Posts Tagged ‘collapse’
(Via Felix Salmon)
I’ve written negatively about Senator Blanche Lincoln in the past for her vote in favor of the Iraq War, her frightening views on indefinite detention and torture, her support of warrentless surveillance, and a host of other sins, but I think she deserves major credit for introducing a bill earlier this week that would ban over the counter derivatives:
“Speculators will not be exempted and all trades will be reported to regulators and the public,” Mrs. Lincoln wrote. In addition, any agency that is used for the trading of swaps contracts, including those dealing with energy commodities, will be required to register with the C.F.T.C.
This is exactly the kind of transparency and oversight that could have prevented the crisis, or at least made it softer. I want to stress that the layers upon layers of new regulation that Timothy Geithner intends to add (and which I discussed in the post immediately before this one), will not do anything for public transparency.
Blanche, you’ve voted for some pretty bad things in the past, but this is a bill I can get behind.
The Times has the latest in a string of articles accusing China of “using global trade rules to its advantage” today. With their angry, disapproving tone and several vague references to trade imbalances, one gets the distinct impression that America (and the Times by extension) has a hard time swallowing its own medicine.
Just look at what China is being accused of:
China buys dollars and other foreign currencies — worth several hundred billion dollars a year — by selling more of its own currency, which then depresses its value. That intervention helped Chinese exports to surge 46 percent in February compared with a year earlier.
Beijing has worked to suppress a series of I.M.F. reports since 2007 documenting how the country has substantially undervalued its currency, the renminbi, said three people with detailed knowledge of China’s actions.
Horrific! Tell me, when was the last time China invaded a country for not selling its main resource in its own currency?
As for the Times’ description of the I.M.F – well, it must be read to be believed:
The International Monetary Fund acts as a kind of watchdog for global economic policy but has no power over countries like China that do not borrow money from it.
Astonishing. The IMF’s true role is that of an economic enforcer on behalf of the United States. It compels “poor” countries to take IMF loans, and when they can’t pay them back, forces the debtors to enact “structural” changes to their economy, changes usually geared towards a neo-liberal agenda. This has happened in Russia, Poland, Argentina, Chile, South Africa, Pakistan, Eastern Europe, and a raft of other countries. The IMF is not so much a “watchdog” as a “police dog”, on behalf of the United States and its “Washington Consensus” economic policies.
Then they accuse China’s “beggar-thy-neighbor” policies as being of the same sort that caused the Great Depression:
Two closely related scourges played a central role in the collapse of world trade in the 1930s: protectionism and beggar-thy-neighbor currency devaluations. World leaders set up two institutions after World War II, now known as the W.T.O. and the I.M.F., to reduce the risk of another Great Depression.
But they neglect to mention the role of US banks and the Smoot-Hawley Tariff, which the US congress enacted in 1930 and began the worldwide trend of “protectionism” during the Great Depression. I mean, this is high school level history here.
Now, there can be no doubt by this point that China is, indeed, keeping its currency devalued in order to boost its export sector. This is common knowledge. But for the Times to blame this whole situation on China belies a real bias on their part.
Remember, it would be impossible for China to keep its currency artificially devalued if the US had not run historic deficits in pursuit of tax cuts and murder in the Middle East. A very weak showing from our “newspaper of record”.
Being a Metro-Detroiter myself, this make me cry:
According to Tim Prophit, a real estate agent, the crisis has led to a unprecedented portfolio of homes, but they are failing to sell.
He said there were homes on the market for $100 (£61), but an offer of just $10 (£6) would be likely to be accepted.
Speaking on a BBC 2 documentary, Requiem for Detroit, to be screened on Saturday, Mr Prophit said: “The property is listed by the city of Detroit as being worth $35,000 (£22,000), but the bank knows that is impossible to ask.
“We’ve got strong financial institutions . . . Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.”
– Hank Paulson, Treasury Secretary, March 16, 2008
“We must [enact a program quickly] in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families’ financial well-being, the viability of businesses, both small and large, and the very health of our economy,”
– Hank Paulson, Treasury Secretary, September 23, 2008
Zero Hedge gives us yet more evidence that the Dow is overvalued: industry insiders are selling stock 82 times faster than they’re buying it.
In the most recent data set, $11.6 million in stock was purchased by insiders, while a whopping $957 million was sold. And somehow pundits are still spinning this mass orchestrated sell into the bid by those in the know as a bull market.
For significant holders of stock, now might be the time to unload.
I missed the last three failed bank Fridays, so here are all seventeen that failed in the past three weeks in a row. As always, from the FDIC:
|Pacific Coast National Bank||San Clemente||CA||57914||November 13, 2009||November 18, 2009|
|Orion Bank||Naples||FL||22427||November 13, 2009||November 17, 2009|
|Century Bank, F.S.B.||Sarasota||FL||32267||November 13, 2009||November 18, 2009|
|United Commercial Bank||San Francisco||CA||32469||November 6, 2009||November 9, 2009|
|Gateway Bank of St. Louis||St. Louis||MO||19450||November 6, 2009||November 9, 2009|
|Prosperan Bank||Oakdale||MN||35074||November 6, 2009||November 9, 2009|
|Home Federal Savings Bank||Detroit||MI||30329||November 6, 2009||November 9, 2009|
|United Security Bank||Sparta||GA||22286||November 6, 2009||November 9, 2009|
|North Houston Bank||Houston||TX||18776||October 30, 2009||November 3, 2009|
|Madisonville State Bank||Madisonville||TX||33782||October 30, 2009||November 3, 2009|
|Citizens National Bank||Teague||TX||25222||October 30, 2009||November 3, 2009|
|Park National Bank||Chicago||IL||11677||October 30, 2009||November 3, 2009|
|Pacific National Bank||San Francisco||CA||30006||October 30, 2009||November 3, 2009|
|California National Bank||Los Angeles||CA||34659||October 30, 2009||November 3, 2009|
|San Diego National Bank||San Diego||CA||23594||October 30, 2009||November 3, 2009|
|Community Bank of Lemont||Lemont||IL||35291||October 30, 2009||November 3, 2009|
|Bank USA, N.A.||Phoenix||AZ||32218||October 30, 2009|
The Huffington Post gives us a nice preview of an insider report in the upcoming issue of Vanity Fair, detailing the secret meetings between Goldman Sachs and the US Treasury at the height of last year’s stock market crash.
Here is a nice little Q&A with the author, Andy Sorkin, to get you warmed up. Look out for this article.