(Image courtesy of Chicken Yoghurt.)
Madness of King George
They’ve All Got It Infamy
What monument could ever be sufficient to mark the reign of a Chimperor ?
The San Francisco Presidential memorial commission thinks it has found the perfect, lasting remembrance of America’s worst ever-president.
What, Me Worried?
I wrote this post about the lessons Credit Anstalt has for today’s economists last September, just as the Northern Rock will they/won’t they nationalise fiasco was coming to a boil and it seems just as appropriate (see also “I’m No Economist…” now, as the first dominoes of the US banking system start to topple. For Northern Rock read: Bear Sterns – for Bank of England read: Federal Reserve.
Is Northern Rock the new Credit Anstalt? .
It’s a spreading meme and I’m probably one of many thousands of bloggers making this comparison this morning.The British media is ramping up for a full blown panic – could the impending collapse of this overextendxed and undercapitalised bank be just the first of many dominoes to topple in our precariously-balanced economy?
“Don’t Panic, Mr Mainwaring!”
Grimly satisfying as it is to see baby-boomers desperately trying to get their comfy pensions and the profits from their hiousing speculations out of a crumbling bank, unfortunately this won’t just affect the comfortable middle classes.
The knock-on effect will be broad and deep: so many are employed in the financial services and derivative industries that if the panic continues and more banks get into trouble, even if there is bailout and the situation stabilises there will be a massive retrenching and many, many people will be out of a job, from call-centrre operators to cleaners to copier technicians to consultants to sysadmins. If doesn’t stabilise… well, then all bets are off, so to speak.
The UK government’s spokesdroids and our laughable chancellor Alistair Darling are desperately trying to convince us in increasingly shaky voices that it’s not a bank crash – as the public sees right through their feeble protestations and continues to queue for its cash. Reportedly
6.1 billion1 ibillion2 billion pounds has been withdrawn over the last couple of days. It’s Financial Contagion in action“When the thunderclap comes, there is no time to cover the ears” –
– Sun TzuA large number of bank failures occurred in the 1930s, accompanied by declines in asset markets, mostly triggered by common adverse business conditions. This seriously weakened the US financial system, and left it unable to support economic activity effectively through financing. Consequently, there was a continuing vicious circle of economic decline and financial weakness.
When asset bubbles burst, or economies suffer a severe downturn, weak banks can become insolvent, and their failure then further weakens other banks causing the problem to spread.
In testimony before the U.S. Senate Committee on the Budget on September 23, 1998 Alan Greenspan said:
“Developed countries’ banks are highly leveraged, but subject to sufficiently effective supervision both by counterparties and regulatory authorities, so that, in most countries, banking problems do not escalate into international financial crises. Most banks in emerging market economies are also highly leveraged, but their supervision often has not proved adequate to forestall failures and a general financial crisis. The failure of some banks is highly contagious to other banks and businesses that deal with them, as the Asian crisis has so effectively demonstrated.”But regulation and supervision of individual financial institutions, however much they may be effective, may not necessarily guarantee the stability of the financial system as a whole. Problems in one bank may spread to other parts of the financial system by the common involvement of other banks in one particular risky business area that turns bad, through counterparty exposure to events such as the Baring Brothers crisis of 1995 or the Long Term Capital Management (LTCM) crisis of 1998, or loss of confidence in one institution may result in funding problems for other institutions if they are perceived to have something in common.
Banks are interconnected through interbank deposits, loans, payment systems, and common markets. An adverse event that drives one bank into insolvency may then cascade to other interconnected banks by generating losses for them. If the losses generated for the next bank in the chain exceed their availability of capital to absorb the losses, then a domino effect of contagion can occur that threatens the whole financial system.
In May 1931, the Austrian Credit-Anstalt bank failed after customers withdrew funds on worries over the soundness of the bank’s loans. A cascade of financial problems ensued, which contributed a great deal to the economic problems of the 1930s.
It started when the bank’s depositors grew concerned about the Austrian economy and the state of the bank’s non-performing loans. After it failed, general confidence in banks was damaged and there were runs on banks in Czechoslovakia, Germany, Hungary, and Poland. The top four banks in Germany declared themselves bankrupt and the Berlin Stock Exchange closed for two months. British investors in Europe and exporters lost money, the UK suffered a rapidly growing deficit, and foreign investors withdrew, deserting the Pound Sterling for gold and other currencies. The British government raised taxes to try to restore confidence, but investor confidence collapsed, and the pound was allowed to float, declining by over 20% against gold.
Comparisons have been made between the Credit-Anstalt crisis and potential risks in China’s banking system:”Even if the Bank of England does manage to maintain confidence in the short-term, this is a globalised economy and the US debt situation is so precarious that it could still tip us all into a worldwide depression.
Recession, resource wars and climate change, what a prospect.
I’m going out into my garden to sit in the last of the summer sun and to try not to think about it any more for today but perhaps I will think about investing in a wheelbarrow.
Lord knows what’ll happen today as the financial markets open and realise the precariousness of the economic precipice they (and we) are teetering on the edge of. We’ve already seen at least one suicide from the subprime mortgage crisis.
Increasingly shrill financial commentators and market pundits are all over the tv and radio attempting to talk things down; but even they. the eternal cheerleaders of the neoliberal corporate agenda, are having to admit something they never thought they would: that they have no idea – no idea whatsoever – what will happen next. And they’re scared.
Some of us have been scared for a long time, since Bush was elected. How is it we’ve seen this coming but the pundits haven’t?
Sweet Karma
Remember the Scooter Libby perjury investigation, when Cheney and Bush both dedlined to be interviewed under oath for fear of incriminating themselves? i
I’s coming back to bite them on the ass, acording to Emptywheel at Firedoglake
“Anything conducted in front of the grand jury is protected by grand jury secrecy; anything before that (like early FBI interviews) or not conducted before the grand jury (like Dick and Bush’s interviews in June 2004, after both had lawyered up) is “fair game.” There’s a delicious irony in this last bit, since it means that the deference Fitz showed to Bush and Dick–by letting them avoid the stress of a grand jury appearance–is precisely what would make their interview transcripts accessible here.”
Heh, heh, heh.
Score another one for Bush: the surge works
The surge in homeless veterans from Iraq and Afghanistan, that is:
Experts who work with veterans say it often takes several years after leaving military service for veterans’ accumulating problems to push them into the streets. But some aid workers say the Iraq and Afghanistan veterans appear to be turning up sooner than the Vietnam veterans did.
“We’re beginning to see, across the country, the first trickle of this generation of warriors in homeless shelters,” said Phil Landis, chairman of Veterans Village of San Diego, a residence and counseling center. “But we anticipate that it’s going to be a tsunami.”
With more women serving in combat zones, the current wars are already resulting in a higher share of homeless women as well. They have an added risk factor: roughly 40 percent of the hundreds of homeless female veterans of recent wars have said they were sexually assaulted by American soldiers while in the military, officials said.
“Sexual abuse is a risk factor for homelessness,” Pete Dougherty, the V.A.’s director of homeless programs, said.
Special traits of the current wars may contribute to homelessness, including high rates of post-traumatic stress disorder, or PTSD, and traumatic brain injury, which can cause unstable behavior and substance abuse, and the long and repeated tours of duty, which can make the reintegration into families and work all the harder.
Once more proof that soldiers, though most are stupid enough to vote Republican everytime and believe in these stupid wars, do not matter to the GOP and its cronies once the photo-op is over. If anybody in the US military is reading this and is scheduled to go to Iraq or Afghanistan save yourself from a future of homelessness.