Is this the end of the New York Times?

I first saw this story linked to from The Daily Dish. Its scary.

For the first time the word depression

It has been a source of some annoyance to me that commentators do not use the word depression to describe the forthcoming financial collapse. I repeat that this is something much more than a mild or even severe recession. This is a depression in the making and not a recession, and it is a whole lot more than a credit crunch. It is instead a capital collapse. Combining capital implosion and economic depression with environmental damage and political fragility goes to creating the Perfect Storm. Think of the French Revoluion times a thousand and on a global scale.

The news coming out of China and Russia will also be very worrying. Russia is the heartland and locus of organised crime, and its hold on the world is enormous. China too has always been at risk of huge labour unrest.

Links to the following stories below should help convince us of this.

Ken Clarke warns Britain is on the brink of 'meltdown'

S&P warns of a debt financing crisis in Europe

Russia lifts rates to 12pc to save rouble as crisis deepens

China Unveils $586 Billion Stimulus Plan

Ken Clarke warns Britain is on the brink of 'meltdown'

Mr Clarke, 68, said the British economy is headed for a "catastrophic crisis" that will be "far worse than anything that has occurred in my lifetime".

"There will be a very serious recession next year," he said in an interview with Telegraph TV. "I think the big problem in 2009 will be the catastrophic fall in consumer spending demand, spending in shops will get worse."

Mr Clarke, who as Chancellor of the Exchequer between 1993 and 1997 led Britain's recovery from Black Wednesday, called for a temporary cut in VAT to boost spending.

Speaking as the Office of National Statistics revealed unemployment has reached an 11-year high of 1.82m, Mr Clarke said the number of jobless could soon reach three million.

"It is going to go up a long way... whether we will get back to three million again is one of those slightly morbid questions I really don't know the answer to. But it could get pretty big," he said. Rising unemployment will have a "devastating effect" on families and lead to more people being unable to pay their mortgages, he said.

The former Chancellor said Gordon Brown has received undue credit for his role in attempting to shore up the global economy. "The idea that Gordon has saved the world is not true," he said. "We still have a major, major crisis in this country and... public finances are in a terrible mess".

Mr Clarke said the larger than expected 1.5 percentage point cut in the base rate was a good move, but cautioned that it would not end the crisis. "We had a big cut in interest rates, about which there was a wholly exaggerated expectation, in the short term it will have modest effects, if any. Long-term it will begin to have effects.

"We are not yet in a state where we can be absolutely certain we are not going to have something close to meltdown next year", he said. "You do have to see what can be done with taxes."

He cautioned that Britain has "mounting debt, which is unsustainable" but said policymakers should bear in mind the effect a "full-blown depression will have on public finances". Looking forward to the Pre-Budget Report he said any fiscal stimulus package would have to work in both the national interest and contribute to worldwide efforts to stabilise the global economy.

Mr Clarke said the public can see the Prime Minister has got more "confident" in his economic judgement, but said he imagines the Treasury is being "driven crazy by the wild way" in which he and his advisers spark speculation about the way the Government intends to combat the financial crisis.

According to Mr Clarke, public respect for banks, which are "hated institutions" at the best of times, has collapsed. He was also "very concerned" that the Government could make the crisis worse by forcing banks into "lending that they cannot afford".

"When I hear these stories of the Chancellor being presumably ordered by the Prime Minister to get the banks in and waving newspaper headlines at them I think that is no way of making policy," he said.

Car giants run out of road as crash forces them to seek rescue deals

Along with the railways, no industry has exemplified American industrial hegemony and preeminence more than its car manufacturing. This is a serious story in the making, and with the Obama bounce in abeyance at least until the inauguration on January 20, it will increasingly dominate the forthcoming headlines. Apocalypse indeed!

World needs four new Saudi Arabias, warns IEA

How long can mankind maintain his beastly and voracious consumption with the following statistics demonstrating just how expensive it is? This expense is in real treasure and not the speculative and inflated 'funny money' of today's capitalism.

Ron Silver on American current affairs

The actor Ron Silver has always one of my favourite actors and a polymath to boot. Watch this interview.

Barack Obama on The Daily Show

End of the hedge

This is merely the start of the financial meltdown. There are many problems which were temporarily delayed through the recent capital injections, not least of which was the currency meltdown and the huge losses incurred in the insurance market.

Will the banks always know best?

'Free market' or cartelised capitalism by any measure has had its day. Banks do not always know best and have taken the most horrendous risks over 30 years. Most of the ridiculously large fortunes of many so called billionaires are in fact empires of borrowed money. Through the financial crisis the general public has come to a knowledge of the situation, and have in themselves the power to be the antidote. All institutions exist through the quiescence of the masses, and this is true of governments and corporations.

A familiar embrace

By Sergei Blagov in Moscow for ISN Security Watch

Belarus, dubbed Europe's last dictatorship, has reiterated pledges to create a "union state" with Russia and act as Moscow's security outpost in the West. In November, Russia and Belarus are due to unify their air defense systems in an apparent bid to counter NATO's eastward advance.

It is believed that Russia has been considering extending its air and missile defense systems to neighboring Belarus. On 23 October, General Alexander Zelin, commander of Russia's air force, said that the joint air defense project with Belarus would serve as a western outpost for Russia's aerial defense.

In recent years, Russian officials repeatedly claimed that the agreement on a united Russia-Belarus air defense system remained ready for signing, but the deal has remained elusive due to economic disagreements between the two countries.

But now Minks is growing wary of what it perceives as increasing international tension. According to the traditionally outspoken Belarusian President Alexander Lukashenko, in a 23 October statement, the NATO military-political bloc has become active to the point that it must view the world as on the brink of war.

Apparently following Russia's example, Belarus has done some saber-rattling of its own. Earlier in October, Lukashenko pledged to modernize the country's armed forces by 2015.

"Today, we are able to mobilize up to 500,000 men," Lukashenko announced on 21 October, following joint war games with Russia.

The Belarusian leader also said his country's army would play a major role in defending the Union State of Belarus and Russia from the western direction. It was hardly coincidental that on the same day, Russia announced it would give US$2 billion in loan to Belarus.

In recent weeks, Russia and Belarus have intensified top-level contacts. On 25 October, Lukashenko traveled to Moscow for talks with his Russian counterpart, Dmitry Medvedev. Both leaders were said to discuss economic and military ties, but no concrete agreements were announced after the talks. Lukashenko voiced support for Russia's initiative to negotiate a new pan-European security treaty, a plan apparently aimed at undermining, or balancing, NATO's clout.

For years, Russia's cheap energy supplies to Belarus have been instrumental in sustaining the authoritarian regime of Lukashenko, who swept to victory in 1994 on promises of reuniting the nation of 10 million people with Russia's 141 million. In 1997, both nations signed a treaty pledging a Russia-Belarus union, but these agreements have yet to materialize.

The Kremlin's backing allowed the Belarus regime to largely ignore western pressure. In March 2006, Lukashenko secured a third term in office with Russian support, but the West slammed the vote as flawed. However, the European Union recently lifted some sanctions against Lukashenko's regime in an apparent bid to limit Belarus' dependence on Russia.

Meanwhile, Moscow has been keen to band together with Minsk due to Russia's significant security interests in Belarus. The two former Soviet nations signed an agreement in 1995, which allowed the Russian military to free use of an early warning radar hub in Baranovichi until 2020. The facility and its some 1,200 staff is designed to provide early warning of missile attacks from Western Europe.

Russian officials have made it clear they view a western military assault well within a realm of possibility. On 22 October, Vladimir Komoyedov, a member of the defense committee of the State Duma, Russia's lower house of parliament, warned that NATO could strike Russia with more than 2,500 cruise missiles.

"A nuclear shield is our only reliable defense," Komoyedov, a former commander of Russia's Black Sea Fleet, said in a statement.

Subsequently, Russia has repeatedly warned it was upgrading its nuclear deterrence systems in response to NATO's continued eastward advance and the US' missile shield moves in Europe. On 22 October, General Nikolai Solovtsov, commander of Russia's Strategic Missile Forces, announced that forces under his command were being equipped with new systems to penetrate US anti-ballistic missile defense, including mobile missile systems.

Earlier in October, Russia held unprecedented strategic missile demonstrations, including the firing of ballistic missiles from nuclear submarines and launching cruise missiles with strategic bombers in highly sophisticated war games. The missile demonstrations were apparently designed to warn the West against pressuring Russia.

Simultaneously, Moscow was thought to be increasingly relying on strategic weapons in its security planning, including missile and air defense plans.

In the meantime, Belarus has hinted at its own desires for strategic rearmament. In November 2007, Belarus authorities criticized US sanctions and accused Washington of violating its commitments towards Belarus. Minsk recalled that the US had promised to refrain from any sanctions when Belarus became a non-nuclear state in early 1990s as Belarus-based nuclear weapons were moved to Russia. In other words, Minsk has indirectly cited western economic sanctions as a possible pretext for returning some strategic weapons, presumably Russian, to its soil.

Moscow continues to support Belarus, apparently counting on this post-Soviet state as a buffer between Russia and the West, and the Russian military clearly views Belarus as an important outpost. Yet it remains to be seen whether this outpost could become truly strategic.

Sergei Blagov is a Moscow-based correspondent for ISN Security Watch.

The views and opinions expressed herein are those of the author only, not the International Relations and Security Network (ISN).

Rescue of civilization

The IMF, EU, and World Bank have literally saved an ancient civilisation furiously trying to modernise. Hungary is the most advanced modern economy and infrastructure in Eastern Europe, the source of tycoons like George Soros and Andrew Grove, as well as being the historic starting point for so many fortunes in America from times past. Hungary was first to expose chinks in the communist armour of the old Soviet bloc with people able to flee from the country for the first time in 40 years. Hungary's contribution to world society is incalculable and its fiscal salvation by the United Nations system is a foregleam of things to come.

The financial reality for all

Russia is now refusing to accept credit cards in many public places. This is entirely understandable and rational in a world where cash has become king. People may laugh at those using hard currency, but when banks are in such a mess then the old principle of hoarding money under the bed holds true comfort. The question remains though, how long will cash keep its value though?

The sadness is that many of the developing countries were learning to stand on their on their own and become independent. Perhaps the West didn't want that?

Mexican cartels dominate the Americas

By Sam Logan at International Security Network

Assassinations related to drug trafficking in Mexico are on pace to pass 4,000 this year. By any count, violence in Mexico is at historical highs, and it is bad for business. Since the end of 2007, when Mexican President Felipe Calderon increased government pressure on organized crime, both the Sinaloa and the Gulf cartels have reached beyond Mexican boundaries to source supplies, secure trafficking routes and kill rivals.

Heavy pressure on Colombian drug-trafficking organizations (DTOs) opened the door for Mexicans to control a greater share of the cocaine supply chain. They now control cocaine routes out of Colombia from Andean ports to wholesale points well inside the United States. But pressure on supply routes and other areas of operation inside Mexico has forced these DTOs abroad. Guatemala, Peru and Argentina are a natural fit - corruption thrives and there is little to no government presence on borders and in many pockets of the country.

As Mexican criminals reach beyond their country to expand control over various drug-trafficking routes in the Americas, they bring a decades old violent brand of business - money or a bullet. Honor and pride push them further to kill anyone who cheats or betrays. Beyond the blood is a trail of dirty money that further corrupts, where Mexican DTOs have been linked to the electoral campaign of President Cristina Fernandez de Kirchner in Argentina.

"Mexican drug traffickers go into locations where there are no laws or regulations," Michael Sanders, spokesman for the Drug Enforcement Administration in Washington DC, told ISN Security Watch.

With billions of dollars to spend, little serious competition and a de facto presence in a number of countries, it is not a far stretch to consider that Central and South America have already become their domain.

The release valve

Pressure in Mexico has forced DTOs there into Guatemala, a neighboring Central American country that serves as a release valve, where they operate alternative supply routes with little trouble from the local government.

Guatemalan President Alvaro Colom publicly claimed on 5 September that his office and residential space was bugged by at least seven listening devices. Days later, few were surprised to learn one of his top intelligence officers, Gustavo Solano, was behind the espionage. Colom blamed the breech in security on the powerful influence of organized crime. Analysts believe the information gathered from the listening devices was sold to members of Los Zetas operating in Guatemala.

At least 300 members of Los Zetas operate in eight of Guatemala's 22 departments, according to Guatemalan news reports and a 17 October article in Mexican daily El Universal. The Guatemalan National Police believe there is a concentration of Mexican organized crime along the Guatemalan-Mexico border in the Peten department, on the country's stunted Caribbean coast, and placed in strategic locations on the borders with Honduras and El Salvador.

A 25 March shoot-out in the Guatemalan department of Zacapa left 11 dead, most of them Guatemalan criminals. Authorities believe the Zetas, formerly the military arm of the Gulf Cartel, consolidated power in the Central American country on that day, taking control over an old Gulf Cartel supply route that since at least 2004 has taken advantage of low altitude air space between two mountain ranges with no radar coverage to bring in planes. Most of this activity today is concentrated in the Sayaxche municipality of Peten, conveniently located on the border with Mexico and just miles away from a well-paved Mexican highway that leads north into the Mexican state of Chiapas, another area closely controlled by Los Zetas.

The other focus of Calderon's government offensive, the Sinaloa Cartel, has taken heavy losses due to the presence of thousands of soldiers in the states of Michoacan, Sinaloa and Sonora, the DTO's primary areas of operation.

Members of this cartel - once considered run solely by Joaquin "El Chapo" Guzman - in the past few years have branched into the methamphetamine business. The Sinaloa Cartel and other, smaller Mexican DTOs, now supply at least 80 percent of all methamphetamines consumed in the US according to the DEA's Sanders.

To launder proceeds from the sale of cocaine and meth (also known as "crystal" or "ice"), members of the Sinaloa Cartel have worked through front companies in Panama to move money back into Colombia where they are constantly pushing for more control up the supply chain.

"The Mexicans are in Colombia to purchase cocaine directly from coca labs to lower their costs," Roman Ortiz, director of Security and Post-Conflict Studies with Bogota-based Ideas for Peace Foundation (FIP), told ISN Security Watch in a recent phone interview.

Mexican DTOs, likely members of the Sinaloa Cartel, are active in Peru for the same reason, as recent violence in Peru suggests Mexican organized crime has joined with what the Peruvian government calls the Shining Path to spur coca leaf and poppy production in the country's highlands.

Backup in the Andes

By 15 October, a number of alleged Shining Path attacks left 17 people dead, 15 of them soldiers. Analysts in Peru believe these attacks may be related to the presence of Mexican DTOs who have hired back country militants to protect their supply routes out of the mountains, especially in the Ayacucho, Cusco, Huancavelica and Junin provinces of Peru - provinces where the Shining Path has caused trouble in the past.

Peru is considered South America's number two source for cocaine and poppy, the raw material source for heroin. Poppy fields, grown at high altitudes in Peru for opium collection, have been considered an illicit cash crop since 2005, when the Peruvian National Police announced the presence of some 5,000 acres of poppy flowers cultivated at over 15,000 feet in the country's southern highlands.

Between January and October 2008 the National Police registered seizures of 103 kilograms of opium paste, indicating the continued presence of poppy cultivation. Over roughly the same period, Peruvian police seized some 20 tonnes of cocaine, worth over US$2 billion according to Reuters and local reports.

The United Nations Office on Drugs and Crime concluded in its 2007 Andean coca survey that production in Peru is up by four percent in Peru, compared to five percent in Bolivia and 27 percent in Colombia.

In early September, Peruvian police seized three tonnes of cocaine hidden in 200 separate bumpers used by boats to prevent damage when docking. At the time of the seizure, a concurrent operation in eight separate points in Lima netted 30 men (some of them Mexican) and Peruvian police believe were working directly for the Sinaloa Cartel, according to a 6 September article in Peruvian daily El Comercio.

South American ephedrine supply

When the Mexican government passed a law on 2 July making all cold medicines that use ephedrine and pseudoephedrine illegal, methamphetamine traffickers, in need of the same precursor chemicals to cook their drugs, were forced to look south.

Not weeks after the Mexican law came into effect, Argentine police arrested on 18 July nine Mexicans and one Argentine who had rented a luxury residence in the Buenos Aires suburbs to cook methamphetamines. A month later, authorities discovered a warehouse where tanks of ephedrine were stored. The meth lab and ephedrine storage tanks were directly linked to the Sinaloa Cartel.

At the top of the Argentine methamphetamine racket was Jesus Martinez Espinoza, an operator with the Sinaloa Cartel who traveled to Argentina to secure a source of ephedrine for methamphetamine production locally in Argentina and abroad in Mexico. He relied on three Argentine men, including Sebastian Forza, who had deep connections in the pharmaceutical industry, as his principal suppliers of ephedrine.

"Argentina can legally import 37 tonnes of ephedrine," the DEA's Sanders told ISN Security Watch, adding, "in 2006 Argentina imported 5 tonnes of ephedrine, and in 2007 Argentina imported 26 tonnes." Still 11 tonnes under the legal limit.

When Martinez's scheme began to unravel in mid July, his local connections had to go. All three Argentine businessmen disappeared on 7 August. Their bodies were found six days later in a ditch outside of Buenos Aires. Forza and the other two were handcuffed and sprayed with bullets. The triple homicide shocked Argentines, who are not accustomed to such assassination-style murders. The news catalyzed a massive investigation that led to Martinez's arrest in Asuncion, Paraguay, just hours before he was to board a flight to Mexico.

Investigations into Forza's past found a long line of bounced checks and deep debt. One of his former associates killed himself. And along with one of the other men allegedly killed by Martinez's men, Forza contributed as much as US$118,000 to the electoral campaign of Argentine President Cristina Fernandez de Kirchner.

Taking over

Over the course of 2008, Mexican organized crime has been tied not only to the triple-homicide in Buenos Aires and the bugging of the office and bedroom of the Guatemalan president, but also to the deaths of five Mexican men, found with their throats slit in Birmingham, Alabama; the kidnapping of a six-year-old boy in Las Vegas, Nevada; and possibly violence in the Peruvian high country.

Between the Sinaloa and Gulf Cartels, Mexican organized crime has proven ties with local operators in a list of countries from the US south through Central and South America, including Guatemala, Colombia, Peru, Ecuador, Venezuela, Paraguay and Argentina.

"When considering methamphetamines, Mexican organized crime is the strongest in the region," Sanders said, pointing out that the countries in Latin America with relaxed chemical import regulations will likely become targets for Mexican DTOs in the future.

"South America has become increasingly part of [Mexico's] hunting grounds, and Guatemala is already deeply involved," Bruce Bagley, chairman of the Department of International Studies at the University of Miami, told ISN Security Watch adding, "these guys are not deterred by borders."

The only other criminal organization that has had this breadth of reach and disregard for national sovereignty was the Revolutionary Armed Forces of Colombia (FARC). Billions more in profits, and potentially thousands more operatives with no political ideology, poise Mexican drug traffickers to become the region's next major security challenge.

Today these criminal groups represent the number one threat to national security in Mexico. Tomorrow, other countries such as Guatemala, Peru and Argentina may make the same claim.

---

Sam Logan is an investigative journalist who has reported on security, energy, politics, economics, organized crime, terrorism and black markets in Latin America since 1999. He is a senior writer for ISN Security Watch and has a book on organized crime and immigration forthcoming from Hyperion in Spring, 2009.

Free market ideology melts down

By Dean Baker at International Security Network

The near collapse of the world banking system and the internationally coordinated government rescue should put to end illusions about the unfettered market. Over the last three decades there has been an enormous upward redistribution of income in the United States and many other countries. This redistribution of income was justified as being the result of the efficient working of the free market. After this massive government intervention to rescue the banks from their own actions, such claims are no longer plausible.

The financial sector stands out as being both at the center of free market ideology as well as the leading engine of inequality in the economy. The United States has substantially deregulated its financial industry in the last three decades. It eliminated barriers that prevented firms from crossing traditional boundaries between areas like investment and commercial banking or banking and insurance. It also eased restrictions on leverage and relied to a substantial degree on self-regulation.

This environment proved to be very profitable for the financial industry. Its share of corporate profits soared, crossing 30 percent at its peak in 2004. High level executives in the sector were extraordinarily well-paid, with salaries and bonuses often running into the tens of millions of dollars, even for those who were still a level or two below the top of the corporate hierarchy.

These high salaries set a benchmark for top executives in other industries. Wall Street pay scales even infected pay structures outside of the corporate world, leading to outsized paychecks for top officers in universities, hospitals and even private charities. With more money going to the top, there was less for those at the middle and bottom. Over the last three decades, the real wage of a typical worker in the United States has barely increased.

This upward redistribution could possibly be justified if it were the result of the natural workings of the market. However, the events of the last few weeks show that this was not the case. Essentially, the financial industry was making huge bets, not with its own money but essentially with the government’s money.

As long as the industry won their bets, they could pretend that they were acting on their own and had no need of the government. However, when they lost big, as they did with the collapse of the housing bubble, they had no choice but to go running to the government for help. Wall Street executives, who might complain about a government support check of a few thousand dollars for an unemployed single mother, suddenly were demanding hundreds of billions of dollars from the government to keep their banks from collapsing.

There are two obvious lessons from this episode. The first is that the enormous wealth that many top executives in the financial sector were able to accumulate had less to do with their mastery of finance than their ability to get into positions where they could extract rents from the economy. These people clearly did not understand the enormous costs that their risky investments and mistakes have imposed on the economy and society.

The second lesson is that a strong role for the government is essential in the shaping of markets. The key assumption behind deregulation was that sophisticated actors in the financial sector would effectively police each other, punishing firms that did not follow sound lending practices.

It turns out that many of the most sophisticated actors had no understanding of what was going on in either the industry or the economy. The collapse of the housing bubble and the over-leveraged state of the major financial firms caught the industry by complete surprise.

Going forward, it is clear that far more careful regulation will be needed. Governments will have to act to ensure that banks do not again become highly leveraged and assume such enormous levels of risk. Central banks will also be required to view asset bubbles as a serious problem. The growth and subsequent collapse of the housing bubble is at the core of this crisis.

Finally, this crisis should cause people to discard the idea that the distribution of income is ever determined by the natural workings of the market. It is determined first and foremost by the structure of social institutions. In the United States, these structures were deliberately shaped in a way to cause income to flow upward. There is no reason that the institutional structures cannot be designed to lead to more broadly based prosperity, which is likely also to result in far better economic outcomes.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. He also has a blog on the American Prospect website, "Beat the Press," where he discusses the media's coverage of economic issues.

The lender of last resort?

Ambrose Evans Pritchard exemplifies through his eloquent analysis the problem facing the world today. Its all very well the western world recapitalising its banks and insurance companies, but what will happen to countries where even the IMF is struggling to find money to loan them? Western capital is premised upon the development of natural resources and manufacturing in these 'developing' countries, so capitalising the IMF will be essential.

A prophet in his own community

Nouriel Roubini is the economist of economists who foretold in detail the 2008 financial apocalypse. He said what needed to be said when it was least fashionable, that is at the height of the boom.

How could people and governments go on borrowing, manufacturing nothing, paying no increased taxation, and then expecting it all to last forever? Stock prices increased 4 times more in the twenty years since the end of cold war than they had in the previous 400 years. This is remarkable when the real value and level of output had not really changed. In other words a highly artificial situation.

Professor Roubini's website can be found at RGE Monitor.

Is Russia resurgent?

Im not sure what to think of Russia's 'resurgence' after the economic meltdown in the ex-Soviet bloc, but this debate is worth watching.


Stream videos at Ustream

Wealth is not all it seems

In the weekend Financial Times, Catherine Belton describes in great detail the truth behind many fortunes, though in this article she talks of the Russian oligarchs.

For all the obsession with 'Dragons Den' type financial success, as if it were the only type of success, most wealth is actually borrowed and leveraged in the extreme. Robert Maxwell helped set the tone by using shares in companies he had just bought as collateral in further purchases. This is certainly the case in many Russian success stories and throughout most of the world. Even Sir Philip Green and Sir Richard Branson borrowed heavily to look and be wealthy, and of course we cannot ignore the legions of private equity and hedge fund 'entrepreneurs' in this equation of rented fortune. With all this money at stake, it makes sense that governments were so keen to rescue the banks. At no time in history have the banks had more collateral in the private sector as they do now. Their fate is ours!

Not the publicity one looks for

This terrifying tale appeared this morning in the Daily Mail. Edward Lucas, along with Misha Glenny, are two of the UK's finest journalists.

The already huge criminality engulfing the world since the collapse of the communist bloc 20 years ago can only get worse with the present financial crisis. Black markets and shadow economies always thrive when authority collapses, and such an apocalypse is foreseeable in the West, let alone the existing disaster in Central and Eastern Europe as well as other parts of the world. The incipient planetary default will provide a breeding ground for an exponential increase in organised crime.

Even bankers have families

The damage elsewhere

The London Times and The Daily Telegraph having been providing some of the most useful and enthralling coverage of the financial crisis so far. In fact they have done so much to enlighten us all, that their dedicated financial press colleagues at the FT, Wall Street Journal and the Economist can in no way be more trusted just because they specialise in the subject.

Anatole Kaletsky gives amazing insight into the effect this crisis is having on small and vulnerable countries that have had to borrow prosperity from foreign capital, itself built on their own backs in large part.

Britain and America and the West in general have a parochial view of this fiscal contagion, and Mr Kaletsky goes a long way to helping us out of that.

A run on countries

Panic on the validity of money itself is exemplified with one of Robert Peston's latest posts.

Hedge fund investors flee in panic

Hedge funds, the hated gamblers of the pre crash of 2008 go-go years, are for the first time on the receiving end of the panic they so eagerly feasted on.

The man from the Economist

Edward Lucas is a first rate journalist who writes for a number of publications on Eurasian affairs. His take on what is happening to the finances of Eastern Europe is a prescient harbinger of what can be soon expected further West in the very near future.

Oil and Glory

This is a blog/website that I have seen on a few occasions, and have decided that it is one of the best on the web. Its author, Steve Levine, has an impeccable journalistic pedigree, which to me is very important, and his observations are well worth keeping abreast of.

The REAL worry

Yes this is what should concern us in the days ahead.

Yes crazy indeed!

Historians will look back and write thousands of books on our work in progress.

Retail therapy anyone?

I guess that for some there is comfort in spending.

News from Warren Buffett

Surely this much is obvious.

No chance

I think this expects too much of the hedge fund industry.

Good sense at work?

Read this chippy and at the same time sensible letter from a 'retiring' hedge fund manager.

At last the correct view of capitalism

A senior figure has at last espoused a heterodox view on the supposed invincibility of free market capitalism.

Property values going up in the UAE

At least somewhere land is still worth something and appreciating in value.

No regulation for SWF's

I'm not sure that the so called sovereign wealth funds (SWF's) need the regulation that is suggested here. These pools of money are already in the main well regulated by their governments and far more wisely invested than any western domiciled source of money.  They are oil wealth well spent, and subjection to western influence will surely diminish their worth.

Chinalco postpones bond issue

The state owned Chinese mining company, Chinalco, is used by the Chinese government to buy strategic stakes in the vital supply companies which service China's voracious appetite for raw materials. These same raw materials then become the West's consumer goods.

It appears that China's stake in Rio Tinto has been frozen and effectively lost because of its location in the frozen accounts of collapsed Lehman Brothers. This has caused Chinalco's caution and postponed its bond issue. Its surely a worrying development for a country that so many boast the strength of.  

Bully on the ropes

Its about time that economic necessity alerted Gazprom, Russia's state gas monopoly, to the limits of its own power.  For the last 5 years the giant natural gas company has held Europe to ransom, and now it no longer wants to gain control of BP's stake in the Tyumen Oil/British Petroleum combine, TNK-BP.  Good News!

Always big?

The Semper Macro fund at least is able to feed, even if so many others cant!

Money for old rope

Even in these straightened times, the risk consultants will still have their pay.

Mining stocks - the last redoubt?

One would feel that tangible commodities and their extraction should be a source of wealth.  Not so!

Whatever next - Mexican derivatives

Greed and panic know no frontiers, and with finance being so heavily algorithmic and computerised, the profits and losses will go anywhere.  Its just such a shame that a poor country like Mexico should have to contend with a derivatives probe.

One would naively have hoped that these countries could to some degree be insured against default of their already fragile economies.  No such joy.

Hedge funds in selling cycle

Not that one should feel sorry for these so called purveyors of 'alternative asset management', but the threat to the real economy is real.

CIC set to boost stake in Blackstone

When will the world learn that huge debt inflated deals on private equity are an age gone by.  Fortunately though in this case the buyer is a well capitalised sovereign wealth fund with real money.

Good riddance to hedge funds

The scourge of continental capitalism, the hedge fund, seems finally to be getting its comeuppance after years of obscene excess and profit.  It seems though that New York will be temporarily domiciling these gambling funds.

Pru quashes rights issue talk

When insurers of ancient pedigree, like the recently nationalised and by no means socialised AIG, start to falter then one knows that depression is on the way.  Insurance is everything, and this news/rumour about Prudential is worrying.

The idiocy of merging debt

Why cant bad banks and companies just die, rather than infecting governments and each other with toxic debt through merger and takeover? Debt wont disappear until the nations redefine money.

Swiss to fund $60bn ‘bad bank’ for UBS

Switzerland, once the home of solid and conservative private banking, is now in the same position as everyone else.

Cheer up?

It would be easy to paint the current world economic and financial news in purely negative terms, but I am afraid one is left with no option but to portray the truth.

Today's FT is full of stories that will come to light in the coming weeks!

More on the French derivatives banking loss

The FT gives it's take on this developing story.

The east is in the red

At one time the east being in the red meant something far different. Now even more sadly it means insolvency, penury, and dependency.

Innovative lawyers?

This superlative report on the world of corporate and finance law is well worth digesting. I saw the FT/RSG Consulting magazine version whilst getting my print copy today, and I cannot recommend enough the importance of this aspect of finance. The law firms have their tentacles in every corner of the planet. It should be said that in fact all commercial activity is premised on and made possible by law.

Insurance for stupidity

This post by the peerless Ambrose Pritchard Evans is frightening.  Most American and world money at some point has a connection with AIG, and this is the crystalline distillation of fear awaiting us on Tuesday 21st October 2008.

Don't worry its only a £500m loss!

With interbank lending frozen and wild swings in the world's stock markets, a once shocking story of loss now has less gravity. That in itself should be worrying, and I refer of course to the recent admission of a French bank, Caisse d’Epargne, to just such a loss.

With Societe Generale, a once venerable Rothschild founded bank, having to learn to live with the crippling losses inflicted by trader Jerome Kerviel, and to a magnitude deemed several times its own capital, then nothing should surprise us in the bastions of European capitalism let alone that of the English speaking world.

Private equity in charge of insurance?

In today's cautious financial environment where will CVC Capital Partners find the money to buy Direct Line and Churchill insurance from RBS?  Private equity is famously dependent on debt, and who provides that? The banks!

Its the banks who need recapitalising because of these kind of huge deals in the past. This continuation can only make matters worse.

End of hedge funds?

This post on Robert Peston's blog is an eye opener.  For years the hedge funds have been anonymous gambling institutions set up by the banks and their alumni whilst making obscene profits from the go-go years.  Could this really be their end?

Will Hutton - The state were in!

Will Hutton is a first class economist and his views need to be taken very seriously, along with those of the BBC's Robert Peston.

Abyss

Ruth Sutherland's piece in The Guardian cannot be bettered.

The gnomes of Zurich

One has to admire a company for continuing to advertise financial services during these times. Ever since the 'old' Zurich Insurance Company merged with the financial interests of British American Tobacco, the 'new' Zurich Financial Services has gone from strength to strength and is the major private sector employer in my home city of Portsmouth in the UK.