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.”

FF&F: Fannie, Freddie and Financial – capital socialism

BREAKING NEWS

US: THE MOST DRAMATIC STATE INTERVENTION IN FINANCIAL MARKETS IN DECADES

As expected, the US authorities have been obliged to A HISTORICAL POLICY CHANGE, i.e. to nationalise the two semi-public agencies (so called Fannie and Freddie) that are behind most of the federal housing policies, including the subcrime disaster. It is Financial Socialism at work: since from the March bailout of Bear Stearns, the weakest of the 5 US financial banks, the Fed and the Bush administration have lead the world tide toward the socialisation of subcriminal financial losses, abandoning forever Reaganism and the Chicago ideology. As Lex suggests, this sharp move of  Bernanke – Paulsson (the initiative to the latter, this time)  towards State Socialism in the US

has in essence converted the Treasury into the US hedge fund of last resort (with the Federal Reserve as its prime broker).

IT IS IN FACT A MOVE TOWARDS STATE SOCIALISM A’ LA SCHUMPETER, much more neat than Bear Stearns: because the private initiative was missing (read Lex just below), and the credit crunch was melting down the US (and world) financial system, the US Federal State and its Federal  Reserve intervene as a last resort.

A full fledged NATIONALISATION at the service of Financial Capital: THEIR SOCIALISM.

Misery (and a lesson) to the left parties, that have abandoned since long the ideals of True Socialism, accepting 100% the Chicago – Reagan – Thatcher ideology of self-healing and supermen markets !!! 

 

RECOMMENDED READINGS:

OUR 13 JULY BLOG POST: https://enzofabioarcangeli.wordpress.com/2008/07/13/indy-fannie-and-freddie/

1. BRAD SETSER’s analysis on Sept. 2: 

http://blogs.cfr.org/setser/2008/09/02/yes-virginia-–-creditors-do-sometimes-get-a-vote-…/

2. LEX (financial times)

Fannie & Freddie: coping with crunches

Published: September 8 2008 09:32 | Last updated: September 8 2008 19:55

The sight of a finance minister caught in reporters’ lights is more usually associated with an emerging market crisis. But Hank Paulson has a lot in common with emerging markets of late. It was Yale-educated former Mexican President Ernesto Zedillo who once commented that markets overreact, so policymakers need to do so as well. Mr Paulson has taken a leaf out of that book.

Coping with the credit crunchHe has taken no chances with the bail-out of Fannie Mae and Freddie Mac. Other investors were not prepared to recapitalise them or buy sufficient amounts of their debt to bring mortgage rates down. So the government will instead. The former investment banker has in essence converted the Treasury into the US hedge fund of last resort (with the Federal Reserve as its prime broker). Oddly, Mr Paulson’s package has proved uncontroversial and been supported by both presidential candidates (although President George W. Bush has kept relatively quiet). And, paradoxically for the self-proclaimed home of democracy, it was enacted by unelected officials.

 

OUR COMMENT: Look at Moody’s graph. When the clouds will be over, we will know how much the US 2008-9 is approaching the 8% of GDP Guinness of Japan around year 2000, and Norway 1990-93.

 

 

3. NOURIEL ROUBINI    http://www.rgemonitor.com/roubini-monitor/253501/fannie_and_freddies_bust_and_deeply_flawed_government_bailout

    the bust and now bailout of Fannie and Freddie is no news for this author and the readers of this blog: it is one of the severe toxic collateral damages of the biggest housing and mortgage bubble and bust in US history.

 

   The recent New York Times Magazine long profile article of yours truly (as “Dr Doom”) reminded readers that this bust of housing, of the mortgage market and of Fannie and Freddie was predicted here exactly two years ago today’s date (September 7th, 2006)

4. RGE MONITOR’s analysis and doc – with links:

 Analysis U.S. Treasury Sep 07, 2008

OpinionsReutersSep 07, 2008
BlogsRGE Finance & Markets MonitorIngo WalterJul 16, 2008
BlogsBrad Setser’s Blog: Follow the MoneyBrad SetserSep 02, 2008   Yes, Virginia – Creditors do sometimes get a vote …
BlogsRGE Analysts’ EconoMonitorElisa Parisi-CaponeJul 14, 2008   How to Solve The GSE Crisis? Overview of Long-Term Solutions
ResearchOFHEOAndrew Leventis et alJul 2008   Mortgage Markets And The Enterprises In 2007
AnalysisOFHEOPresentation by James B. Lockhart IIIMay 2008   Lessons Learned From Mortgage Market Turmoil – Latest data on Fannie&Freddie
 RGE WritingsRGE MonitorElisa Parisi-CaponeSeptember 2006   An Analysis of the Systemic Risks Posed by Fannie Mae and Freddie Mac

5 FURTHER READINGS

The best analysis of Fre&Fan in the frame of  US housing and income-debt-wealth policies is:

 

Paul Jorion (2007), Vers la crise du capitalisme américain? Paris: La Découverte – MAUSS.

For updates see: http://www.ft.com/indepth/freddieandfannie

 

alphaville, ft

US bank exposure to Fannie and Freddie prefs

Sep 08 09:08
by Paul Murphy
Comment

The table here may be a little difficult to read, but probably worth pasting all the same – the exposure of 40 US regional banks to GSE preferred stock.

According to Goldman Sachs, the key names at risk are Westamerica and SovereignMore…

Fannie & Freddie: A tale of two Bills

Sep 08 11:38
by Tracy Alloway

So Bill Gross’s Pimco has got what he wanted – a bailout of Fannie/Freddie, all in the name of saving the world from financial meltdown.

Pimco is of course, loaded to the gills with GSE mortgage-backed securities and has been screaming for Treasury intervention, More…

Further Fannie and Freddie

Sep 08 08:08
by Paul Murphy
Comment
(13 comments)

The latest on that bailout:

Is this the beginning of the end of capitalism? (NOTE- our answer: a sort of; but not Marx style, better Schumpeter-style: capitalism evolves naturally toward autocratic and bureaucratic socialism)

– The exit packages… – Syron gets an extra $8.8m for forfeiting “certain equity grants.”

– Cramer: “There is, for the first time, More…

US takes control of Fannie and Freddie

Sep 08 05:43
by Gwen Robinson
Comment

The US government on Sunday seized control of the troubled Fannie Mae and Freddie Mac mortgage groups in what could become the world’s biggest financial bail-out, reports the FT. While the Bush administration stopped short of using the word “nationalisation”, More…

 

ft

US rescue boosts investor risk appetite

World equities markets rallied and Treasury prices tumbled after the US government seized control of Freddie Mac and Fannie Mae, which between them have outstanding liabilities of $5,400bn – 11:40

LEX

Fannie & Freddie: market reaction

Published: September 8 2008 09:29 | Last updated: September 8 2008 13:38

Investors had half the weekend to ponder the resuscitation of the toxic twins – Fannie Mae and Freddie Mac. It is fair to say, however, that nobody really knows what the implications for financial markets or the global economy will be. In baffling times, the wisdom of crowds – where the average response of many people can prove remarkably accurate – may prove a useful guide. So what are Monday’s markets telling us so far?

The conclusion seems to be that the bail-out is not a quick-fix for the credit crunch. If it were, bank stocks across the planet should have at least tripled. That share prices from Credit Suisse in Switzerland to Mizuho in Japan rose between 10 and 15 per cent was, in fact, a muted response – prices are only back to where they were mid-August. Ditto for currencies: the dollar’s rally versus the euro was short-lived while gains were surprisingly modest in the “carry-trade” currencies. If risk appetites had genuinely returned, the Aussie dollar would have bounded like a kangaroo.

THIS IS 1\4 TODAY’S COMMENTS BY LEX (another one was quoted above), they are all quite nice and they give the sense of an epochal move toward a FINANCIAL STATE “SOCIALISM”, while sticking to facts:

Fannie & Freddie: market reaction

In baffling times, the wisdom of crowds may prove a useful guide. So what are Monday’s markets telling us so far? – Sep-08

Fannie & Freddie: coping with crunches

Hank Paulson is following the theory of financial crises that markets over-react, so policymakers need to as well – Sep-08

Fannie & Freddie: effect on banks

Europe’s banks will take all the good news they can get these days. The Fannie Mae and Freddie Mac rescue does a couple of helpful things – Sep-08

Fannie and Freddie

The US’s decision to place Fannie Mae and Freddie Mac into “conservatorship” came without a specific cause but a sense they were failing to provide affordable mortgage debt – Sep-08

nyt

U.S. Takeover of Mortgage Giants Lifts Global Markets

Stocks in Asia and Europe rallied, even as the rescue of Fannie Mae and Freddie Mac reinforced concerns about the U.S. economy.

Over the years, Fannie Mae and Freddie Mac showered riches on many winners: their executives, Wall Street bankers and Washington lobbyists. Now the foundering mortgage giants are leaving some losers in their wake, notably their shareholders, rank-and-file employees and, in the worst case, American taxpayers.

 

wsj

wsj:  THE GOVERNMENT SEIZED Fannie Mae and Freddie Mac in its most dramatic market intervention in decades. Treasury plans to replace the companies’ CEOs and provide up to $200 billion as part of the rescue. (Complete coverage)

Morgan Stanley assigned two veterans to the prestigious task of advising the Treasury in orchestrating the takeover of Fannie Mae and Freddie Mac.

La dittatura Tremonti sul bilancio e l’ideologia dell’emergenza

Il governo Berlusconi ha concluso i suoi 100 giorni salvando il premier dai procedimenti giudiziari in sospeso, come al solito, inoltre ripulendo le vie di  Napoli e modificando surrettiziamente la legge di Bilancio, nonostante la protesta del presidente Napolitano che ne ha solo bloccato la punta dispotica  più estremista (si veda ieri 5 agosto l’articolo di “Geronimo” C. Pomicino su Il Giornale, La fretta di Tremonti):

a) un piano triennale di bilancio pubblico riduce del 3% del PIL la spesa pubblica, approvato dopo appena 10′ di dibattito nel governo e PER DECRETO (!?!), con DOPPIO voto di fiducia in Parlamento;

b) nemmeno i Ministri ne conoscono i contenuti, di fatto delegati al Super Ministro Superman 3Monti, ma si stima che esso ricadrà su:

– sanità

– scuola: 100.000 insegnanti in meno; università in crisi catatonica e senza assunzione di giovani ricercatori;

– sicurezza: 3.000 soldati nelle grandi città oggi, ma 30.000 poliziotti e CC in meno nel triennio;

– Mezzogiorno e metà dei suoi territori – governati dalla criminalità organizzata (NB: Napoli ripulita SOLO dalle scoasse, NON dalla camorra, con cui continua  il patto tacito delle istituzioni): a settembre si applicherà il federalismo fiscale di Bossi = meno soldi alle regioni del Sud, così (???) li spenderanno meglio (la ricerca Bordignon ha mostrato che la Lega ha avanzato nelle Regioni in surplus fiscale):

c) a settembre la legge annuale di bilancio consisterà in una serie di tabelle di variazione di Bilancio: allora forse emergerano pro quota i tagli di 1% del PIL, e sarà bagarre tra Ministeri e gruppi di pressione. Pomicino, cit.:

E che senso avrebbe una Finanziaria che, stando alle dichiarazioni di Tremonti, dovrebbe contenere solo tabelle correttive del bilancio dello Stato se non si conosce ancora lo stesso bilancio dopo i tagli operati dalla manovra economica approvata qualche giorno fa?

d) Per opposizione della Lega, interessata a cariche e magna-magna, bloccata la liberalizzazione dei servizi pubblici locali.

e) Nulla per consolidare la ripresa strutturale dell’industria italiana di media e bassa  tecnologia, a favore di innovazione ed istruzione superiore: anzi quest’ultima indebolita, pregiudicando le generazioni prossime.

f) Per ottenere tutto questo, Tremonti ha avuto gioco facile a fare IDEOLOGIA DELL’EMERGENZA e terrorismo sulla crisi economica mondiale (che i nostri lettori ben conoscono,  ma non sta affatto precipitando: essenzialmente, oltre che per la tenuta dei consumi americani,  per il neo-socialismo pro-bancario: Banche Centrali e governi stanno bloccando l’esito di mercato del credit crunch, che avrebbe dovuto essere di circa $10 trilioni, e rimandando la recessione – che ad 1 anno dalla crisi muove ancora i primi passi, oggi ad es. è il caso della Germania ad esserne toccata con un inatteso -1% PIL 08Q2). Peccato che, se la crisi fosse ancor più precipitosa come dice Tremonti, non sarebbe affatto  il caso di ridurre la spesa pubblica, ma semmai di stimolare investimenti e consumi privati – sotto il vincolo del tremendo debito pubblico creato da Craxi, il Maestro ed inventore del Berlusconismo, e gonfiato da Berlusconi 1 e 2.

Il nostro blog CONTRO-ARGOMENTA che l’attuale recessione può essere benissimo frenata da politiche economiche inedite e massicce, adatte alla sua natura acuta e radicata nei meccanismi centrali della finanza globale. Ma ciò non farebbe che AVVICINARE IL DECENNIO DI CUPA DEPRESSIONE che è insito nei “fundamentals”: aumenta la povertà nei paesi ricchi, più che viceversa, e non c’è domanda effettiva per sorreggere la sovraccapacità; da 20 anni l’economia-mondo è in crisi di sovra-acccumulazione che, quando scoppia, farà un botto.

g) Cirino Pomicino cit., analizza col consueto acume gli aspetti istituzionali della manovra del min. Superman, vero primo Ministro ombra (altro che l’inetto Veltroni!), sia pure in un luogo inadatto e surrealistico, come “il Giornale ” scippato al povero Indro:

Una visione «semplificatoria» della politica e delle istituzioni che non troviamo né in altre democrazie parlamentari, né in quelle presidenziali del tipo americano e francese. E la stessa carta per i poveri al posto di un aumento delle pensioni più basse, come pure fece il governo Berlusconi nel 2001, dà quel tocco di paternalismo che accompagna sempre i governi di un illuminato. (..)

ed il 29 luglio, con orgoglio:

Rivendichiamo il merito di aver scritto, dalle colonne del quotidiano edito dalla famiglia Berlusconi, che alcune norme introdotte nel provvedimento economico non solo violerebbero la Costituzione, ma trasformerebbero nel profondo la nostra democrazia parlamentare come, ad esempio, la facoltà data al ministro dell’Economia di modificare gli stanziamenti di bilancio previsti dalle leggi con propri decreti amministrativi.

Il pronto e saggio richiamo del presidente Napolitano e l’altrettanto rapida condivisione dell’intero governo a modificare queste norme ci confortano nel continuare in un’antica pratica di libertà …

Infine, alla 7 stamane ricorda che Berlusconi governa con poco più del 40% dei voti, NON IL 51% come nei sistemi proporzionali. Se vogliono il sistema francese o inglese, si deve modificare in coerenza tutto, anche la Costituzione- ammesso che vi siano consenso e maggioranza per farlo.

US bank runs: who told a systemic meltdown is over? IT IS NOT

CAN YOU HEAR SITTING BULL’S WAR-CRY? WELL, THE LITTLE BIG HORN OF SHADOW FINANCE IS ON. After that, in Autumn non-financial co. will start going bankrupt.

Hard 2 read and 2 believe: but this is REALLY the NYT front page, day after Little Big Horn!!! Thanks the sublime NYT serivce: On this Day  (Copyright 2007 the NYT Company). 25 June 1876. Col. George A. Custer and his 7th Cavalry were wiped out by Sitting Bull’s Sioux and Cheyenne Indians in the Battle of Little Big Horn, Montana. 

FACTS, NOT FAIRY TALES!

June 18 update. Alphaville: HOT AUTUMN, banks’ bears warnings 

Deeprecession has a 1 day lead on the RBS mail, 2 days on Alphaville

Bearish analysts are out in force. Bob Janjuah [credit strategist] of RBS, in an email on Tuesday, warns of a global stock and credit crash in the next few months; with the S&P 500 likely to lose up to a quarter of its value. In credit, Janjuah sees the iTraxx soaring to 130/150 and the iTraxx Crossover to 650/700. (…) Wall Street should rally through early July before succumbing to the twin pressures of high oil and high inflation – the first painful spasms of a recession. The RBS team also point specifically to the limited range of options open to central banks. The point is taken up by analysts at Morgan Stanley. A note from last week – “1992 redux” – by the bank’s European banking team – warns of potential for a “catastrophic event” on the horizon to match the European monetary crisis of the early nineties.

MS: We find striking similarities between the transatlantic macro tensions that built up in the early 1990s and those that are accumulating again today. In both cases, monetary authorities took opposite options on both sides of the Atlantic: stabilising output in the US, and stabilising prices in Europe. Macro tensions caused a major currency crisis in Europe in 1992. Will history repeat itself? 1992 Redux - MS note

Just after this entry, posted by Sam Jones on June 18th, 2008 at 11:07,

another contemporary Alphaville post, by Robert Cookson at 13:24 adds:

Mr Janjuah’s peers at other European banks agreed it was inevitable that credit markets would deteriorate later in the year, potentially quite dramatically, when large companies started to default on their debt. However, most said that RBS was a touch aggressive in forecasting that turmoil would strike as soon as August. (According to one strategist)  many struggling companies would be able to limp along into 2009 before falling apart.

The discussion is only about time frame: dead bodies might keep walking to 2009.

Original post

FACTS, not a propaganda trying to delay the redde rationem, an always imminent RUN on US FINANCIAL BANKS  (spada di Damocle).

1) we are still, and only, in the beginning (since end 2007) of a global “subcrime” recession, rooted in historical and structural processes in the creation and appropriation of economic value:

1a) the peculiar way a Reagan-microelectronics Kondratiev Long Wave (KLW) went burst (see Carlota Perez – for full references: goto  subcrimebiosocialscience1.pdf). We mean, not just one bubble or another went burst, but a unique, entire, historical chance of sustainable progress (late capitalisms could not grasp) was missed by humanity and the Earth. For enriching the pockets of a few hundred billionaires. A Donald Duck world.

 

1b) How did such a quantum technological jump go wrong and lost? It was killed on the altar of such Medieval rites as: b1) enrich a handful of global rentiers and rape an obsolete Middle Class (no democracy to be socially enveloped any more); b2) fuck the Russian mil.-ind. complex and “ally”, more exactly link up with China; b3) tell people there is laissez faire and democracy, while MONOPOLIES RULE in thanato-political liberal régimes or tyrannies (Adam Smith and Loretta Napoleoni, Michel Foucault and Roberto Esposito). c) We live for decades to come, a generation or two, in a new (post-Reagan and MPUs) Deflationary Long Wave: a  byproduct of the Greenspan-Clinton irresponsible, witchcraft manipulations of the declining US economy in the 1990s (Aglietta-Berrebi, Chesnais). Hopefully, Bill will not come back as first lady!

2) Last episode of such a deep, structural process in value production and circulation (Marx, Capital, Book 2): the subcrime-based shadow finance, was meant to enlarge the circuits of over-accumulation in search of an outlet. The target was scientifically selected: afro-american bobos and regular Latino workers (at least $4000 of family earnings, in order to steal them 3000-3500 per month !!! see case studies in the quoted subcrime … .pdf). Systemic scope, only way to create a “growth” illusion, in a CRAZY RENTIERS WORLD sunk into deflation and depression:

2A) RAPE the first (quasi-affluent blacks) and second tier (latinos) of people still wiling to enter, via patriotic-sacre housing property, the middle class.

 

2B) From stealing their homes, hopes, lives and wages: create a fixed material point, that the fantasy of the casino economy will multiply some thousand times in  “assets” (in fact, property rights on a chain leading at the end to the real asset: Chesnais; this is why someone had to be RAPED at chain end), to be bought by the Rentiers èlite savings, out of the surplus value they expropriated from productive value chains.

 

3) 3 months ago, in March 2008 the US Bush Adm. and the Fed JOINTLY delayed a meltdown of the 5 US pure financial banks, likely spreading quickly into a global meltdown, by bailing out Bear Stearns. Now it’s Lehman last bell, death time. Third to be soldout will be Merill Lynch soon (the FT tells BofA wants it), and fourth Morgan Stanley, likely to be historically reunited in the (JP) Morgan mother house. Only Goldman Sachs will survive this Little Big Horn. We do not invent such an order: it is written in their books, leverage ratios and the premium rates they pay (see graph). Rentiers carry on telling (not believing, they are smart), and THEIR MEDIA keep echoing every day as a litany: a systemic meltdown is over. You always find this proposition in newspapers, with redundancy. Ask Roubini: he knows and tells you the answer.  

 

4) Rev. Jessie Jackson, one of the greatest living personalities, as far as we know invented “subcrime” for subprime. In a March 20 timely speech in Chicago (quoted in our .pdf, Section 4), where he accused the Govt. of moral hazard financing bankrupt banks, while ignoring foreclosures and people. As we have already discussed in this blog, in synchrony with the economic blogs community (namely: perplexity towards a NYT  op-ed by  Robert J. Shiller, on May 18), this is a delicate issue of policies; since a bailout of foreclosures (with the excuse of the poor rape victims) will always close the gap of Subcriminals. It’s the easy credit for sacred property TABOO that must be challenged, overcome, identified as a Middle Class narrative belonging to the past, while manipulation belongs to the present (see Joriot). But the US left is always in a mess, lost in between Blair-Clintonian Late  Reaganism, and a-scientific, ideological Populism. Even Obama – basically a postClintonian, on that line of evolution of neoDemocrats, but somehow divided, as it often happens to us, between his rational mind and heart. This is physiological in a country that, after Tocqueville (no democracy without religion), is so much ideological and radical, but has not declined a variety of complex ideologies (like Eurasia). They stand by the American Myth, Father of a constellation of Myths – e.g., housing, financed by the Fed. State via Freddie Mac and Fannie Mae (Joriot)- a bit like Greece before the Ionians and the Athenians. They hardly get (perhaps The Nation?) to such a Myths deconstruction (Derrida), that would engender a Real Socialist left. This is a priority area of political work, in networks of international coop – helping US progressives to make a step further. This is what we mean by “Robin Hood policies”. More on this another time. 

 

The DIAGNOSIS, from p. 5 of  subcrimebiosocialscience1.pdf

 

1. the global economy is locked in a longrun demand deficit hysteresis (requiring a drastic redistribution), and liquidity trap (making monetary and credit policies totally ineffective)

2. fiscal and income policy implication: the world badly needs an epoch-making, giant income and wealth redistribution, from the élites to impoverished masses. A Keynes-Kalecki and Ricardo-Pasinetti models classic case, calling to rebalance 25 years of counter-distribution

 

3. in fact, the “1987-2007 Rentiers’ glorious years” increased:

– both the rate of Absolute and Relative Surplus Value extraction: in each OECD country, 9% GNP shifted from wages, to gross profits and self-employment incomes; – and of its appropriation by Rentiers – see Fig. 2 of the pdf: showing that the US finance margins jumped from 35% to 50% in the “20 Glorious” 

4. such a counter-distribution dropped the global economy into a deflationary régime

 

5. a drastic improvement of world welfare, an intrinsic ICTs potential, went bust by Lewis-effects (unlimited labour supply discouraging technical change, i.e. substituting Absolute for Relative Surplus Value)

 

6. a complication: political systems do not allow such a global Keynesian-Obama New Deal

7. morale: a political hysteresis (Blair-Clinton-socialdem. PostReaganism, a follow up of “doc” Reaganism) in leading OECD countries, is blocking the road out of the economic hysteresis.