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ECONOMY & FINANCE
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Apr 21st, 2009 at 07:12:38 AM EST
Geithner says hard to set prices on toxic assets | U.S. | Reuters

WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner on Tuesday said difficulty in setting a value on banks' toxic assets was a continuing hindrance to their ability to lend and borrow.

Testifying before the Congressional Oversight Panel that monitors the Treasury's efforts to bail out troubled banks, Geithner said toxic assets were "congesting" the U.S. financial system and hindering efforts to get credit flowing normally.

"Uncertainty about the value of legacy assets is constraining the ability of financial institutions to raise private capital," he said, adding that he hoped a public-private investment program will improve the ability to put a price on troubled mortgage and other assets.

Treasury is currently conducting stress tests on 19 of the largest U.S. banks and will make some of the results public next month. Geithner said the majority of banks have more capital than they need to be considered well capitalized.

"However, concerns about economic conditions -- combined with the destabilizing impact of distressed 'legacy assets' -- have created an environment under which uncertainty about the health of individual banks has sharply reduced lending across the financial system," he said.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Apr 21st, 2009 at 12:22:27 PM EST
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"However, concerns about economic conditions -- combined with the destabilizing impact of distressed 'legacy assets' -- have created an environment under which uncertainty about the health of individual banks has sharply reduced lending across the financial system," he said.
A "legacy" of fraud and criminality, combined with massive public denial by governmental authorities, will do that.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 22nd, 2009 at 01:12:23 AM EST
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afew:
difficulty in setting a value on banks' toxic assets

It's kinda cool who they're always in favor of letting the markets work unfettered, until they're not.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt št gmail dotcom) on Wed Apr 22nd, 2009 at 04:17:38 AM EST
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Well, now they have realised for themselve why the market won't touch the assets with a 10-foot pole.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Carrie (migeru at eurotrib dot com) on Wed Apr 22nd, 2009 at 04:36:02 AM EST
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I.M.F. Puts Bank Losses From Crisis at $4.1 Trillion - NYTimes.com
WASHINGTON -- With the global economic downturn deepening and confidence in the financial system still elusive, the International Monetary Fund estimates that banks and other financial institutions face aggregate losses of $4.1 trillion in the value of their holdings as a result of the crisis.

 In its global financial stability report, released Tuesday, the fund estimated that financial institutions would have to write down an estimated $2.7 trillion in loans and securities originating in the United States from 2007 to 2010. That estimate is up from $2.2 trillion in the fund's report in January, and $1.4 trillion last October.

The financial crisis "is likely to be deep and long lasting," the report said, noting that global financial stability has deteriorated further since its October report, especially in emerging markets, particularly in Europe, where banks face more write-downs and may require fresh equity, even as businesses seek to refinance debt.

The authorities "have been proactive in responding to the crisis," the fund said, but "policies are being challenged by the scale of resources required."

The fund also cast doubt on recent market optimism, noting that in spite of "some improvements in short-term liquidity conditions and the opening of some term funding markets, other measures of instability have deteriorated to record or near-record levels."

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Apr 21st, 2009 at 12:23:08 PM EST
[ Parent ]
British economy falls into deflation for first time since 1960

The Retail Prices Index (RPI) measure of inflation fell to -0.4pc in March, indicating that prices paid by consumers last month were lower than a year ago - a trend not seen since March 1960.

The figure, published by the Office for National Statistics on Tuesday, was roughly in line with economists' predictions of a fall to -0.5pc.

RPI inflation, which includes housing and mortgage costs, has been driven down by the the series of aggressive interest rate cuts from the Bank of England which have triggered lower variable rate mortgage repayments.


by Sassafras on Tue Apr 21st, 2009 at 01:39:53 PM EST
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EUobserver: China outranks Germany in world car production

EUOBSERVER / BRUSSELS - China has become the world's largest car manufacturer, surpassing EU champion Germany and the US, whose ailing industries are struggling for survival amid the economic crisis.

China became the largest car producer in 2008, with a world market share of 17.2 percent, outranking Germany with its 14.7 percent and the US (14.6%), the German association of car manufacturers VDMA revealed on Monday.

by Sassafras on Tue Apr 21st, 2009 at 02:57:04 PM EST
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OMG!  The pigs!!  They've spouted wings!!!

HuffPo: Judge Richard Posner Questions His Free-Market Faith In "A Failure Of Capitalism"

One of the most prominent proponents of free-market capitalism is having second thoughts.
Judge Richard A. Posner, a federal appeals court judge who has been called the most cited legal scholar of all time, discussed his doubts and his analysis of the current financial crisis in a wide-ranging interview with the Huffington Post.

A longtime proponent of deregulation, the idea that business works best in a free market without burdensome government regulations, Posner began to change his mind when he realized the enormity of the crisis. This change of heart inspired him to write his upcoming book, "A Failure Of Capitalism."

Though still a believer in the virtues of capitalism, Posner now emphasizes the importance of government regulations; the need to strengthen the regulatory structure by directly funding authorities rather than the current fee-based model; the dangers of excessive executive compensation, and even expressed support for the idea of changing bankruptcy law to make it easier for homeowners who face foreclosure.

"I wouldn't have thought the economy was as vulnerable," he explains. "I wouldn't have thought that banking deregulation was dangerous."




"Talking nonsense is the sole privilege mankind possesses over the other organisms." -Dostoevsky
by poemless on Tue Apr 21st, 2009 at 05:53:02 PM EST
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FT.com: Why the `green shoots' of recovery could yet wither(Martin Wolf)
Spring has arrived and policymakers see "green shoots". Barack Obama's economic adviser, Lawrence Summers, says the "sense of freefall" in the US economy should end in a few months.
So, Summers says that we should reach terminal velocity in a few months and the market thinks this justifies a raly now?
The president himself spies "glimmers of hope". Ben Bernanke, chairman of the Federal Reserve, said last week "recently we have seen tentative signs that the sharp decline in economic activity may be slowing, for example, in data on home sales, homebuilding and consumer spending, including sales of new motor vehicles".

Is the worst behind us? In a word, No. The rate of economic decline is decelerating. But it is too soon even to be sure of a turnround, let alone of a return to rapid growth. Yet more remote is elimination of excess capacity. Most remote of all is an end to deleveraging. Complacency is perilous. These are still early days.

As the Organisation for Economic Co-operation and Development noted in its recent Interim Economic Outlook, "the world economy is in the midst of its deepest and most synchronised recession in our lifetimes, caused by a global financial crisis and deepened by a collapse in world trade". In the OECD area as a whole, output is forecast to contract by 4.3 per cent this year and 0.1 per cent in 2010, with unemployment rising to 9.9 per cent of the labour force next year. By the end of 2010, the "output gap" - a measure of excess capacity - is forecast to be 8 per cent, twice as large as in the recession of the early 1980s.



Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Carrie (migeru at eurotrib dot com) on Wed Apr 22nd, 2009 at 04:50:05 AM EST
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"A world that doesn't learn from history is condemned to repeat it," said World Bank President Robert B. Zoellick. "While the recent G20 meeting focused on financial issues, we need to learn from the history of past crises, when governments squeezed for cash cut into social programmes with often devastating impacts on the poor."

As usual, Zoellick seems willing to pirate Santayana conveniently ignoring the source of his near-exact quote- right along with conveniently ignoring the source of this wide-spread trashing of the safety nets--

World Bank loan requirements and policy.

Can we anticipate the increased availability of loans from the world Bank to private firms who, in private-public partnerships(tm)might kindly wish to help reconstruct those same nets?
Frying pan into the fire?

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Wed Apr 22nd, 2009 at 06:15:01 AM EST
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