Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Feb 7th, 2010 at 01:08:55 PM EST
Goldman's chief gets bonus of $9 million in stock | McClatchy

WASHINGTON -- Goldman Sachs' chairman and CEO Lloyd Blankfein was awarded a $9 million bonus for 2009, but in restricted stock that he must hold for five years under a new policy adopted to quiet a furor over the firm's soaring compensation, the company disclosed Friday.

The 58,381 in shares, which will convert into Goldman's common stock in thirds over the next three years, is a fraction of the figures rumored in the media in recent weeks. One New York paper said Blankfein was to be paid $100 million.

Goldman's other four highest officers -- President Gary Cohn, Finance Chief David Viniar, and vice chairmen John Weinberg and Michael Evans -- received identical awards, Goldman disclosed in filings with the Securities and Exchange Commission.

Lucas van Praag, Goldman's chief spokesman, said that Blankfein received no other bonus compensation for his performance in the firm's record-setting year.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Feb 7th, 2010 at 01:22:52 PM EST
[ Parent ]
Call the caterer! Bank bonuses a relief in Greenwich, Conn. | McClatchy

GREENWICH, Conn. -- After one of the leanest years in memory, life in this upper-crust enclave is slowly returning to normal. The Greenwich version of normal, anyway.

Caterers' cell phones are ringing again. Luxury car dealers are sending the Porsches out for test drives. An architect is booking multimillion-dollar jobs for his "masters of the universe" clients, titans of Wall Street who've made this leafy Connecticut suburb of New York one of the wealthiest towns in the country.

When the financial industry tumbled, Greenwich's fortunes fell with it. Now, as the federal bailout has helped lift investment banks to surprisingly robust profits, the news that major financial firms will dole out billions of dollars in salaries and bonuses this year came as welcome relief here, even though the rest of the country is still grappling with 10 percent unemployment.

Discreetly, Greenwich is starting to spend money again, and spending here -- where the median household earns $126,549, almost two-and-a-half times the national median, based on 2008 census estimates -- isn't quite like spending anywhere else.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Feb 7th, 2010 at 01:23:52 PM EST
[ Parent ]
Senate's Cantwell takes tough approach to big banks | McClatchy

WASHINGTON -- To hear Sen. Maria Cantwell talk, another economic bubble is building as Wall Street banks -- backed by taxpayer bailouts -- continue to play the high-risk derivatives markets rather than extend credit to struggling businesses on Main Street.

Cantwell says that Congress and the Obama administration are just watching it happen. The Washington state Democrat is among the most outspoken members of the Senate when it comes to calling for tough new regulations to rein in Wall Street.

She's not looking to pick a fight with the White House, the Federal Reserve or powerful congressional committee chairmen. She was, however, one of 30 senators to vote against the confirmation of Ben Bernanke to a second term as Fed chairman; she temporarily blocked the appointment of the White House nominee to head the Commodity Futures Trading Commission; and she's been highly critical of Treasury Secretary Timothy Geithner and Larry Summers, the top White House economic adviser.

"We are trying to keep the focus on what needs to be done to get credit flowing and avoid another bubble," Cantwell said in an interview. "Do I wish the White House team was more attuned to these issues? Yes."

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Feb 7th, 2010 at 01:25:32 PM EST
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Geithner Says U.S. Will `Never' Lose Its Aaa Debt Rating - BusinessWeek

Feb. 7 (Bloomberg) -- Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.

"Absolutely not," Geithner said, when asked in an ABC News interview broadcast today whether a downgrade is a concern. "That will never happen to this country."

Geithner said investors around the world turn to U.S. Treasury securities and dollar-denominated assets whenever they are worried about global stability. That reflects "basic confidence" in the U.S. and its ability to bounce back from the global recession, he said.

Moody's Investors Service Inc. last week said the U.S. government's bond rating will come under pressure in the future unless additional measures are taken to reduce budget deficits projected for the next decade.

The U.S. plans to rein in the deficit once the labor market recovers, Geithner said. In the short run, that means focusing on ways to "make sure that this economy is growing again," he said. The administration says the deficit will shrink over the next four years as more Americans find jobs and the economy accelerates.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Feb 7th, 2010 at 01:53:44 PM EST
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"That will never happen to this country."

You bet. "This country" just happens to run the ratings system.

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Feb 7th, 2010 at 04:18:10 PM EST
[ Parent ]
Probably not "this country" so much as individual criminals residing therein.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Feb 7th, 2010 at 05:20:39 PM EST
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If we consider that the financial plutocracy dominates "this country", and that "this country"'s sole-superpower status is partly mediated by its hegemony over global finance, then we might just stick with the "this country" label (no offence meant to the many decent citizens who are part of the American people).
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 8th, 2010 at 09:40:20 AM EST
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FT.com / UK / Business - BAE to pay $450m to end bribery case

BAE Systems was on Friday night preparing to plead guilty to criminal charges and pay one of the biggest ever fines over alleged corporate bribery after striking a deal to end transatlantic corruption probes that have entangled it for years.

The deal will cost the group almost $450m (£288m) - the bulk of it in the US - but should prevent it from being barred from government defence contracts in the US and elsewhere that underpin its business.

The deal - in Britain's biggest and most politically contentious corporate corruption case- immediately sparked debate over whether BAE had got off lightly after eight years of investigation in London and Washington.

Under the settlement, the first co-ordinated transatlantic deal in a corporate bribery case, BAE has agreed to pay a $400m fine in the US and plead guilty to one charge of conspiring to make false statements to the government in connection with regulatory filings and undertakings.

In Britain, the company is set to pay £30m and plead guilty to a minor accounting offence. Unlike the US, Britain has ruled out prosecuting any individuals.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Feb 7th, 2010 at 02:04:30 PM EST
[ Parent ]
the consensus view here is that BAE got away with it.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Sun Feb 7th, 2010 at 06:30:58 PM EST
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What isn't mentioned here is that the fine ends all existing investigations.

A public trial would have been far more expensive than a fine, and might - allegedly - have implicated senior figures on both sides of the Atlantic, in Europe, and elsewhere.

So it's basically - allegedly - hush money.

Also interesting is the fact that a huge part of the fine is being paid to the US, which - as everyone knows - has a defence sector that is the envy of the world when it comes to business ethics.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Feb 8th, 2010 at 06:25:21 AM EST
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Defence spending: Time to attack defence spending | The Economist

HERE'S your latest budget factoid. The freeze on non-defence discretionary spending, should it come to pass, will trim $250 billion off the cumulative deficit over the next ten years. Over that same period, defence discretionary spending will add $284 billion to the deficit.

Spencer Ackerman has been providing some nice graphics over the last few days, illustrating the size and relevance of defence spending. Here's another good one:

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Sun Feb 7th, 2010 at 04:34:04 PM EST
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Branson warns of oil crunch within five years | Business | guardian.co.uk

Sir Richard Branson and fellow leading businessmen will warn ministers this week that the world is running out of oil and faces an oil crunch within five years.

The founder of the Virgin group, whose rail, airline and travel companies are sensitive to energy prices, will say that the ­coming crisis could be even more serious than the credit crunch.

"The next five years will see us face another crunch - the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well," Branson will say.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Sun Feb 7th, 2010 at 06:41:44 PM EST
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I seem to recall that Branson's companies enjoyed a few good years during the last oil-price run-up because they had purchased huge amounts of oil in advance.
by paving on Mon Feb 8th, 2010 at 03:24:48 AM EST
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The OTHER Reason that the U.S. is Not Regulating Wall Street  George Washington   Zero Hedge

On March 1, 1999, countries accounting for more than 90 per cent of the global financial services market signed onto the World Trade Organization's Financial Services Agreement (FSA). By signing the FSA, they committed to deregulate their financial markets.

For example, by signing the FSA, the U.S. agreed not to break up too big to fails. The U.S. also promised to repeal Glass-Steagall, and did so 8 months after signing the FSA.

Indeed, in signing the FSA and other WTO agreements, the U.S. has legally bound itself as follows:

   * No new regulation: The United States agreed to a "standstill provision" that requires that we not create new regulations (or reverse liberalization) for the list of financial services bound to comply with WTO rules. Given that the United States has made broad WTO financial services commitments - and thus is forbidden by this provision from imposing new regulations in these many areas - this provision seriously limits the policy [options] available to address the current crisis.

    * Removal of regulation: The United States even agreed to try to even eliminate domestic financial service regulatory policies that meet GATS [i.e. General Agreement on Trade in Services] rules, but that may still "adversely affect the ability of financial service suppliers of any other (WTO) Member to operate, compete, or enter" the market.

    * No bans on new financial service "products": The United States is also bound to ensure that foreign financial service suppliers are permitted "to offer in its territory any new financial service," a direct conflict with the various proposals to limit various risky investment instruments, such as certain types of derivatives.

    * Certain forms of regulation banned outright: The United States agreed that it would not set limits on the size, corporate form or other characteristics of foreign firms in the broad array of financial services it signed up to WTO strictures ...

    * Treating foreign and domestic firms alike is not sufficient: The GATS market-access limits on U.S. domestic regulation apply in absolute terms; that is to say, even if a policy applies to domestic and foreign firms alike, if it goes beyond what WTO rules permit, it is forbidden. And, forms of regulation not outright banned by the market-access requirements must not inadvertently "modify the conditions of competition in favor of services or service suppliers" of the United States, even if they apply identically to foreign and domestic firms.

In other words, the problem isn't just that Congress and the White House have sold out to the Wall Street giants.

The problem is also that the U.S. has signed WTO agreements that have given the keys to the too big to fails, and have neutered their regulators.  Even if some politicians tried to stand up to Wall Street - or even if we "throw out all of the bums" currently in political roles - the U.S. would still be locked into the WTO's scheme for helping the financial giants to grow ever bigger and to take ever-bigger and ever-riskier gambles.


On the other hand, if the American people stood up for our sovereignty and demanded that the financial giants be reined in, it would be easy to fix the WTO agreements which the U.S. has already signed. Public Citizen notes, "as a legal matter, these problems are easy to remedy ..."

If you want to do something there is nothing like insuring that you are legally required to do it.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 7th, 2010 at 08:41:29 PM EST
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You're only tied to international agreements if you want to be. The US could walk away if there was any domestic will to do so

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Sun Feb 7th, 2010 at 08:47:19 PM EST
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The top bankers don't want to walk away and the people are too spellbound to demand that we do. If the US pulled out it would be the end of that financial regime, but so would it be were the EU to pull out, or just Germany, France and the U.K., but you have the same problem. So it is down the drain together.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 7th, 2010 at 11:44:35 PM EST
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The people don't understand what the problem is. Vague resentment against bankers isn't specific enough, because it has been co-opted into not-so vague resentment against government - government being the only institution that could make a difference, but won't, for political reasons.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Feb 8th, 2010 at 06:28:05 AM EST
[ Parent ]
IOW, spellbound.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 8th, 2010 at 10:34:48 AM EST
[ Parent ]
Rorschach's Journal: Last Night, a Comedian Died in New York...
  Jesse's Café Américain

This was no accident, no act of God. No unforeseen mishap, no simple miscalculation.

Somebody pushed AIG out a window, to collect the insurance. Then they saw the opportunity to extort billions from the Congress and a Presidency in transition by bringing the financial system to the point of collapse. And they took it. And somebody knows who and how they did it.

Somebody knows.

NY Times

Goldman Helped Push A.I.G. to Precipice
February 6, 2010


Negotiating with Goldman to void the A.I.G. insurance was especially difficult, Federal Reserve Board documents show, because the firm did not own the underlying bonds. As a result, Goldman had little incentive to compromise.


The government would soon settle the yearlong dispute between Goldman and A.I.G., with Goldman receiving full value for its bets. The federal bailout locked in the paper losses of those deals for A.I.G. The prices on many of those securities have since rebounded.

So Goldman did not own the bonds around which the insurance was written---in other words, did not have an insurable interest. More and more, as I once suggested, it looks like a case of taking out an insurance policy on an individual and then putting out a contract to have him killed. Then the NY Fed served as the executor of the estate of the decedent and settled everything in Goldman's interest. How nice for Goldman.  But we should not look back.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 8th, 2010 at 12:23:46 AM EST
[ Parent ]
Les marchés financiers américains attaquent l'euro - Coulisses de Bruxelles, UE
Selon des informations fiables que j'ai obtenu vendredi, émanant à la fois d'autorités de marché et de banques, une grande banque d'investissement américaine (qui a bénéficié du plan de sauvetage des banques US) et deux très importants hedge funds seraient derrière les attaques contre la Grèce, le Portugal et l'Espagne. Leur but ? Gagner un maximum d'argent en créant une panique qui leur permet d'exiger de la Grèce des taux d'intérêt de plus en plus élevés tout en spéculant sur le marché des CDS, un marché non régulé et totalement opaque, afin là aussi de les vendre plus cher qu'ils ne les ont achetés.

American financial markets attack the euro - Backstage of Brussels, EU

According to reliable information that I received Friday from both market authorities and banks, a large American investment bank(which has benefited from the bailout of U.S. banks) and two very large hedge funds would be behind the attacks against Greece, Portugal and Spain. Their goal? Earn a lot of money by creating a panic that allows them to demand ever higher interest rates from Greece while speculating on the CDS market, a market completely unregulated and opaque.

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Mon Feb 8th, 2010 at 02:02:34 AM EST
[ Parent ]
Towards a Euro(pean) Monetary Fund | The Centre for European Policy Studies
The turmoil affecting southern euro area countries (notably Greece) has ushered in the second phase of the financial crisis: that of sovereign default. It is now time to look for a new framework that allows the Union to deal with the failure of one of its members. In this new CEPS Policy Brief, authors Daniel Gros of CEPS and Thomas Mayer of the Deutsche Bank Group argue for the setting up of a European Monetary Fund. One of the tasks of this EMF would be to manage the insolvency of euro area countries in an orderly way.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Mon Feb 8th, 2010 at 10:45:53 AM EST
[ Parent ]
BBC - Gavin Hewitt's Europe: Fear that shadows the euro

"Saving the eurozone will no doubt edge its way onto the agenda at this week's informal summit on jobs and growth in Brussels."

Oh how nice. We'll get around to it when that agenda item comes up for discussion. Frist comes the discussion on the curviture of bananas and the roundness of oranges. Markets don't wait for bureaucracies. They are now lightning fast. The rush to the exit when it comes could crash the Euro in a matter of hours. The EU created a ticking time bomb with the invention of the Eurodollar and it could detonate at any time now.

"The IMF stands in the wings, ready and willing to administer its harsh medicine."

Another naive and vain hope. The world's currency markets trade surpassed a trillion dollars a day many years ago. Anything the IMF or anyone else could try to bolster the Euro would be easily overwhelmed, swamped by the markets. The IMF could bankrupt itself by trying, making it impossible to help anyone else again.

"But say the conclusion from this crisis is that the euro is fatally flawed; that it might survive this storm but will surely be holed next time around. Then, inevitably, the arguments will start as to whether the eurozone needs the equivalent of a single treasury."

Laughable. Knowing that, why wouldn't investors simply get out now while they still can. There isn't going to be a next time. This is it. The first time will be the last time. The Euro is probably as good as dead and buried already. How fortunate for the UK that it still has the pound sterling...or should I say the pound pewter. If the UK were smart, it would quit the EU immediately to get out from under any and all obligations to rescue anyone but itself. And what a payback that would be to France and Germany.

The old adage proves true once again, that the flight to quality means a flight to the US dollar. There won't be any strikes in the US for more government spending. The anger centers around the government spending a lot less. It is said of the US economy that when the US catches a cold, the rest of the world catches pneumonia. What happens when the US catches pneumonia?

The chickens are on their way home to roost. The only question is when will they arrive and how much of their droppings will Europe have to endure. IMO this is all very good news for the US taxpayer and consumer. US markets should eventually do very well too as investment money comes pouring in to its markets from all over the world. Europe had its chance and blew it.

i'm corn-fused...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Feb 8th, 2010 at 11:16:08 AM EST
[ Parent ]
I thought for a minute that was Gavin Hewitt revealing what an utter Europe-hater he is...

But no, it's from the comments...

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 8th, 2010 at 12:00:10 PM EST
[ Parent ]


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