American Investment Banking on the Ropes - Lehman / Citigroup etc. - the 8.5 trillion Bailout

Switch on Bloomberg now - Wall Street, Hank Paulson and Bernanke getting slapped as we speak by Pelosi, Reid and Dodd who made up part of a Senate Banking Comittee to come up with a solution to the liquidity issue. "No blank cheque" says Reid, plenty of oversight, transparency and a concerted effort that the American taxpayer will not lose this money, ultimately.

Pelosi makes it sound like it could be some kind of watershed in terms of public democracy - every detail will be on the internet for scrutiny and they are hoping it will be passed tomorrow.

Sounds serious for Paulson, the arrogant bastard - his three and a half page proposal was rubbished indignantly by the comittee. He's gone with Fortis.

Mercantilist wrote:

Just look at their website http://www.fortis.com. You always know a crap company, when they put pictures of smiling people on their front page. To me it shows managment with poor judgement. A company where the marketing department is more important than the operations.

AIB used to have pictures of families running down a beach on their online banking pages. That was under their previous CEO. It was really annoying. I nearly closed my accounts.

Fortis in Trouble

Quote :

A state-sponsored rescue of Fortis was under way Sunday night as ministers and central bankers in Belgium and the Netherlands scrambled to shore up confidence in the embattled banking and insurance group.

Following a weekend of intense negotiations, policymakers were Sunday night leaning towards a partial nationalisation of Fortis by the Belgian, Dutch and Luxembourg governments. FT

Did I just hear Benelux was putting up 16 billion yoyos for this bank ?

Suddenly I'm starting to wonder why we're in 8 billion deficit - can we account for where all our spending went over the past year or two?

The Bill has been voted down in Congress - a big chunk of the Democrats broke ranks and voted with the Republicans.

The Democrats will throw the election away yet - shame on them for supporting this wretched Bill no-one has had a chance to look at.

Has anyone come up with a coherent plan B yet or is that too much to expect?

Interesting to see how this plays out tomorrow with the ISEQ. To me it is good news but not yet reason to jump in.

Squire wrote:

Has anyone come up with a coherent plan B yet or is that too much to expect?

Interesting to see how this plays out tomorrow with the ISEQ. To me it is good news but not yet reason to jump in.

Paulson and Bernanke should resign.

The Bill has now been officially lost. They kept the vote open for fifteen minutes so that they could torture people until they cracked in back rooms. No one backed down.

Now they can start to think about what to do without being bullied by a pack of crooks.

Quote :

Sept. 29 (Bloomberg) -- U.S. stocks plunged after congressmen voted against a $700 billion plan to rescue the financial system, sending the Standard & Poor's 500 Index down the most since 1987.

The S&P 500 sank as much as 87.02 points, or 7.2 percent, to 1,125.99 at 1:49 p.m. in New York. The Dow Jones Industrial Average slid 670, or 6 percent, to 10,472.89. The Nasdaq Composite Index declined 144, or 6.6 percent, to 2,038.61.

The S&P 500 extended last week's 3.4 percent retreat after the deal hammered out by Treasury Secretary Henry Paulson and congressional leaders over the weekend failed to convince investors it will shore up banks saddled with growing mortgage losses. The crisis that began with bad home loans to subprime borrowers is threatening to push the economy into a recession as consumers lose confidence and banks cut back on lending.

Bloomberg

The Dow went south at the news and yes it'll be interesting to see if the ISEQ goes even lower tomorrow. Was there a neat enough Party split on this and some of the Democrats went against it or are both parties divided internally on it?

If you can hear Nancy Pelosi, Harry Dodd and Mr. Reid after the agreement last night, they expressed sheer and open disbelief and disdain at the fact that Paulson produced a three and a half page request for the 700 billion with no strings attached - classic. Cheeky bastard.

Edit

About 130 - 60 for from the Democrats and most of the Republicans voted against.

Bush and the Republican leadership were in favour of the bailout and opposed by the Republican congressmen.

The problem for Congress is they are facing election in a few weeks and the Republicans were banjaxed. Voting against was their only chance.

What are you on about. Bush and the republican leadership were for the bailout.

The Dow is down 548 points to 10594 according to Bloomberg. Highest volumes in two years and down from over 14000 points of a year ago.

My reading of this is that Bush was for the cheeky chappy, back of an envelope original and just about everyone else was struck dumb, or should that be dumber?

youngdan wrote:

What are you on about. Bush and the republican leadership were for the bailout.

Agreed - what they were against was their own congressmen and their 'No' vote. Will they all be expelled for insubordination ?

Bush looks like an irrelevancy in all this.

Quote :

In her speech before the vote, Pelosi, a California Democrat, said the Bush administration's policies were ``built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision and no discipline in the system.''

House appropriations committee chairman David Obey scoffed at assertions that Pelosi's speech turned Republicans against the package, sinking the bill. ``Do they really think it's credible to say that they changed their mind on how they were going to vote because of a speech?'' he said. ``If they're that tenderhearted, they don't belong in this place.''

Bloomberg

There's plenty of scare propaganda out there now - some are saying that a black hole will now start in lower Manhattan and won't stop til every small town in America is swallowed up. They're up to their necks in the lack of credit it seems. Maybe youngdan can comment on that from his own viewpoint if his mood is agreeable.

An English hippy's take on it


http://ie.youtube.com/watch?v=I3QeHhQlX4E&feature=user

cactus flower wrote:

Bush looks like an irrelevancy in all this.

Of course he is, the election is in less than two months and from then on, it's either McCain or Obama's problem. I'm amazed that neither of them have really modified their election manifestoes in regard to this crisis. It's my view that they won't be able to implement a meaningful percentage of their promises, at least in their first term. Their priority will be to clean up after the almighty failure of the Bush presidency, help end this crisis and balance the books which have been soaked in red ink over the past 7 years. That's why it doesn't matter hugely who gets elected, they'll be so busy sorting out the mess caused by the Bush Administration that they won't have much time to do anything of their own making.

Actually, Obama made one of his trademark "change" speeches in Colarado and was broadcast on CNN during the lull between the vote tally and Pelosi's retort to the Republican commentary right after the vote. Bad cess to Obama. I believe he wouldn't have made any speech of meaningful intent on the economy but was forced by the turn of events to alter his campaign strategy and address the issues. He's finally copped onto the fact that the average US citizen is scared to the core. This is no longer about talking of change and the US's place in the world. They have to talk about if the US will any longer exist in its present form. They may go from super-power to pauper in very short order.

I've looked for a McCain response on the web and can't find one. This is very worrying. Imo, the fella is just too old to handle a crisis and the US will be in crisis mode for some time to come. I believe McCain takes the week-ends off from electioneering because he can't handle the pace.

Auditor #9 wrote:

An English hippy's take on it

It is really quite simple we have to make goods people want at a competitive price. To me that means the opposite of a strong currency. Western currencies have to fall unless we try YoungDan's alchemy and tilt the playing field another way. If we are not careful we may find that Bedouin tribesmen and anyone with gold dental work end up the richest people on earth.

Both Obama and McCain are dire on economics, not a clue and neither wish to speak frankly and deliver a straight message. If one of them actually did (or could), and had some sane rationale they may actually win. Being the messenger of really bad news isn't always a political disaster. Politically whoever wins is well skewered. I doubt that they will be re elected unless they are truely exceptional.

Bush should have been indited and the Democrats could have attempted but didn't.

Squire wrote:

Auditor #9 wrote:

An English hippy's take on it

It is really quite simple we have to make goods people want at a competitive price. To me that means the opposite of a strong currency. Western currencies have to fall unless we try YoungDan's alchemy and tilt the playing field another way. If we are not careful we may find that Bedouin tribesmen and anyone with gold dental work end up the richest people on earth.

Your man thought America - and maybe the West - needed to take a step back from these heights we're at of creating "wealth" out of gambling on money growth and high interest and gambling on gambling - it's gone mad. America is probably a giant planetary casino in your man's eyes. He's probably closer to the truth than we know. There's only wizardry that can happen with money products - he's intimating a return to a focus on real products ...

The currency thing confuses me because American currency is bound up with oil so closely. It's the volatility between currencies that's probably more important thought isn't it? Or the stability ... better for business if there is a power of prediction that's faithful.

The Hippie made a lot of sense, but suggested sound money. Yes money has to be sound but IMO to get production costs in the West down to competitive levels our currencies need to slide down. There is no other realistic way that we can compete. There is a limit to high end job creation.

Our currencies need to slide against all the other ones? Isn't the Yuan pegged to the Dollar so the Chinese will always be slightly more competitive than the US? - or maybe this is not the case anymore now.

Isn't it that our currencies need to be sliding against a fixed point like a gold standard - only a carbon standard or an energy standard? The more carbon you put out over a certain amount then the more you decrease your buying power because you have to fork out.

It's hard but I'd say someone has worked it out.

Auditor #9 wrote:

Squire wrote:

Auditor #9 wrote:

An English hippy's take on it

It is really quite simple we have to make goods people want at a competitive price. To me that means the opposite of a strong currency. Western currencies have to fall unless we try YoungDan's alchemy and tilt the playing field another way. If we are not careful we may find that Bedouin tribesmen and anyone with gold dental work end up the richest people on earth.

Your man thought America - and maybe the West - needed to take a step back from these heights we're at of creating "wealth" out of gambling on money growth and high interest and gambling on gambling - it's gone mad. America is probably a giant planetary casino in your man's eyes. He's probably closer to the truth than we know. There's only wizardry that can happen with money products - he's intimating a return to a focus on real products

To be fair, we're not totally focused on 'services' as opposed to industry. The EU on average is 2.1% Agri, 27.3% Industry, and 70.5% Services, whereas the US is 0.9%, 20.4%, and 78.6% respectively. World averages are 4%, 32%, and 64% respectively.

ibis wrote:

Auditor #9 wrote:

Squire wrote:

Auditor #9 wrote:

An English hippy's take on it

It is really quite simple we have to make goods people want at a competitive price. To me that means the opposite of a strong currency. Western currencies have to fall unless we try YoungDan's alchemy and tilt the playing field another way. If we are not careful we may find that Bedouin tribesmen and anyone with gold dental work end up the richest people on earth.

Your man thought America - and maybe the West - needed to take a step back from these heights we're at of creating "wealth" out of gambling on money growth and high interest and gambling on gambling - it's gone mad. America is probably a giant planetary casino in your man's eyes. He's probably closer to the truth than we know. There's only wizardry that can happen with money products - he's intimating a return to a focus on real products

To be fair, we're not totally focused on 'services' as opposed to industry. The EU on average is 2.1% Agri, 27.3% Industry, and 70.5% Services, whereas the US is 0.9%, 20.4%, and 78.6% respectively. World averages are 4%, 32%, and 64% respectively.

And 80/20 in general wouldn't sound too wrong either would it?

Squire, you're getting your wish on the slide of the currencies.

yen to 1 Euro


yuan to 1 Euro


Singapore dollar to 1 Euro

Consider the effect that this will have on inflation.

But equally


Wons to Euro

So it is up and down.

I still think we need a larger industrial base and smaller service sector. Perhaps I just like seeing things made, but there are all sorts of skills and services that go with a strong industrial sector.

In the medium term I would be concern about increases in interest rates and their impact on our economy.

As we can sell our skills online internationally services are fine. A lot of us can write and all of us can talk. We're the best placed geographically for wind and tidal renewables anywhere. We're elected.

Where's Ard-Taoiseach when we need him to talk us up ?

I saw this this morning and was quite surprised. Then I thought about it a bit more and checked on the EBK (Eidgenossisches Banken Kommission), the bank regulator, site and on other sources of data and realise that Switzerland is not in bad shape at all. There have been reports that Merkel has said that not a single Euro of German taxpayers money will go towards bailing out US and UK banks, adding to what she said here

http://www.dw-world.de/dw/article/0,,3662664,00.html?maca=en-kalenderblatt_topthema_englisch-347-rdf

Here is what the economic forecast for Switzerland looks like

Switzerland to slip into recession in coming months: institute
Switzerland will slip into a short recession in the coming months due to harsh international economic conditions but the worst will be over by 2009, experts at the Swiss economic institute KOF said Monday.
"In our current forecast, the quarterly real GDP growth rate will show slightly negative values for two consecutive quarters (the fourth quarter of 2008 and first of 2009), which would fulfil an often used criterion for a recession," said the institute in a statement.
The overall growth rate for the year would reach 1.9 percent, while in 2009, the growth rate is expected to climb only by 0.3 percent.
"The nadir will be reached in the coming winter. However, that will be followed by a rapid recovery, producing a real GDP growth of 1.5 per cent in 2010," said the institute.
Switzerland has in the past three years shown exceptional economic growth, thanks partly to its financial sector.
But it is also particularly exposed to a slowdown in the sector.
Its two biggest banks, UBS and Credit Suisse, were forced to write down substantial amounts of assets on the subprime crisis.
Bank Pictet's chief economist Jean-Pierre Beguelin agreed with KOF's forecast, saying that it was "possible" that a recession was on the way.
"We are expecting a rather difficult period in Switzerland, with a possibility of a recession at the beginning of next year," he said.
However, he also added that a slowdown was "not completely bad in the long term" as the economy had been growing at an overheated pace in 2006 and 2007.
Julius Baer chief economist Janwillem Ackett meanwhile, was more bullish on the situation.
He described KOF's forecasts as "very pessimistic, even if such a development was possible."
"We don't see a (recession) in Switzerland," he said, adding that there was a "good chance" that GDP growth for 2009 could yet hit 1.0 percent.
He also noted that the Swiss central bank had not hinted that it would lower its interest rates, as it did during the last recession to stimulate growth.
Earlier this month, the Swiss National Bank left its interest rate unchanged for the fourth consecutive time at 2.25-3.25 percent.
It also kept its GDP growth forecast at 1.5 to 2.0 percent for 2008.

This could be worse. If this is as bad as it will get, I think I can live with it. We shall see.