Black Monday degenerated into a 6-11 October BLACK WEEK

Today’s Slate cartoon, by Mike Thompson, http://cartoonbox.slate.com/mikethompson/

homeless, but not hopeless

The point on policies: great expectations on 2 world w\e meetings in Washington. 

FORGET THE FINANCIAL SYSTEM’S PERFECT STORM: IT’S JUST DEAD, AND NO OXYGEN WILL MAKE IT RESURRECT.

RADICAL SOCIALIST INCOME REDISTRIBUTION MEASURES ARE NEEDED NOW, IN ORDER TO AVOID A 2010s DEPRESSION.

ONLY A STONG CLASS STRUGGLE CAN SUPPORT THIS ALTERNATIVE TO THE ENSLAVING OF STATES TO RENTIERS.

Moment of Truth Paul Krugman – ANCHE I PROFESSORI TALORA S’INCAZZANO.

Moment of Truth, by Paul Krugman, Commentary, NY Times:

Last month, when the U.S. Treasury Department allowed Lehman Brothers to fail, I wrote that Henry Paulson … was playing financial Russian roulette. Sure enough, there was a bullet in that chamber: Lehman’s failure caused the world financial crisis, already severe, to get much, much worse.

The consequences of Lehman’s fall were apparent within days, yet key policy players have largely wasted the past four weeks. Now they’ve reached a moment of truth: They’d better do something soon — in fact, they’d better announce a coordinated rescue plan this weekend — or the world economy may well experience its worst slump since the Great Depression.  (..)

Why this weekend? Because there happen to be two big meetings taking place in Washington: a meeting of top financial officials from the major advanced nations on Friday, then the annual International Monetary Fund/World Bank meeting Saturday and Sunday. If these meetings end without at least an agreement in principle on a global rescue plan … a golden opportunity will have been missed, and the downward spiral could easily get even worse.

What should be done? The United States and Europe should just say “Yes, prime minister.” The British plan isn’t perfect, but there’s widespread agreement among economists that it offers by far the best available template for a broader rescue effort. 

0K. Nonetheless, although Paul is a flagship Keynesian, he keeps just proposing here FINANCIAL socialism (part-time nationalisations, HOOD ROBIN), and not a Keynesian blend  – ROBIN HOOD, namely restoring a balance in income redistribution, against the rentier class, therefore attacking the current Marx-Kalecki-Keynes-Minsky node: “How to avoid a severe recession to become a decade depression”.

Another Paul, Paul Thoma, not a revolutionary socialist indeed, already got it today.  And he also quotes, in his precious blog, The Guardian’s Time to grasp the fiscal nettle, by Barry Eichengreen yesterday: A MILESTONE PAPER, moving  faster than Paul k. along neo-keynesian lines (aggressive, internationally coordinate fiscal policies; we agree 100%, and just add the redistributional dimension with more stress and with an open connection to a class struggle revival, from Milan to Mumbai and Shangai,  on technology appropriation, profits, rents and wages). Giacomo Vaciago, in today’s il Sole 24 ore edito, on the same line: the emergency now is growth, and consumer expenditure.

Don’t despair: Paul is slow in changing his mind but, when he does, he moves the public and intellectuals median opinion to the point. 

It’s a diffusion of innovations geography game: Nouriel,  Paul, then the critical mass. 

 

Saturday’s newspapers: Slate

TODAY’S PAPERS
Worst. Week. Ever.

By Jesse Stanchak
Posted Saturday, Oct. 11, 2008, at 6:03 AM ETThe Dow Jones Industrial Average had its most volatile day ever Friday, oscillating more than one thousand points before ending up 128 points down, capping the worst week in the Dow’s 112-year history. The index lost 18.2 percent of its value between the opening bell Monday and closing bell Friday. Amid the panic, some very somber discussions are being held and all the papers lead with some kind of reaction to the bad news.

The Washington Post leads with finance ministers from the U.S. and six other wealthy nations vowing to take “all necessary steps” to deal with the burgeoning financial crisis. The Los Angeles Times leads (at least online) with Treasury Secretary Henry Paulson coming out of that meeting and saying the U.S. government would buy non-voting stakes in financial institutions, as part of an ongoing attempt to restore market liquidity. The New York Times leads with a double billing of the international cooperation announcement and word ofpossible merger talks between General Motors and Chrysler. The Wall Street Journal devotes the top half of its front page to summing up Friday’s manic market activity; it tops its world-wide newsbox with both presidential candidates issuing new economic proposals in light of the crisis.

Friday’s facts.

il Sole 24 ore. Borsa: l’Europa chiude un’altra seduta da brivido. Milano -7,1%

 Sui mercati prevale una situazione di estrema volatilità. Le Borse europee, appesantite dai cali registrati a Wall Street, chiudono in forte ribasso. Milano perde circa il 7 per cento. Francoforte è la peggiore e cede l’8,05 per cento. Le vendite hanno colpito l’intero listino. Attesa per misure straordinarie dal G-7 a Washington.  …» 

Friday, October 10,  3.30 pm GMT

11:32 a.m. EDT (3.32  pm GMT)  10/10/08 Major Stock Indexes (wsj

  Last   – Change  – % Chg

DJIA (Dow Jones) 8171.39 -407.80 -4.75

Nasdaq 1577.94 -67.18 -4.08

S&P 500 861.01 -48.91 -5.38

DJ Wilshire 5000 8712.03 -475.91 -5.18

Russell 2000 479.83 -19.37 -3.88

DJ World exUS 145.66 -11.31 -7.21

Japan: Nikkei Average* 8276.43 -881.06 -9.62

DJ Stoxx 50* 2090.58 -201.19 -8.78

UK: FTSE 100* 3981.70 -332.10 -7.70

Brazil: Bovespa   34246.43   -2833.87   -7.64%

China: DJ Shanghai* 204.20 -9.95 -4.65%

Bombay Sensex* 10527.85 -800.51 -7.07%

FTSE/JSE All-Share* 20595.23 -657.06 -3.09%

 * at close

CHART: S&P 500 the last 2 years: now (before closure) at 869, 1 year ago twice at 1550 (in July and October) – http://online.wsj.com/mdc/public/npage/2_3050.html?symb=&sid=3377&page=us&symbChange=aaaaa~0&time=2yr&freq=1dy&DrawChart.x=63&DrawChart.y=2&startdate=&enddate=&type=64&compidx=aaaaa~0&comp=Enter+a+symbol&ma=1&maval=100&lf=1&lf2=4&lf3=1024

 

This early morning in Asia

TOKYO

Asian stocks dive as panic erupts over financial crisis (from India Times)

10 Oct 2008, 0950 hrs IST,AGENCIES

Tokyo dived more than 11 percent as investors took fright at news that Yamato Life Insurance will file for bankruptcy protection, becoming the first Japanese insurer to go bust amid the global credit crisis.

The bloodbath quickly spread to other markets. Sydney plunged 6.5 percent, Singapore lost more than seven percent, Seoul was down 7.5 percent and Shanghai opened 3.8 percent lower. Hong Kong followed, opening down 7.7 percent.

“It’s beyond panic,” Oh Hyun-Seok at Samsung Securities told Dow Jones Newswires. “Concerns about the global economy are deepening further and there is no signs of easing in the global credit crunch.” 

Shangai is down 60% frome year start. The Nikkei ends the day almost at -10% – in its biggest one-day drop since the 1987 crash –  with a weekly fall of  -24%. Nikkei limps to 24% weekly drop.

MUMBAI

Fearing recession, markets end sharply lower

10 Oct 2008, 1632 hrs IST,  www.economictimes.com

Bombay Stock Exchange’s Sensex closed at 10,536.69, down 791.67 points or 6.99 per cent. The index touched an intra-day low of 10239.76. 

Retired Bill is poorer and poorer

Buffett pips Bill Gates to top new Forbes list: Report
10 Oct, 2008, 1602 hrs IST, REUTERS

Warren Buffett has overtaken Bill Gates to become the richest American in Forbes list, said a media report. Young Billionaires | Top Global Brands | Richest people of US


The euro-american afternoon.

Now, at 3.00 pm GMT (Italian legal time 5.00): – 4% then – 5% NY, -6% Bovespa SP,  – 8% Paris and London; Frankfurt closing worst, at – 8.7%.

Although Milan (-7.4% Mibtel at close)  suspends all the “vendite allo scoperto”:  UniCredit at -14% (falling towards €2,  after a title suspension), Intesa SP recovering from the morning and “only” – 4.8% but at €2.9, i.e.  under  €3 per share, Mediaset suspended for excess obscillations. People laugh at today’s new Berlusconi appeal (during stock markets opening time !!! he’s just crazy and silly) to buy now undervalued shares, namely ENEL (- 7.5% today)  and ENI (-6%) –listen to the audio file – and (yesterday): don’t sell Mediaset. Telecom Italia down at €0.75. Portfolio, fund managers must sell “good” shares, and therefore contribute to diffuse the fall to energy and manufacturing industries. Berlusconi from Naples: in Europe we will rewrite all rules in a new Bretton Woods, and we might suspend markets (than he denies having said the latter); “non  siamo ad oggi in una recessione”.

He’s even more funny, stupid and unreliable than a prudent, and lately metamorphic President Bush.

BBC at 2:14 pm GMT

The Dow Jones Industrial Average dipped below 8,000 but then recovered slightly to trade down 3% at 8,321 points.

President Bush has sought to reassure traders, saying the US government was acting to resolve the crisis and restore stability to the markets. 

Wall Street has lost more than 20% of its value in the past ten trading days and is heading for one of its biggest weekly falls since the Dow was created 112 years ago. (..)

In Europe share prices falls have been much steeper. In London the FTSE 100 share index was down 6.9%, Paris was down 8.4%, and Frankfurt was down 8.9%.

Finance ministers from the G7 are to meet in Washington later.

As well as the G7 meeting, talks will be held at the International Monetary Fund (IMF) in Washington.

(…) The BBC’s business editor Robert Peston said markets were worried about Friday’s auction of insurance claims on the debts of the collapsed US investment bank, Lehman Brothers. 

Wall Street was sharply lower after a dizzying open session that saw the Dow fall more than 600 points before recovering most of its losses. London’s FTSE 100 fell 9%. European indices also tumbled. Japanese shares touched 20-year lows, leading Asia-Pacific down as fears of a global recession mounted – 14:53

wsj

Global Indexes Plunge

European stocks tumbled, with Germany losing 9.9% and the FTSE falling 9.3% to below 4000 amid heightened anxiety about the global economy and a distressed financial sector. Asian markets posted sharp losses, with the Nikkei closing down 9.6% and Sydney dropping 8.3%.

October 10, 2008 10:46 A.M.ET

Zooming back to flat
Dow industrials below 8,000 for first time in five years before bounce
        

With aggregate losses deep in the trillions, U.S. stocks suffer latest brutal open, picking up from Thursday’s bloodbath — and the waves of selling that ensued around the globe — but the comeback is stirring.

SECTOR IN FOCUS: FINANCE
Morgan sits out sector turnaround
Financials rise, pacing broad-market bounce off day’s low. But Morgan Stanley remains in the grip of a damaging sell-off.

 

PREVIOUS PARTS OF THIS BLOG POST FOLLOW, looking at yesterday and this morning again:

Friday October 10; 9.30 am GMT

Yesterday afternoon, ice shower on markets from “champagne socialist” Strauss Kahn’s (IMF) certification of our analysis: a global recession is on, and will hit hard in 2009 even Brazil,  China, and then it will be a global stop. Wiping out all the nonsense that has been said against the mere economic reality and truth (the credit crunch monetary mechanisms of transmission into a severe real recession).

il cavalier Pinocchioni

But imbeciles are still in power:  yesterday’s Guinness of PINOCCHIO-of-the-day goes to Cav. Berlusconi (waiting for today’s Bush speech), recommending Italian people to hold stocks, since in the long run they will re-evaluate. Not saying that in the short run, on average they will lose another 50%: stock capitalisations are now 1/3 down from  1 year ago’s maxima. In a few months the will be grosso modo another 50% down, to 1/3 of their maxima: only then a floor will be in sight. This is a rough estimation of fundamentals, in the middle of the hardest world recession of the last 80 years.

Friday morning Tokyo opened at  -4.5%, Mumbai closed at – 7% (see above); in Europe, markets were opening from  -6% to – 10%, then they were correcting upwards during the morning, but only slightly, with Frankfurt still at – 7.8% (now, at 9 am GMT) and Milan’s MIB – 6%. UniCredit is losing 12%, Intesa SP 10%, Italy’s Telecom 9% down to €0.75 (our target price: €0.25). 

 

A review of some top oL pages today, in the European morning:

ft

Equities plunged after a dramatic late sell-off in New York. London’s FTSE 100 opened 10% down before recovering somewhat to stand 5% lower. Japanese shares touched 20-year lows, leading Asia-Pacific down as fears deepened that the world economy was heading for recession. Overnight, Wall Street suffered its biggest fall since the 1987 crash – 09:37 (London time)

Guardian

NAKED CAPITALISM

European Markets Open With A Crash

http://www.nakedcapitalism.com/2008/10/european-markets-open-with-crash.html

It was bad enough that the Nikkei traded down over 9% today and most of the rest of Asia fell 6% to 8%. But the opening of European markets is a dramatic vertical trajectory down: DJ Stoxx 50 down 8.3%, FTSE down over 10% in five minutes, now down a comparatively modest 9.23% Dax 30 down 9.8% CAC 40 down 9.8% The yen is at 98 to the dollar, Brent crude is at $79 a gallon, gold is $926 an ounce. …

nyt

Markets in Europe and Asia Plunge

Global stocks plummeted, with selling momentum accelerating after a Japanese insurance company was driven out of business. In Tokyo, the Nikkei fell 9.6 percent.

wp

Fears of Recession Deepen Rout

Fear and foreboding took hold on Wall Street yesterday, as the stock market again plunged and investors became convinced that the nation is on the verge of a deep and prolonged recession. The rout continued in Japan, where stocks plummeted in early…

3 hours ago in The Washington Post

wsj

Global Indexes Plunge

European stocks tumbled, tracking a global stock market rout, amid heightened anxiety about the global economy and a distressed financial sector. Asian markets posted sharp losses, with the Nikkei closing down 9.6% and Sydney dropping 8.3%.

Blue Chips Slide 678.91 Points, or 7.3%

The Dow industrials plunged 678.91 points, or 7.3%, to 8579.19, falling for the seventh straight day, or more than 20% over that stretch. An early rally morphed into a broad-based selloff that picked up speed near the end of trading.…

5 hours ago in http://online.wsj.com

On Wall Street yesterday (Detroit’s capitalisation was sinking, GM in a moment was at -33%), also:

http://ftalphaville.ft.com/blog/2008/10/10/16871/overnight-markets-rout/

The US stock market suffered its largest loss since the crash of 1987 on Thursday (our bold) amid panic over General Motors, Morgan Stanley and several big insurance companies. The market collapse heightened speculation that the US would unveil a bank recapitalisation plan in the coming days. More…

This was – by contrast – the sunny picture yesterday morning in Europe, when markets were still quiet (after and before the storms), before IMF ice shower:

Thursday October 9, 12 am GMT

After 3 days  underwater, starting from Tokyo and Hongkong, today stock exchanges are actually taking a breath and a holiday finally,  – e.g. – UniCredit was even gaining +8% at mid-day, some fresh air.

But, read below in previous posts (and in AAA updates … page, our always longer and longer selection of economic facts) what we were reading just 1 week ago from Roubini. At the wsj live blogging, Oct. 2, at the FAQ “What if Paulson plan fails ?”, the answer was: nationalisation. Lead by the socialist premier Gordon Brown, even Amerika is fast moving into that dramatic direction of fully fledged bourgeois, financial socialism (reverse Robin Hood, people call it  

“HOOD  ROBIN”:

stealing from poor taxpayers to guarantee and save the rich rentier).

A symptom is Technorati percolation temperature now: in the news the no.1 percolating news is this one:

http://technorati.com/

U.S. May Take Ownership Stake in Banks

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash into banks that request it.…

1 day ago in The New York Times
JUST PAULSON’s DICTATORSHIP from now to Obama taking power in January. The voted plan said exactly the opposite: we buy toxic derivatives; the day after they moved into commercial papers, and  now to FINANCIAL SOCIALISM. Because markets discounted already the failure of Paulson’s Plan A.
Finally, this quasi-news is becoming now a critical mass news,  getting  on screen top in the wsj oL:

U.S. Mulls Stakes in Banks

The U.S. Treasury is considering ways to inject capital directly into banks, possibly by taking equity stakes.

U.S. officials are discussing temporarily backing all U.S. bank deposits if economic conditions continue to worsen, a move that would mark another unprecedented step.

U.S. Mulls Direct Capital Infusions

The U.S. Treasury is considering ways to inject capital directly into banks, possibly by taking equity stakes.

Deal Journal: The World’s Biggest Hedge Fund

The NYT is adding on Friday that

    The United States and Britain appear to be converging on a similar blueprint for stemming the financial chaos sweeping the world, one day before a crucial meeting of leaders begins in Washington that the White House hopes will result in a more coordinated response.

    The British and American plans, though far from identical, have two common elements according to officials: injection of government money into banks in return for ownership stakes and guarantees of repayment for various types of loans….

Of course, Yves Smith   at Naked Capitalism is unhappy, arguing that banks shareholders took their risks and should face them. He concludes Friday morning, at 12.44 am:

Dear God, Rome is burning, and the Treasury Department is hung up on niceties like executive comp and the standing of existing shareholders. If the bank needs capital, current sharedholder WILL be diluted. The fact that this is coming up in discussions about how to keep the financial system from imploding is deeply troubling. 

Among comments to Yves:

    October 10, 2008 2:46 AM 

baychev said…

    The FDIC has coverage for only 0.8% of all deposits, now the gov’t will back debt that probably exceeds GDP. How is this going to soothe any sane investor?

    And what happens to the CDSs written on this debt? Cancelled, default is triggered, or the protection sellers get a free ride from the gov’t?

    October 10, 2008 1:08 AM 
LJR said…
    I think a stake has been driven through the heart of the Republican party’s penchant for deregulation. There’s a bright side to everything that happens.

MORALE. AN AUTO-CRITIQUE: mea culpa …

YESTERDAY WE MADE a good point (nationalisations in the US) but at the same time such A BIIIG MISTAKE, when we predicted that this step would have perhaps occurred in January. It started to get critical mass the day after. It is difficult, BUT NECESSARY, t otake the exact pace of the HYPER-CRITICAL MASS global village ( markets, media, web 2.0 and word of mouth) where phenomena and meta-phenomena happen. That is: the crisis itself, and all the related class struggles,  game powers,  ideologies, narrations and self-fulfilling “news”. No immaterial economy, ON THE CONTRARY: a word of mouth becomes so quickly a Material Tsunami, with megatons of economic power shifting hands in a few hours.

At  the  moment, Paulson has more power than a G8 enlarged to China. FAQ 1: Will he keep it intact until January?

FAQ 2: Is Obama socialist? At the moment, only the far right believes it. 

http://astuteblogger.blogspot.com/2008/10/evidence-is-clear-obama-was-member-of.html,

quoted by Technorati,  argues that 12 years ago, the young lawyer was a member of the “New Party”:

What was the “New Party”? It was a far-left “workers’ party” fighting for:

full employmenta shorter work week

a guaranteed minimum income for all adults and a universal “social wage”

full public financing of elections with universal voter registration

“the democratization of banking and financial systems”, which included public control and regulation of banking

a more progressive tax system

reductions in military spending and an end to unilateral military interventions.

 

 

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Black Monday: 2 days after

Stock exchanges continue to plunge for the 3rd day. The WSJ oL opens with:

Central Banks Cut Rates World-Wide

The Federal Reserve, ECB and other major central banks announced coordinated cuts in target interest rates, the latest dramatic action to help stem a growing global financial crisis.

Palliative again! Of course, the liquidity and credit crisis is imploding, but policies are not changing anything. As Roubini has detected  in his Oct.3 post on the “cardiac arrest”, CIRCLATING K has almost stopped its circulation.

But no one is coordinating and harmonising ST and LT measures to regulate this hugh crisis of global capitalism. The crisis is likely precipitate  for the same reasons of its origin: an unequal distribution depressing effective demand, and behind it the weakness of the oppressed of the world, the lack of any alternative to usury capitalism, after the fall of totaliarian communism.

Actually, political power and CC.BB.  are turning around themselves, like in a Turkish Dervishi mystical dance, but never get to the point.

1) On the one hand, the “FINANCIAL K PARTY”, as well as other sections of K, push towards an EMERGENCY NATIONALISATION, along financial socialist lines: let’s make the taxpayer pay the crisis a  2nd time (foreclosures, and new taxes to save banks, sub-criminals and Wall Street). On this, as Paul Krugman notes today UK is leapfrogging the US: Paulson just buys toxic derivatives and commercial papers, Gordon Browns nationalises the whole UK banking system (except perhap HBOS). The US will get there as soon as Paulson’s plan will make its failure evident – likely at the start of Obama’s Presidence.

2) On the other hand, markets perceive how hard is the ongoing recession, forecast a deepening of the global recession in 2009, and their stocks precipitate. There is no floor in sight  for stock markets; they have already lost approx. 1/3  of their value and might fall another 50% in a few months (at 1/3 of their top). Then the expected real recession will hit harder and harder, as soon as Asia decelerates abruptly (small export-lead countres are doing it already, then it’ll ne the turn of India and China – see yesterday’s, Oct. 7 rge-monitor.com:  Are We Headed Towards a Global Recession?).

3) Without Keynesian-socialist ROBIN HOOD new  rules, fiscal and structural policies, the recession will not touch a floor until 2010, then even a depression is possible.

FINANCIAL SOCIALIST and myopic SR measures on liquidity, are leading the global economy to a historical, unprecedented disaster.

MUCH WORST THAT  IN THE 1930s.

Published in: on October 8, 2008 at 1:23 pm  Leave a Comment  
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Black Monday: the day after

ENGLISH ABSTRACT

Understanding Black Monday. IT IS NO “NEGATIVE BUBBLE”, as silly bulls say.

a) It’s a low fundamentals issue, STUPID !!!

From yesterday on, global markets  are anticipating the real size of the  Main Street’s REAL RECESSION. The  shadow financial  – formal finance meltdown – credit crunch – deep recession chain is working from August 2007,  WITH NO COUNTERBALANCE in terms of policies and rules. Just post factum inadequate interventions on the consequences (even them, chaotic in Europe), and nothing upon the factors: neither Obama, nor McCain of course, are dealing prospectively with them (SEE OUR subcrime key document; in sum, long run deflation from a low global effective demand, hyper – concentration of income and wealth, imbalances and over-unemployment generated by: Reaganism, US private debts system and the post- communism “2nd Great Transformation”).

Prof. Roubini confirms today the title of our blog (which was inspired, last January, by our readings of Prof. Roubini himself):

The global economy is now already in a recession (as GDP is now contracting in all advanced economies and sharply slowing down in emerging market economies). We need now to take steps avoid a global depression.

And today’s rge papers aggregation “Are We Headed Towards a Global Recession?” specifies further:

IMF: The global financial crisis may have “extremely serious” consequences – including famines – in developing countries in Africa and Latin America.

◦ IMF: Signs of deceleration are most pronounced for several Emerging Asian economies that are tightly linked to the global manufacturing cycle: Philippines, Thailand, Malaysia, Taiwan PoC, Singapore, Hong Kong SAR, and—to a lesser extent—India.

b) In Europe, an institutional factor adds up. The ususal no-EU keynesian and structural policies issue. The one, that already made EU the only 0 growth world region (Aglietta and Berrebi).

WAKING UP FROM A DREAM: the gloom understanding that European finance is not free from the consequences of the $ 10 tr. global SHADOW FINANCE MELTDOWN. As Breakingnews said yesterday (see quotation in our Black Monday  post),

” It shouldn’t have come to this. A year ago, Europe looked well placed to fend off financial ills. True, the UK had US-style problems with a housing bubble and a big trade deficit, but the eurozone had few bubbles, balanced trade, reasonably prudent governments, a firm central bank and a strong tradition of government guidance and support in banking. 

It turned out, though, that some European banks had dabbled too much in overvalued and overly complex US assets. The authorities have also been slow.”

c) POLICY IMPLICATIONS.

After Reaganism, which blend of Socialism?

We quote from our ” AAA updates on subCrimes” static page, par. 2 on policies.

The Oct. 6 BLACK MONDAY, mainly but not only in  European stock markets (worst from 1987 Black Monday) confirms thet WE WERE RIGHT ON CONDEMNING THE PAULSON – BERNANKE  hurried up plan. Markets don’t care about it, and discount the recession is on and its size is much worst than they expected. Therefore the issue moves to the alternative between:

a) a financial (pseudo-) socialism: once failed again, the finance K party will move to nationalisations and direct State and SWF re-capitalisations … . It would eventually cure the financial meltdown, not the risk of the recession giving rise to a long depression in the 2010s.

b) a Keynesian socialism: redistribute drastically  income and wealth  (through policies, rules and Robin Hood fiscal policies) in order to gradually sort out of the 1990s longrun global deflation (Aglietta and Berrebi, Chesnais).

More in our .pdf –  subcrime key document.

SLATE

TODAY’S PAPERS

Drowned World Tour

By Daniel Politi
Posted Tuesday, Oct. 7, 2008, at 6:29 AM ETIt’s a new week, and the bad news keeps getting worse. “The global financial crisis has taken a perilous turn,” declares the Wall Street Journal. Hopes that the massive bailout package approved by Congress last week would give investors some breathing room were quickly dashed as soon as the markets opened. And pretty much the whole world is feeling the pain. Markets in Asia, Europe, and Latin America closed deep in the red yesterday, a pattern that was repeated in the United States. The Dow Jones industrial average plunged 800 points, or 7.7 percent, before rebounding late in the day to close down nearly 370 points, or 3.6 percent. It marked the first time the Dow fell below the 10,000 mark since 2004. USA Today helpfully puts it in perspective and points out that the Dow has lost nearly 30 percent since Oct. 9, 2007.

The New York Times and Washington Post highlight word that the Federal Reserve is considering a plan to buy large amounts of unsecured short-term debt–so-called commercial paper–in an effort to revive the financial system. This “radical new plan” (NYT) would essentially make the Fed “a major funder of a wide range of U.S. businesses facing imminent cash shortages,” explains thePost. While the growing financial crisis is putting pressure on government officials to act, the Los Angeles Times points out that if there’s a clear message from yesterday’s worldwide sell-off it’s that investors are increasingly concerned“that government intervention won’t be enough to stave off a potentially severe global recession.”

CRONACA DI OGGI

TENGONO LE BORSE EUROPEE, ma non recuperano il crollo storico di ieri, mentre a NY il Dow Jones scende di oltre  il 5%, S&P del 5.7%, a conferma della bocciatura del, e sfiducia nell’ affrettato ed elettorale Piano Paulson. I titoli finanziari di NY al loro minimo dal 1997 (solo oggi -25% Morgan Stanley e BoA). In caduta libera le grandi banche inglesi (-50% in 2 giorni  HBOS e RBS), forzando un Piano Straordinario di Gordon Brown tra i $60 e 90 bn. Paul Krugman commenta:

Britain leads the way?

 

According to the FT,Gordon Brown, the UK prime minister, on Tuesday night ordered a massive taxpayer-backed cash injection to rebuild the balance sheets of Britain’s high street banks, in effect part-nationalising the sector at a cost of tens of billions of pounds.

DA LEGGERE OGGI:

Marco Onado su Il Sole 24 ore.

– la autocritica del CEO UniCredit, Aless. Profumo, in una lunga intervista a La Repubblica: abbiamo fatto il passo più lungo della gamba e sottovalutato il financial meltdown. Il fatto: gli azionisti (le fondazioni bancarie) che ricapitalizzano la prima banca italiana, al momento si guardano bene (in piena crisi e tentativo di rilancio, risanamento) dal dimissionare Profumo (responsabile di una strategia di crescita del tutto azzardata e FUORI TEMPO rispetto al ciclo mondiale, come lui stesso e’ costretto ad ammettere POST FACTUM), ma lo mettono SOTTO TUTELA. Escludendo le liquidazioni, nel 2007 e’ il manager più pagato d’Italia.

– DA IERI, ripreso oggi in Italia su La Stampa, l’incredibile udienza parlamentare di Mr Fuld PADRE-PADRONE di Lehman Bros (che i nostri lettori conoscono MOLTO BENE).

– IERI SERA ottimo dibattito alla morente LA 7 (che la Telecom vuol chiudere), all’Infedele, con parterre de rois che includeva dei Grandi come Marcello DeCecco ed un lucido, mordace Tony Negri. Peccato che, dopo averla tenuta a bagnomaria con Tronchetti Provera, ora la chiudano di brutto. L’ultima voce libera, troppo ose’  per la thanato-politica cavalier-leghista.

ORA LEGALE 13: il punto.

MERCATI VOLATILI. Abortisce un primo tentativo di rimbalzo delle borse europee in mattinata, che dura appena un’ora. A mezzogiorno nuova spinta verso il positivo, MENO CHE  A  MILANO. Qui Piazz’affari appesantita specie da una  UniCredit senza pace. Le ammissioni a denti stretti di Profumo (intervista cit.) non rassicurano molto: costui ha sbagliato proprio tutto,  con una iper-crescita non proporzionale alla capitalizzazione, in tempi di deflazione mondiale strutturale e di evidente (ad ogni osservatore onesto) preparazione della catastrofe della shadow finance, con tutte le conseguenze che oggi si dipanano.

Alle 13: Milano sullo 0%, resto Europa + 1%. UniCredito -4.4%, Telecom – 5,5% e  sotto gli E 0,9, Impregilo – 7%, e sospesa per ribasso Tiscali (-15%).

Nel pomeriggio escono i 3 Nobel della Fisica: gli svedesi hanno fregato il Gabibbo, e dato il Nobel a 2 giapponesi che avevano sviluppato la sua scoperta. Che figura di merda ci fanno a stoccolma!

CHIUSURA BORSE

Come avevamo previsto, oggi nessun nuovo tonfo ne’ recupero dell’abbassamento fundamentals-driven di ieri, LUNEDI NERO. A Milano (-0 .6%) problemi specifici:

– LA POPOLARE continua a tonfare (qualcuno deve sapere perche’),

– UniCredit insensibile alle dotte auto-critiche EX POST, perde un altro 4% perche’, mentre ieri S&P aveva mantenuto il rating stabile, questo pomeriggio Moody l’ha abbassato.

– Pianto greco del CFO Telecom: a queste quotazioni frazionali sotto €0.9, improbabile si facciano vivi gli  investitori potenziali, come SWF libici, Q8 e russi.

peso el tacòn del buso

BREAKING NEWS, ore 4:05pm GMT

A 2nd, European BLACK MONDAY, 6 ottobre 2008.

Today European stocks are losing as never happened since 1987.

foto (Mara Bastone, AFP \ Getty Images): l’altro Black Monday, quello del 1987

I mercati finanziari, stanno oggi bocciando pesantemente le autorità monetarie US ed europee:

US

– la radicale insufficienza, il ritardo e la logica assente del grande bail-out di Paulson (le cui vere dimensioni non sono di $0,85 trilioni, ma assai di più, ma non bastano in un POZZO SENZA FONDO ed un EFFETTO DOMINO innesacoto dala loro GIORNATA DI DISTRAZIONE IL 15 SETTEMBRE SCORSO: Lehan Bros).

– IL “FINANCIAL SOCIALISM” classista, inventato a marzo (Bear Stearn bailout) dai LIBERISTI PENTITI (ma sempre banditi di classe, dalla parte dei RENTIERS) del Tesoro, d’intesa con la Fed di Bernanke (e Geitner, il giovane ambizioso Direttore della Fed nell’occhio del ciclone: NY).

EU

– la fellonia dei 4 paesi non-leader europei riunitisi sabato a Parigi per non decidere nulla: per decidere di non decidere e fare nulla a livello sovra-nazionale, ma solo IN ORDINE SPARSO. Il non-piano Merkel. Milano sta crollando nel pomeriggio (prima della chiusura) più del 7,4% dell’11 settembre 2001, vengono giù le borse prima asiatiche (che anticipano una dura crisi creditizia europea), e poi le europee del 7-8%, Milano peggio di tutte seguita da Londra e tutte le altre.   Più tardi Parigi cade del 9%, peggio dell’8% di Milano. Anche NY attorno al – 5% ed il Dw SOTTO LA SOGLIA PSICOLOGICA di 10.000.  Le banche scendono a precipizio, ma non specificamente UniCredit (il titolo, sceso al -15%, dopo sospensioni si e’ risollevato al – 3% diventando la migliore azione della giornata: le decisioni del Consiglio di riconsolidare il capitale  l’hanno fatto tenere).

Il Banco Popolare (titolo bancario oggi più debole) perde il 16%, Intesa Sp – 12% e Telecom scende sotto  1 euro per azione.

La decisione tedesca di assicurare tutti i depositi bancari (seguendo l’Islanda) e’ stata correttamente  letta come: “allora la situazione e’ assai peggio di come ce  la raccontavano”, ed ha creato l’attesa che gli altri paesi la introducano. Sospensioni  delle contrattazioni in Brasile e Russia.

Notizie, cronache del pomeriggio da: bbc, breakingnews, ft e wsj.

bbc

Page last updated at 16:01 GMT, Monday, 6 October 2008 17:01 UK

Financial crisis pummels stocks

World stock markets have plunged after government bank bail-outs in the US and Europe failed to stem fears of slower global economic growth.

London’s key UK share index lost 7.85% and France’s Cac-40 lost 9.04%. On Wall Street, the Dow Jones fell below 10,000 points for the first time since 2003. (…)

Trading on key stock markets in Brazil and Russia was temporarily suspended after share prices plummeted by 10% and 15% respectively. Russia’s RTS index ended 19.1% down.

breakingviews, 11:53

Decisiveness deficit

European banks: It was another tough weekend for European politicians and bankers. They did what they were supposed to, but it looks like another tough week lies ahead.

The authorities are certainly trying. On Sunday morning, three European banks faced serious challenges. The rescues of Hypo Real Estate in Germany and the Belgian part of Fortis had proven inadequate, while the Italian Unicredit looked short of capital.

By October 6, these problems had been resolved – by a bigger rescue, a takeover and a capital raising respectively. Not bad for a region with a reputation for muddled indecision. There were also new deposit guarantees in Germany, Austria and Denmark, warm words from the leaders of the four largest economies and broad hints of a recapitalisation of UK banks.

But investors weren’t comforted. The region’s stock markets dropped by 5-6% early on October 6 …

It shouldn’t have come to this. A year ago, Europe looked well placed to fend off financial ills. True, the UK had US-style problems with a housing bubble and a big trade deficit, but the eurozone had few bubbles, balanced trade, reasonably prudent governments, a firm central bank and a strong tradition of government guidance and support in banking.

It turned out, though, that some European banks had dabbled too much in overvalued and overly complex US assets. The authorities have also been slow. Governments solutions to institutional problems have been fragmentary and central bank liquidity provision reactive.

With Asia slowing and the US struggling, Europe cannot depend on the rest of the world to rebuild confidence. It needs to act boldly itself. Perhaps the UK, the most troubled of the big European economies, will take the lead. A comprehensive reorganisation – with taxpayers getting preferred shares and banks being led to an orderly deleveraging – could be just what the markets need.

Ft

http://www.ft.com/cms/s/0/8eafcd26-936f-11dd-9a63-0000779fd18c.html

Government action fails to halt global sell-off

By Michael Hunter and Neil Dennis in London and Lindsay Whipp in Tokyo

Published: October 6 2008 08:35 | Last updated: October 6 2008 17:04

Stocks suffered sharp falls on Monday, as worries about the extent of the crisis in the financial sector deepened after finance ministers failed to reach a consensus on how to react.

WSJ on line nel pomeriggio:

October 6, 2008, 9:13 am

Just Another Manic Monday

Posted by David Gaffen

U.S. markets are in for it this morning. The passage of the bailout bill Friday has not alleviated concerns about credit markets, particularly those in Europe, where a series of capital injections and bank failures has undermined confidence in those markets, which do not benefit from a central federalized system as in the U.S.

* EUROPE MARKETS

* OCTOBER 6, 2008, 11:03 A.M. ET

Bank Turmoil Sinks European Shares

European stocks plunged Monday as a wave of emergency government measures failed to stem concerns about the region’s financial system and economy. (…)

European policy-makers spent their weekend shoring up the financial system. The German government moved Sunday night to arrange a bailout for property lender Hypo Real Estate Holding AG. German officials also issued a guarantee for all consumer bank deposits. The Belgian and Luxembourg governments arranged for French bank BNP Paribas SA to take over the Belgian and Luxembourg operations of ailing financial firm Fortis NV after a previous aid plan failed to prevent customers from leaving. Iceland’s government is also scrambling to rescue its banking industry, while Denmark late Sunday took measures to protect its financial stability. The wave of measures largely overshadowed the passage of the U.S. government’s $700 billion market bailout last Friday.

“People are waiting,” said Benoit Hubaud, head of research at French bank Societe Generale in Paris. “They’re trying to understand the consequences of what has been announced.” (…)

In the credit markets, the cost of insuring against default on €10 million of European company debt for five years jumped to about €134,500 annually, from €125,000 Friday, according to the Markit iTraxx index. (…)

Worse, the markets that banks rely on for funding remained under severe pressure, despite efforts by the world’s central banks in recent weeks to pump more cash into the financial system.

The London interbank offered rate, which is supposed to reflect the short-term rates at which banks lend to one another, rose for overnight dollar loans to 2.37% from 2% Friday. The U.S. Federal Reserve’s target for the overnight rate is 2%. Three-month dollar Libor improved slightly, falling to 4.29% from 4.33%. However, a key gauge of concerns about banks — the difference between three-month Libor and market expectations for central-bank target rates — rose to 2.89 percentage points from 2.84 percentage points. Euro-based Libor rates also rose, with the three-month rate hitting 5.34% from 5.33%.

“The situation is not improving at all,” said Societe Generale’s Mr. Hubaud, who added that he expects central bankers to cut interest rates soon to pump blood into the global economy.

* TODAY’S MARKETS

* OCTOBER 6, 2008, 11:11 A.M. ET

Dow Dips Under 10000 As Bank Woes Persist

The U.S. market’s drop comes on the heels of a plunge in European markets during the overnight hours in New York. Investors around the world are increasingly worried that a deep global economic slowdown is taking hold despite measures like last week’s bailout of Wall Street and moves by the Federal Reserve prior to Monday’s opening bell to further encourage bank lending.


“It’s hard to be bullish based on monetary policy or bailouts alone,” said Chris Johnson, president of Johnson Research Group, in Cincinnati. “It doesn’t address the fundamentals of the stock market, which have some very deep problems right now.”