Blog

Daily Digest - March 7

Saturday, March 7, 2009, 7:12 AM
  • Pictures: The credit crunch tent city which has returned to haunt America
  • Uh Oh, White House Seeks Economic Advice From Twitter
  • Twitter? Enough! - Lets ALL email them proper advice (Chris's Crash Course Link)
  • House Prices More To Fall? 1,600 Sq. Ft. $549,000.00 , See Today, Won't Last
  • The Reality is Worse (Hat Tip PhilV)
  • Bill Seeks to Let FDIC Borrow up to $500 Billion
  • Week #10 Bank Failure #17
  • Top U.S., European Banks Got $50 Billion in AIG Aid
  • Wholesale Shipments: Booze and Cigarettes (2 Charts on Page)
  • The Running of the Bears
  • Institutional Risk Analytic's Bank Stress Tests (Chat on Page)
  • Banana Republic Watch: Rodgin Cohen a Candidate for Deputy Treasury Secretary
  • Unheeded Warning: Circa S&L Crisis
  • Vide-o-rama
  • Ruger
  • Unemployment 
  • Economic Collapse - The Joker...

Economy 

Pictures: The credit crunch tent city which has returned to haunt America 

A century and a half ago it was at the centre of the Californian gold rush, with hopeful prospectors pitching their tents along the banks of the American River. 

Today, tents are once again springing up in the city of Sacramento. But this time it is for people with no hope and no prospects.

With America's economy in freefall and its housing market in crisis, California's state capital has become home to a tented city for the dispossessed.Those who have lost their jobs and homes and have nowhere else to go are constructing makeshift shelters on the site, which covers several acres.

As many as 50 people a week are turning up and the authorities estimate
that the tent city is now home to more than 1,200 people.

Uh Oh, White House Seeks Economic Advice From Twitter 

Going to the White House tomorrow for a meeting about the economy (which must mean they're *really* out of ideas). What should I tell them? Evan Williams 

Twitter? Enough! - Lets ALL email them proper advice (Send Chris's Crash Course Link)

House Prices More To Fall? 1,600 Sq. Ft. $549,000.oo , See Today, Wont Last

The Reality is Worse (Hat Tip PhilV) 

The original copy was headed: "European banks may need £16.3 trillion bail out, EC document warns," claiming access to a "secret document" which put an estimate of toxic debt in the European banking system at that figure - £16.3 trillion. 

The implications of this are truly staggering as the IMF estimates total global losses related to asset impairment at a "mere" $2.2 trillion, putting the potential European write-down at getting on for ten times the global figure.

Less than 24 hours later, however, the headline was changed to become "European bank bail-out could push EU into crisis". The specific reference to the £16.3 trillion had disappeared, along with two paragraphs of the original text.

Despite this, there is no conspiracy. I spoke to Bruno earlier today and he dismissed any such idea. Under pressure of a deadline, he had misread an obscure passage in the Annex to the document, which retailed speculations on what figures had been considered. The figure was not an estimate, per se, merely a record of what some had speculated it could be.

Bruno was not the only one to make the mistake. Guardian correspondent David Gow, made the same mistake, yet his article still stands, with a header: "Bank protectionism will destroy European single market, finance ministers warned".

The reality, though - Bruno tells me - is actually worse. There was no formal estimate as to the extent of the toxic debt in the European banking system because the commission has no idea of what it might be. Debt has been spread through the international system so much that no one is sure of the ownership, where the liabilities lies, or even the order of magnitude. It could be £16.3 trillion, it could be less - but it could be more. No one actually knows. 

Bill Seeks to Let FDIC Borrow up to $500 Billion 

WASHINGTON -- Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department. 

The Connecticut Democrat's effort -- which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner -- would give the FDIC access to more money to rebuild its fund that insures consumers' deposits, which have been hard hit by a string of bank failures.

Mr. Dodd's bill could also give the FDIC more firepower to help address "systemic risks" in the economy, potentially creating another source of bailout funds in addition to the $700 billion already appropriated by Congress.

Mr. Bernanke said in a Feb. 2 letter to Mr. Dodd that such a "mechanism would allow the FDIC to respond expeditiously to emergency situations that may involve substantial risk to the financial system."

The FDIC would be able to borrow as much as $500 billion until the end of 2010 if the FDIC, Fed, Treasury secretary and White House agree such money is warranted. The bill would allow it to borrow $100 billion absent that approval. Currently, its line of credit with the Treasury is $30 billion.

The FDIC's deposit-insurance fund has fallen precipitously with 25 bank failures in 2008 and 16 so far in 2009. Some bank failures have a bigger impact on the fund than others, as IndyMac's failure cost the fund more than $10 billion, while many others cost the fund less than $100 million.

A 1991 law generally caps the amount of money the FDIC can borrow from the Treasury at $30 billion, and the FDIC hasn't borrowed money from the Treasury in more than a decade.

Ms. Bair said a change in the law would give the FDIC more options to determine the best way to rebuild its depleted fund. In an interview, she stressed that all insured deposits were already backed by the "full faith and credit of the United States government."

A change in the law would ease "the mechanics of how seamlessly we can access our lines of" funding. "I'm the kind of person that likes to be prepared for all contingencies," she said. 

Week #10 Bank Failure #17 

Freedom Bank of Georgia, Commerce, Georgia, was closed today by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Northeast Georgia Bank, Lavonia, Georgia, to assume all of the deposits of Freedom Bank of Georgia. 

Top U.S., European Banks Got $50 Billion in AIG Aid 

The beneficiaries of the government's bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant. 

Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.

Covered Counterparties

Some banks that were paid by AIG after it was bailed out by the government

Other banks that received large payouts from AIG late last year include Merrill Lynch, now part of Bank of America Corp., and French bank Société Générale SA.

More than a dozen firms with smaller exposures to AIG also received payouts, including Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, according to the confidential document.

The names of all of AIG's derivative counterparties and the money they have received from taxpayers still isn't known, but The Wall Street Journal has identified some of them and is publishing others here for the first time.

Lawmakers Want Names
The AIG bailout has become a political hot potato as the risk of losses to U.S. taxpayers rises. This past week, legislators demanded that the Federal Reserve disclose names of financial firms that have received money from AIG, which Fed officials have described as too systemically important in the financial system to be allowed to fail.

In a Senate Banking Committee hearing in Washington on Thursday, Fed Vice Chairman Donald Kohn declined to identify AIG's trading partners. He said doing so would make people wary of doing business with AIG.

But Mr. Kohn told lawmakers he would take their requests to his colleagues. The Fed, through a new committee led by Mr. Kohn to discuss transparency concerns, is now weighing whether to disclose more details about the AIG transactions.

The Fed rescued AIG in September with an $85 billion credit line when investment losses and collateral demands from banks threatened to send the firm into bankruptcy court. A bankruptcy filing would have caused losses and problems for financial institutions and policyholders globally that were relying on AIG to insure them against losses.

Since September, the government has had to extend more aid to AIG as its woes have deepened; the rescue package now has swelled to more than $173 billion.

The government's rescue of AIG helped prevent its counterparties from incurring immediate losses on mortgage-backed securities and other assets they had insured through AIG. The bailout provided AIG with cash to pay the banks collateral on the money-losing trades; it also bought out underlying mortgage-linked securities, many of which are currently worth less than half their original value.

Wholesale Shipments: Booze and Cigarettes (2 Charts on Page) 

Shipments of manufactured durable goods in January, down six consecutive months, decreased $7.5 billion or 4.0 percent to $182.4 billion, revised from the previously published 3.7 percent decrease. This also was the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992 and followed a 1.5 percent December decrease. 

Shipments of manufactured nondurable goods, up following five consecutive monthly decreases, increased $1.0 billion or 0.5 percent to $187.0 billion. This followed a 5.1 percent December decrease. This increase was due to petroleum and coal products, which increased $2.7 billion or 9.4 percent to $32.0 billion. 

The Running of the Bears 

This week's survey of investor sentiment by the American Association of Individual Investors (AAII) showed that investors are now at their most bearish levels in the history of the survey. As shown, 70.27% of respondents to the weekly survey (which didn't include today's 4% decline) are currently in the bearish camp. 

Institutional Risk Analytic's Bank Stress Tests (Chat on Page) 

Chris Whalen (via The Big Picture) details his firm's (Institutional Risk Analytics) latest bank stress test results: 

Notice the way in which the banking industry has shifted from a skew in favor of "A+" rated bank units at the start of 2006 - those with stress levels below the 1995 benchmark in the Stress Index - to a situation today where the number of "A+" rated banks has been cut in half and over 2,000 bank units now are rated "F".

Being rated "D" or "F" does not mean that the institution will fail, but it does mean that the bank' current performance in Q4 2008 was far above the industry's elevated stress levels and thus the bank get's a poor grade for this period. Indeed, in many cases institutions with relatively high levels of stress could be excellent value for investors. 

Banana Republic Watch: Rodgin Cohen a Candidate for Deputy Treasury Secretary 

This tidbit comes in a Wall Street Journal story, "Top Treasury Candidates Pull Out":
Treasury has identified and is vetting other people for top slots, including H. Rodgin Cohen, chairman of top law firm Sullivan & Cromwell LLP and an adviser to virtually every firm on Wall Street, for the deputy secretary position, two people familiar with the matter said. 

Sullivan & Cromwell has long been the outside counsel for Goldman, and outside counsel is a vastly more important role for a securities firm than just about any other type of business. In the stone ages, when I worked for a few years at Goldman, certain S&C partners had so much clout at Goldman that they could get a mid-level banker fired. And even then, "Rodg", head of the banking practice, was a very influential figure at Goldman.

After I left Goldman, I was involved in a behind the scenes role on a deal that broke new ground from a regulator standpoint. Cohen was representing the other side, the target of a minority investment. I was later told by a senior bank regulator that Cohen worked against my client's interest in a particularly duplicitous way.

So Cohen is not only deeply tied to entrenched interests, but he plays a ruthless game, with a mild manner that would lead you not to suspect him of that sort of behavior.

In case you think this reaction is extreme, some e-mail comments from reader Marshall:
We should operate from the assumption that Geithner will always surround himself with the most awful Wall Street cronies imaginable. He's totally captive to that ideology. This Administration is going to make Warren Harding's Administration seem like a convention of nuns by comparison. 

Unheeded Warning: Circa S&L Crisis 

Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations. 

Vide-o-rama

Ruger

Unemployment

Economic Collapse - The Joker...

Endorsed Financial Adviser Endorsed Financial Adviser

Looking for a financial adviser who sees the world through a similar lens as we do? Free consultation available.

Learn More »
Read Our New Book "Prosper!"Read Our New Book

Prosper! is a "how to" guide for living well no matter what the future brings.

Learn More »

 

Related content

21 Comments

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - March 7

God Bless (Tent City) America? Population 1,200, growing by 50 p/week.

sacramento tent citysacramentosacramento tent citysacramento tent city

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - March 7

Hello:

I used the 3rd link from the top to send the CM Crash Course to the White House. Maybe if they get several thousand of these they will wake up before Tent City morphs CA.

SkylightMT's picture
SkylightMT
Status: Silver Member (Offline)
Joined: Sep 30 2008
Posts: 125
Re: Daily Digest - March 7

We've always had a homeless population here in Whatcom County that lives in tents. They usually camp on "private" land (like the land behind Fred Meyers grocery store) and they are rousted by the police every 60 days or so.

Our city ordinances say temporary dwellings cannot remain longer than 30 days.

We're seeing so many more people living in tents this past 6 months that we're petitioning the city council to allow permanent tent cities. Its more complicated than it seems. Crime rates at tent cities are much higher, drug use is much higher. Allowing permanent tent cities means allocating additional funding for police to patrol the area. Its not so good for the young child to be ten feet from the crazed meth user, so additional patrols are critical.

Having a permanent tent city allows for establishment of soup kitchens in the area. Local dentists will donate their time on site with their portable clinics (teeth issues are the number one health issue of the homeless, and yes, dental decay can kill you when the infection goes to the heart muscle). Local eye clinics will also go onsite once a month or so and provide very basic vision services, and keep a supply of donated old prescription eyeglasses to match up with people they fit. At our last Project Homeless Connect (two months ago) we even had hairdressers giving out free haircuts - you should have seen the line!

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - March 7

Even so, he said he did not find blogs to be reliable, citing the economy as one example. 

"Part of the reason we don't spend a lot of time looking at blogs," he said, (President Oboma) "is because if you haven't looked at it very carefully, then you may be under the impression that somehow there's a clean answer one way or another - well, you just nationalize all the banks, or you just leave them alone and they'll be fine."

Man, if he or any of his staff spent 2 hours of watching the crash course and I'd bet everything he'd retract that statement. Personally I have found the 25 blogs I visit to be a MUCH better source than anything I have heard come out of his advisors lips.

I didn't think the man was this narrow minded.

Nime's picture
Nime
Status: Bronze Member (Offline)
Joined: Jan 29 2009
Posts: 88
Re: Daily Digest - March 7

OK, but CC while very good at describing the problems and their roots offers no real solution. And in the forums here the only solution offered is basically to give in to civilization's collapse and become a permaculture farmer, preferably in a remote area - not something that would be helpful for the president now (not that he would listen anyway).

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1503
Re: Daily Digest - March 7

Hey Davos,

I sent Obama a completely free, no cost, zero obligation invitation to watch the Crash Course!  Hope others do as well!

I hope I'm not on some "black list" now.  

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - March 7

Hello Patrick: I sent one also, maybe if 10 or 20 thousand bloggers do this they will, at the very least, know what the problem is. Take care

SkylightMT's picture
SkylightMT
Status: Silver Member (Offline)
Joined: Sep 30 2008
Posts: 125
Re: Daily Digest - March 7
Nime wrote:

OK, but CC while very good at describing the problems and their roots offers no real solution. And in the forums here the only solution offered is basically to give in to civilization's collapse and become a permaculture farmer, preferably in a remote area - not something that would be helpful for the president now (not that he would listen anyway).

Every once in a while someone starts a "solutions" thread which generates some good ideas sometimes. But then the thread gets buried and we forget about it.

It would be really cool to sticky a solutions thread on the main page.

Even cooler, as we generate ideas on that thread, we could poll members to rank the best ones, and submit our solutions list to relevant parties, such as the POTUS, and link our solutions to the many and varied other forums we CCers visit.

cannotaffordit's picture
cannotaffordit
Status: Gold Member (Offline)
Joined: Jun 12 2008
Posts: 273
Re: Daily Digest - March 7

SkylightMt......didn't realize you were in Whatcom County.  So are we, N. Bellingham.  Drop me a note

at [email protected] and lets connect and see who else from this site might be here.  We're retired and pretty active in volunteering in social causes, etc.  Right now, we're coordinating construction of community garden, 50 raised beds, end of Cordata.

 Ben Andrews 

fujisan's picture
fujisan
Status: Gold Member (Offline)
Joined: Nov 5 2008
Posts: 296
Re: Daily Digest - March 7

'Run on UK' sees foreign investors pull $1 trillion out of the City - Business News, Business - The Independent

Quote:


'Run on UK' sees foreign investors pull $1 trillion out of the City

 

Banking crisis undermines Britain's reputation as a safe place to hold funds

By Sean O'Grady, Economics correspondent

Saturday, 7 March 2009

 

A silent $1 trillion "Run on Britain" by foreign investors was revealed yesterday in the latest statistical releases from the Bank of England. The external liabilities of banks operating in the UK – that is monies held in the UK on behalf of foreign investors – fell by $1 trillion (£700bn) between the spring and the end of 2008, representing a huge loss of funds and of confidence in the City of London.

 

Some $597.5bn was lost to the banks in the last quarter of last year alone, after a modest positive inflow in the summer, but a massive $682.5bn haemorrhaged in the second quarter of 2008 – a record. About 15 per cent of the monies held by foreigners in the UK were withdrawn over the period, leaving about $6 trillion. This is by far the largest withdrawal of foreign funds from the UK in recent decades – about 10 times what might flow out during a "normal" quarter.

The revelation will fuel fears that the UK's reputation as a safe place to hold funds is being fatally comp-romised by the acute crisis in the banking system and a general trend to financial protectionism internat- ionally. This week, Lloyds became the latest bank to approach the Government for more assistance. A deal was agreed last night for the Government to insure about £260bn of assets in return for a stake of up to 75 per cent in the bank. The slide in sterling – it has shed a quarter of its value since mid-2007 – has been both cause and effect of the run on London, seemingly becoming a self-fulfilling phenomenon. The danger is that the heavy depreciation of the pound could become a rout if confidence completely evaporates. 

 

MarkP's picture
MarkP
Status: Member (Offline)
Joined: Dec 13 2008
Posts: 16
Re: Daily Digest - March 7

I'm all for sending a link to someone who I believe will have a little interest to begin with, but, I think this calls for a more substantial gesture.  Anyone consider sending a spanky new copy of the 3-dvd set with a well (hand) written letter asking that he and/or his staff view the Crash Course?

 

May be taken more seriously that way... 

Nime's picture
Nime
Status: Bronze Member (Offline)
Joined: Jan 29 2009
Posts: 88
Re: Daily Digest - March 7

I'm amazed: you really, trully believe that sending CC DVD to the White House could change anything. Think for a while what that tells us all about America's situation.

In believing that sending this martial to Obama would change anything you say you believe Obama is indeed totally ignorant of the causes of the situation and thus you think that by educating him a change of policy could be achieved. In this case that means US is being led by an ignorant. (I'd also ask why did  you vote to the highest office in your country someone who in your opinion is so clueless that the problems laid out in the Crash Course would be news to him).

The other option is, of course, that he or at least some of this entourage are very aware of all the problems outlined in the CC as well as their causes. However, for some reasons they stay the course and continue implementing actions that make situation worse, not better. (In that case I'd say conspiration theorists are right and your president is just a pupet in the hands of financial elite pushing for NWO)

EndGamePlayer's picture
EndGamePlayer
Status: Platinum Member (Offline)
Joined: Sep 2 2008
Posts: 546
Irrelivant information

I have a lot of sympathy for our president. He inherited a situation that came as a result of years of -

  • un-checked financial free-for-all'ing;
  • no energy policy (we had a beginning when Jimmy Carter was pres but that plan was dumped) and
  • climate change is now on the excellorated upswing of the hockey stick.(Isn't everything but inflation??)

I will consider him a successful president if he can:

  1. Prepare the people by being up-front on the road ahead; 
  2. print more money and buy the world some time and resources to prepare for that long road ahead. 

 

Sure, everyone else is having a tizzy about the trillions of dollars he's spending but I can see him spending over 15T more before 2011 so when hyper-inflation kicks in (2011 is my "best-guess" date for hyper-inflation to kick in . . .unless it happens sooner) - the money for all these entitlements is already locked in. He already is looking at 3.6T for 2010 and I think that is a good start.

I really don't see his advisors as being any smarter than this group's "collective thinking".

EndGamePlayer

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - March 7

I don't know.

I read Paul O'Neill's book. The fired treasury secretary was, in my opinion, very candid.

Could be ignorance, could be financial greed. 

The net of either greed or ignorance is equivalent - a disastrous effect upon upper, middle and lower middle and low income classes.

This thing has been playing out since we broke the Constitution in 1913. Perhaps some are influencing it for their own advantage, but to be honest, everything I so far have seen is driven by utter and absolute ignorance.

Either way I look at it education should cure both, the only difference being is which group must be educated, the masses or a few behind the curtain pulling the levers.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - March 7

PS here is an excellent example of ignorance. I think we have some pretty ignorant people up on the hill. I'm sure they are nice and of good intention. 

 vol·un·tar·y  (vobreve.giflprime.gifschwa.gifn-tebreve.gifrlprime.gifemacr.gif)


adj.
1. Done or undertaken of one's own free will: a voluntary decision to leave the job.
2. Acting or done willingly and without constraint or expectation of reward: a voluntary hostage; voluntary community work.
3. Normally controlled by or subject to individual volition: voluntary muscle contractions.
4. Capable of making choices; having the faculty of will.
5. Supported by contributions or charitable donations rather than by government appropriations: voluntary hospitals.
6. Law
a. Without legal obligation or consideration: a voluntary conveyance of property.
b. Done deliberately; intentional: voluntary manslaughter. 

http://www.youtube.com/watch?v=R7mRSI8yWwg 

 

Nime's picture
Nime
Status: Bronze Member (Offline)
Joined: Jan 29 2009
Posts: 88
Re: Daily Digest - March 7
Davos wrote:

The net of either greed or ignorance is equivalent - a disastrous effect upon upper, middle and lower middle and low income classes.

If this is greed then watching CC couldn't possibly change the policy, if this is ignorance then, well, you're in trouble being led by an ignorant but then it is worth trying. Either way it is sad.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - March 7

Nime Wrote:

 

"...if this is ignorance then, well, you're in trouble being led by an ignorant but then it is worth trying. Either way it is sad." 

 

I agree it is sad, but I do think worth a shot. The one nagging doubt I have after seeing Harry Reid is: Is he dumb or does he just think we are all this stupid that we'd buy this [email protected] Like you said: Either way it is sad!

 

Take care 

djhester1940's picture
djhester1940
Status: Bronze Member (Offline)
Joined: Sep 22 2008
Posts: 35
Re: Daily Digest - March 7

Hi Davos,

Please tell me that his interview is really a Saturday Night Live spoof using a Harry Reid look alike comedian making the comments. If it is real, then we have a pretty decent explanation of why things are the way they are (especilly in the Senate) and illustrates that we are in doo doo much more deeply than we ever imagined.

Again i'll quote the 1960's Limelighter line.

I'll leap into my bed, assume the prenatal position and turn my electric blanket up tp 9.

Take care,

Don

mainecooncat's picture
mainecooncat
Status: Gold Member (Offline)
Joined: Sep 7 2008
Posts: 488
Re: Daily Digest - March 7

This Harry Reid thing reminds me of the video I watched recently where Ron Paul claimed that there were dozens of members of Congress who believe that the US is still on the gold standard. The interviewer was obviously stunned and asked him to clarify several times to the point where Paul was laughing as he reiterated his point. Sorry, but I forget where it was, so no link.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - March 7

I think I just need to write and ask, even if left unanswered, I can at least say I tried to get answers.

Reid: Are you too stupid to understand voluntary or do you just think we are too stupid and will swallow anything you say?

Greenspan: You wrote what would happen in 1967, http://www.scribd.com/doc/192230/GOLD-AND-ECONOMIC-FREEDOM-Alan-Greenspan then turned around and did the exact opposite in the 2000s. Sometime in the 2000s Paul had a meeting with you and dug out the original copy of that article. You autographed it for him and told him,"I just read this recently and I fully support everything I wrote." So the question is: Are you bipolar or just pathologically insane and were on a mission to ruin our country? 

Oh, and which end were you speaking of when you made this statement? “A democratic society requires a stable and effectively functioning economy.I trust that we and our successors at the Federal Reserve will be important contributors to that end.” ~Greenspan 

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest - March 7

http://www.independent.co.uk/news/business/news/run-on-uk-sees-foreign-investors-pull-1-trillion-out-of-the-city-1639413.html

'Run on UK' sees foreign investors pull $1 trillion out of the City

Banking crisis undermines Britain's reputation as a safe place to hold funds

By Sean O'Grady, Economics correspondent

Saturday, 7 March 2009

Some $597.5bn was
lost to the banks in the last quarter of last year alone, after a
modest positive inflow in the summer, but a massive $682.5bn
haemorrhaged in the second quarter of 2008 – a record. About 15 per
cent of the monies held by foreigners in the UK were withdrawn over the
period, leaving about $6 trillion. This is by far the largest
withdrawal of foreign funds from the UK in recent decades – about 10
times what might flow out during a "normal" quarter.

The revelation
will fuel fears that the UK's reputation as a safe place to hold funds
is being fatally comp-romised by the acute crisis in the banking system
and a general trend to financial protectionism internat- ionally. This
week, Lloyds became the latest bank to approach the Government for more
assistance. A deal was agreed last night for the Government to insure
about £260bn of assets in return for a stake of up to 75 per cent in
the bank. The slide in sterling – it has shed a quarter of its value
since mid-2007 – has been both cause and effect of the run on London,
seemingly becoming a self-fulfilling phenomenon. The danger is that the heavy depreciation of the pound could become a rout if confidence completely evaporates.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments