberg) -- Russian markets stopped trading for a second day after emergency funding measures by the government failed to halt the biggest stock rout since the country's debt default and currency devaluation a decade ago.

The ruble-denominated Micex Stock Exchange suspended trading indefinitely at 12:10 p.m. after its index erased a 7.6 percent gain and plunged as much as 10 percent within an hour. The benchmark fell 17 percent yesterday, the biggest drop since Bloomberg started tracking the gauge in May 2001. The dollar- denominated RTS halted trading after similar declines.

The government yesterday injected $20 billion into the interbank lending market via central bank and Finance Ministry auctions in a bid to contain soaring borrowing rates as credit dried up in the wake of the Lehman Brothers Holdings Inc. bankruptcy. The one-day MosPrime overnight rate, a gauge for monitoring liquidity demand, leapt 25 basis points to a record 11.08 percent today.

The Finance Ministry attempted to stop the selloff by offering 1.13 trillion rubles ($44 billion) of budget funds to the country's three biggest banks, OAO Sberbank, VTB Group and OAO Gazprombank, for at least three months. That measure came as KIT Finance, a Russian brokerage, said it's in talks to find a buyer after failing to meet some financial obligations related to repurchase agreements.

Bond Market `Closed'

<snipped>

September 17, 2008

The Dow Jones industrial average plunged more than 400 points today as anxieties about the financial system still ran high after the government's bailout of insurer American International Group Inc.

Shares of most Louisiana companies declined, including Entergy, Pool Corp., Superior Energy Services, Tidewater Inc. and Whitney Holding Corp.

Covington-based Hornbeck Offshore was a rare exception, pulling off a 74-cent gain to close at $37.91.

The Dow closed at 10,609.66, down 449.36.

http://www.nola.com/business/index.ssf/2008/09/dow_plunges_more_than_400_poin.html


Mission Accomplished. America is Bankrupt.

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

Barometers of financial stress hit record peaks across the world. Yields on short-term US Treasuries hit their lowest level since the London Blitz. Lending between banks in effect halted and investors scrambled to pull their funding from any institution or sector whose future had been called into doubt.

The $85bn emergency Federal Reserve loan for the troubled insurance group AIG, announced on Tuesday night, failed to curb the surge in risk aversion. Instead, markets were hit by a fresh wave of anxiety.

Speculation mounted that the Federal Reserve, which refused to cut rates on Tuesday, could be forced into an embarrassing U-turn. Amid the financial chaos, traders were pricing in 32 basis points of rate cuts by the end of the month – essentially betting that there was a 60 per cent chance the Fed would cut rates by half a percentage point in the coming days.

http://www.ft.com/cms/s/0/8058d308-84d3-11dd-b148-0000779fd18c.html

Goldman and Morgan shares under fire

Shares of Morgan Stanley and Goldman Sachs plunged on Wednesday while the cost to insure against default of their debt surged as confidence ebbed in Wall Street’s two largest independent investment banks.

The sell-off came a day after both securities firms reported quarterly profits and made the case that they would not need to link up with a commercial bank to secure more stable sources of funding.

However, the rising price of credit insurance for Morgan Stanley raised acute questions about whether rising borrowing costs would threaten its ability to remain profitable.

By late morning, dealers had quoted credit default swaps on the firm’s debt in “points up front”, indicating sellers wanted to be paid more in advance amid concern the likelihood of a default had increased.

http://www.ft.com/cms/s/0/5068c4f4-84f2-11dd-b148-0000779fd18c.html


/*------------------------------------------------------------------*/

The barbarians are at the gate.

Another thrashing for stocks
Dow's 449-point drop is year's 2nd worst as AIG bailout spreads fear to financial sector.

By Alexandra Twin, CNNMoney.com senior writer
Last Updated: September 17, 2008: 7:16 PM EDT

NEW YORK (CNNMoney.com) -- Stocks plummeted Wednesday, with the Dow industrials falling 449 points in its second worst session of the year, as the government's emergency rescue of AIG amplified fears about the stability of financial markets.

The Dow Jones industrial average (INDU) lost 449 points, or 4% and fell to the lowest level since November 2005. The Standard & Poor's 500 (SPX) index lost 4.7% and fell to its lowest point since April 2005. The Nasdaq composite (COMP) lost 4.9% and ended at its lowest point since August 2006.

Selling pressure eased in the mid-afternoon as the jump in oil and gold prices boosted the underlying stocks. But any recovery attempt lost steam and the market finished the session just above the worst levels of the day.

After the close, a New York Times report said that Morgan Stanley (MS, Fortune 500) was considering a merger with Wachovia (WB, Fortune 500) or another bank.

Morgan Stanley (MS, Fortune 500) shares had tumbled 24% during the session on worries about its profits and ability to raise capital, even though the company announced better-than-expected quarterly results Tuesday night. Goldman Sachs (GS, Fortune 500) also slumped despite having reported better-than-expected results. (Full story)

Also after the close, a Wall Street Journal report said that Wells Fargo (WFC, Fortune 500) and Citigroup (C, Fortune 500) have expressed interest in Washington Mutual (WM, Fortune 500), the mortgage lender that has seen its business erode in the housing market collapse.

<snipped>

Morgan Stanley is in preliminary merger talks with Wachovia, the troubled regional lender, and is exploring other potential deals in an effort to avoid becoming the next victim of the credit crunch.

Wachovia’s approach to Morgan Stanley came after the shares of Morgan Stanley and Goldman Sachs plunged and the cost of insuring their debt rose sharply – a sign of waning investor confidence in Wall Street’s last two large investment banks.

Washington Mutual, the Seattle-based lender, is also looking to sell itself and has hired Goldman to run an auction, according to people close to the situation.

Goldman has approached a number of banks including Citigroup, JPMorgan Chase and Wells Fargo but it is unclear whether rivals would bid for a company that has billions of bad assets.

http://www.ft.com/cms/s/0/5068c4f4-84f2-11dd-b148-0000779fd18c.html

Goldman's next - the sharks are circling.

From that article (on edit - this is priceless) remember morgan stanley was the
company that dumped the stock of all world companies that supported unions.

John Mack, Morgan Stanley’s chief executive, was said to be livid at the plunge
in the share price. He contacted Hank Paulson, Teasury secretary, and Christopher
Cox, Securities and Exchange Commission chairman, accusing short sellers of
targeting Morgan Stanley and urging them to take action.

HA HA!! john, i'm short up to my neck in your demise, asshole.

Oh its truly a hollywood moment to watch the thundergods being brought down to
earth like crumbling statues of saddam. John Mack, you've presided over the worst
single day collapse in share price of any modern morgan stanley CEO - oooohhh its
gotta hurt. :)

This is the official .gov website for the Treasury Department announcing new auctions outside of the normally scheduled auctions- http://www.ustreas.gov/press/releases/hp1144.htm
===========================




September 17, 2008
HP-1144

Treasury Announces Supplementary Financing Program

Washington- The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week. To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.

The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve. The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives.

Announcements of and participation in auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules. Treasury will provide as much advance notification as possible regarding the timing, size, and maturity of any bills auctioned for Supplementary Financing Program purposes.

The US is going to add $100 billion to the national debt in two days.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a21pnk8Qb_.0
===================

Treasury 3-Month Bill Rates Drop to Lowest Since World War II

By Sandra Hernandez

Sept. 17 (Bloomberg) -- U.S. Treasury three-month bill rates dropped to the lowest since World War II as a loss of confidence in credit markets worldwide prompted investors to abandon higher-yielding assets for the safety of the shortest- term government securities.

Investors pushed down the rate to 0.0203 percent on concern that credit market losses will widen after the bankruptcy of Lehman Brothers Holdings Inc. and the federal takeover of American International Group Inc. In a sign of banks' reluctance to lend, the rates charged for short-term loans relative to U.S. bill rates rose to the highest on record.

``It's scary,'' said E. Craig Coats Jr., who co-heads fixed income at Keefe, Bruyette & Woods Inc. in New York and started trading bonds in 1969. ``This is the worst it's ever been since I've been in the business. Nobody knows what's really going on. Systemic risk is here and there and everywhere.''

Three-month bill rates fell 65 basis points to 0.041 percent at 5:15 p.m. in New York, after earlier touching 0.0203 percent. They had dropped to 0.3867 percent on March 20, after the Federal Reserve and Treasury engineered the takeover of Bear Stearns Cos.

The Treasury sold $40 billion in 35-day debt today under a new program that will allow the central bank to keep pumping cash into the banking system after its takeover of AIG. Funds from the sales will be kept in a Fed account. The bills drew a rate of 0.3 percent. Another $60 billion will be sold tomorrow, $30 billion in 20-day bills and $30 billion in 76-day bills, the Treasury said.

<snip>

http://online.wsj.com/article/SB122169431617549947.html
=========================




* SEPTEMBER 18, 2008

Worst Crisis Since '30s, With No End Yet in Sight

The financial crisis that began 13 months ago has entered a new, far more serious phase.

Lingering hopes that the damage could be contained to a handful of financial institutions that made bad bets on mortgages have evaporated. New fault lines are emerging beyond the original problem -- troubled subprime mortgages -- in areas like credit-default swaps, the credit insurance contracts sold by American International Group Inc. and others. There's also a growing sense of wariness about the health of trading partners.

The consequences for companies and chief executives who tarry -- hoping for better times in which to raise capital, sell assets or acknowledge losses -- are now clear and brutal, as falling share prices and fearful lenders send troubled companies into ever-deeper holes. This weekend, such a realization led John Thain to sell the century-old Merrill Lynch & Co. to Bank of America Corp. Each episode seems to bring government intervention that is more extensive and expensive than the previous one, and carries greater risk of unintended consequences.

<snipped>

http://www.bloomberg.com/apps/news?pid=20601087&sid=app5nbK0gajQ&refer=home
================

U.S. to Sell $100 Billion in Bills to Fund Fed Moves (Update2)

By Rebecca Christie

Sept. 18 (Bloomberg) -- The U.S. Treasury said it will sell an additional $100 billion in short-term debt to aid the Federal Reserve's balance sheet, amid the biggest extension of central- bank credit to financial companies since the Great Depression.

The Treasury today announced plans to sell $30 billion in 59-day bills at 11:30 a.m. tomorrow, $30 billion in 45-day bills at 1 p.m. tomorrow and $40 billion in seven-day bills on at 11:30 a.m. on Sept. 24.

Yesterday the Treasury started a special program to help finance the Fed's portfolio with an initial $100 billion in bill auctions. The proceeds will give the central bank cash to boost liquidity in credit markets struggling from $519 billion in writedowns and losses since the start of last year.

<snipped>

One of the most extraordinary features of the past month is the extent to which the dollar has remained immune to a once-in-a-lifetime financial crisis. If the US were an emerging market country, its exchange rate would be plummeting and interest rates on government debt would be soaring. Instead, the dollar has actually strengthened modestly, while interest rates on three- month US Treasury Bills have now reached 54-year lows. It is almost as if the more the US messes up, the more the world loves it.

But can this extraordinary vote of confidence in the dollar last? Perhaps, but as investors step back and look at the deep wounds of America’s flagship financial sector, the public and private sector’s massive borrowing needs, and the looming uncertainty of the November presidential elections, it is hard to believe that the dollar will continue to stand its ground as the crisis continues to deepen and unfold.

It is true that the US government has very deep pockets. Privately held US government debt was under $4,400bn at the end of 2007, representing less than 32 per cent of gross domestic product. This is roughly half the debt burden carried by most European countries, and an even smaller fraction of Japan’s debt levels. It is also true that despite the increasingly tough stance of US regulators, the financial crisis has probably already added at most $200bn-$300bn to net debt, taking into account the likely losses on nationalising the mortgage giants Freddie Mac and Fannie Mae, the costs of the $29bn March bail-out of investment bank Bear Stearns, the potential fallout from the various junk collateral the Federal Reserve has taken on to its balance sheet in the last few months, and finally, Wednesday’s $85bn bail-out of the insurance giant AIG.

Were the financial crisis to end today, the costs would be painful but manageable, roughly equivalent to the cost of another year in Iraq. Unfortunately, however, the financial crisis is far from over, and it is hard to imagine how the US government is going to succeed in creating a firewall against further contagion without spending five to 10 times more than it has already, that is, an amount closer to $1,000bn to $2,000bn.
http://www.ft.com/cms/s/0/dd9aa390-84d6-11dd-b148-0000779fd18c.html

The last blog of Barry Ritholtz shows his anger at the notion of transferring all the bad investments to the federal government The blog entry has a 100 comments in its first 150 minutes. These are his choice words in the body of that entry at http://bigpicture.typepad.com/comments/2008/09/sec-ban-all-sho.html

============

[b] 1) We suffer a loss of Market Integrity; The US is now a Banana Republic

2) Blatant market manipulation: this is nothing more than an attempt to force markets higher;

3) 60 days prior to a presidential election? This is a none-too-subtle attempt to influence the elections -- especially coming on top of the Fannie/Freddie bailout;

4) The coming pop will create a huge air pocket, ultimately leading to us crashing much lower;

5) Expect a huge increase in volatility -- upwards first, then down;

We Are A Nation of Morons, led by complete Idiots, making us complicit in our own self destruction.

Guess what; the public needs to bail out some more rich people. Bet you didn't guess. ;)

"We're dealing with a completely irrational market reaction," said a source at one major bank. "But if you live by the market, you have to accept that markets can occasionally be irrational."

After bailing out the insurer AIG on Tuesday, the Bush administration is keen to avoid any further situations in which it has to decide whether to allow an institution to sink or swim. A group of conservative Republicans in the House of Representatives wrote to Paulson and to the Federal Reserve chairman, Ben Bernanke, demanding that they refrain from any "additional government-financed bailouts for large financial firms".

http://www.guardian.co.uk/business/2008/sep/19/wallstreet.lehmanbrothers

Speculation intensified last night that Bradford & Bingley's days as an independent bank were numbered, after its shares were pummelled and its market value fell to £390m, a fall of more than 90% from its peak.
http://www.guardian.co.uk/business/2008/sep/27/bradfordbingley.banking

Wachovia approached potential buyers, including Citigroup, Wells Fargo and Spain’s Banco Santander, on Friday after a 27 per cent plunge in its shares deepened fears over the future of the sixth-largest US bank.
http://www.ft.com/cms/s/0/1830ae2e-8c24-11dd-8a4c-0000779fd18c.html

let the fire fall

This has video of protest all over California.

=============
http://www.latimes.com/business/la-fi-voxpop26-2008sep26,0,3246836.story

By Ken Bensinger, Los Angeles Times Staff Writer
September 26, 2008
As congressional leaders struggled to craft a bailout plan for the nation's troubled financial system Thursday, angry protesters mobbed Wall Street, telephones rang off the hook in House and Senate offices and a group of prominent economists sent off e-mail blasts critiquing the proposal.

Numerous opinion polls taken this week came to wildly varying conclusions about the level of support among Americans for the Bush administration's $700-billion plan. But the increasingly loud roar coming from all corners of the nation shows that the idea of a bailout has touched a particularly sensitive nerve among the public.




*
Bush says action needed now on bailout

A spokesman for Sen. Dianne Feinstein (D-Calif.) said her five offices had doubled staffing to deal with the constantly ringing phones. Through late Thursday, Feinstein's offices had received a total of 39,180 e-mails, calls and letters on the bailout, with the overwhelming majority of constituents against it. The spokesman said the volume was as great as during the immigration debate and at key points during the war in Iraq.

Rep. Linda T. Sanchez (D-Lakewood) was also hearing it from her district, which includes parts of the city of Los Angeles and unincorporated L.A. County. "My constituents are telling me loud and clear that they aren't convinced," she said in a statement.

<snipped>

Germany guarantees savings to avert panic

By Bertrand Benoit in Berlin and James Wilson in Berlin and agencies

Published: October 5 2008 16:45 | Last updated: October 6 2008 00:37

Germany said on Sunday it would guarantee all private German bank accounts – currently worth €568bn – in a dramatic move to prevent panic withdrawals as fears over the worldwide financial crisis spread to Europe’s largest economy.

“We want to tell people that their savings are safe,” Angela Merkel, chancellor, said at an unscheduled press conference on Sunday. The scheme would cover existing accounts and others which savers might open.

http://www.ft.com/cms/s/d895ef54-92ef-11dd-98b5-0000779fd18c,dwp_uuid=11f94e6e-7e94-11dd-b1af-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fd895ef54-92ef-11dd-98b5-0000779fd18c%2Cdwp_uuid%3D11f94e6e-7e94-11dd-b1af-000077b07658.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Findepth%2Fglobal-financial-crisis

Ireland, Greece and Now Germany are guaranteeing all bank deposits. I hope the
UK does it soon, or i'm gonna open an irish account.

If the meltdown is just warming up - germany has history with banking collapse
and runaway currency. Its taken rather seriously - unlike the glib short termism
of federal reserve bailout-by-printing-press-weimar approaches.

The suspension covers trading in all financial instruments issued by Kaupthing, Landsbanki, Glitnir, the Icelandic lender bailed out by the government after its short-term funding dried up, Straumur-Burdaras, Exista and Spron.

Iceland's Financial Services Authority requested the move, the OMX Nordic Exchange in Iceland said. The exchange said: "This decision is made in order to safeguard the equality of investors while awaiting an announcement.''

Iceland's prime minister Geir Haarde has confirmed the country's major banks have agreed to "sell their foreign assets and decrease their activity abroad", as pressure mounted for the government to secure a rescue deal for its ailing financial system.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3144756/Trading-in-Icelandic-banks-halted-pending-announcement.html

The storm has overrun iceland - they simply do not have the capital to bail it out.

Industrials Drop 680 After Late Collapse
By PETER A. MCKAY

The stock market's collapse accelerated Thursday as bank lending remained stubbornly clogged and investors remained unwilling to hold anything except cash and government debt, no matter how tiny the returns for doing so.

The Dow Jones Industrial Average declined for a seventh straight day, plunging 678.91 points, or 7.3%, to 8579.19. Blue chips last dipped below the 9000 level five years ago. Thursday's fall was the Dow's third-worst all time in point terms and 11th worst in percentage terms. During its recent losing run, blue chips have fallen by a startling 20.9% and are down 39.4% from their record high, which was hit exactly one year ago.

Translating the day's losses into dollar terms, the Dow Jones Wilshire 5000, a proxy for the total U.S. stock market, lost $872 billion in market capitalization on Thursday, $2.5 trillion over the last seven trading sessions, and $8.3 trillion since the all-time high it hit last October.
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http://online.wsj.com/public/article/SB122354853453718755.html

Its a long way down to 5000 weeeeeeeeeeee.

Global Stocks Tumble on Earnings Concern; Treasuries, Yen Rally

By Sarah Jones

Oct. 24 (Bloomberg) -- Stocks tumbled around the world, sending the global benchmark index to the lowest level since June 2003, on concern the deepening economic slump will crimp earnings. Yields on 30-year Treasuries dropped to a 31-year low, and the yen climbed to a 13-year high against the dollar.

The Standard & Poor's 500 Index and the Dow Jones Industrial Average dropped more than 5.1 percent after futures trading on the indexes was limited to prevent further declines. The U.K.'s FTSE 100 Index sank 6.9 percent and the pound slid the most versus the dollar since 1971 after the economy shrank for the first time since 1992. South Korea's Kospi Index fell 10 percent as the country's economy grew at the slowest pace in four years.

The MSCI World Index of 23 developed markets lost 6.1 percent to 855.32 at 9:38 a.m. in New York, extending this week's retreat to 10 percent. The MSCI measure of 25 emerging markets lost 8.1 percent to 472.64 as Russia's Micex Stock Exchange stopped trading until next week after shares slumped 14 percent.

``The panic levels are now quite unseen,'' said Christian Gattiker, Zurich-based head of equity research at Bank Julius Baer & Co. which manages about $307.6 billion globally. ``It's difficult to have any words for this situation right now.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aTFM4vIxJR4E&refer=home

These indexes are too high by thousands... the pound is at 37 year lows as the
UK economy implodes. Bouf!

The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.

They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3260052/Europe-on-the-brink-of-currency-crisis-meltdown.html

Showtime indeed - the nikkei's close to hitting the 6000's this morning.

http://media.mcclatchydc.com/smedia/2008/10/10/10/782-10102008Babin.slideshow_main.prod_affiliate.91.jpg

http://www.ritholtz.com/blog/wp-content/uploads/2008/10/bottom.jpg

http://img.photobucket.com/albums/v133/davidekhalil/911fall.jpg

It is beginning to look like the Financial System was already showing its strains by 2001.A spectacular event,blaming the Arabs and an invasion were the presciptions of the ruling class.Iraq was chosen as the victim because Saddam had lots of cash in addition to oil.

It somehow adds up.

Remember the talk that the economy was “too hot”, or Clinton constantly boasting that his economic policies was producing rates far larger than what his team was estimating? These were in reality red flags, BIG ones. This was the start fiscal bubble beginning to inflate.

Enron was another big red flag. Enron was as much a product of the reliquary environment as it was of corruption. But when it collapsed, market analysts hailed it not as a warning flag, but as evidence that the system worked. And Enron was actually predated by another economic crises called the California Electric Crises (oh now we are deep in the way-back Professor Peabody,). This was precipitated by deregulation made by Bush specifically to bail out Enron, which only forestalled its collapse. In that case, they knew in advance what was happening, but they thought that their geniuses, political, and economic savvy could defy the very laws of physics.

To answer your question, I think it would be no, the preps never once suspected that the system would collapse. In fact, they still seem to have trouble grasping the fact that it HAS collapsed.

http://www.reuters.com/article/Finance08/idUSTRE4AB7HT20081112
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By Joseph A. Giannone

NEW YORK (Reuters) - The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself, former Goldman Sachs chairman John Whitehead, said at the Reuters Global Finance Summit on Wednesday.

Whitehead, 86, said the prospect of worsening consumer credit woes combined with an overtaxed federal government make him fear that the current slump is far from over.

"I think it would be worse than the depression," Whitehead said. "We're talking about reducing the credit of the United States of America, which is the backbone of the economic system." Whitehead encountered plenty of crises during his 38 years at the investment banking firm and was a young boy during the 1930s.

Whitehead warned the country's financial strength is at risk due to the sweeping demand for tax relief and a long list of major government spending plans.

"I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America," said Whitehead, who served as chairman of the Lower Manhattan Development Corp after the World Trade Center was destroyed during the September 11, 2001 attacks.

Whitehead, who helped make Goldman a top-tier Wall Street firm and led its international expansion, left in 1984 to become a deputy secretary of state under Ronald Reagan.

He warned that the country's record deficit is poised to balloon as the public calls on government for more support.

"Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds," he said. "Eventually U.S. government bonds would no longer be the triple-A credit that they've always been."

There are at least ten "trillion dollar problems," facing the United States, he said, including social security, expanding health insurance, rebuilding infrastructure and increased spending on green energy. At the same time, the public does not want to pay for it.

<snipped>

http://www.nytimes.com/2008/11/22/business/22citi.html?_r=1
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Citigroup, Under Siege, Holds Talks With U.S.

By ANDREW ROSS SORKIN and LOUISE STORY
Published: November 21, 2008

With the sharp stock-market decline for Citigroup rapidly becoming a full-blown crisis of confidence, the company’s executives on Friday entered into talks with federal officials about how to stabilize the struggling financial giant.

In a series of tense meetings and telephone calls, the executives and officials weighed several options, including whether to replace Citigroup’s chief executive, Vikram S. Pandit, or sell all or part of the company.

Other options discussed included a public endorsement from the government or a new financial lifeline, people involved in the talks said.

<snipped>

This is the introduction to a policy paper from the Cato Institute
http://cato.org/pub_display.php?pub_id=9788
============

November 18, 2008
Briefing Paper no. 110

How Did We Get into This Financial Mess?

by Lawrence H. White

As policymakers confront the ongoing U.S. financial crisis, it is important to take a step back and understand its origins. Those who fault "deregulation," "unfettered capitalism," or "greed" would do well to look instead at flawed institutions and misguided policies.

The expansion in risky mortgages to underqualified borrowers was encouraged by the federal government. The growth of "creative" nonprime lending followed Congress's strengthening of the Community Reinvestment Act, the Federal Housing Administration's loosening of down-payment standards, and the Department of Housing and Urban Development's pressuring lenders to extend mortgages to borrowers who previously would not have qualified.

Meanwhile, Freddie Mac and Fannie Mae grew to own or guarantee about half of the United States' $12 trillion mortgage market. Congressional leaders pointedly refused to moderate the moral hazard problem of implicit guarantees or otherwise rein in their hyperexpansion, instead pushing them to promote "affordable housing" through expanded purchases of nonprime loans to low income applicants.

The credit that fueled these risky mortgages was provided by the cheap money policy of the Federal Reserve. Following the 2001 recession, Fed chairman Alan Greenspan slashed the federal funds rate from 6.25 to 1.75 percent. It was reduced further in 2002 and 2003, reaching a record low of 1 percent in mid-2003 - where it stayed for a year. This set off what economist Steve Hanke called "the mother of all liquidity cycles and yet another massive demand bubble."

The actual causes of our financial troubles were unusual monetary policy moves and novel federal regulatory interventions. These poorly chosen policies distorted interest rates and asset prices, diverted loanable funds into the wrong investments, and twisted normally robust financial institutions into unsustainable positions.

Full Text of Briefing Paper no. 110

(PDF, 212 KB | HTML)

http://blog.mint.com/blog/finance-core/a-visual-guide-to-the-financial-crisis/

http://blog.mint.com/blog/wp-content/uploads/2008/11/visualguidecrisis2.jpg

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=ajvGYTNcoqr8
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...Employers cut 533,000 jobs last month, bringing losses so far this year to 1.91 million, the Labor Department said today in Washington. November’s drop exceeded all 73 forecasts in a Bloomberg News survey. The unemployment rate rose to 6.7 percent, the highest level since 1993.

...The average work week shortened to 33.5 hours, the lowest since records started in 1964, from 33.6 hours, today’s report showed. Average weekly hours worked by production workers dropped to 40.3 hours from 40.5 hours, while overtime decreased to 3.3 hours from 3.5 hours.

made the profit motive and efficiency the watchwords of corporations.As a result, a robot has just as much value as a worker.In fact, any engineer worth his salt would say that he would prefer a robot to a worker any day.

In this environment, we should not be surprised that high unemployment and under employment will continue in the most advanced nations.It will be followed by the same problems in emerging economies like India,Brazil,China,Korea etc.

The only solution is to change our thinking that profits are all that matter and maximization of profits is good.Although they may be good for the corporation in question, the larger social aims are not compatible with maximizing profits for one individual corporation.E.F.Schumacher said as much in his work "Small is Beautiful".He advocated that society restore the concept of the supremacy of an individual.

From time mark 2:15 to 2:42 is PI
http://www.youtube.com/watch?v=H8oiuQ1nK9A

Barclays shares in new collapse as bank crisis enters second phase
But Barclays shares have been falling all week, along with those of the other major banks, as investors come to terms with further bailouts by the US government and a raft of gloomy predictions for the UK economy.

Citigroup, Bank of America and Merrill Lynch revealed losses over three months of $25bn (£17bn) between them yesterday.Citigroup sought extra funds from the US treasury and is being forced to break itself up as the price of its rescue. Bank of America, which bought the largest mortgage lender in the US last year at the height of the sub-prime crisis, also announced large write-downs on its assets, mainly *sub-prime home loans. The US government has promised $800bn of extra funds after the Senate released the second tranche of a $750bn bailout yesterday.
http://www.guardian.co.uk/business/2009/jan/16/barclays-bank-shares-in-new-collapse