In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.
But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.
Monday, March 30, 2009
Sunday, March 15, 2009
The wisdom of Crowds?
Either they are interested in the fashion, or interested in wearing armour on a day to day basis to survive Gordon's Depression.
Click the title for the link.
Click the title for the link.
Friday, March 13, 2009
Local councils set to provide business loans
Local councils set to provide business loans
* Story by: Simon Read
* Magazine: FinancialAdviser
* Published Thursday , March 12, 2009
Local councils are planning to start offering loans to help boost local economies.
Essex Council has revealed details of a proposed Bank of Essex, which will make finance available to local small businesses struggling to get finance through commercial banks.
At the same time several local authorities are pressing for government support for a scheme which will allow them to help residents who are unable to get mortgage finance from banks. Essex Council said the proposed Bank of Essex would act as an intermediary to release European Investment Bank funds for local firms.
Lord Hanningfield, leader of Essex County Council, said: "I am passionate about supporting local businesses through the downturn, as they truly are the backbone of our local economy."
He revealed secured loans would be available on a short-term basis - between six and 18 months - and would be awarded in tens of thousands rather than hundreds of thousands of pounds.
At Birmingham City Council, plans are advanced to lend to businesses and homeowners and it is also considering the possibility of taking deposits.
Jack Glonek, a spokesman for the council, said: "It is a question of finding the right people and experts to partner with."
Meanwhile, a number of councils - led by Lambeth and Bolton - are exploring the feasibility of offering loans to residents, but could also need help from advisers.
Steve Reed, leader of Lambeth Council, said: "This is not something councils can do alone, they will have to work with financial experts and mortgage professionals."
Akhtar Zaman, executive member for housing strategy and regeneration for Bolton Council, said: "We are looking at the possibility of identifying sources of funding to help."
However, Sue Anderson, head of external relations at the CML, said: "We would be surprised if it became mainstream and widespread."
Idiocy.
* Story by: Simon Read
* Magazine: FinancialAdviser
* Published Thursday , March 12, 2009
Local councils are planning to start offering loans to help boost local economies.
Essex Council has revealed details of a proposed Bank of Essex, which will make finance available to local small businesses struggling to get finance through commercial banks.
At the same time several local authorities are pressing for government support for a scheme which will allow them to help residents who are unable to get mortgage finance from banks. Essex Council said the proposed Bank of Essex would act as an intermediary to release European Investment Bank funds for local firms.
Lord Hanningfield, leader of Essex County Council, said: "I am passionate about supporting local businesses through the downturn, as they truly are the backbone of our local economy."
He revealed secured loans would be available on a short-term basis - between six and 18 months - and would be awarded in tens of thousands rather than hundreds of thousands of pounds.
At Birmingham City Council, plans are advanced to lend to businesses and homeowners and it is also considering the possibility of taking deposits.
Jack Glonek, a spokesman for the council, said: "It is a question of finding the right people and experts to partner with."
Meanwhile, a number of councils - led by Lambeth and Bolton - are exploring the feasibility of offering loans to residents, but could also need help from advisers.
Steve Reed, leader of Lambeth Council, said: "This is not something councils can do alone, they will have to work with financial experts and mortgage professionals."
Akhtar Zaman, executive member for housing strategy and regeneration for Bolton Council, said: "We are looking at the possibility of identifying sources of funding to help."
However, Sue Anderson, head of external relations at the CML, said: "We would be surprised if it became mainstream and widespread."
Idiocy.
What's the difference between Bernard Madoff and Gordon Brown?
Gordon Brown and Bernard Madoff are separated by a single detail – Bernie's pleading guilty
Jeff Randall believes that the Prime Minister's mismanagement, which has brought us a dysfunctional state as well as financial disaster, will prove far more costly than any Ponzi scheme.
What's the difference between Bernard Madoff and Gordon Brown? Answer: one has drained fortunes from gullible victims, plundering their income and savings to create an illusion of prosperity. The other is going to jail.
Mr Madoff has thrown in the towel. His Ponzi scheme, whereby he needed to suck in ever greater quantities of other people's money in order to maintain a semblance of competence, collapsed under the weight of undeliverable expectations. Nobody knows for sure how much has gone missing, but Wall Street scribes are calling it a $65 billion fraud.
Not bad for peddling fresh air. It is, however, a nickel-and-dime swindle when set alongside the
12-year con trick perpetrated by Mr Brown on British taxpayers. That, too, has been a form of Ponzi, but with many more zeroes and little chance of the mastermind ending his days in what Americans call Crowbar Hotel.
The Prime Minister is nothing if not a man of vaulting ambition, with a desire for power which, like Macbeth's, "o'er leaps itself". While Big Bucks Bernie was snaffling billions, Mr Brown had his sights trained on trillions.
Five trillion, to be precise – that's £5,000,000,000,000 – which is how much Labour has taxed and spent since it came to power. In 1998-99 its Budget was £333 billion. By 2008-09, the Government's annual expenditure had grown to £618 billion. Every year, the sums required to shore up the house of cards became bigger and bigger. But while the good times rolled, too few cared to notice what was really going on.
We await with trepidation this year's stab in the dark. On the basis that bad numbers take longer to add up than good ones, it is ominous that the Chancellor has put back his annual showpiece to April 22, the latest it has been for many years. One fears that fiscal discipline has been thrown over the fence, replaced by a confection of guesstimates, wishful thinking and spin.
Though the scale of their operations was very different, the sales techniques of Mr Madoff and Mr Brown were remarkably similar. Mr Madoff persuaded clients that he owned the secret of everlasting growth, a way of defying financial gravity. His unique selling points were, yes, stability and prudence.
So, while the returns of rivals bounced about in line with economic conditions, Mr Madoff kept producing a steady, above-average performance. Or so it seemed. He never claimed to have abolished boom and bust, but invited punters to infer that, thanks to his genius, this was indeed the case.
Over the years, Mr Madoff stretched the credulity of his constituency well beyond what a rational man might have thought possible. Those who tipped cash into his coffers seemed anxious, in some cases perversely determined, not to ask difficult questions. The trompe l'oeil was too delicious to be questioned. For a while, fantasy economics passed for reality in New York and London.
When the elastic finally snapped, so did Mr Madoff's resolve. Rather than conjure yet more elaborate excuses to cover the hole where his clients' investments were supposed to be, the old rogue confessed. He could no longer bear the strain of living a lie. Coming clean, it seems, was a relief.
It's at this point that comparisons to Mr Brown come to an end. For not only is there no prospect of the Prime Minister pleading guilty, he refuses to acknowledge any aspect of his catastrophic mismanagement. It may seem impossible to believe, but Mr Brown, far from recognising that he has ruined Britain, still has plans to save the world.
The astonishing element of Mr Madoff's magic is that, by all accounts, he made the money disappear. Investigators do not expect to find it stuffed under a Manhattan mattress or locked away in a Panamanian bank. They say that it has literally vanished. One minute it was in a Florida savings account, the next it was being propelled through the ether and beyond. Whoosh! Mr Madoff's loyal followers have been left with a whole lotta nuthin'.
For the victims of Mr Brown, it's worse than that. Much worse. His legacy is not an empty box. If only it were that simple. What he will leave behind is a dysfunctional state, stripped of sovereignty, up to its eyeballs in so much debt that not even our children's children will be free from the burden.
The misguided promotion of multiculturalism and open borders that marked the first and second phases of Labour's administration will continue to undermine social cohesion. Children in comprehensives will be handed debased certificates of success, while falling further behind pupils in grammar and independent schools. An unfunded pension system that is, in effect, an inverted pyramid of unaffordability will buckle and crack.
The Prime Minister's shameless blaming of others for this mess has been rumbled. Even senior civil servants are spilling the beans. Hector Sants, chief executive of the Financial Services Authority, pointed to the Prime Minister's complicity in the economic crisis. He said there had been "a prevailing mindset of Government and society promoting the benefits of credit and asset inflation, notably in housing".
Everywhere, there has been scandalous waste. But, as the banking system soaks up unimaginable sums, voters are suffering from "billions fatigue". They find it hard to put into context ministers' depredations of the public purse. When, as happened this week, the Public Accounts Committee calls a £500 million information system for prison officers "a spectacular failure" and "a masterclass in sloppy project management", we are not shocked.
Attempts by critics to stem the flow of government profligacy are met with the predictable response from Downing Street that savings of any sort will mean job cuts, school closures and an abandonment of hospitals. This scare tactic may have worked in the last general election campaign, but looks risible now.
On Newsnight, the ridiculous Yvette Cooper, Chief Secretary to the Treasury, kept a straight face while insisting that the Tories' proposed tax cut on pensioners' investments would mean an end to Britain's apprenticeship schemes. I mean, really! Who is feeding her this claptrap?
The Prime Minister's nightmare is that his credibility is crumbling faster than the nation's finances. His timing is woeful. Between now and the next election just about every indicator of wellbeing will move in the wrong direction. Rising unemployment, bankruptcies and home repossessions will remind an ungrateful electorate how little it owes him.
Bernie Madoff got away with it for so long because his clients wanted to believe in reward without risk, something for nothing. He told a US district judge: "I'm deeply sorry and ashamed for my crimes. I am painfully aware that I have hurt many, many people."
Here, in the Court of Public Opinion, Mr Brown will show no such contrition.
Jeff Randall believes that the Prime Minister's mismanagement, which has brought us a dysfunctional state as well as financial disaster, will prove far more costly than any Ponzi scheme.
What's the difference between Bernard Madoff and Gordon Brown? Answer: one has drained fortunes from gullible victims, plundering their income and savings to create an illusion of prosperity. The other is going to jail.
Mr Madoff has thrown in the towel. His Ponzi scheme, whereby he needed to suck in ever greater quantities of other people's money in order to maintain a semblance of competence, collapsed under the weight of undeliverable expectations. Nobody knows for sure how much has gone missing, but Wall Street scribes are calling it a $65 billion fraud.
Not bad for peddling fresh air. It is, however, a nickel-and-dime swindle when set alongside the
12-year con trick perpetrated by Mr Brown on British taxpayers. That, too, has been a form of Ponzi, but with many more zeroes and little chance of the mastermind ending his days in what Americans call Crowbar Hotel.
The Prime Minister is nothing if not a man of vaulting ambition, with a desire for power which, like Macbeth's, "o'er leaps itself". While Big Bucks Bernie was snaffling billions, Mr Brown had his sights trained on trillions.
Five trillion, to be precise – that's £5,000,000,000,000 – which is how much Labour has taxed and spent since it came to power. In 1998-99 its Budget was £333 billion. By 2008-09, the Government's annual expenditure had grown to £618 billion. Every year, the sums required to shore up the house of cards became bigger and bigger. But while the good times rolled, too few cared to notice what was really going on.
We await with trepidation this year's stab in the dark. On the basis that bad numbers take longer to add up than good ones, it is ominous that the Chancellor has put back his annual showpiece to April 22, the latest it has been for many years. One fears that fiscal discipline has been thrown over the fence, replaced by a confection of guesstimates, wishful thinking and spin.
Though the scale of their operations was very different, the sales techniques of Mr Madoff and Mr Brown were remarkably similar. Mr Madoff persuaded clients that he owned the secret of everlasting growth, a way of defying financial gravity. His unique selling points were, yes, stability and prudence.
So, while the returns of rivals bounced about in line with economic conditions, Mr Madoff kept producing a steady, above-average performance. Or so it seemed. He never claimed to have abolished boom and bust, but invited punters to infer that, thanks to his genius, this was indeed the case.
Over the years, Mr Madoff stretched the credulity of his constituency well beyond what a rational man might have thought possible. Those who tipped cash into his coffers seemed anxious, in some cases perversely determined, not to ask difficult questions. The trompe l'oeil was too delicious to be questioned. For a while, fantasy economics passed for reality in New York and London.
When the elastic finally snapped, so did Mr Madoff's resolve. Rather than conjure yet more elaborate excuses to cover the hole where his clients' investments were supposed to be, the old rogue confessed. He could no longer bear the strain of living a lie. Coming clean, it seems, was a relief.
It's at this point that comparisons to Mr Brown come to an end. For not only is there no prospect of the Prime Minister pleading guilty, he refuses to acknowledge any aspect of his catastrophic mismanagement. It may seem impossible to believe, but Mr Brown, far from recognising that he has ruined Britain, still has plans to save the world.
The astonishing element of Mr Madoff's magic is that, by all accounts, he made the money disappear. Investigators do not expect to find it stuffed under a Manhattan mattress or locked away in a Panamanian bank. They say that it has literally vanished. One minute it was in a Florida savings account, the next it was being propelled through the ether and beyond. Whoosh! Mr Madoff's loyal followers have been left with a whole lotta nuthin'.
For the victims of Mr Brown, it's worse than that. Much worse. His legacy is not an empty box. If only it were that simple. What he will leave behind is a dysfunctional state, stripped of sovereignty, up to its eyeballs in so much debt that not even our children's children will be free from the burden.
The misguided promotion of multiculturalism and open borders that marked the first and second phases of Labour's administration will continue to undermine social cohesion. Children in comprehensives will be handed debased certificates of success, while falling further behind pupils in grammar and independent schools. An unfunded pension system that is, in effect, an inverted pyramid of unaffordability will buckle and crack.
The Prime Minister's shameless blaming of others for this mess has been rumbled. Even senior civil servants are spilling the beans. Hector Sants, chief executive of the Financial Services Authority, pointed to the Prime Minister's complicity in the economic crisis. He said there had been "a prevailing mindset of Government and society promoting the benefits of credit and asset inflation, notably in housing".
Everywhere, there has been scandalous waste. But, as the banking system soaks up unimaginable sums, voters are suffering from "billions fatigue". They find it hard to put into context ministers' depredations of the public purse. When, as happened this week, the Public Accounts Committee calls a £500 million information system for prison officers "a spectacular failure" and "a masterclass in sloppy project management", we are not shocked.
Attempts by critics to stem the flow of government profligacy are met with the predictable response from Downing Street that savings of any sort will mean job cuts, school closures and an abandonment of hospitals. This scare tactic may have worked in the last general election campaign, but looks risible now.
On Newsnight, the ridiculous Yvette Cooper, Chief Secretary to the Treasury, kept a straight face while insisting that the Tories' proposed tax cut on pensioners' investments would mean an end to Britain's apprenticeship schemes. I mean, really! Who is feeding her this claptrap?
The Prime Minister's nightmare is that his credibility is crumbling faster than the nation's finances. His timing is woeful. Between now and the next election just about every indicator of wellbeing will move in the wrong direction. Rising unemployment, bankruptcies and home repossessions will remind an ungrateful electorate how little it owes him.
Bernie Madoff got away with it for so long because his clients wanted to believe in reward without risk, something for nothing. He told a US district judge: "I'm deeply sorry and ashamed for my crimes. I am painfully aware that I have hurt many, many people."
Here, in the Court of Public Opinion, Mr Brown will show no such contrition.
Credit Bubbles enable Fraud.
Although the exact amount defrauded has not been revealed, a report by Ipswich Borough Council estimated banks and building societies were left out of pocket by at least £6million.
Up to 70 new-build flats were thought to be involved in the Ipswich fraud. It is believed con artists bulk-purchased Orwell Quay apartments at massive discounts and made huge sums by taking out fake mortgages at over-inflated prices, leaving them to pocket the difference.
Up to 70 new-build flats were thought to be involved in the Ipswich fraud. It is believed con artists bulk-purchased Orwell Quay apartments at massive discounts and made huge sums by taking out fake mortgages at over-inflated prices, leaving them to pocket the difference.
Quote of the Day
“I was asked what I thought about the recession. I thought about it and
decided not to take part” - Sam Walton, founder of Global Chain Wal-Mart
My plan too, but then my company also decided not to take part in the credit bubble.
decided not to take part” - Sam Walton, founder of Global Chain Wal-Mart
My plan too, but then my company also decided not to take part in the credit bubble.
Thursday, March 12, 2009
Quote of the Day
'And in the end, it's not the years in your life that count. It's the life in your years.' Abraham Lincoln
Wednesday, March 11, 2009
Thought for the Day
I wonder are those who want to raise income taxes like those Luddites who burnt the spinning jennys?
They both want to stop productivity increasing.
They both want to stop productivity increasing.
Tuesday, March 10, 2009
Thought for the day.
I wonder how long until the phrase sea level rises become see level change. Like Global-Warming has become Climate change.
"Greed" is good.
"Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to become the means by which men deal with one another, then men become the tools of other men. Blood, whips and guns or dollars. Take your choice - there is no other." Ayn Rand.
Sunday, March 08, 2009
Thursday, March 05, 2009
Time to Shrug?
"If they believe that the purpose of my life
is to serve them, let them try to enforce their creed.
If they believe that my mind is their property --
let them come and get it...
[W]hen robbery becomes the purpose of law,
and the policeman's duty becomes, not the protection,
but the plunder of property -- then it is an outlaw
who has to become a policeman."-- Ragnar Danneskjöld
is to serve them, let them try to enforce their creed.
If they believe that my mind is their property --
let them come and get it...
[W]hen robbery becomes the purpose of law,
and the policeman's duty becomes, not the protection,
but the plunder of property -- then it is an outlaw
who has to become a policeman."-- Ragnar Danneskjöld
Thanks to Instapundit for reminding me
"Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as “bad luck.”"
Robert Heinlein
This is known as “bad luck.”"
Robert Heinlein
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