By JOELLEN PERRY
WSJ
JUNE 3, 2009
In a speech on Tuesday in Berlin, Chancellor Angela Merkel expressed ‘great skepticism’ over the clout of central banks and suggested their aggressive moves in Europe, the U.S. and the U.K. might backfire. She is shown here at a rally later in Saarbrücken, Germany, for European Parliamentary elections.
German Chancellor Angela Merkel, in a rare public rebuke of central banks, suggested the European Central Bank and its counterparts in the U.S. and Britain have gone too far in fighting the financial crisis and may be laying the groundwork for another financial blowup. Read the rest of this entry »
Archive for the ‘Financial crisis’ Category
The financial system established in England after 1688, based on usurious lending to the state by private bankers, is reaching its final blowout in the form of a series of devastating bubbles and a massive bailout of the financiers with public money. But the issuance of money doesn’t have to be in the hands of a private consortium: another credit system is possible.
Germany Blasts “Powers of the Fed”
Posted by smeddum on June 3, 2009
Posted in Financial crisis | Tagged: ECB, Financial crisis, Multipolar world, stop the bailout | Leave a Comment »
Max Keiser comparing the United States to the Eurozone
Posted by smeddum on June 3, 2009
Posted in Financial crisis | Leave a Comment »
US calls for China to have greater say in world economic affairs
Posted by seumasach on June 2, 2009
11st June, 2009
On the day US car giant General Motors filed for bankruptcy protection, Mr Geithner, said that mutual co-operation between China and the US was now fundamental to bringing the world out of the global financial crisis.
Posted in Financial crisis, Multipolar world | Tagged: China and US bond markets | Leave a Comment »
It’s Finished
Posted by smeddum on June 2, 2009
It’s Finished
28th May
John Lanchester
London Review of Books
It’s a moment of confusion and loathing that most of us have experienced. You’re in a shop. It’s time to pay. You reach for your purse or wallet and take out your last note. Something about it doesn’t feel quite right. It’s the wrong shape or the wrong colour and the design is odd too and the note just doesn’t seem right and . . . By now you’ve realised: oh shit! It’s the dreaded Scottish banknote! Tentatively, shyly – or briskly, brazenly, according to character – you proffer the note. One of three things then happens. If you’re lucky, the tradesperson takes the note without demur. Unusual, but it does sometimes happen. If you’re less lucky, he or she takes the note with all the good grace of someone accepting delivery of a four-week-dead haddock. If you’re less lucky still, he or she will flatly refuse your money. And here’s the really annoying part: he or she would be well within his or her rights, because Scottish banknotes are not legal tender. ‘Legal tender’ is defined as any financial instrument which cannot be refused in settlement of a debt. Bank of England notes are legal tender in England and Wales, and Bank of England coins are legal tender throughout the UK, but no paper currency is. The bizarre fact of the matter is that Scottish banknotes are promissory notes, with the same legal status as cheques and debit cards. Read the rest of this entry »
Posted in Financial crisis | 1 Comment »
How Stevie The Rat Bankrupted GM
Posted by seumasach on June 2, 2009
Greg Palast
1st June, 2009
Screw the autoworkers.
They may be crying about General Motors’ bankruptcy today. But dumping 40,000 of the last 60,000 union jobs into a mass grave won’t spoil Jamie Dimon’s day.
Dimon is the CEO of JP Morgan Chase bank. While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders – led by Morgan and Citibank – expect to get back 100% of their loans to GM, a stunning $6 billion.
The way these banks are getting their $6 billion bonanza is stone cold illegal.
I smell a rat.
Stevie the Rat, to be precise. Steven Rattner, Barack Obama’s ‘Car Czar’ – the man who essentially ordered GM into bankruptcy this morning.
When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what’s left. That’s the law. What workers don’t lose are their pensions (including old-age health funds) already taken from their wages and held in their name.
But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi.
Here’s the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replace by GM stock. The percentage may be 17% of GM’s stock – or 25%. Whatever, 17% or 25% is worth, well … just try paying for your dialysis with 50 shares of bankrupt auto stock.
Yet Citibank and Morgan, says Rattner, should get their whole enchilada – $6 billion right now and in cash – from a company that can’t pay for auto parts or worker eye exams.
Preventive Detention for Pensions
So what’s wrong with seizing workers’ pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it’s illegal.
In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can’t seize workers’ pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that’s because they are the same thing: workers give up wages in return for retirement benefits.
The law is darn explicit that grabbing pension money is a no-no. Company executives must hold these retirement funds as “fiduciaries.” Here’s the law, Professor Obama, as described on the government’s own web site under the heading, “Health Plans and Benefits.”
“The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits.”
Every business in America that runs short of cash would love to dip into retirement kitties, but it’s not their money any more than a banker can seize your account when the bank’s a little short. A plan’s assets are for the plan’s members only, not for Mr. Dimon nor Mr. Rubin.
Yet, in effect, the Obama Administration is demanding that money for an elderly auto worker’s spleen should be siphoned off to feed the TARP babies. Workers go without lung transplants so Dimon and Rubin can pimp out their ride. This is another “Guantanamo” moment for the Obama Administration – channeling Nixon to endorse the preventive detention of retiree health insurance.
Filching GM’s pension assets doesn’t become legal because the cash due the fund is replaced with GM stock. Congress saw through that switch-a-roo by requiring that companies, as fiduciaries, must
“…act prudently and must diversify the plan’s investments in order to minimize the risk of large losses.”
By “diversify” for safety, the law does not mean put 100% of worker funds into a single busted company’s stock.
This is dangerous business: The Rattner plan opens the floodgate to every politically-connected or down-on-their-luck company seeking to drain health care retirement funds.
House of Rubin
Pensions are wiped away and two connected banks don’t even get a haircut? How come Citi and Morgan aren’t asked, like workers and other creditors, to take stock in GM?
As Butch said to Sundance, who ARE these guys? You remember Morgan and Citi. These are the corporate Welfare Queens who’ve already sucked up over a third of a trillion dollars in aid from the US Treasury and Federal Reserve. Not coincidentally, Citi, the big winner, has paid over $100 million to Robert Rubin, the former US Treasury Secretary. Rubin was Obama’s point-man in winning banks’ endorsement and campaign donations (by far, his largest source of his corporate funding).
With GM’s last dying dimes about to fall into one pocket, and the Obama Treasury in his other pocket, Morgan’s Jamie Dimon is correct in saying that the last twelve months will prove to be the bank’s “finest year ever.”
Which leaves us to ask the question: is the forced bankruptcy of GM, the elimination of tens of thousands of jobs, just a collection action for favored financiers?
And it’s been a good year for Señor Rattner. While the Obama Administration made a big deal out of Rattner’s youth spent working for the Steelworkers Union, they tried to sweep under the chassis that Rattner was one of the privileged, select group of investors in Cerberus Capital, the owners of Chrysler. “Owning” is a loose term. Cerberus “owned” Chrysler the way a cannibal “hosts” you for dinner. Cerberus paid nothing for Chrysler – indeed, they were paid billions by Germany’s Daimler Corporation to haul it away. Cerberus kept the cash, then dumped Chrysler’s bankrupt corpse on the US taxpayer.
(“Cerberus,” by the way, named itself after the Roman’s mythical three-headed dog guarding the gates Hell. Subtle these guys are not.)
While Stevie the Rat sold his interest in the Dog from Hell when he became Car Czar, he never relinquished his post at the shop of vultures called Quadrangle Hedge Fund. Rattner’s personal net worth stands at roughly half a billion dollars. This is Obama’s working class hero.
If you ran a business and played fast and loose with your workers’ funds, you could land in prison. Stevie the Rat’s plan is nothing less than Grand Theft Auto Pension.
It doesn’t make it any less of a crime if the President drives the getaway car.
******
Economist and journalist Greg Palast, a former trade union contract negotiator, is author of the New York Times bestsellers The Best Democracy Money Can Buy and Armed Madhouse. He is a GM bondholder and card-carrying member of United Automobile Workers Local 1981.
Posted in Financial crisis | Tagged: GM bankruptcy, looting pension funds | 1 Comment »
China Is Now in Firm Control of U.S. Debt Markets
Posted by seumasach on May 29, 2009
26th May, 2009
It is hilarious listening to the propagandists try to “spin” the events in bond and currency markets to make it sound like the U.S. government is still operating from a position of strength.
While there are many Western, corporate-media outlets spouting such drivel, I’ll use the Financial Times as my example.“China stuck in dollar trap”, crows FT on May 24th. Then, later “…[Beijing] has little choice but to keep pouring the bulk of its growing reserves into the U.S. Treasury”.
Posted in Financial crisis | Tagged: China and US bond markets, US bond markets | Leave a Comment »
Bond markets defy Fed as Treasury yields spike
Posted by smeddum on May 29, 2009
The US Federal Reserve may soon be forced to launch fresh blitz of quantitative easing whatever the consequences for the US dollar, or risk seeing economic recovery snuffed out by the latest surge in long-term borrowing costs.
By Ambrose Evans-Pritchard
29 May 2009
Telegraph
Market expects Fed will have to double purchases of Treasuries.
Yields on 10-year Treasury bonds have risen relentlessly since March when the Fed first announced its plan to buy $300bn (£188bn) of US government debt directly, a move that briefly forced rates down to nearly 2.5pc, a level thought to be the Fed’s implicit target.
Yields have jumped to 3.69pc – after spiking as high as 3.74pc on Wednesday – pushing up the standard 30-year mortgage loan to 5.08pc and lifting the borrowing cost for corporations. Read the rest of this entry »
Posted in Financial crisis | Tagged: bursting bond bubble | 3 Comments »
Germans Angry with US Role in Opel Negotiations
Posted by smeddum on May 29, 2009
05/28/2009
Despite an entire night of non-stop negotiations in Angela Merkel’s Chancellery, there is still no plan in place to save Opel from following GM into bankruptcy. The problem, say Berlin politicians, is a lack of transparency — and a surprise 300 million euro demand — from the Americans. Read the rest of this entry »
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All Hail The British Revolution!- All Power to the Oligarchy!
Posted by seumasach on May 28, 2009
Cailean Bochanan
28th May, 2009
At first sight the whole MPs’ expenses scandal looks like a carefully prepared and choreographed stratagem to divert attention from the mega-corruption of the oligarchy’s bailout to the micro-corruption of our representatives’ little pilferings. The oligarchs have taken everything we’ve got upfront and in advance; surely it’s ungenerous for them to deny the House some small reward for their supine passivity in the face of this greatest of all heists. But its not soft-heartedness that got our robber baron’s where they are today: they know more than any that wealth without power is ultimately vain, and that absolute wealth demands absolute power. And so it is that they have decided add to their great financial coup a political coup which will, they hope, free them from political hassles in perpetuity. The new man in their life, the one chosen to undertake this task, (the undertaker, if you like, for what remains of British democracy) is David Cameron. For revolution is in the air and who better to entrust with “the transfer of power from the powerful to the powerless” than one freshly sprung from their own ranks.
At the heart of Cameron’s reform programme is a theme which I have dealt already in these columns: the oligarchy don’t like strong executive power fearing that, no matter what precautions they take in grooming the candidates for no. 10, at a certain point it may be the focal point for a counter attack based on popular or establishment disaffection. Better then to completely emasculate the executive to preclude any power rivalling theirs. So it’s not enough to have humiliated Brown and reduced him the the pathetically pliant creature we see today: the prime ministership itself must be dimished to the point of impotence. This the first plank of Cameron’s programme.
Here, the beauty of Britain’s constitution , or lack of one, pays dividends: the executive power is inextricably bound up with the legislative. The head of state is the monarch and only through a process of evolution did the prime minister, from the time of Disraeli onward, accrue power. It did this indirectly through the development of the party system and the whips. Therefore, by weakening these the Prime Minister’s status and power is undermined. This is precisely Cameron’s elegant solution. In general, all these plans to reform the legislative look quite sensible except that they all require one thing to complete them: a president elected by a popular vote. But that would be Jacobinism; it wouldn’t do as we Brits say. Similarly Cameron knows not to put forward proportional representation thus allowing a chamber which represents a range of views and not just the endless mudge and fudge of the mire that is the middle ground of British politics. That wouldn’t do either.
Having knobbled the political process at its core and put the politicians in their place(for it is to these that he refers when he talks of “the powerful”) let us turn to the powerless. There is a strange admission in Cameron’s terminology since how can people be powerless in the world’s foremost democracy. Did we fight and win two world wars to be powerless. The answer is “yes” as Cameron implicitly concedes in what I suppose you could call “ a breath of fresh air”. Anyway, what remedy for the powerless? Power is to be decentralised; we are to be given local power. Yes, it’s the old power to the people trick. We can concede the importance of local government without being so stupid as to think it a substitute for central power. Without central power, oligarchy, corporate and financier power rule. They can knobble local councils easily and just to make this solution even more elegant, they have already done so. I’ll leave readers to speculate on or explore the modalities of this vassalage for themselves. It is all around us: just look at how the mobile phone companies have enforced their will on local bodies.
The third plank of reform is taking power back from Brussels. Here in Britain both left and right oppose Europe because it’s “bourgeois”. You know bourgeois law, all that stuff- regulation, what have you. Too many hassles, man! Oligarchs particularly dislike the rule of law since it contravenes their right to loot whatever they can get their hands on. That’s why they have effectively privatised the courts system in this country. But if Europe won’t move with the times, won’t “modernise” then we must shun them. And so say all of us! And anyway, what’s wrong with the Pound? ( I’ll come to that point further down)
So here, in a nutshell, we have the principles which will guide us through the rapids of revolution under the infallible guidance of the Dear Leader to Be, once everyone has been told to elect him. Does anyone see any problems with it? It has every chance of success, will be supported by all parties apart from a bit of quibbling about PR and should guarantee bankster power in our time. Never in the field of class conflict have so few owed so much to so many (and so many just allowed them to keep it).
Still, there is a problem. This is so very a much a British affair. A rerun of that pageant of history in which barons, big whigs, financiers and oligarchs made their stand against sovereign and constitutional power in the name of that timeless British ideal of Private Interest. From the treasonous barons at Runnymede, to the genocidal Puritan lunatics; from the Dutch invasion and coup d’etat of 1688 to the unabashed delinquency of the Gordon riots, always the same theme dominates: oligarchy. Why should it not do so now?
Were our wars not to have been so disastrous; were our productive capacities not so diminished; was our credibility in the world not to have sunk so low; was our currency not about to become the butt of short sellers and jesters, this apotheosis of Britishness might be accepted as an unpleasant but inevitable culmination of our development, the fulfillment of our spirit as the Prussian state was of Hegel’s. But in a global world, our position looks precarious. A global paradigm shift is in process and we’re not part of it. We’re locking ourselves out and, quite frankly, given the state of the place, the utter shambles, we might be better off as North Korea. The reality of today’s world is expressed in geopolitics: the power shift from West to East and the alliance of creditor nations from Russia and China to the Arab world are the predominant emerging facts on the ground. If we want the capital inflows, on which we are totally dependent, to continue we must start to recognise these new factors. The power of the City of London, the Empire, in other words, is over and their little plans to stitch up what’s left of the realm, though quaint, will hold no sway in this greater scheme of things.
Posted in Constitutional change in Britain, Financial crisis | Tagged: reform of British constitution | 3 Comments »
China warns Federal Reserve over ‘printing money’
Posted by smeddum on May 28, 2009
China warns Federal Reserve over ‘printing money’
Informationclearinghouse
China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed’s direct purchase of US Treasury bonds.
By Ambrose Evans-Pritchard
May 27 2009 “The Telegraph,
” — Richard Fisher, president of the Dallas Federal Reserve Bank, said: “Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature.”
“I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States,” he told the Wall Street Journal. Read the rest of this entry »
Posted in Financial crisis | Leave a Comment »
Short-Sellers Set For Flame Forum
Posted by smeddum on May 28, 2009
Wall Street
Liz Moyer, 05.27.09,
One year ago, David Einhorn of Greenlight Capital took to the stage at an annual investor conference in New York and skewered Lehman Brothers, claiming its feckless risk taking had put the financial system in peril. Read the rest of this entry »
Posted in Financial crisis | Tagged: failing banks | 2 Comments »