Bloomberg.com: Economy

Oct. 4 (Bloomberg) -- Leaders of the European Union's four largest economies agreed to support their own nation's banks ``when faced with a crisis,'' while coordinating with their counterparts, seeking a consensus approach to the credit crunch.

The officials, meeting in Paris at a summit today convened by French President Nicolas Sarkozy, also called for regulations on hedge funds, credit-rating firms and investment banks.

``We've made a solemn commitment to support banks and financial institutions faced with the crisis,'' Sarkozy said after the meeting with leaders from Britain, Italy and Germany, in addition to European Central Bank President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Juncker.

When locusts move on, they leave nothing behind

BBC NEWS | UK | March urges child poverty action

Campaigners calling on the government to end child poverty have been staging a march through London.

"Keep the promise" has been organised by the Campaign to End Child Poverty, a coalition of 120 organisations.

It says the 2009 Budget is the last real chance the government has to meet its 2010 target to halve child poverty.

After meeting group members, Prime Minister Gordon Brown repeated a pledge to impose a legal duty on government to eradicate child poverty by 2020.

Ad astra per aspera

CZECH REPUBLIC: Communism Alive, Despite Isolation

PRAGUE, Oct 2 (IPS) - The government's frequent use of the 'communist card' against opponents is casting a shadow on its lustration attempts in a country where an isolated but strong communist party persists.

A former prime minister, two former cabinet ministers, a presidential candidate, a state attorney and an archbishop are some of the high-ranking figures that have recently faced accusations of cooperating with the communist secret services.

Efforts to remove all traces of the communist past from the state apparatus have gained new impetus following the nomination in 2006 of Ivan Langer, a prominent member of the ruling neo-liberal Civic Democrats (ODS), for the post of interior minister.

Parliament last year approved the creation of the Institute for the Study of Totalitarian Regimes to collect, analyse and publish documents on the Nazi and Communist periods in Czech lands, giving particular attention to the activities of the communist secret services.

"Seeking for StB (the state security service of former Czechoslovakia) collaborators is still an important activity. Czech people must learn that immoral behaviour can't pay off," Lukas Cvrcek, a historian at the Institute told IPS.

The social-democratic opposition and the communists are unhappy with the Institute, and fear that personal information can be selectively used to discredit political opponents, as was recently the case in neighbouring Poland.

When locusts move on, they leave nothing behind

Observer: The party's over for Iceland, the island that tried to buy the world

'Customers would come in and we would apply for credit online for them, a 100 per cent loan, and they can drive away in their new Range Rover. It took ten minutes, it was very easy. But 60 to 70 per cent of those loans were in foreign currency, Japanese yen or Swiss francs, and they have gone up 90 per cent as the krona burns. A car worth 5 million krona now has a 9 million loan on it; how are people going to make those payments?'

Interesting account of how the Icelanders went stark staring bonkers on borrowed money...

Bloomberg.com: Worldwide

Oct. 3 (Bloomberg) -- Treasury Secretary Henry Paulson is hiring as many as 10 asset-management firms to join the lawyers and bankers he is recruiting to jumpstart the government's new $700 billion bank-rescue program.

The Treasury began implementing the plan within an hour of the House of Representatives vote giving Paulson the extraordinary powers he had sought to combat the U.S. financial crisis. Paulson is seeking to assemble a team to determine which toxic securities to target, how to value them and how to arrange purchases.

``This is something that, for a typical company, would take no less than five years,'' said Lynn Turner, a former chief accountant at the Securities and Exchange Commission. ``Anyone who thinks they can do this in two weeks is insane.''

When locusts move on, they leave nothing behind

U.S. to Sell Taiwan Billions in Weapons - washingtonpost.com

TAIPEI, Taiwan, Oct. 4 -- Taiwanese President Ma Ying-jeou on Saturday welcomed U.S. plans to sell the island almost $6.5 billion in weaponry in a move that appeared to repair years of frayed ties between Taiwan and the Bush administration.

The Pentagon's Defense Security Cooperation Agency said in a press release Friday that it had notified Congress about the sale, which marks Taiwan's first purchase of Patriot Advanced Capability-3 missiles, a surface-to-air guided missile air defense system.

"We think this announcement from the U.S. government is a sign that the past eight years of discord are over," Ma said in a statement. "This symbolizes the start of a new era of security, peace and mutual trust between Taiwan and the U.S."

When locusts move on, they leave nothing behind

BBC NEWS | World | Africa | Ethiopia frees Kenyan 'Islamists'

Eight Kenyan men deported to Ethiopia and jailed as terror suspects for more than a year have returned to Kenya.

The eight were imprisoned in 2007 on suspicion of being members of an Islamic militia driven out of Somalia by Ethiopian troops.

Human rights activists and Muslim groups say Kenya's government rounded up and deported terror suspects after thousands of people fled Somalia.

A Kenyan official said all eight had now been returned to their homes.

"Eight Kenyans who had been fighting with Somali separatists and who had been held in Ethiopia were early this morning returned home to Kenya," government spokesman Alfred Mutua said in a statement.

Ad astra per aspera

BBC NEWS | World | Middle East | US kills 'senior Baghdad bomber'

A man said to be the planner of series of deadly al-Qaeda attacks in Iraq has been killed, the US military says.

Mahir al-Zubaydi, also known as Abu Assad or Abu Rami, was said to head the group behind bombings which killed at least 16 people in Baghdad this week.

US officials described him as the al-Qaeda military commander for the whole of Baghdad east of the Tigris river.

They say he played a key role in planning some of the worst atrocities in Iraq over the past few years.

Zubaydi also took part in the videotaped killing of four Russian diplomats in June 2006, officials say.

Ad astra per aspera

BBC NEWS | Asia-Pacific | China lung disease 'to kill 83m'

A US study has suggested that more than 80 million people in China will die in the next 25 years as a result of lung disease.

The research says the vast majority of those premature deaths are preventable.

The study focused on the devastating impact of smoking and the widespread practice of burning wood or coal at home for cooking and heating.

The Harvard School of Public Health research looked at a 30-year period, spanning the last five and the next 25.

Respiratory disease is already a leading cause of death in China, but this latest study suggests a startling rise.

When locusts move on, they leave nothing behind

OBAMA: "Subsidising Big Oil Makes No Sense"

IPS: There are supposed to be built-in-protections for the middle class and poor in the bailout of Wall Street. How would a Barack Obama administration ensure that those protections are maintained?

BO: What I've done is written into the legislation, that there is going to be an independent oversight board to monitor what the Treasury is doing. We have legislation that says that the money from the sale of assets that are purchased all goes back into reducing the national debt so that taxpayers are getting their money back.

But it's going to require that the next administration is diligent about these protections and it's going to be very important that the next administration does everything it can to strengthen the underlying housing market and to prevent the foreclosures that have been devastating in so many communities, particularly in the African American and Hispanic communities.

IPS: You talk about oil companies a lot. What about the 20 to 40 billion dollars they get from the U.S. government in subsidies every year? Under an Obama administration, would that be eliminated or cut to invest in alternative energy?

BO: Well, I think there is no doubt that we should not be giving them tax breaks when they are making 12 billion dollars a quarter. You've had three consecutive quarters now where ExxonMobil made almost 12 billion dollars a quarter and the notion that they need subsidies makes no sense. And so we would, I think, be trying as part of a comprehensive energy plan to make sure that those subsidies are shifted to alternative fuels like solar and wind, biodiesel that can be so important to our long-term energy future.

When locusts move on, they leave nothing behind

IPS : RIGHTS: U.N. Report Castigates Israel for Harassing Journalists

UNITED NATIONS, Oct 3 (IPS) - A new United Nations report on the human rights situation in Palestinian territories blasts the Israeli government for its heavy-handed treatment of journalists reporting on the military occupation.

The 20-page report, which will go before the 63rd sessions of the General Assembly currently underway, singles out the mistreatment of award-winning Palestinian journalist Mohammed Omer who was stripped, interrogated, kicked and beaten up when he returned from Europe to his home town in the occupied territory of Gaza last June.

A stringer for Inter Press Service (IPS) news agency, Omer, 24, was awarded the Martha Gellhorn Prize for Journalism for "displaying courage and ability in covering war zones".

The U.N. report, by Richard Falk, the Special Rapporteur on the Situation of Human Rights in the Palestinian Territories, says that Omer was convinced the brutal assault on his person was carried out by personnel from Shin Bet, the Israeli security agency.

The security agents "were fully aware that he had received the Gellhorn Prize while abroad, and were attempting to confiscate the award money, but were frustrated because it has been deposited in a bank account and was unavailable."

When locusts move on, they leave nothing behind

Pressured to Take On Risk, Fannie Hit a Tipping Point
David Scull/Bloomberg News

"The market was changing, and it's our job to buy loans, so we had to change as well."

"Almost no one expected what was coming. It's not fair to blame us for not predicting the unthinkable. -Daniel H. Mudd, former chief executive of Fannie Mae, the government-chartered mortgage company.

"

THE BUILDERS By 2000, chief executives like Franklin D. Raines, above, and the chief financial officer J. Timothy Howard had greatly expanded Fannie Mae.

When the mortgage giant Fannie Mae recruited Daniel H. Mudd, he told a friend he wanted to work for an altruistic business. Already a decorated marine and a successful executive, he wanted to be a role model to his four children -- just as his father, the television journalist Roger Mudd, had been to him.

Fannie, a government-sponsored company, had long helped Americans get cheaper home loans by serving as a powerful middleman, buying mortgages from lenders and banks and then holding or reselling them to Wall Street investors. This allowed banks to make even more loans -- expanding the pool of homeowners and permitting Fannie to ring up handsome profits along the way.

But by the time Mr. Mudd became Fannie's chief executive in 2004, his company was under siege. Competitors were snatching lucrative parts of its business. Congress was demanding that Mr. Mudd help steer more loans to low-income borrowers. Lenders were threatening to sell directly to Wall Street unless Fannie bought a bigger chunk of their riskiest loans.

So Mr. Mudd made a fateful choice. Disregarding warnings from his managers that lenders were making too many loans that would never be repaid, he steered Fannie into more treacherous corners of the mortgage market, according to executives.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

Debt Rattle, October 4 2008: And The Law Won

Ilargi   http://theautomaticearth.blogspot.com/

-Skip-

We've been through this before: the effects of the bail-outs get shorter-lived each time, even as the amounts grow like whale babies.

-Skip-

And that means that as early as Monday, the Dow will start tanking, and this time for real, and that the next series of bail-outs and bank failures will be around the corner, and with it panicked clamoring for the next ever bigger sums of other people's money.

-Skip-

The plan provides the SEC with the power to put a moratorium on mark-to-market valuations on "difficult-to-value" and "hard-to-price" (the new fad terms for "toxic") assets.

-Skip-

This time around, though, Paulson can force any bank of his choice to sell these assets to him at any price he wants. He can bankrupt institutions at a single stroke of his pen, and they can't take him to court for doing so.

Having digested MarketTrustee's comment as to why foreign investors would be reluctant to put capital in any US financial institution, I can now see that this is a prime example of why.  It would seem that it is crucial in this environment to have a reliable inside understanding of who is targeted for survival and who is targeted for acquisition or bankruptcy.  London Bankers Financial Eugenics diary supports this view as well. Perhaps Warren Buffett's long and intimate acquaintence with the entire market makes it unnecessary for him to ask anything of anyone.

$700 billion down the black drain hole, for an unconstitutional law that has ironclad provisions written in it which ensure and guarantee that it will not work as advertised.

We can but stop in our tracks and stare in awe at the incompetence of many, and the cunning of the few.

This may shed some light on the question GiP and I were discussing yesterday in his diary: Did the Lion Roar in the Night?  

I am tending to the view that Paulson was drafted to manage a situation which was getting more and more risky, rather like Mickey Mouse playing the Sorcerer's Apprentice in Disney's Fantasia.  He has been trying to protect his and Goldman's interests while keeping things from falling apart on his watch.  He only cares about getting to January 20, 2009 without total collapse.  He is making it up as he goes and trying to do what he can to protect his friends while not appearing too partial.  He is smart enough to see the numerous disasters looming, doesn't see or care about any truly global solution and just wants out ASAP. Opacity helps him in this.  Events may well not be in his favor.

If sanity be culturally normative, then by the norms of this culture I claim insanity.

CNN |  Judge blocks Wells Fargo's purchase of Wachovia

A New York judge has temporarily blocked Wells Fargo from acquiring Wachovia.

Citigroup has accused Wells Fargo of maneuvering to cut off its bid to purchase Wachovia's banking operations for $2.1 billion. Wells Fargo agreed to pay $14.8 billion for Wachovia on Friday.

Och nu den svenska kocken bakar en Alaskan älg jägare. Bork! Bork! Bork!

BBC NEWS | World | Americas | Palin makes Obama terrorist claim

US Republican vice-presidential nominee Sarah Palin has accused the Democratic presidential candidate, Barack Obama, of associating with terrorists.

Life should consist in at least fifty percent pure waste of time, and the rest doing what you please.

Op-Ed Columnist - Racism Without Racists - NYTimes.com

... the evidence is that Senator Obama is facing what scholars have dubbed "racism without racists."

The racism is difficult to measure, but a careful survey completed last month by Stanford University, with The Associated Press and Yahoo, suggested that Mr. Obama's support would be about six percentage points higher if he were white. That's significant but surmountable. <...>

For decades, experiments have shown that even many whites who earnestly believe in equal rights will recommend hiring a white job candidate more often than a person with identical credentials who is black. In the experiments, the applicant's folder sometimes presents the person as white, sometimes as black, but everything else is the same. The white person thinks that he or she is selecting on the basis of nonracial factors like experience. <...>

John Dovidio, a psychologist at Yale University who has conducted this study over many years, noted that conscious prejudice as measured in surveys has declined over time. But unconscious discrimination -- what psychologists call aversive racism -- has stayed fairly constant.

"In the U.S., there's a small percentage of people who in nationwide surveys say they won't vote for a qualified black presidential candidate," Professor Dovidio said. "But a bigger factor is the aversive racists, those who don't think that they're racist."

Truth unfolds in time through a communal process.

Ha'aretz | 5.10.2008

The bill proposed by MK Shelly Yachimovich (Labor) to limit executives' salaries is now gaining momentum in the Knesset, and certain sections of the bill have garnered the support of Justice Minister Daniel Friedmann and the chairman of the Israel Securities Authority, Zohar Goshen.
[...]

1. Public companies will be required to report the five lowest salaries in the firm in their financial reports, including those of contractors and service providers. However, the lowest paid will not be named.

2. Public companies will be required to report the number of employees earning less than 1/40th of the highest wage paid in the company.

3. If the ratio between the company's highest and lowest salary is more than 40 times, the board of directors will be required to detail the basis for the high salaries, including if the company's performance in the previous year was above or below average compared with public companies in general, and in the specific business sector.

BBC NEWS | World | Americas | OJ Simpson convicted of robbery

OJ Simpson has been found guilty on 12 charges of armed robbery, conspiracy to kidnap and assault with a deadly weapon by a court in the US city of Las Vegas.

The former US football star and actor was accused of robbing two sports memorabilia dealers a year ago.

The armed robbery charges carry a mandatory jail sentence, and kidnapping carries a possible life term.

Simpson, 61, who denied the charges, was acquitted of murder in 1995 in what was dubbed "the trial of the century".

Ad astra per aspera

BBC NEWS | Entertainment | Musicians enter into rights fight

British pop and rock stars including Radiohead, Robbie Williams, David Gilmour and Kate Nash have signed up to a new body to fight for musicians to have more control over their work.

It is almost exactly a year ago that Radiohead made their latest album available on their own website.

It was a simple act - but it was like an incendiary bomb in the music industry.

Radiohead were one of Britain's biggest bands, but their major label deal had expired and they proved that big names no longer needed the big labels.

"I think it was one piece of the hammer that started to crack the mould of the old business model," says Brian Message, one of the band's co-managers.

Ad astra per aspera

Offenbach: Overture to Orpheus in the Underworld.

And what Orpheus in the Underworld has to do with this:

I'll never understand.

Och nu den svenska kocken bakar en Alaskan älg jägare. Bork! Bork! Bork!

Pursuit of an Edge, in Steroids or Stocks | New York Times:

This particular type of market failure occurs when two conditions are met. First, people confront a gamble that offers a highly probable small gain with only a very small chance of a significant loss. Second, the rewards received by market participants depend strongly on relative performance.

<...> The problem occurs because, just as in sports, an investment fund's success depends less on its absolute rate of return than on how that rate compares with those of rivals.

If one fund posts higher earnings than others, money immediately flows into it. And because managers' pay depends primarily on how much money a fund oversees, managers want to post relatively high returns at every moment.

One way to bolster a fund's return is to invest in slightly riskier assets. (Such investments generally pay higher returns because risk-averse investors would otherwise be unwilling to hold them.) Before the current crisis, once some fund managers started offering higher-paying mortgage-backed securities, others felt growing pressure to follow suit, lest their customers desert them.

<...> The new mortgage-backed securities were catnip for investors, much as steroids are for athletes. Many money managers knew that these securities were risky. As long as housing prices kept rising, however, they also knew that portfolios with high concentrations of the riskier assets would post higher returns, enabling them to attract additional investors. More important, they assumed that if things went wrong, there would be safety in numbers.

<...>

The invisible hand breaks down, however, when rewards depend heavily on relative performance. A high proportion of investors are simply unable to stand idly by while others who appear no more talented than them earn conspicuously higher returns. This fact of human nature makes the invisible hand an unreliable shield against excessive financial risk.

Truth unfolds in time through a communal process.

AP via Yahoo:  Effort against LA taco trucks loses its bite

LOS ANGELES - The great Taco Truck Wars of 2008 appear to have come to a close.

The Los Angeles County district attorney's office said Friday that it won't appeal a judge's ruling in August that threw out a law requiring taco truck operators to move every hour or face $1,000 fines and possible jail time.

Phil Greenwald, an attorney for the vendors, praised the prosecutor's decision.

"After all, they're not selling porn, they're not selling drugs, all they're selling is food," he told The Associated Press. "Carne asada is not a crime."

Maybe we can eventually make language a complete impediment to understanding. -Hobbes

Hehe, I just got an offer on my house in the US.

It's a loss based on what I bought it for, plus the garage and addition made to it, but still (slightly) more than I owe on the damn mortgage.

My kids are still healthy and life is very very good to me here, so I really don't care all the money I have lost, like so many others, in the US. At least I will not be bankrupt.

I will be happy to be rid of any and all obligations remaining over there.

Cheers to all!

"C'est un scandale !"