is the credit crunch just beginning?

[muppet]

while we are talking about Scare Mongering - this was been reeled out last week - which I found amusing.

According to two sources of mine from the Dept. of Defense, this $700 bill proposal from the Sec. of the Treasury Henry Paulson is an attempt to tie up an enormous portion of the US future budgets.

Supposedly, Paulson doesn't plan on bailing out the many failing banks because the loans are going to be falling through the floor. The loss would be too great to the US government.

Pres. George Bush, Fed Chairman Bernanke, Sec. Paulson and Wall Street are going to tie up most of this money so that when (potentionally) Obama takes the White House, he will not be able to enact any of the Social Policies and or tie his hands to change the direction of the wars in the middle-east without financial support from Wall Street.

The media throughout the world needs to take this very seriously... the neo-conservitives of this country are playing dirty tricks at the expense of markets throughout the world. Action on this blockage must come immediately!

Bullshit

That might stand up if the Democrats were all voting against it. But they are not.

[Maroon Heaven]

Did the rounds last week lads - not from me.

I found it hilarious, some of the USa election websites went to town on the conspiracy

[passedit]

http://www.bbc.co.uk/blogs/thereporters/robertpeston/

The day the bill arrived



Since the onset of the credit crunch in August of last year, there have been bad days, worse days and today.

What a horrible coincidence of accidents and emergency resuscitations we've seen.

Here they are, in no particular order.

1) The collapse and nationalisation of Bradford & Bingley, set to cost our cash-strapped banks at least £9bn over the coming years (see my notes of this morning).
2) The injection into Fortis, a continental bank rather bigger on one measure than the Belgian economy, of £9bn of Benelux taxpayers' cash.
3) The takeover, with US taxpayer support, of Wachovia - the huge battered US retail bank - by Citigroup, a bank which has had capital-deficiency problems of its own.
4) A massive penny dropping on Wall Street, the recognition that Congress will extract back from financial firms in a few years the $700bn to be injected into banks to keep them alive.

It's the day when no-one could be under any illusion about the costs of rebuilding our structurally impaired financial system.

That cost will fall directly on taxpayers and on banks.

Indirectly it will hurt businesses - some of which are already being starved of vital capital by banks' inability to lend.

And for millions of people in the US and Europe, there's the double blow of an erosion in the value of their wealth (through declining property prices and the falling value of long term savings in pension funds) and of an increased risk of redundancy.

Or to put it another way, for most of us, there's little in the way of shelter from the storm.

Don't forget that last week we had a massive injection of one-week loans into the banking system by the Federal Reserve and Europe's troika of leading central banks. And in the UK, the Bank of England auctioned £40bn of three-month loans.

That was supposed to calm nerves and reduce the price of money for banks.

But the cost for banks of borrowing from each for three months in sterling, euros or dollars has risen again.

Banks are as worried as they've ever been about the credit-worthiness of their peers. Trust and confidence are almost extinct qualities.

Share prices too are falling hard - which in part is a belated recognition that the crisis in money markets will have an impact on the prospects for most companies.

If economic growth was going to be slow before the events of the past three weeks, it's going to be a lot worse now.

And if you wish to know which economies are perceived by global investors to be most flawed and vulnerable, you could do worse than look at the price of insuring sovereign debt in the credit default swap market.

Those CDS prices tell you that Austria, Belgium, Denmark, Finland, France, Germany, Sweden, and the Netherlands are all perceived to be more credit-worthy - to be in a better position to service their national debt - than either the US or the UK.

PS. Silly me. In my list of financial firms in receipt of massive first aid, I forgot to mention Germany's Hypo Real Estate, the commercial property lender, which has received a whopping £28bn in credit guarantees from the German government in collaboration with a consortium of banks.

Oh, and Iceland's third largest bank, Glitnir, has been nationalised.

[orangeman]

Just read the above - no end in sight ? FTSE is down 5.3%  today alone.

[Denn Forever]

Heard that currently the bill for the Iraq excusion is currently 10 billion/month.  So the american government have already paid out 700 billion without stabilising the western capatilist system.  It must be a bitch to have to pay the same again!!

That said, thankfully the dig out in america has checks in place (so they say) so all of the 700 billion may not have to be paid.

Maybe Bertie could get a job, keeping all the dig outs in order?  Sarah Palin could be his PA.  She wouldn't let herself be brow beaten or succomb to tears for Bertie!

[passedit]

http://www.youtube.com/watch?v=jbgwR1pA1k0

[passedit]

Might not get through?

http://news.bbc.co.uk/1/hi/uk/7459669.stm

for 196 against 221.

voting closed but rules being bended as we speak!

can't go through now

[magickingdom]

Hows that bounce going?

Admittedly this is from the guy who bought Northern Rock...

i think you should buy now and sell monday, deadly serious cause this bail out is going to happen over the w/e and we'll get a nice bounce monday morning before whatever reality sets in on tuesday! i worked for 7 years in investment banking in the late 90's (as an accountant) and even then no one knew what was going on with some of the banks. this is an unmitigated disaster for our economies...

ouch! fcek u heganboy... thankfully didnt buy any

[passedit]

Arse falling out of Dow now.

[Declan]

Hard to believe but stories of queues at ATMs hitting the web already

[magickingdom]

Hows that bounce going?

Admittedly this is from the guy who bought Northern Rock...

i think you should buy now and sell monday, deadly serious cause this bail out is going to happen over the w/e and we'll get a nice bounce monday morning before whatever reality sets in on tuesday! i worked for 7 years in investment banking in the late 90's (as an accountant) and even then no one knew what was going on with some of the banks. this is an unmitigated disaster for our economies...

ouch! fcek u heganboy... thankfully didnt buy any

bounce is back on for thursday hagenboy... how ironic that a jewish holiday will delay the bailout

[Seamus]

There is none more dangerous than when those responsible for the failure is believed to be its savior.

Derivatives and greed are the main reason for the financial crises not the sub prime mortgages.  99% of people have no idea how mortgages are created. They are of the understanding that banks give out mortgages from funds derived from costumer deposits. No such thing and the same goes for credit cards. For the banksters it's the greatest game in town. Take a walk down Manhattan, you will find a bank or two or three in nearly every block and across the street is probably a Drug store, two of the most corrupt businesses in town.

Getting back to how mortgages are created. At closing the bank produces a check which is given to the seller on the strength of the buyers signature. In other words the money is printed from fresh air or in this case electronically transferred. The buyers signature is the collateral and new money enters society. From that one signature the banks receives nine times the mortgage amount all from fresh air. It gets better. They then group mortgages together which they leverage up to one hundred times and sell as securities on the open marker. Fractional banking at its very best. One percentage move in the wrong direction and they incur massive losses. The losses due to derivatives in the US stands at over one thousand trillion dollars, more than all the assets of the world combined. Other banks throughout the world also got in on the act hence the worldwide financial collapse.

The government and financial institutions saw this coming with years, the more they manipulated the economy and stock market and the more years they dragged the inevitable out the worse the final outcome. They have sucked as much as they could out of the system and now they want to keep their system going by blaming the people. The treasonous Bail Out did not have the interest of the American people at heart. Most of the $851B went to Europe and Asia along with some US financial institutions and pay back to the corrupt politicians.  Again money printed from fresh air as America is bankrupted since 1933. Interest has to be paid to the private bankers Federal Reserve System by the US tax payer. Every cent of income tax has always gone to the Federal Reserve. If you ever wrote a check to the IRS note that on the back it is made payable to the Federal Reserve.  A must read is Money by James E. Ewart in order to get a better understanding of how the banking system works.

The only good thing coming from this mess is that more and more people are waking up. The American Empire is about to fall but it will get a lot worse before it gets better. A global depression is on the horizon. Three straight losing quarters and a 25% unemployment rate is the definition of a depression, we are almost there. 

We have to return to the Constitution and hold the government accountable for the rule of law. Vote Chuck Baldwin for President instead of one of the two puppets. Vote otherwise and you will get what you deserve even though Diebold will make the selection.   

[DrinkingHarp]

Ireland's economy ends long winning run By SHAWN POGATCHNIK, Associated Press Writer
2 hours, 7 minutes ago



DUBLIN, Ireland - Davey McKeever was down to his last bet slip of the night, crumpled in a sweaty fist, at the Shelbourne Park greyhound track. The remnants of McKeever's first unemployment check would rise or fall on the ironically named Nest Egg.

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When the jet-black greyhound fell behind at the bend, the recently laid-off plasterer found it too painful to watch. He bowed his head. He looked up again just as Nest Egg crossed the line a frothy-mouthed winner — two lengths ahead of an underdog named So Your Crazy.

"I am going crazy," a flushed, visibly shaking McKeever said as he collected his winnings without pausing for a celebratory pint of Guinness with his friends. His $170 win was already destined for his 35-year mortgage on an apartment bought at market's peak two years ago.

"For the longest time I've enjoyed a night at the races. I've had cash for a social life, for the odd splash-out, for foolish bets," said McKeever, one of more than 20,000 workers laid off this year from Ireland's suddenly dormant building sites. "The dumbest bet I've ever made was on this Celtic Tiger. Now I can't afford to lose."

Tens of thousands of Irish face a financial white-knuckle ride because Europe's longest-running winning streak — the vaunted Celtic Tiger economy — has come to an inglorious end. Last month, Ireland became the first country in the 15-nation euro zone to fall into recession, and economists predict that a familiar era of closing factories and net emigration could return.

"We face stark choices. If we do not make the right ones, it will have catastrophic consequences," Prime Minister Brian Cowen said at a dinner of the country's top businessmen last week as his government authorized an emergency plan to insure the nation's banks against collapse.

The speed of the reversal has stunned Ireland top to bottom. And denial is giving way to desperation.

"We've had this corpse on the kitchen table for a while, and it's just today we've decided that it's actually dead," said Eddie Hobbs, Ireland's ubiquitous investment guru.

Hobbs became a national icon three years ago when he fronted a blunt-spoken TV series called "Rip-off Republic" highlighting the outrageous expense of boomtime Ireland and foreshadowing the crash to come. This month he's featured on an Irish financial magazine's cover in full battle gear and offering street-smart advice on how to survive Ireland's first recession since 1983.

Hobbs' gloomy forecast: property price drops of 20 percent to 60 percent, labor strikes and government cutbacks. He noted that Irishmen and women who grew up in the 1980s or earlier know how bad things might get, but to the Celtic Tiger's cubs "it's about as alien as a moonscape."

From 1994 to 2007, Ireland was one of Europe's brightest stars. Its gross domestic product expanded at nearly triple the European average. Unemployment fell from 15 percent to below 4 percent, and a centuries-old tradition of emigration was turned upside down.

About 1,000 foreign companies, more than half of them American, arrived or expanded in this English-speaking outpost on the EU's western edge. The companies largely sought to exploit a 12.5 percent rate of business tax, the lowest within the euro zone, and took heart from the arrival of peace in the neighboring British territory of Northern Ireland.

Within a few whirlwind years, Ireland shed its status as one of the EU's poorest members and became a magnet for many of Europe's best and brightest graduates in software design, information technology and drug research.

As in the United States, good times fueled a runaway property market, the fastest-growing in Europe. Thousands of Irish-emigre engineers, architects, plasterers and bricklayers came home from as far afield as Sydney and San Francisco.

Sean Six-Packs bought half-built apartments off architects' plans and collected hefty profits selling them a year later. Barmen bought a half-dozen properties on the side. The typical family dinner-table conversation swirled about the next smart development deals from Tipperary to Tuscany, and about how impossible the traffic was getting with all the new houses and cars.

Then the U.S. subprime crisis sent shockwaves across the Atlantic, hitting particularly hard the most America-dependent economy in Europe. International investors cast a cold eye on the exceptional exposure of Ireland's banks to property developers, bad loans and grossly inflated land prices.

The bank-heavy Irish Stock Exchange has shed nearly three-fourths of its value since April 2007. As Dublin bankers' ability to borrow internationally dried up, the government responded with a world-first guarantee for all deposits and borrowings of Irish-owned banks — a liability so big it represents $130,000 per man, woman and child.

The guarantee seemed to work, with a reported $14 billion in new deposits flowing into Dublin this month. But the decision to take on bank liabilities exceeding $550 billion has maimed the nation's credit rating. This is particularly bad timing for Ireland because, after more than a decade of double-digit hikes in spending and fat budget surpluses, the national finances are glowing neon red.

Finance Minister Brian Lenihan estimates that Ireland will have to borrow more than $16 billion this year to balance the books, or 5.5 percent of GDP, the worst deficit since the mid-1980s. Economists say the country's lower credit ratings will add around $85 million to annual interest costs on national debt.

Some economists say Ireland had no choice, because it faced a real risk that its six homegrown banks would fall like dominos.

"Had Brian Lenihan not intervened courageously to guarantee all deposits last Monday night, then at least one, if not two, Irish banks would have collapsed last Tuesday," said David McWilliams, an investment banker-turned-commentator who has warned for nearly a decade that Ireland's love affair with property would end in tears. "There simply was no other choice." McWilliams said Ireland's property prices were "nowhere near the floor yet."

For now, the property market remains at a virtual standstill; an estimated 20,000 newly built homes lie unsold and no significant new developments have been launched in the past year.

A few of the country's biggest developers, sitting on half-filled luxury developments on Dublin's posh south side, would rather offer interest-free money to potential buyers than allow their prices to drop officially.

"The property business has been cyclical since Adam was a boy. You have to expect ups and downs. But the up always comes," said Ray Grehan, managing director of major Dublin developer Glenkerrin Homes, which is waging a high-stakes blinking contest with the moribund market.

His Grange development, which includes $3 million penthouses and a 24-hour concierge service novel to Ireland, sold its first 200 apartments rapid-fire in the heady days of 2005. He blamed Ireland's membership of the euro — which delivered interest rates much too low to control Celtic Tiger excess — for pushing up prices too high and too quickly.

"The cheap money was like adding rocket fuel to a fire," he said. "It was an absolute feeding frenzy, especially in 2005 and early 2006. There were queues of buyers at pretty much every development across the city."

Today, Grehan sits in the middle of the unfinished Grange, whose construction hoardings boast images of catwalk models, champagne flutes and the motto "The spirit of gracious living."

Scores of apartments remain unsold, two-thirds of would-be buyers have reclaimed their deposits because of cold feet or credit shortcomings, and a third phase is on indefinite hold. He's dropped prices at least $140,000 and is offering zero-interest loans good for seven years equal to 15 percent of the purchase price.

He employed 1,200 construction workers two years ago, but today just 200.

Grehan, 45, who started out as a tiler 24 years ago, remains reassured and inspired by how far his nation has come. Back then, he said, Ireland was not much better than a Third World country. Now its whole national image has changed.

"We have the youngest, fastest-growing population in Europe, our schools are bulging at the seams, and those kids are going to need someplace to live," he said. "So the Celtic Tiger can make a comeback. But he will be a tamer tiger."