NightBlogger

The Irish government is on the brink of launching a multi-billion euro rescue plan for the country’s banks, including an injection of taxpayers’ money, the Irish Independent newspaper reported on Wednesday. A finance ministry spokesman declined to comment. “It is understood the government has now accepted that it will have to put public money into the banks,” the Irish Independent said. In another report, the Irish Times said the government was in discussions with a number of international investors, including several private equity firms, about injecting fresh capital into Irish banks following deep falls in their shares. More

Treasury secretly tucked in massive tax changes benefiting banks. Notice how this Washington Post piece portrays Congress as victims. I think not.

Washington Post
“A Quiet Windfall For U.S. Banks”
The financial world was fixated on Capitol Hill as Congress battled over the Bush administration’s request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention. But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion. The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.

“Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no,” said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. “They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks.”

The story of the obscure provision underscores what critics in Congress, academia and the legal profession warn are the dangers of the broad authority being exercised by Treasury Secretary Henry M. Paulson Jr. in addressing the financial crisis. Lawmakers are now looking at whether the new notice was introduced to benefit specific banks, as well as whether it inappropriately accelerated bank takeovers. More

The French state has threatened to seize control of the country’s banks and fire top staff unless they do their part to stabilise the economy by stepping up lending to companies in need. “The banks have got to open up credit to business: they have the means to do it,” said prime minister Francois Fillon, accusing lenders of hoarding cash. “We don’t think the banks are stepping up to task as necessary. We can withdraw the credit that we have extended to them under the state’s contract with the banks, and that will put them in difficulty. At that moment the question arises whether we should take an equity stake, change their managers, and assume control over their strategy.” More

Washington Post
Banks to Continue Paying Dividends
U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years. The government said it was giving banks more money so they could make more loans. Dollars paid to shareholders don’t serve that purpose, but Treasury officials say that suspending quarterly dividend payments would have deterred banks from participating in the voluntary program. Critics, including economists and members of Congress, question why banks should get government money if they already have enough money to pay dividends — or conversely, why banks that need government money are still spending so much on dividends. “The whole purpose of the program is to increase lending and inject capital into Main Street. If the money is used for dividends, it defeats the purpose of the program,” said Sen. Charles E. Schumer (D-N.Y.), who has called for the government to require a suspension of dividend payments. More

Yahoo News
More than 30 letters containing a suspicious powder were mailed to Chase bank branches and federal banking regulators’ offices in nine cities, authorities said Tuesday in what was being investigated as a first, if extreme, public backlash over the nation’s financial crisis. Initial tests on the powder proved negative for poisonous or otherwise dangerous toxins, the FBI said. An FBI spokesman in Oklahoma, where eight letters turned up, said local preliminary assessments showed the powder was harmless calcium.

Additional tests were being run on the letters Tuesday as officials zeroed in on possible suspects near Amarillo, Texas, where the letters were postmarked. “Most of these letters contain a powder substance with a threatening communication,” the FBI said in a statement.

“Even sending a hoax letter is a serious crime,” the FBI said.

A law enforcement official said the letters were mailed to Chase bank branches in or near Atlanta, Chicago, Columbus, Ohio, Dallas, Denver, Newark, N.J., New York City, Oklahoma City and Washington. They all appear to be from the same source and began showing up at the banks on Monday, according to the official who spoke on condition of anonymity because he was not authorized to discuss the matter publicly. More

Guardian
Spanish officials were yesterday reported to be looking for ways of encouraging Spaniards to remove the estimated 108m €500 notes they have hoarded in safes or under floorboards and take them to the bank. That averages out to at least two per Spaniard, or a total of €54bn, circulating outside the country’s banking system. A combination of tax-cheating and a long-standing mistrust of banks, means Spain soaks up a quarter of all the €500 notes - one of the world’s highest denomination bank bills - released every year. One option for getting the notes into the banking system, by offering a no-questions-asked fiscal amnesty, was ruled out by the finance minister Pedro Solbes yesterday. El Mundo newspaper reported, however, that there had been pressure from within the government’s finance team to consider a fiscal amnesty. Spain’s tax inspectors, whose job it is to root out the notes when they are used for tax fraud, were among those opposing the idea. More

Source: GATA
By Jane Cai and Adam Chen
South China Morning Post, Hong Kong
Thursday, September 25, 2008

http://www.scmp.com

BEIJING — Mainland regulators have told domestic banks to stop lending to United States financial institutions in the interbank market in a bid to prevent possible losses during the financial crisis, industry sources said yesterday. The ban from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to US banks but not to banks from other countries, a source said. The CBRC was not available for comment yesterday.

The decree appears to be Beijing’s first attempt to erect defences against the deepening US financial meltdown after the mainland’s major lenders reported billions of US dollars in exposure to the credit crisis. Lending transactions on the mainland interbank market totalled 10.65 trillion yuan (HK$12.17 trillion) last year, according to the People’s Bank of China. In the first eight months of this year, transactions totalled 10.11 trillion yuan, up 104 per cent from a year earlier. At the end of last year, the mainland interbank market had 717 members, including banks, securities companies and trust companies. Another banking source said the CBRC issued the ban after obtaining data about the exposure of mainland banks to bonds issued by bankrupt Lehman Brothers Holdings. Top officials said they were keeping a close watch on the crisis and warned mainland financial institutions to be cautious in their daily business and overseas expansion.

“The international transaction volume of Chinese banks is not big. Those concerning subprime loans are probably lower than US$10 billion,” deputy central bank governor Ma Delun wrote this week in the China Business Post, a People’s Bank of China-affiliated newspaper. But the deteriorating situation in the US has shocked top officials. Mr Ma said that among the unexpected developments was the effect the crisis was having on normal assets, not just problematic assets; its impact on the whole credit market, not just single products; and its effect on Europe and other nations, not only the US. The exposure of seven listed mainland banks to bonds related to Lehman Brothers totalled US$721 million. Mainland banks had US$9.8 billion in exposure to US subprime loans at the end of last year and US$25 billion to Fannie Mae and Freddie Mac by June 30.

Submitted by partypup on September 17, 2008 - 10:37pm
piggington.com
I know that I have been characterized as “alarmist” and a “doomsayer” by many on this board in the past, but I would be remiss if I did not pass along some information to you all that I have learned from a very knowledgeable and well-placed source in the finance industry who has guided me for the past two years as I have attempted to navigate this crisis.

This source predicted, four (4) months ago, that the market would enter a heart-pounding phase in mid-late September. It would be as though, in his words, “the world would hold its breath” in anticipation of what would follow.

And then, on or about the first week of October, the dam would suddenly burst and the ride to hell would begin — for months. He predicted that the system would experience a massive seizure, such that all electronic forms of trade (stocks, banks, ATMS) would simply fail. And the much-delayed death of the dollar would begin in earnest.

This coincides almost exactly with what the think tank at LEAP (http://leap2020.eu/GEAB-in-English_r25.html) has been predicting for the past 18 months. I have studied each of their reports, in which they have consistently labeled Fall 2008 as the point in which the world in general, and the U.S. in particular, would enter the heart of the system crisis. The only variation I note is that LEAP estimates that the dollar’s role as the world’s reserve currency will cease around the end of the 2nd quarter of 2009. My source believes that it will happen sooner. Or perhaps it is the case that the process begins in October and culminates in June. In any event, the Fall and Winter are going to be extraordinarily brutal.

I am hoping that all who read this will understand the message that I am trying to relay to you: time is short. Many of us have been expecting what is coming from months or years. Some have only awaken to what is coming a few months ago. Others still don’t understand what is coming. But as Wall St literally disintegrates before our eyes, I don’t think there can be any question at this point that we are on the verge of something unprecedented and catastrophic.

If you have money in the markets, you need to get it out NOW.

If you have a 401K and are fearful of a withdrawal penalty and taxes, keep in mind that 60% of something is better than 100% of nothing.

If you have more funds in your bank than the absolute minimum necessary to pay your expenses, then you’re playing Vegas odds. FDIC is technically insolvent as I write this, and one more major bank failure will trigger an unstoppable run on our retail banking system.

Buy a safe. Keep as much cash at home as you feel comfortable storing. BUY METALS. They will be volatile in the near term, but they are truly your best bet for asset protection in a world that is about to implode in a derivatives supernova.

The Chinese did something astounding…they effectively broadcast to the world that a new world reserve currency is needed. The world heard them…I think that any thinking person can see that the unthinkable is now about to happen. The dollar is about to become irrelevant.

http://us.mobile.reuters.com/mobile/m/An…

And lastly, at the risk of sounding completely alarmist, I would advise you all to begin stocking up on goods that you will need to keep your household functioning in the near (and possibly long) term. When the system fails, there will be massive supply disruptions for a variety of reasons, not the least of which will be that panic will trigger a hoarding mentality, gas will be in short supply and inventories will be easily wiped off of store shelves. Can we buy enough food and supplies to last the rest of our lives? Of course not. The goal here is simply not to be a casualty in the first wave of the tsunami that will wipe out millions. Once the first wave has passed, we can pick ourselves up, look around for a place of safety and start moving.

I’m not advising anyone to buy a gun or any form of protection, although I think civil unrest is entirely possible, particularly in large metropolitan areas.

I am simply advising that, at a minimum, we all be prudent in preparing for what now seems inevitable. An ounce of prevention in these times is easily worth a ton of cure.

For those who may disagree with my post, I respect your opinion and would only ask that you not denigrate mine and simply move on to the next thread. I share this information with you all solely out of a concern for my fellow citizens.

I am hoping this thread will allow like-minded individuals to share practical information and advice as we all move into a grim and unchartered period in our nation’s history.

Good luck to us all.

Mish
Global Economic Analysis
Somehow Paulson has gone from “Our banking system is a safe and a sound one” to Paulson telling Congress “That we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.” Mortgage lenders, banks, the auto industry, home builders, broker-dealers all are asking for handouts. Today I see Paulson saying Foreign banks may get help. The implications are twofold.

1) Paulson and Bernanke are liars
2) Paulson and Bernanke are incompetent

There are no other choices except “both of the above”. Shouldn’t Paulson and Bernanke have the obligation to explain how that happened, and most important what the Fed’s role and Congress’s roll in that was? Yet somehow Congress is supposed to rush through a package that is arguably unconstitutional, because two known liars and/or incompetents say there is an urgent need to do so. Sadly, Congress is more concerned about getting something done quickly than getting something done right. In the corporate world one would expect to see overtime hours. Here we are in a global financial emergency and Congress is concerned about getting something done before recess. Notice that Paulson does not want Congress adding anything to the bill, yet he is willing to bailout foreign banks. In return for what? Read More

Contact Your Senator Today!

It’s time to contact your senator. Here is contact information for Senators of the 110th Congress.

Phone or Email your Senators today. Tell them in your own words

* Urge your senator to Filibuster any bailout legislation.
* Emphatically state you do not want a bailout of any kind for anyone.
* No Dictatorial power for Paulson or Bernanke
* Taxpayers should not have to bail out banks making bad loans
* Tell them that “The Fed” and Paulson are systemic risk”.

Email AND Phone Senators Shelby, Bunning, Kyle, Ensign, Hagel

Whether Senator Shelby is your Senator or not, flood him with calls and emails asking for a filibuster and to stop the insanity. Senators Shelby, Bunning, Ensign, and Kyle might be sympathetic to the cause, based on past statements. I am taking a stab at Hagel.

Ask For A Filibuster

Please email and phone the following. Specifically ask for a filibuster and tell them to vote no to any bailout.

Tell them that anyone who votes for this bailout will never get your vote again.

Shelby, Richard C.- (R - AL)
110 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-5744
E-mail: senator@shelby.senate.gov

Bunning, Jim- (R - KY)
316 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-4343
Web Form: http://bunning.senate.gov/public/index.cfm?FuseAction=Contact.ContactForm

Kyl, Jon- (R - AZ)
730 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-4521
Web Form: kyl.senate.gov/contact.cfm

Ensign, John- (R - NV)
Washington D.C. Office
119 Russell Senate Building
Washington, D.C. 20510
Phone: (202) 224-6244
Fax: (202) 228-2193
Web Form: ensign.senate.gov/forms/email_form.cfm

Hagel, Chuck (R - NE)
248 RUSSELL SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-4224
Web Form: hagel.senate.gov/public/index.cfm?FuseAction=Contact.Home

Please email and phone both of your senators as well.

Source: Financial Week.com
U.S. federal regulators recently called a number of banks asking if they would consider buying Washington Mutual should it eventually falter, the New York Post said, citing sources. Federal banking regulators, in recent days, contacted Wells Fargo, J.P. Morgan Chase, HSBC and several other financial institutions to gauge their interest in a possible acquisition of WaMu, the paper said. No merger discussions are currently under way between the Seattle-based bank and anyone else, the sources told the paper. Washington Mutual could not be immediately reached for comment.

Jim Willie CB
The bankruptcy of America is the story of the year, as 2008 is the year the system breaks. The crowning blow is the exported bond fraud, its lack of prosecution within the US, and the exclusion of US banks and some corporations from the planned ‘Post-US World’ underway. Numerous summit level conferences where important commerce and banking agreements have been recently forged on several continents, all having excluded the United States from participation. Big movement is seen in the US bond market. Foreign central bank intervention has accelerated in the last several weeks. The 10-year TNote yield is at the 3.6% level after hue & cry of price inflation all through spring months. NO SURPRISE HERE! We might be seeing a double top failure in the long-term USTreasurys. The historical chart bears this out more clearly.

Along with a USTreasury rally has come a giant swap trend, as foreign wealth centers have traded out US Mortgage Agency bonds and into USTreasurys, adding to the blowoff top. Some foreign entities are openly requesting bailout redemption of impaired bonds. All corners seem to be hunkering down into USTBonds as a safe haven. The risk of an actual default in USTreasurys must be taken seriously, in view of upcoming intentions, however unwillingly executed, to nationalize everything under the sun inside the US landscape. The natural nemesis in financial markets for gold is the USTreasury Bond. New supply puts it at great risk. The printing press with raised lamination will produce huge USDollar output soon. Nationalization demands it. The consequent risk to the USDollar and USTreasury Bond is deep, profound, and stark!

As the USEconomic recession has taken grip, capital gains tax revenues and payroll income tax revenues are way down. Almost no specific story supports the growth story told. Even the export trade will be tripped up by global slowdown. The USGovt federal budget deficit will be enormous, even without the nationalization demands. The collection of sectors seeking imminent bailouts in the nationalization theme include Fannie Mae & Freddie Mac, General Motors and Ford, Wall Street banks, and some airlines. Add to that demand some staggering funding requirements for the Federal Deposit Insurance Corp (covering failed bank deposits) and the Pension Guarantee Fund (covering failed corporate pension funds), to raise strain to a crescendo. Did PIMCO actually hint they wanted a bailout too? Of course, never overlook the sacred military budget demands, never to be challenged or reduced, but always adding great USTBond supply.

During the past two decades, foreigners have accumulated gigantic USTBond holdings. Now finally, too many foreign enemies hold huge amounts of USTBonds, a risk my work has mentioned steadily. The US no longer controls its destiny. The risk to sovereignty has built to a point of recognition as capital sale replenishment deals abound, a frequent occurrence for big banks. The USDollar is rallying when its financial condition is imploding. The driving force for the deteriorating crippled US condition is the housing decline. Just today, more dreadful home foreclosure and delinquency data was released. The story of US relative strength is absurd on its face, and yet another important chapter in the US Economic Mythology treatise. Such a contradiction invites a reaction.

Watch the South Koreans not invest in either Lehman or Merrill Lynch, since they are not fools. Did Lone Star actually sue the Koreans so as to block this rescue effort? Look for one or both of these Wall Street crippled firms to fall into bankruptcy soon. The climate will change radically as a result. The end of the Q3 quarter is nigh, and admission of renewed larger bank losses is a cinch. They are nowhere near the end of their mortgage nightmare. Watch Citigroup and AIG for matching failures. The Credit Default Swap conflagration is located on the AIG doorstep. The sovereign risk to the United States is now overshadowed by a risk of pre-emptive financial attack from foreign locations. The point here is that a mountain of new USTreasury supply is guaranteed to come soon. The new supply flies in the face of rising price. The timing for a bond attack is soon possibly perfect. For years, nobody has questioned the USTBond as the only viable parking lot for surplus capital, the largest and most liquid market in the world. Times will change. Third World bonds do not flourish!

The price inflation front is another big risk for USTreasurys. A CPI over 5% for back to back months represents a threat, but it is allayed by dormant wages. Next year, many sharp analysts expect the US Consumer Price Index to top level 10% level. Already the jobless rate surpassed 6% in the US, amidst a strange admission. Recognized in the open was how the extension of state jobless benefits resulted in counting more of the jobless! The return of gold used as an inflation hedge will be realized soon. As trade friction grows with China, in Post-Olympics times, the US will be less the beneficiary to lower wages from globalization. Gold will be the ultimate safe haven vehicle soon.

A scenario must be laid out for theories of discontinuous nonlinear events and solutions whose fallout will alter completely the global geopolitical chessboard. The September Hat Trick Letter will focus on this topic from numerous angles. The next global chapter will have the United States isolated into a ‘Glorified Third World’ surreal land. What many analysts fail to comprehend is that the current situation cannot continue, characterized by Third World finances, unspeakable bank fraud, and aggressive military behavior, whose mix is totally incongruous. Continuation of the status quo is untenable. The most recent events to upset the geopolitical balance in a state of constant flux is the attack by the US and Georgia forces against Russia, portrayed in opposite fashion. The US even had some help from allies on the battlefield, with dead soldiers behind the Russian lines held in freezer chests as bargaining chips and tangible proof. This all is avoided by the intrepid deceptive US press. To seek sanctions against Russia for its own defense seems ludicrous. The Russian bear has been goaded, poked, and provoked in a systematic fashion. It will respond. Behind the scenes, plans have been made. The USMilitary is funded increasingly by foreigners, many of whom are considered enemies. It is almost tragic that so-called trade partners at the beginning of this decade 2000 have turned into enemies. Russia and China will become uneasy essential allies, whose common trait will be their opposition to the United States. They each want a formal seat at Global Finance Minister Meetings, routinely denied. The fragile trade relationship that the US depends so critically upon hinges upon continued USTreasury Bond support. Do not consider it assured. The USTreasury Bond is the quintessential point of vulnerability to the entire US financial, economic, and military system. A pre-emptive attack against the USTBond must be taken seriously. That is the story that has come to my desk in recent weeks.

Europe is the key prize. The US is attempting to push Europe into a conflict with Russia, so that the Russian emerging giant does not forge closer ties with Europe, to the exclusion of the United States. The NATO accords have been twisted and dishonored, used as a US convenience. Some might argue that NATO is dead, remaining only as a sharp stick to poke Russia with. The Russian-German relationship is natural and historical. Even Catherine the Great from Russia was from German royal bloodlines. The Russian-European energy supply relationship is natural and efficient. President Putin, and now his sidekick Medvedev, have grand resource and energy deposit wealth, and full willingness to use it as a powerful weapon. They might soon exclude the US in the supply chain, in favor or China, all the while keeping the tap flowing to Europe. The German leaders seem to be talking honestly with Russians, but engaging in lipservice to the Americans, winking across the Urals in the process. The next stage of conflict is Ukraine, where more US color revolution meddling is deep. What many US tacticians fail to comprehend is that the USMilitary machine is on the verge of depletion (both troops & machinery), at a time when Russia has developed some key tactical superiority. The USMilitary is left with missiles, aircraft, and drones. See the anti-ship Sunburn and Onyx missiles in Russian control, each supersonic. The US Cruise missile is not. An attack on Iran, whether warranted or not, will immediately prompt a harsh and lethal financial counter-measure by Russia and its allies. The hapless US leaders are left to squirm and wonder who their allies are these days. Iran could be the grand trap. More

Banks transferred funds out of the United States and into Europe in the first three months of 2008 as they turned to safer assets amid the global credit crunch, the Bank for International Settlements said. “In the first quarter of 2008, reporting banks continued their net transfer of funds out of the United States, a trend evident since the onset of the financial turmoil in mid-2007,” the Swiss-based BIS said in its quarterly review of financial markets and banking activity, published on Monday. More

Bennet Sedacca
Minyanville.com
What strikes me the most about impaired companies, whether they are automakers, airline companies, banks, brokers or GSE’s is that they seem to sing the same tune, that there is a pattern of behavior. This is how I have attempted to identify in the past what would be in trouble in the future (whether that was just to avoid their stocks and bonds from the long side or to try to profit from their missteps on the short side).

It’s a pattern that isn’t terribly dissimilar from the emotion charts I like to focus on so much. But in the graphic below, I will run this analysis on banks. I call this cycle the “Dead Man Walking Cycle.”

The first “tip-off” or “tell” is when a company releases earnings or some sort of positive announcement and the stock falls. Another important tell is the credit spreads of the debt of the company begins to widen. Then, the company will usually announce that “all is well and is so great that we will buy back stock and not cut the common dividend.” After this comes the “acceptance” phase and write-offs/write-downs are announced and that some sovereign wealth fund or private equity firm will inject capital or that a company within the same group will buy a “strategic stake.” After a brief pop in the stock and short covering rally, the stock begins to fall further and credit spreads begin to blow out and preferred shares get hammered. Then, more write-downs and more write-offs and another capital raise and finally a dividend cut to “preserve capital.”

Sound familiar yet? More

Captain Hook
Subterfuge, illusion, and misdirection - this is what the bureaucracy perpetuates on the public every day. Please look over here at the giveaways and presents we have for you while we continue to defraud your children out of a future - all for the greater good you know. Not surprisingly then, the net result of all this is an increasingly debased society, which accounts for our willingness to allow the same for the currency. Quite literally, one couldn’t make this stuff up if you tried, such supposedly wealthy and educated people willing to give up their liberties so easily, but at the same time this has all happened before (think Rome - Bread And Circuses), just not on this scale. And nobody wants to touch the subject matter because it’s just that ugly, a dark reflection on what we have become. A society of gamblers and drug addicts who need a variety of fix every day just to get by.

By extension then, this tendency is seen within investing habits as well, where once conservative markets have literally turned into casinos, with all caution thrown to the wind. And it’s important for you to recognize this, that present trading mechanisms are not ‘markets’ anymore, but instead ‘betting parlors’, which accounts for the unbridled growth of derivatives and toxic paper contracts designed to swindle your money in being heavily in favor of the house. Certainly the most flagrant example of this is found in the rise and fall of various toxic securitized real estate debt schemes perpetuated by ‘the establishment’ that helped blow that bubble up far greater than ever should have been allowed. Having worked through the initial effects of subprime in the markets for the most part at present, which has finally set our corrupt financial community on the road to ruin where it belongs, process continues to unfold in this regard.

Oh yes, and corrupt they are, our present day financial community, and more. They are bold and reckless as well. Exactly how bold and reckless are they, and why should this matter to you? If I may, I would like to borrow from one of Jim Sinclair’s recent dispatches that sums the situation up nicely in my opinion, as follows:

“The banks think that they have established the principle that if they over borrow enough, if they are reckless enough, if they expand enough, they become “too big to fail” and their losses will be borne by the taxpayers and all holders of the currency, while they keep their personal profits and bonuses.”

So you see, the reason one should care about this is in adding insult to injury, an equally corrupt bureaucracy expects the public to pay for the financial community’s excesses on the premise to do otherwise would level the system. Talk about holding a gun to your head, no? And of course this is in fact the situation, while at the same time banks and the bureaucracy also conspire to suppress precious metals to remove alternatives for those who contemplate exiting the system. In a nutshell then, the markets and financial system are a function of the government sponsored Ponzi Scheme (the largest ever — known as the Fed) being perpetuated by the banks, now intensifying as an implosion approaches. More

Former US Federal Reserve chairman Alan Greenspan has warned that governments the world over may have to bail out more banks before the current financial crisis is over. Writing in the Financial Times on Tuesday, Greenspan also warned of the “awesome cost” of a move towards protectionism by governments, arguing that globalisation was “at the root” of economic growth around the world over the past decade. “Fears of insolvency have not, as yet, been fully set aside,” Greenspan wrote. “There may be numbers of banks and other financial institutions that, at the edge of defaulting, will end up being bailed out by governments.” More

(Reuters) - Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year old credit crisis took a persistent toll, while the commercial paper market continued to contract, signaling tough conditions for short term borrowers. Banks’ primary credit borrowings averaged $17.45 billion per day in the latest week, the second straight week this had hit a record and up from $16.38 billion the previous week, Fed data showed on Thursday. “It shows there’s a shortage of liquidity in the system,” said Christopher Low, chief economist at FTN Financial in New York. Secondary credit the Fed extended, which is usually taken out by banks in need of emergency cash, rose to $89 million in the latest week, from $34 million the week before. Although these numbers are still very small compared with primary credit, “What that tells you is that there’s an increasing number of banks that the Fed is classifying as ‘unsound’ or inadequately capitalized,” Low said. More

Banks struggling to recover from multibillion-dollar losses on real estate are curtailing loans to American businesses, depriving even healthy companies of money for expansion and hiring. “The second half of the year is shot,” said Michael T. Darda, chief economist at the trading firm MKM Partners in Greenwich, Conn., who was until recently optimistic that the economy would continue expanding. “Access to capital and credit is essential to growth. If that access is restrained or blocked, the economic system takes a hit.” Companies that rely on credit are now delaying and canceling expansion plans as they struggle to secure finance.

Drew Greenblatt, president of Marlin Steel Wire Products, figured it would be easy to get a $300,000 bank loan to finance a new robot for his factory in Baltimore. His company, which makes parts for makers of home appliances, is growing and profitable, he said. His expansion would add three new jobs to an economy hungry for work. But when Mr. Greenblatt called the local branch of Wachovia — the same bank that had been aggressively marketing loans to him for years — he was distressed by the response. “The exact words were, ‘We’re saying no to almost everybody,’ ” Mr. Greenblatt recalled. “This is why God made banks, for this kind of transaction. This is going to slow down the American economy.” More

Daniel Gross
In recent weeks, American financial services companies have moved from the post-binge phase of dilutive capital raising—running around the world with a tin cup, urging well-heeled foreigners to invest in the crippled firms on purportedly advantageous terms—into the phase of selling the family jewels. Over the past year, banks have taken write-downs and raised new cash from investors, only to take new write-downs within weeks, thus turning those new investors into losers. And so as they face the need to raise more capital, banks can no longer raise billions from Dubai gazillioniaries and Chinese investment funds, who’ve been burned once. Now banks are having to sell their hard assets—in some cases, extremely valuable hard assets that have been passed down from generation to generation. More

The Securities and Exchange Commission’s move to curb “naked” short selling may have blunted some of the selling pressure on financial stocks. Or, it may have just driven that business into the options market. Options traders don’t appear to have been infected by the recent optimism in financial shares that erupted when the SEC decided to require investors to “pre-borrow” shares of 19 financial companies before selling them short. This week, options to sell bank stocks continued to see much higher demand than options to buy. And for 11 of the 15 firms on the SEC’s list for which options trade in U.S. markets (19 firms were named in total), the ratio of puts to calls has actually widened. “Our customers are looking for an aggressive pullback in financials, and to make that play now, they’re buying puts and selling calls,” said a trader at a mid-sized New York brokerage.

For example, HSBC Holdings PLC has seen its outstanding put-to-call ratio climb to 2.2 as of Tuesday’s close from 1.9 earlier this month, according to data from TradeAlert. That’s the case even though the bank’s stock has climbed 16% since the SEC announced its new rule last week. Wednesday, 27,000 put options on HSBC stock traded, compared with 3,000 calls, even as the stock climbed another 1.7%. Puts are options to sell a stock at a later date at a given price, and a higher ratio suggests more bearishness. More

Banks in Colorado, Maryland, Georgia and California top privately-prepared lists of troubled banks being circulated on Wall Street and in Washington. While the Federal Deposit Insurance Corporation (FDIC) is keeping secret its official list of 90 troubled banks, ABC News has obtained other lists prepared by several research groups and financial analysts. The lists use versions of the so-called “Texas ratio” which compare a bank’s assets and reserves to its non-performing loans, based on financial data made public by the FDIC in March.

Analysts say banks with a ratio over 100 per cent would be the most likely to fail, based on what happened to Texas savings and loans during the 1980’s. “That a fair measure,” said Hal Scott, a Harvard law school professor specializing in banking law. “It doesn’t mean every one of those banks is going to become insolvent, but if you have more bad loans than assets, it’s not a bad way to judge what could happen,” Scott told ABC News. More

July 4 (Bloomberg) — European stocks dropped, capping their fifth weekly decline, on concern banks will post more writedowns and near-record oil will curb airlines’ profits. Canada’s benchmark index and most shares in Brazil and Asia also fell. The fifth straight weekly drop is the longest losing streak since a seven- week slump ending Jan. 25. “Markets around the world have had a rough ride and news flow remains challenging,” said Andreas Nigg, head of international equities Vontobel Asset Management in Zurich, which oversees $39 billion. “The banks are not in good shape, and it will get harder to raise capital. Oil is still going up. It’s like a tax that keeps getting worse.” More

As automakers dropped their latest batch of awful sales numbers on the market on Tuesday, reinforcing the gloom spreading across the economy, the troubles confronting American workers seemed to intensify. Plummeting home prices have in recent months eliminated jobs for hundreds of thousands of people, from bankers and real estate agents to construction workers and furniture manufacturers. Tighter lending standards imposed by banks in the wake of huge mortgage losses have made it hard for many Americans to secure credit — the lifeblood of expansion in recent years — crimping the appetite of consumers, whose spending amounts to 70 percent of the economy. Joblessness has accelerated, and employers have slashed working hours even for those on their payrolls, shrinking the size of paychecks just as workers need them the most. More

NEW YORK (Reuters) - The high price of gasoline has some U.S. drivers looking to the future. A recently introduced service called MyGallons.com allows drivers to fill up their tanks sometime in the future but at current prices, using a debit-like card which banks gallons rather than dollars. “The price of gasoline was changing all the time. It seemed unpredictable,” Steven Verona, founder and owner of the Miami-based company, said on Monday. “It seemed there had to be a way to fix the price,” he said. Working on the assumption that the price of gasoline will continue to rise, Verona started about two and a half years ago to put together the company which gives the driver some measure of control of what he pays for gasoline. More

CANADIAN PRESS
“Banks are often victims and we know that they only declare very few of the crimes committed against them,” said Yves Francoeur, who heads the Montreal police brotherhood. The RCMP’s anti-fraud centre has tried to push the financial sector to be more up front with authorities. But they claim the major players in the industry fear their reputations will be tarnished by having embarrassing cases such as identity theft exposed in public.

The Mounties believe the $35 million of mass-market fraud reported in 2007 represents at most 10 per cent of all incidents. Criminals make use of phishing e-mails and other forms of social engineering technology to steal personal information, which can in turn be used to defraud retailers and financial institutions. Social engineering fraudsters work from the belief that its easier to trick someone into giving up information than to steal it from them.
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LARA JAKES JORDAN/AP
The Globe and Mail
U.S. authorities have charged 38 people with stealing names, Social Security numbers, credit card data and other personal information from unsuspecting Internet users, the Justice Department said Monday. Indictments unsealed in Los Angeles and New Haven, Conn., say a global crime ring sought to rip off thousands of consumers and hundreds of financial institutions.

The Justice Department announced the busts in two separate but related cases Monday morning during a trip by the deputy attorney general to Romania. More than half of the people charged are Romanian, although the alleged scam also operated from the United States, Canada, Portugal and Pakistan. Read more

Photo whorange

Investors in Swiss bank UBS have found out the hard way that putting your cash in the hands of investment management “professionals” is as good a way as any to ensure you get back less than you put in. Now just wait and see what happens to American banks … and then to American shares … and houses, and bonds. Doomed? Absolutely.
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Photo courtesy of Bob

Rising costs are hitting the middle class hard with staples such as rice, wheat, corn and milk on the rise. At food banks across the country, donations are slowing down, because, among other things, people who once donated are now in need of food themselves. So, donations are decreasing as the need for their services increases. One food bank official calls it “the perfect storm”.
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Photo by McGun

Newsmonster
Christeen Skinner is one of a growing, albeit secretive, network of astrologers who work for seemingly conservative British institutions such as high street banks, City investment funds and retailers. Desperate to avoid financial meltdown in the ongoing ‘credit crunch’ and to spot fashions and consumer trends before they start, these institutions have turned to the stars to divine the future.

Jim Porter, chief technical analyst for one of the UK’s largest banks…uses heliocentric magi astrology to predict the direction of the international financial markets. Millions of pounds worth of commodities, shares and currencies are traded on his command.
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