If you have more interest also read the article from www.Chicagogsb. edu/igm which says that it is time to save Capitalism from the Capitalist.
I have been saying for some time that the Capitalist is no longer in charge. They serve at the alter of Capitalism and can only behave according to it's dictates. Paulson and Congress are bound to act in ways that are destructive to them without realising it.
This is a mouthful since they are supposed to be amongst the smartest people in the world but greed makes us stupid. If they were so smart how come we are in this mess?
There is unprecedented conflict of Interest in the system. The top management of Fannie and Freddie have received favorable mortgages, all from Country wide the biggest hawker of sub prime mortgages. A lot more graft and mutual back scratching has yet to come to light.
No one is focussed on the real issue. Mortgages have been given to people with no ability to repay them. The problem is not that Real Estate prices have come down ( according to Bush), the problem is that loans were made that should never have been made. The way to make these loans good is to look at each one of them and renegotiate the terms according to the ability of the borrower to repay. Some may just have to be written off but not all. No one wants to do the hard work. Every one is looking at a formula. The customer is just a number and will either fit into a formula or not.
Banking has deteriorated from my time. The branch manger does not know his/her borrower. The transactions are done by faceless call center employees with faceless numbered individuals. Banking is no different today then the meat packing Industry. Parts of the animal are sliced and diced and packed in bundles of a certain weight and then sold as just meat. The shoulder, the thigh, the shank are all mixed up and no one knows the quality of the meat. Mixed in is meat from young animals, old animals and some downright stale animals. There is a lot of meat in there unfit for human consumption. No wonder there is such a stink around.
There needs to be a bailout but not one authored by the people who created the problem in the first place. The package presented by Paulson and Bernanke is an insult to Congress. It is long on Dollars and short on specifics and it asks for the fox to be appointed incharge of the chicken.
I will not repeat the arguments given by experts and let you read them. This package, if accepted, in it's present form will postpone the problem for a very short while, it will not resolve it. In fact it has all the makings of making it worse. My recommendation would be to get out of the stock market as fast as you can, if you have not already done it. This is not a bottom, there is worse to come. As a nation we have become addicted to living on credit. We are now borrowed to the hilt and the tax payer is being asked to lend ( give) money when no one else wants to.
Khusro
Paulson’s plan was not a true solution to the crisis
By Martin Wolf
Published: September 23 2008 19:38 Last updated: September 23 2008 19:38
Desperate times call for desperate measures. But remember, no less, that decisions taken in haste may shape the financial system for a generation. Speed is essential. But it is no less essential to get any new regime right.
EDITOR’S CHOICE
Economists’ forum - Nov-16
Every week, 50 of the world’s most influential economists discuss Martin Wolf’s articles on FT.com
No doubt, the crisis has long passed the stage when governments could leave the private sector to save itself, with just a little help from central banks. For the US, the rescue of Bear Stearns was the moment when that option evaporated. But the events of the past two and a half weeks – the rescues of Fannie Mae and Freddie Mac, the failure of Lehman Brothers, the sale of Merrill Lynch, the rescue of AIG, the flight to safety in the markets and the decisions by Morgan Stanley and Goldman Sachs to become regulated bank holding companies – have made a comprehensive solution inevitable.
The US public expects action. The question is whether it will get the right action. To answer it, we must agree on the challenge the US financial system faces and the criteria for judging how it should be met.
What then is the challenge? The answer given by Hank Paulson, the all-action US Treasury secretary, last Friday, in announcing his “troubled asset relief programme”, is that “the underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy.” The core challenge, then, is viewed as illiquidity, not insolvency. By creating a market for the toxic assets, Mr Paulson hopes to halt the spiral of falling prices and bankruptcies.
I suggest we should take a broader view of events. The aggregate stock of US debt rose from a mere 163 per cent of gross domestic product in 1980 to 346 per cent in 2007. Just two sectors of the economy were responsible for this massive rise in leverage: households, whose indebtedness jumped from 50 per cent of GDP in 1980 to 71 per cent in 2000 and 100 per cent in 2007; and the financial sector, whose indebtedness jumped from just 21 per cent of GDP in 1980 to 83 per cent in 2000 and 116 per cent in 2007 (see charts). The balance sheets of the financial sector exploded, as did the sector’s notional profitability. But leverage, alas, works both ways.
Since US net international debt was 39 per cent of GDP at the end of 2007, virtually all of this debt is an asset of another domestic entity and would net out to zero. But when the gross debt stock is huge and economic conditions difficult, the chances that many entities are bankrupt is high. When people fear mass insolvency, lenders stop lending and the indebted stop spending. The result can be the “debt deflation”, described by the American economist, Irving Fisher, in 1933 and experienced by Japan in the 1990s.
Given the recent explosion in leverage, the challenge is unlikely to be one of mispricing of the toxic mortgage-backed securities alone. Many people and institutions made leveraged bets that have since gone sour. Their debt cannot be repaid. Creditors are responding accordingly.
Now turn to the criteria to be used in judging the intervention. First, it would deal with the systemic threat. Second, it would minimise damage to incentives. Third, it would come at minimum cost and risk to the taxpayer. Not least, it would be consistent with ideas of social justice.
The fundamental problem with the Paulson scheme, as proposed, is then that it is neither a necessary nor an efficient solution. It is not necessary, because the Federal Reserve is able to manage illiquidity through its many lender-of-last resort operations. It is not efficient, because it can only deal with insolvency by buying bad assets at far above their true value, thereby guaranteeing big losses for taxpayers and providing an open-ended bail-out to the most irresponsible investors.
Furthermore, these assets are illiquid precisely because they are so hard to value. The government risks finding its coffers stuffed with huge amounts of overpriced junk even if it tries not to do so. Also objectionable, though more in design than in the fundamentals, were the unchecked powers for the Treasury. Such a fund should be operated professionally, under independent oversight. Finally, if the US government is to bail out incompetent investors it should surely also provide more help to the poor and often ill-informed borrowers.
Yet, above all, a scheme for dealing with the crisis must be able to remedy the looming decapitalisation of the financial system in as targeted a manner as possible. A fascinating debate on how to do this is under way in the economists’ forum on FT.com. To the contributions, including Tuesday’s Comment page article by Dominique Strauss-Kahn, managing director of the International Monetary Fund, I would add one by Luigi Zingales of Chicago University’s graduate school of business.*
The simplest way to recapitalise institutions is by forcing them to raise equity and halt dividends. If that did not work, there could be forced conversions of debt into equity. The attraction of debt-equity swaps is that they would create losses for creditors, which are essential for the long-run health of any financial system.
The advantage of these schemes is that they would require not a penny of public money. Their drawback is that they would be disruptive and highly unpopular: banking institutions would have to be valued, whereupon undercapitalised entities would have to adopt one of the ways to improve their capital positions.
If, as seems plausible, a scheme that imposes such pain on the financial sector would be rejected out of hand, the next best alternative would be injection of preference shares by the government into decapitalised institutions, on the lines proposed by Charles Calomiris of Columbia University. This would be a bail-out, but one that constrained the behaviour of beneficiaries, not least on payment of dividends. That would make it far better than dropping benefits on the unworthy, via mass purchases of overpriced toxic paper.
What then do I conclude? Yes, there may well be a place for intervention in the market for toxic securities. But this is a costly and ineffective way of meeting today’s deepest challenge. What is needed, still more, is a clear and effective way of deleveraging and recapitalising the financial sector, ideally without using taxpayer funds. If such funds are to be used, they must also be injected in as carefully targeted and controlled a way as possible. Comprehensive action is essential, as Mr Paulson has decided. But let the US take the time to make that comprehensive action right.
*Why Paulson is wrong, www.chicagogsb. edu/igm
martin.wolf@ ft.com
Copyright The Financial Times Limited 2008
Thursday, September 25, 2008
Tuesday, September 23, 2008
The Wall Street debacle and its "rescue"
"But the crisis we are seeing calls for even deeper changes than that. The reason these junk loans were allowed to proliferate was not just because the regulators didn't understand the risk. It is because we have an economic system that measures our collective health based exclusively on GDP growth. So long as the junk loans were fuelling economic growth, our governments actively supported them. So what is really being called into question by the crisis is the unquestioned commitment to growth at all costs. Where this crisis should lead us is to a radically different way for our societies to measure health and progress."
Naomi Klien is more right then even she knows. The sole measure of success in today's world is wealth. How it is created and how it is spread, no one seems to worry too much about. The search for quarterly profits on Wall Street has created an unsustainable culture of short term thinking.
According to Naomi, the Right sees this as an opportunity to Nationalize everything with tax payer money so that they can subsequently privatize everything by selling these same Assets to the privileged few at low prices and make them even richer. First the rich are bailed out and then made richer still. There is a pattern in these activities which justify what Klien is claiming.
The lurch from one bubble to another creates an opportunity for the Capitalist which is a God send. Only a few are equipped to profit from these disasters and they do and these are the very people who control Congress, the Regulators, Wall Street, The Rating Agencies, The Media,the White House. We have all become victims of a society that will ensure the enrichment of the few at the cost of the millions. The millions in America are happy because even if they do not compare well to the rich, they compare well to the billions outside America whose share of wealth they are happy to usurp. So far the American Army has made sure of this. Armed exploitation of countries once rich in resources and proud of their heritage and history have turned these countries into rubble so that the American standard of living can be maintained.
I believe we are seeing the last of these bubbles. The Economy is so broke that it is not repairable. The exploitation of other countries is about to come to a halt because they have dug in and are resisting like mad. We are witnessing a great society crumble under the weight of its own greed.
Khusro
PS. Please watch both videos.
--- On Tue, 9/23/08, Naomi Klein's Newsletter wrote:
From: Naomi Klein's NewsletterSubject: Time to Resist the Shock Doctrine on Wall Street!To: kandrelley@yahoo. comDate: Tuesday, September 23, 2008, 5:06 AM
A Note from NaomiI wrote The Shock Doctrine in the hopes that it would make us all better prepared for the next big shock. Well, that shock has certainly arrived, along with gloves-off attempts to use it to push through radical pro-corporate policies (which of course will further enrich the very players who created the market crisis in the first place…). But here’s the thing: these tactics can only work if we let them. They work when we give in to our fear and our desire for “strong leaders” – even if they are the same strong leaders who used the September 11 attacks to launch the Disaster Capitalism Complex. Sadly, there are no saviors in this crisis, and the only hope of preventing another dose of shock politics is loud, organized grassroots pressure on all political parties.In this newsletter, Debra Levy, who runs www.shockdoctrine. org and was my closest colleague in researching The Shock Doctrine, has compiled my recent writing and interviews on the crisis, as well as information about an upcoming protest in New York. We also have the gory details of how the right wing think tanks are already using the market shock to push for some old fashioned economic shock therapy.We send this with an urgent request: please, don’t be silent. If you have read the book, you know that this is precisely the kind of moment in which we stand to lose (or gain) it all. If we are slow, the radical changes will be locked in; if the Bush Administration gets its way, the actions taken this week will not be subject to repeal or to any legal challenge. So write letters to the editor, call your elected representatives, contact the Obama campaign, and let them know: the way to solve a crisis born of deregulated capitalism is not with more gifts and giveaways for Wall Street!
BE AWARE: Former Republican House Speaker Newt Gingrich Is At It AgainYesterday, Gingrich laid out 18 policy prescriptions for Congress to take in order to "return to a Reagan-Thatcher policy of economic growth through fundamental reforms." In the midst of this economic crisis, he actually called for the repeal of the Sarbanes-Oxley Act, which would lead to further deregulation of the financial industry. Gingrich also called for reforming the education system to allow "competition" (AKA school vouchers), strengthening border enforcement, creating an immigrant guestworker program, and his signature move: allowing offshore drilling.It would be a grave mistake to dismiss this conservative wish list for how to “solve” the financial crisis. Don’t forget that Newt Gingrich's 527 organization, American Solutions for Winning the Future, is still riding the wave of success from its offshore drilling campaign, "Drill Here, Drill Now!" As Naomi wrote in her last Nation column, just four months ago, offshore drilling "was not even on the radar" and now the US House of Representatives has passed legislation. In fact, Gingrich is holding an event this Saturday, September 27 that will be broadcast on satellite television to shore up public support for these controversial policies. So friends, get ready! We must start putting forth our own alternative proposals and not shy away from a tough debate.
Naomi Discusses the Financial Crisis on Real Time with Bill Maher Watch Naomi discuss the economic crisis and Wall Street bailouts with Bill Maher, conservative blogger Andrew Sullivan, and musician Will.I.Am. She also spoke last week about the role of unregulated capitalism in the credit crisis on BBC Newsnight.
Naomi Klein's Latest ColumnFree Market Ideology is Far from Finishedby Naomi KleinSeptember 19, 2008
Whatever the events of this week mean, nobody should believe the overblown claims that the market crisis signals the death of "free market" ideology. Free market ideology has always been a servant to the interests of capital, and its presence ebbs and flows depending on its usefulness to those interests.During boom times, it's profitable to preach laissez faire, because an absentee government allows speculative bubbles to inflate. When those bubbles burst, the ideology becomes a hindrance, and it goes dormant while big government rides to the rescue. But rest assured: the ideology will come roaring back when the bailouts are done. The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis that will be the rationalization for deep cuts to social programs, and for a renewed push to privatize what is left of the public sector. We will also be told that our hopes for a green future are, sadly, too costly.What we don't know is how the public will respond. Consider that in North America, everybody under the age of 40 grew up being told that the government can't intervene to improve our lives, that government is the problem not the solution, that laissez faire was the only option. Now, we are suddenly seeing an extremely activist, intensely interventionist government, seemingly willing to do whatever it takes to save investors from themselves.This spectacle necessarily raises the question: if the state can intervene to save corporations that took reckless risks in the housing markets, why can't it intervene to prevent millions of Americans from imminent foreclosure? By the same token, if $85bn can be made instantly available to buy the insurance giant AIG, why is single-payer health care – which would protect Americans from the predatory practices of health-care insurance companies – seemingly such an unattainable dream? And if ever more corporations need taxpayer funds to stay afloat, why can't taxpayers make demands in return – like caps on executive pay, and a guarantee against more job losses?Now that it's clear that governments can indeed act in times of crises, it will become much harder for them to plead powerlessness in the future. Another potential shift has to do with market hopes for future privatizations. For years, the global investment banks have been lobbying politicians for two new markets: one that would come from privatizing public pensions and the other that would come from a new wave of privatized or partially privatized roads, bridges and water systems. Both of these dreams have just become much harder to sell: Americans are in no mood to trust more of their individual and collective assets to the reckless gamblers on Wall Street, especially because it seems more than likely that taxpayers will have to pay to buy back their own assets when the next bubble bursts.With the World Trade Organization talks off the rails, this crisis could also be a catalyst for a radically alternative approach to regulating world markets and financial systems. Already, we are seeing a move towards "food sovereignty" in the developing world, rather than leaving access to food to the whims of commodity traders. The time may finally have come for ideas like taxing trading, which would slow speculative investment, as well as other global capital controls.And now that nationalization is not a dirty word, the oil and gas companies should watch out: someone needs to pay for the shift to a greener future, and it makes most sense for the bulk of the funds to come from the highly profitable sector that is most responsible for our climate crisis. It certainly makes more sense than creating another dangerous bubble in carbon trading.But the crisis we are seeing calls for even deeper changes than that. The reason these junk loans were allowed to proliferate was not just because the regulators didn't understand the risk. It is because we have an economic system that measures our collective health based exclusively on GDP growth. So long as the junk loans were fuelling economic growth, our governments actively supported them. So what is really being called into question by the crisis is the unquestioned commitment to growth at all costs. Where this crisis should lead us is to a radically different way for our societies to measure health and progress.None of this, however, will happen without huge public pressure placed on politicians in this key period. And not polite lobbying but a return to the streets and the kind of direct action that ushered in the New Deal in the 1930s. Without it, there will be superficial changes and a return, as quickly as possible, to business as usual.This article first appeared on The Guardian.
Naomi Klien is more right then even she knows. The sole measure of success in today's world is wealth. How it is created and how it is spread, no one seems to worry too much about. The search for quarterly profits on Wall Street has created an unsustainable culture of short term thinking.
According to Naomi, the Right sees this as an opportunity to Nationalize everything with tax payer money so that they can subsequently privatize everything by selling these same Assets to the privileged few at low prices and make them even richer. First the rich are bailed out and then made richer still. There is a pattern in these activities which justify what Klien is claiming.
The lurch from one bubble to another creates an opportunity for the Capitalist which is a God send. Only a few are equipped to profit from these disasters and they do and these are the very people who control Congress, the Regulators, Wall Street, The Rating Agencies, The Media,the White House. We have all become victims of a society that will ensure the enrichment of the few at the cost of the millions. The millions in America are happy because even if they do not compare well to the rich, they compare well to the billions outside America whose share of wealth they are happy to usurp. So far the American Army has made sure of this. Armed exploitation of countries once rich in resources and proud of their heritage and history have turned these countries into rubble so that the American standard of living can be maintained.
I believe we are seeing the last of these bubbles. The Economy is so broke that it is not repairable. The exploitation of other countries is about to come to a halt because they have dug in and are resisting like mad. We are witnessing a great society crumble under the weight of its own greed.
Khusro
PS. Please watch both videos.
--- On Tue, 9/23/08, Naomi Klein's Newsletter
From: Naomi Klein's Newsletter
A Note from NaomiI wrote The Shock Doctrine in the hopes that it would make us all better prepared for the next big shock. Well, that shock has certainly arrived, along with gloves-off attempts to use it to push through radical pro-corporate policies (which of course will further enrich the very players who created the market crisis in the first place…). But here’s the thing: these tactics can only work if we let them. They work when we give in to our fear and our desire for “strong leaders” – even if they are the same strong leaders who used the September 11 attacks to launch the Disaster Capitalism Complex. Sadly, there are no saviors in this crisis, and the only hope of preventing another dose of shock politics is loud, organized grassroots pressure on all political parties.In this newsletter, Debra Levy, who runs www.shockdoctrine. org and was my closest colleague in researching The Shock Doctrine, has compiled my recent writing and interviews on the crisis, as well as information about an upcoming protest in New York. We also have the gory details of how the right wing think tanks are already using the market shock to push for some old fashioned economic shock therapy.We send this with an urgent request: please, don’t be silent. If you have read the book, you know that this is precisely the kind of moment in which we stand to lose (or gain) it all. If we are slow, the radical changes will be locked in; if the Bush Administration gets its way, the actions taken this week will not be subject to repeal or to any legal challenge. So write letters to the editor, call your elected representatives, contact the Obama campaign, and let them know: the way to solve a crisis born of deregulated capitalism is not with more gifts and giveaways for Wall Street!
BE AWARE: Former Republican House Speaker Newt Gingrich Is At It AgainYesterday, Gingrich laid out 18 policy prescriptions for Congress to take in order to "return to a Reagan-Thatcher policy of economic growth through fundamental reforms." In the midst of this economic crisis, he actually called for the repeal of the Sarbanes-Oxley Act, which would lead to further deregulation of the financial industry. Gingrich also called for reforming the education system to allow "competition" (AKA school vouchers), strengthening border enforcement, creating an immigrant guestworker program, and his signature move: allowing offshore drilling.It would be a grave mistake to dismiss this conservative wish list for how to “solve” the financial crisis. Don’t forget that Newt Gingrich's 527 organization, American Solutions for Winning the Future, is still riding the wave of success from its offshore drilling campaign, "Drill Here, Drill Now!" As Naomi wrote in her last Nation column, just four months ago, offshore drilling "was not even on the radar" and now the US House of Representatives has passed legislation. In fact, Gingrich is holding an event this Saturday, September 27 that will be broadcast on satellite television to shore up public support for these controversial policies. So friends, get ready! We must start putting forth our own alternative proposals and not shy away from a tough debate.
Naomi Discusses the Financial Crisis on Real Time with Bill Maher Watch Naomi discuss the economic crisis and Wall Street bailouts with Bill Maher, conservative blogger Andrew Sullivan, and musician Will.I.Am. She also spoke last week about the role of unregulated capitalism in the credit crisis on BBC Newsnight.
Naomi Klein's Latest ColumnFree Market Ideology is Far from Finishedby Naomi KleinSeptember 19, 2008
Whatever the events of this week mean, nobody should believe the overblown claims that the market crisis signals the death of "free market" ideology. Free market ideology has always been a servant to the interests of capital, and its presence ebbs and flows depending on its usefulness to those interests.During boom times, it's profitable to preach laissez faire, because an absentee government allows speculative bubbles to inflate. When those bubbles burst, the ideology becomes a hindrance, and it goes dormant while big government rides to the rescue. But rest assured: the ideology will come roaring back when the bailouts are done. The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis that will be the rationalization for deep cuts to social programs, and for a renewed push to privatize what is left of the public sector. We will also be told that our hopes for a green future are, sadly, too costly.What we don't know is how the public will respond. Consider that in North America, everybody under the age of 40 grew up being told that the government can't intervene to improve our lives, that government is the problem not the solution, that laissez faire was the only option. Now, we are suddenly seeing an extremely activist, intensely interventionist government, seemingly willing to do whatever it takes to save investors from themselves.This spectacle necessarily raises the question: if the state can intervene to save corporations that took reckless risks in the housing markets, why can't it intervene to prevent millions of Americans from imminent foreclosure? By the same token, if $85bn can be made instantly available to buy the insurance giant AIG, why is single-payer health care – which would protect Americans from the predatory practices of health-care insurance companies – seemingly such an unattainable dream? And if ever more corporations need taxpayer funds to stay afloat, why can't taxpayers make demands in return – like caps on executive pay, and a guarantee against more job losses?Now that it's clear that governments can indeed act in times of crises, it will become much harder for them to plead powerlessness in the future. Another potential shift has to do with market hopes for future privatizations. For years, the global investment banks have been lobbying politicians for two new markets: one that would come from privatizing public pensions and the other that would come from a new wave of privatized or partially privatized roads, bridges and water systems. Both of these dreams have just become much harder to sell: Americans are in no mood to trust more of their individual and collective assets to the reckless gamblers on Wall Street, especially because it seems more than likely that taxpayers will have to pay to buy back their own assets when the next bubble bursts.With the World Trade Organization talks off the rails, this crisis could also be a catalyst for a radically alternative approach to regulating world markets and financial systems. Already, we are seeing a move towards "food sovereignty" in the developing world, rather than leaving access to food to the whims of commodity traders. The time may finally have come for ideas like taxing trading, which would slow speculative investment, as well as other global capital controls.And now that nationalization is not a dirty word, the oil and gas companies should watch out: someone needs to pay for the shift to a greener future, and it makes most sense for the bulk of the funds to come from the highly profitable sector that is most responsible for our climate crisis. It certainly makes more sense than creating another dangerous bubble in carbon trading.But the crisis we are seeing calls for even deeper changes than that. The reason these junk loans were allowed to proliferate was not just because the regulators didn't understand the risk. It is because we have an economic system that measures our collective health based exclusively on GDP growth. So long as the junk loans were fuelling economic growth, our governments actively supported them. So what is really being called into question by the crisis is the unquestioned commitment to growth at all costs. Where this crisis should lead us is to a radically different way for our societies to measure health and progress.None of this, however, will happen without huge public pressure placed on politicians in this key period. And not polite lobbying but a return to the streets and the kind of direct action that ushered in the New Deal in the 1930s. Without it, there will be superficial changes and a return, as quickly as possible, to business as usual.This article first appeared on The Guardian.
Sunday, September 21, 2008
The Taliban
I have no doubt in my mind that Talibanisation is coming and that it is the only way to rid Pakistan of the US, which is fast becoming an enemy rather than an ally. It is also the only way to rid Pakistan of it's elitist leeches. To drive foreign forces out of the country has to be the first step towards freedom.
The question is does this mean making a pact with the devil. Kamal's report shows that the Taliban are capable of growing and maturing. If they do not then they have no hope of dealing with the horrendous issues created by the ruling elite in Pakistan. Younger and better educated people will bring their own sense of realism. So it is important to recognise that the Taliban cannot and will not stick to the formula of growing beards and forcing Hijab on women and cutting off peoples hands.
It is important to remember that America and Australia were first built by Religious outcasts, bandits, con men, adventurers and all sorts of other undesirables thrown out from their mother societies. When these people were joined by more regular people, they were forced to reorganise themselves and build rules more consistent with an orderly society which did not tolerate adhoc decision making.
I see a similar parallel for the Muslim world whose biggest challenge is to throw of the yoke of American Imperialism. If they do not then country after country in The Muslim world will be decimated, their people made homeless and their lands and resources confiscated. The plunder of Iraq has not hit the Muslim world which are used to reading the US version of it. The total decimation of Afghanistan has similarly not hit the Muslim world to the extent that it is not happening to them. At the moment the Taliban are the only people standing in the way of the decimation of Pakistan.
The Iranians are the only people who are not under occupation, militarily, economically or politically. Pakistan is a basket case. They are occupied economically and politically and are about to be occupied militarily. America gains nothing from occupying Pakistan. in fact their problems will increase 1000 fold but so embarrassing is their defeat at the hands of the Taliban that they want to shift the blame to Pakistan.
Kamal's conclusion that there is no Military solution to this issue is not a solution that is on any ones table. America is hellbent on a military solution. In fact they are incapable of a diplomatic solution. They can only negotiate from a position of strength and they are getting weaker not stronger. The weaker they get the more belligerent they are becoming that the problem is not having used enough force. The so called "surge" is being trotted out as a huge success and a formula to be followed. The surge has done nothing for the Iraqis. It simply corrected a mistake that the Americans had made of sidelining the Sunnis.
The problem of American Foreign policy is that there is no policy. In the past the policy was to fight Communism and to protect the interests of the State of Israel.After the fall of Communism, the policy has dwindled to protecting the interests of the State of Israel. The Interests of Israel, whatever they may be, are the mantra of both candidates who want to lead "the free world" ( another laughable notion).
I believe that the bazzars in Pakistan are full of women and children, shopping like crazy for new clothes, gifts, jewelry and sweetmeats for the coming Eid Celebration. While the Marriot burns in Islamabad and the throngs go about their business as if it will all pass, I wonder if this is the time to celebrate or to hunker in for the coming catastrophe.
Khusro
--- From: K.ShoaibSubject: [khusroelley] TalibansTo: khusroelley@ yahoogroups. comDate: Sunday, September 21, 2008, 3:00 AM
“The new Taliban movement has created a parallel government structure that includes defence and finance councils and appoints judges and officials in some areas. It offers cash to recruits and presents letters of introduction to local leaders. It operates Web sites and a 24-hour propaganda apparatus that spins every military incident faster than Afghan and Western officials can manage.
"This is not the Taliban of Emirate times. It is a new, updated generation," said Waheed Mojda, a former foreign ministry aide under the Taliban Islamic Emirate, which ruled most of the country from 1996 to 2001. "They are more educated, and they don't punish people for having CDs or cassettes," he said. "The old Taliban wanted to bring sharia, security and unity to Afghanistan. The new Taliban has much broader goals -- to drive foreign forces out of the country and the Muslim world."
“Their statements focus on ridding Afghanistan of foreign occupiers and incompetent leaders. Although they use Islam to motivate followers, they regularly violate what people here consider to be basic Islamic tenets against such things as the murder of women and trafficking in opium.
Their predecessors used harsh punishments to instil law and order but were often pious Muslims. This year, the insurgents have killed teachers, mayors, policemen, truck drivers, doctors, female aid workers and Muslim clerics.
"These people claim to be Muslims, but they are nothing more than terrorists," said Abdul Razzak Qureshi, police chief of Paghman, a district in the mountains west of Kabul ”
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/19/AR2008091903980.html?wpisrc=newsletter&sid=ST2008092000530&s_pos=
A longish but very readable article. It contains no pearls of wisdom, but its description of the sate of affairs in South/South East Afghanistan (which is consistent with other reports) is most revealing.
I contribute the following conclusions:
It demonstrates how badly the Western Alliance is losing the war. The stark image is of the Alliance and the (clown) Karzai with his limited supporters holed up under siege in Kabul and in a few tens of square miles at various Western Military bases. It further demonstrates that a large part of the Afghan ‘insurgents’ are home grown. Whatever the contribution of Pakistan and ISI and the US and CIA and Saudi Arabia in creating the original Taliban, for the US to blame Pakistan, to any extent, for the present Afghanistan situation is ridiculous (yes, many supply lines run through Pakistan, ISI has rogue elements, the Afghan Taliban have many sympathizers across the border who are willing to and do provide safe havens, etc. etc.)
The insurgents on both sides of the Pak-Afghan border comprise a multiplicity of groups. To name the main ones:
Old fashioned Taliban (led by Mullah Omar the leader of the pre-US Afghanistan )
These people claim to be Muslims, but they are nothing more than terrorists (quoted from above)
“The new Taliban has much broader goals -- to drive foreign forces out of the country and the Muslim world." (quoted from above)
Local power groups
Tribal Leaders of yore, happy to take advantage of power vacuums to extend their authority or who, having known nothing else, indignant at incursions into ancient tribal customs
Etc. etc.
To attempt a single (military or otherwise) solution is a recipe for failure
The military “solutions’ are failing on both sides of the border and as I wrote to the group recently“A degree of accommodation howsoever repugnant backed by a large dose of social and economic inputs are the only way to a lasting peace.”Sadly neither US/NATO or the Pak Govt./Army have even commenced trying to implement these complex, hence difficult, but essential measures
Regards
Kemal Shoaib
The question is does this mean making a pact with the devil. Kamal's report shows that the Taliban are capable of growing and maturing. If they do not then they have no hope of dealing with the horrendous issues created by the ruling elite in Pakistan. Younger and better educated people will bring their own sense of realism. So it is important to recognise that the Taliban cannot and will not stick to the formula of growing beards and forcing Hijab on women and cutting off peoples hands.
It is important to remember that America and Australia were first built by Religious outcasts, bandits, con men, adventurers and all sorts of other undesirables thrown out from their mother societies. When these people were joined by more regular people, they were forced to reorganise themselves and build rules more consistent with an orderly society which did not tolerate adhoc decision making.
I see a similar parallel for the Muslim world whose biggest challenge is to throw of the yoke of American Imperialism. If they do not then country after country in The Muslim world will be decimated, their people made homeless and their lands and resources confiscated. The plunder of Iraq has not hit the Muslim world which are used to reading the US version of it. The total decimation of Afghanistan has similarly not hit the Muslim world to the extent that it is not happening to them. At the moment the Taliban are the only people standing in the way of the decimation of Pakistan.
The Iranians are the only people who are not under occupation, militarily, economically or politically. Pakistan is a basket case. They are occupied economically and politically and are about to be occupied militarily. America gains nothing from occupying Pakistan. in fact their problems will increase 1000 fold but so embarrassing is their defeat at the hands of the Taliban that they want to shift the blame to Pakistan.
Kamal's conclusion that there is no Military solution to this issue is not a solution that is on any ones table. America is hellbent on a military solution. In fact they are incapable of a diplomatic solution. They can only negotiate from a position of strength and they are getting weaker not stronger. The weaker they get the more belligerent they are becoming that the problem is not having used enough force. The so called "surge" is being trotted out as a huge success and a formula to be followed. The surge has done nothing for the Iraqis. It simply corrected a mistake that the Americans had made of sidelining the Sunnis.
The problem of American Foreign policy is that there is no policy. In the past the policy was to fight Communism and to protect the interests of the State of Israel.After the fall of Communism, the policy has dwindled to protecting the interests of the State of Israel. The Interests of Israel, whatever they may be, are the mantra of both candidates who want to lead "the free world" ( another laughable notion).
I believe that the bazzars in Pakistan are full of women and children, shopping like crazy for new clothes, gifts, jewelry and sweetmeats for the coming Eid Celebration. While the Marriot burns in Islamabad and the throngs go about their business as if it will all pass, I wonder if this is the time to celebrate or to hunker in for the coming catastrophe.
Khusro
--- From: K.Shoaib
“The new Taliban movement has created a parallel government structure that includes defence and finance councils and appoints judges and officials in some areas. It offers cash to recruits and presents letters of introduction to local leaders. It operates Web sites and a 24-hour propaganda apparatus that spins every military incident faster than Afghan and Western officials can manage.
"This is not the Taliban of Emirate times. It is a new, updated generation," said Waheed Mojda, a former foreign ministry aide under the Taliban Islamic Emirate, which ruled most of the country from 1996 to 2001. "They are more educated, and they don't punish people for having CDs or cassettes," he said. "The old Taliban wanted to bring sharia, security and unity to Afghanistan. The new Taliban has much broader goals -- to drive foreign forces out of the country and the Muslim world."
“Their statements focus on ridding Afghanistan of foreign occupiers and incompetent leaders. Although they use Islam to motivate followers, they regularly violate what people here consider to be basic Islamic tenets against such things as the murder of women and trafficking in opium.
Their predecessors used harsh punishments to instil law and order but were often pious Muslims. This year, the insurgents have killed teachers, mayors, policemen, truck drivers, doctors, female aid workers and Muslim clerics.
"These people claim to be Muslims, but they are nothing more than terrorists," said Abdul Razzak Qureshi, police chief of Paghman, a district in the mountains west of Kabul ”
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/19/AR2008091903980.html?wpisrc=newsletter&sid=ST2008092000530&s_pos=
A longish but very readable article. It contains no pearls of wisdom, but its description of the sate of affairs in South/South East Afghanistan (which is consistent with other reports) is most revealing.
I contribute the following conclusions:
It demonstrates how badly the Western Alliance is losing the war. The stark image is of the Alliance and the (clown) Karzai with his limited supporters holed up under siege in Kabul and in a few tens of square miles at various Western Military bases. It further demonstrates that a large part of the Afghan ‘insurgents’ are home grown. Whatever the contribution of Pakistan and ISI and the US and CIA and Saudi Arabia in creating the original Taliban, for the US to blame Pakistan, to any extent, for the present Afghanistan situation is ridiculous (yes, many supply lines run through Pakistan, ISI has rogue elements, the Afghan Taliban have many sympathizers across the border who are willing to and do provide safe havens, etc. etc.)
The insurgents on both sides of the Pak-Afghan border comprise a multiplicity of groups. To name the main ones:
Old fashioned Taliban (led by Mullah Omar the leader of the pre-US Afghanistan )
These people claim to be Muslims, but they are nothing more than terrorists (quoted from above)
“The new Taliban has much broader goals -- to drive foreign forces out of the country and the Muslim world." (quoted from above)
Local power groups
Tribal Leaders of yore, happy to take advantage of power vacuums to extend their authority or who, having known nothing else, indignant at incursions into ancient tribal customs
Etc. etc.
To attempt a single (military or otherwise) solution is a recipe for failure
The military “solutions’ are failing on both sides of the border and as I wrote to the group recently“A degree of accommodation howsoever repugnant backed by a large dose of social and economic inputs are the only way to a lasting peace.”Sadly neither US/NATO or the Pak Govt./Army have even commenced trying to implement these complex, hence difficult, but essential measures
Regards
Kemal Shoaib
Wednesday, September 17, 2008
Who will bail out the US ?
"The earthquake will come via a collapse in the market for U.S. government bonds as domestic and foreign investors realize that the only way Uncle Sam can meet his future spending obligations is to print massive quantities of money."
Lehman filed for Bankruptcy but was not Bankrupt. Similarly AIG is tottering and may go Bankrupt but is not Bankrupt. Some one asked me how can some one with Assets of $ 600 billion be Bankrupt.
The answer is that it is a question of running out of cash. Corporations work with the cash of others and are therefore dependant on others to deal with it. When there is a crisis of confidence and counter parties hold back on doing business with you then you not only run out of cash you run out of customers and it produces an effect very much like a run on a Bank. There is panic and people withdraw their business.
A Company which was solid today will be unable to meet it's obligations tomorrow. If it had the time it could sell some of it's Assets and convert them to cash but time is precisely what it has run out of and suddenly it's Asset fetch much less in a distress situation. Lehman and AIG are desperately looking for buyers for it's Assets. Lehman ran out of time, AIG was just given time by the Feds. Merrill was clever and sold itself before it lost the confidence of the market.
It is the same with the US. It is dependant on it's creditors, China, Japan, the oil producing countries to continue to invest their surpluses in US Treasuries. If they stop, the US could go Bankrupt. So serious would be the situation that the US might militarily attack, let us say Saudi Arabia if the Saudis decided to pull their Dollars out of the US. In that event the Saudis might ask Pakistan, China, Russia to come to their aid and we might have the start of World War 3.
In order to avoid this scenario, the US invaded Iraq, which wanted to denominate its reserves in Non US Assets. The Iranians want to do the same thing and this might start a trend. The vulnerability of the US to its creditors is a result of its live now pay later philosophy. The vulnerability of the US is to a culture of greed for wealth which it calls it's way of life and which it wants to export to the whole world using force if necessary.
When McCain says that the crisis on Wall street has been caused by greed and when I say that the crisis on Wall street has been caused by greed , the difference is that McCain thinks he can solve the problem by regulating against greed. How can you regulate against greedy regulators, greedy law makers and greedy administrators ? It is a disease which needs deep and invasive surgery and even after that the patient might not live.
The problem is not weapons of mass destruction, or terrorists or Islamic fundamentalists or Pakistan not being helpful enough or President Bush, the problem is the American public and its cry for maintaining a life style which is unsustainable. The problem with American leadership is that it does has not have the guts to tell the addicts that they need to kick the habit. The leadership is looking to go outside it's shore and kill, beg, borrow steal rather than give the child time out.
The American public, God bless them are amongst the most disciplined in the world and if they knew the truth are more than capable of tightening their belts. The problem is the truth has become too bitter a pill to be told. Truth has become a casualty of greed. just as Human Rights has become a casualty of greed and Justice and Equity has become casualties of greed.
You may now read the article which does not take into account the three trillion dollars that are going to be spent on Iraq alone.
Khusro
Now that the Federal government has bailed out Fannie and Freddie, who's going to bail out the federal government?
The federal government's takeover of Fannie Mae and Freddie Mac (nyse: FRE - news - people ) represents a huge financial tremor. These two institutions now issue 70% of Americans' mortgages. Their failure would have triggered a complete meltdown in housing and financial markets. So now Uncle Sam is on the hook for $5 trillion, consisting of corporate debt owed by those two institutions and mortgage debt guaranteed by them.
If only the government's total debt were that low. Uncle Sam, for all his righteous indignation, is, in fact, the father of all deceptive accounting. The government has arranged its budgeting to keep the great bulk of its liabilities off the books and out of sight.
The real liability facing our government is $70 trillion. This represents the present value difference between all the government's projected future spending obligations and all its projected future tax receipts. This fiscal gap takes into account Uncle Sam's need to service official debt--outstanding U.S. government bonds. But it also recognizes all our government's unofficial debts, including its obligation to the soon-to-be-retired baby boomers to pay their Social Security and Medicare benefits.
Given current policies, each of the 78 million boomers can expect, on average, to receive $50,000, in today's dollars, from these programs in each and every year of retirement. Multiply 78 million boomers by a $50,000 annual payment and you get close to $4 trillion per year. This helps you see why our nation's true indebtedness is so extraordinarily high.
There are other obligations, too, that aren't calculated into the national debt, or even in the $70 trillion, but for which the government remains at risk. House prices haven't stopped falling. They are down 20% from their peak two years ago. But they remain 70% above their value in early 2000. That was the year prices started going crazy. If the price pendulum swings back to 2000, we'll see the mortgage default rate, currently at a record 9%, soar. We'll also see more Americans file for personal bankruptcies and default on their credit cards. This will put many more financial institutions under water. The Federal Deposit Insurance Corp. has $45 billion on hand to cover bank failures, such as that of Indymac earlier this year, which cost the FDIC $9 billion. Large-scale bank failures could leave the FDIC short hundreds of billions of dollars. The total of insured deposits in this country is $4.5 trillion.
These are the devils we don't know. What about the one we do know--the $70 trillion one? How do we pay for that? One option is doubling employer plus employee payroll tax rates immediately and permanently. That would take another 15% out of our pockets each payday. Not likely to happen.
Another option is to cut benefits. Medicare could be scaled back to keep its cost growth in line with the growth in the economy. Social Security is 20% underfunded, which means that its taxes have to go up or its future benefits have to come down. But neither presidential candidate is acknowledging our nation's true insolvency, let alone providing real solutions (such as raising the retirement age or indexing benefits to prices rather than wages).
The decline in the dollar and our low national saving rate reflect an old policy of the government living beyond its means. If you look at all the extra consumption, it's occurring in large part among the elderly and, in large part, in the form of health care. This is not oldster bashing. We need to care for older Americans, but we need to do so in a way that doesn't constitute fiscal child abuse.
There is still time, and there are ways to put our fiscal house in order. But the longer we wait, the more likely we're going to get hit by a true financial and economic earthquake.
The earthquake will come via a collapse in the market for U.S. government bonds as domestic and foreign investors realize that the only way Uncle Sam can meet his future spending obligations is to print massive quantities of money. The result will be sky-high inflation and interest rates and, most surely, a prolonged reduction in output and employment. This could happen today. It could happen tomorrow. But it will happen here just as it has happened in every other country that tried to spend far beyond its ability to pay.
Having our government acknowledge and fix its long-term fiscal crisis will provide our financial industry something it so desperately seems to need--an honest financial role model.
Laurence J. Kotlikoff is a professor of economics, Boston University, and coauthor (with Scott Burns) of Spend 'Til the End . __._,_.___
Lehman filed for Bankruptcy but was not Bankrupt. Similarly AIG is tottering and may go Bankrupt but is not Bankrupt. Some one asked me how can some one with Assets of $ 600 billion be Bankrupt.
The answer is that it is a question of running out of cash. Corporations work with the cash of others and are therefore dependant on others to deal with it. When there is a crisis of confidence and counter parties hold back on doing business with you then you not only run out of cash you run out of customers and it produces an effect very much like a run on a Bank. There is panic and people withdraw their business.
A Company which was solid today will be unable to meet it's obligations tomorrow. If it had the time it could sell some of it's Assets and convert them to cash but time is precisely what it has run out of and suddenly it's Asset fetch much less in a distress situation. Lehman and AIG are desperately looking for buyers for it's Assets. Lehman ran out of time, AIG was just given time by the Feds. Merrill was clever and sold itself before it lost the confidence of the market.
It is the same with the US. It is dependant on it's creditors, China, Japan, the oil producing countries to continue to invest their surpluses in US Treasuries. If they stop, the US could go Bankrupt. So serious would be the situation that the US might militarily attack, let us say Saudi Arabia if the Saudis decided to pull their Dollars out of the US. In that event the Saudis might ask Pakistan, China, Russia to come to their aid and we might have the start of World War 3.
In order to avoid this scenario, the US invaded Iraq, which wanted to denominate its reserves in Non US Assets. The Iranians want to do the same thing and this might start a trend. The vulnerability of the US to its creditors is a result of its live now pay later philosophy. The vulnerability of the US is to a culture of greed for wealth which it calls it's way of life and which it wants to export to the whole world using force if necessary.
When McCain says that the crisis on Wall street has been caused by greed and when I say that the crisis on Wall street has been caused by greed , the difference is that McCain thinks he can solve the problem by regulating against greed. How can you regulate against greedy regulators, greedy law makers and greedy administrators ? It is a disease which needs deep and invasive surgery and even after that the patient might not live.
The problem is not weapons of mass destruction, or terrorists or Islamic fundamentalists or Pakistan not being helpful enough or President Bush, the problem is the American public and its cry for maintaining a life style which is unsustainable. The problem with American leadership is that it does has not have the guts to tell the addicts that they need to kick the habit. The leadership is looking to go outside it's shore and kill, beg, borrow steal rather than give the child time out.
The American public, God bless them are amongst the most disciplined in the world and if they knew the truth are more than capable of tightening their belts. The problem is the truth has become too bitter a pill to be told. Truth has become a casualty of greed. just as Human Rights has become a casualty of greed and Justice and Equity has become casualties of greed.
You may now read the article which does not take into account the three trillion dollars that are going to be spent on Iraq alone.
Khusro
Now that the Federal government has bailed out Fannie and Freddie, who's going to bail out the federal government?
The federal government's takeover of Fannie Mae and Freddie Mac (nyse: FRE - news - people ) represents a huge financial tremor. These two institutions now issue 70% of Americans' mortgages. Their failure would have triggered a complete meltdown in housing and financial markets. So now Uncle Sam is on the hook for $5 trillion, consisting of corporate debt owed by those two institutions and mortgage debt guaranteed by them.
If only the government's total debt were that low. Uncle Sam, for all his righteous indignation, is, in fact, the father of all deceptive accounting. The government has arranged its budgeting to keep the great bulk of its liabilities off the books and out of sight.
The real liability facing our government is $70 trillion. This represents the present value difference between all the government's projected future spending obligations and all its projected future tax receipts. This fiscal gap takes into account Uncle Sam's need to service official debt--outstanding U.S. government bonds. But it also recognizes all our government's unofficial debts, including its obligation to the soon-to-be-retired baby boomers to pay their Social Security and Medicare benefits.
Given current policies, each of the 78 million boomers can expect, on average, to receive $50,000, in today's dollars, from these programs in each and every year of retirement. Multiply 78 million boomers by a $50,000 annual payment and you get close to $4 trillion per year. This helps you see why our nation's true indebtedness is so extraordinarily high.
There are other obligations, too, that aren't calculated into the national debt, or even in the $70 trillion, but for which the government remains at risk. House prices haven't stopped falling. They are down 20% from their peak two years ago. But they remain 70% above their value in early 2000. That was the year prices started going crazy. If the price pendulum swings back to 2000, we'll see the mortgage default rate, currently at a record 9%, soar. We'll also see more Americans file for personal bankruptcies and default on their credit cards. This will put many more financial institutions under water. The Federal Deposit Insurance Corp. has $45 billion on hand to cover bank failures, such as that of Indymac earlier this year, which cost the FDIC $9 billion. Large-scale bank failures could leave the FDIC short hundreds of billions of dollars. The total of insured deposits in this country is $4.5 trillion.
These are the devils we don't know. What about the one we do know--the $70 trillion one? How do we pay for that? One option is doubling employer plus employee payroll tax rates immediately and permanently. That would take another 15% out of our pockets each payday. Not likely to happen.
Another option is to cut benefits. Medicare could be scaled back to keep its cost growth in line with the growth in the economy. Social Security is 20% underfunded, which means that its taxes have to go up or its future benefits have to come down. But neither presidential candidate is acknowledging our nation's true insolvency, let alone providing real solutions (such as raising the retirement age or indexing benefits to prices rather than wages).
The decline in the dollar and our low national saving rate reflect an old policy of the government living beyond its means. If you look at all the extra consumption, it's occurring in large part among the elderly and, in large part, in the form of health care. This is not oldster bashing. We need to care for older Americans, but we need to do so in a way that doesn't constitute fiscal child abuse.
There is still time, and there are ways to put our fiscal house in order. But the longer we wait, the more likely we're going to get hit by a true financial and economic earthquake.
The earthquake will come via a collapse in the market for U.S. government bonds as domestic and foreign investors realize that the only way Uncle Sam can meet his future spending obligations is to print massive quantities of money. The result will be sky-high inflation and interest rates and, most surely, a prolonged reduction in output and employment. This could happen today. It could happen tomorrow. But it will happen here just as it has happened in every other country that tried to spend far beyond its ability to pay.
Having our government acknowledge and fix its long-term fiscal crisis will provide our financial industry something it so desperately seems to need--an honest financial role model.
Laurence J. Kotlikoff is a professor of economics, Boston University, and coauthor (with Scott Burns) of Spend 'Til the End . __._,_.___
Monday, September 15, 2008
Wall Street in Denial
In an article on Sunday, Andrew Barry writing in Barron's wrote, "It's tempting to say that AIG is a bargain." he goes on to say " calculations indicate that AIG and Merrill shares are cheap".
On Monday Merrill was sold to Bank Of America in a distress sale, AIG shares fell 50% and AIG has 48 hours in which to raise $ 40 billion or go bust. Here's what the CEO of Lehman had to say recently " This firm has a history of facing adversity.. We are on the right track to put these last two quarters behind us." On Monday ( Today) Lehaman filed for Bankruptcy.
The degree of self serving statements from people and Magazines who are regarded as pillars of Wall Street even while institutions are on their death beds is not only misleading and deceptive but also an indicator of how much Wall street is in denial about the seriousness of this finacial crisis. It is'nt as if the lies in these statements are exposed over a period of time, they are proved to be totally wrong within 24 hours. The culture of fooling the public has now been combined with a disbelief that this happenning.
How can people who are supposed to be the best brains in the country be so stupid? How can Institutions which have been household names for a 100 years go belly up without warning? Why do people insist that this is business as usual and in the famous words of Dick Cheyne say, " stuff happens". My answer is that greed makes us all stupid. No one questions the fact that the root cause of the sub prime crisis is pure unabashed greed. Yet no one is ready to reaxamine the great Capitalist mantra that greed is good. No one questions that greed makes us unethical. No one is ready to question that Capitalism as practiced in the US mostly works through creating monopolies of vested interests, exploitation of the powerless and the uninformed and is unprincipled and fraudulent at the highest levels.
No one questions because from the regulators to the rating agencies down to lowest level of stock broker, all have a finger in this gravy train. No one wants to kill the goose that kills the golden egg. If the myth is kept alive long enough then the system will surely correct itself like it has done in the past.
This will not happen because the goose that has been laying the golden egg died a few years ago. What we see today is a charade to make people believe that Capitaism is alive and well and it is Communism that died. The facts on the ground are horrendous whether any one cares to look at them critically or not. Merrill Lynch was the great bull of Wall Street. Merrill died a few months ago, John Thain ( it's new CEO) was simply embalming it to give a proper funeral to a worthy giant.
The Domino effects of Lehman's fall have yet to be seen. Citibank has unsecured outstandings of over $ 130 billion to Lehman. For $ 130 billion Citi could have bought two Merrills. Lehman's filing is the biggest corporate bankruptcy in history in terms of assets held. Lehman has assets of $ 639 billion.
The current PR output from the street is that it is the Investment Banks who were the naughty boys, the Commercial Banks are sound. This is not true. Citi is in deep trouble as is Wachovia but the Bank which will really be in trouble soon is Bank of America. This is a story of greed written all over it's face. B of A has just bought Merrill but previously it bought Country Wide Financial the largest originator of Mortgages. B of A believes like very one else that institutions are at a bargain. They have been on a spending spree lately and will learn very quickly that they have overpaid for buying junk. The so called Retail Network of Merrill is a bunch of brokers trained in a market which only went up. If this is the Crown Jewels of Merrill then God help BOA.
General Electric, the most venerable of the names has a large portfolio of subprime loans in its GE Capital sub. and this is no small change. GE will not file for Bankruptcy but there is a good chance that AIG would. Of the $40 billion it needs to fend off Bankruptcy, it has $ 20 billion within it's organisation but the other 20 could pose serious difficulties particularly because it has to be raised within the next 48 hours.
Is it just Wall Street that is in denial or also the USA. Unknown to itself, the US stopped being a super power the day it attacked Iraq on false pretences. Perhaps it stopped being a super power even before, but this was an acid test in which it should have come to terms with reality. Once again greed ( greed for cheap oil) was it's undoing once again the media, the brains trusts, the elected representatives continue to preserve a charade of invincibilty in the face of defeats by weaker, inconsequential adversaries. Instead of admitting defeat, every one is busy redefining victory. If this was not such a tragedy it would be laughable.
Merrill was founded in 1914, AIG in 1919 ( went public in 1969), Bank of America in 1904,Bear Sterns in 1923, Lehman in 1844 and the USA in 1776. Over the years we have all looked up to these fine Institutions and benefitted from them. I wish they could be saved but no one can save some one who has become addicted to greed, who worships on the alter of materialism and who have lost their principles and their humanity in the pure unadultrated pursuit of wealth.
Khusro
On Monday Merrill was sold to Bank Of America in a distress sale, AIG shares fell 50% and AIG has 48 hours in which to raise $ 40 billion or go bust. Here's what the CEO of Lehman had to say recently " This firm has a history of facing adversity.. We are on the right track to put these last two quarters behind us." On Monday ( Today) Lehaman filed for Bankruptcy.
The degree of self serving statements from people and Magazines who are regarded as pillars of Wall Street even while institutions are on their death beds is not only misleading and deceptive but also an indicator of how much Wall street is in denial about the seriousness of this finacial crisis. It is'nt as if the lies in these statements are exposed over a period of time, they are proved to be totally wrong within 24 hours. The culture of fooling the public has now been combined with a disbelief that this happenning.
How can people who are supposed to be the best brains in the country be so stupid? How can Institutions which have been household names for a 100 years go belly up without warning? Why do people insist that this is business as usual and in the famous words of Dick Cheyne say, " stuff happens". My answer is that greed makes us all stupid. No one questions the fact that the root cause of the sub prime crisis is pure unabashed greed. Yet no one is ready to reaxamine the great Capitalist mantra that greed is good. No one questions that greed makes us unethical. No one is ready to question that Capitalism as practiced in the US mostly works through creating monopolies of vested interests, exploitation of the powerless and the uninformed and is unprincipled and fraudulent at the highest levels.
No one questions because from the regulators to the rating agencies down to lowest level of stock broker, all have a finger in this gravy train. No one wants to kill the goose that kills the golden egg. If the myth is kept alive long enough then the system will surely correct itself like it has done in the past.
This will not happen because the goose that has been laying the golden egg died a few years ago. What we see today is a charade to make people believe that Capitaism is alive and well and it is Communism that died. The facts on the ground are horrendous whether any one cares to look at them critically or not. Merrill Lynch was the great bull of Wall Street. Merrill died a few months ago, John Thain ( it's new CEO) was simply embalming it to give a proper funeral to a worthy giant.
The Domino effects of Lehman's fall have yet to be seen. Citibank has unsecured outstandings of over $ 130 billion to Lehman. For $ 130 billion Citi could have bought two Merrills. Lehman's filing is the biggest corporate bankruptcy in history in terms of assets held. Lehman has assets of $ 639 billion.
The current PR output from the street is that it is the Investment Banks who were the naughty boys, the Commercial Banks are sound. This is not true. Citi is in deep trouble as is Wachovia but the Bank which will really be in trouble soon is Bank of America. This is a story of greed written all over it's face. B of A has just bought Merrill but previously it bought Country Wide Financial the largest originator of Mortgages. B of A believes like very one else that institutions are at a bargain. They have been on a spending spree lately and will learn very quickly that they have overpaid for buying junk. The so called Retail Network of Merrill is a bunch of brokers trained in a market which only went up. If this is the Crown Jewels of Merrill then God help BOA.
General Electric, the most venerable of the names has a large portfolio of subprime loans in its GE Capital sub. and this is no small change. GE will not file for Bankruptcy but there is a good chance that AIG would. Of the $40 billion it needs to fend off Bankruptcy, it has $ 20 billion within it's organisation but the other 20 could pose serious difficulties particularly because it has to be raised within the next 48 hours.
Is it just Wall Street that is in denial or also the USA. Unknown to itself, the US stopped being a super power the day it attacked Iraq on false pretences. Perhaps it stopped being a super power even before, but this was an acid test in which it should have come to terms with reality. Once again greed ( greed for cheap oil) was it's undoing once again the media, the brains trusts, the elected representatives continue to preserve a charade of invincibilty in the face of defeats by weaker, inconsequential adversaries. Instead of admitting defeat, every one is busy redefining victory. If this was not such a tragedy it would be laughable.
Merrill was founded in 1914, AIG in 1919 ( went public in 1969), Bank of America in 1904,Bear Sterns in 1923, Lehman in 1844 and the USA in 1776. Over the years we have all looked up to these fine Institutions and benefitted from them. I wish they could be saved but no one can save some one who has become addicted to greed, who worships on the alter of materialism and who have lost their principles and their humanity in the pure unadultrated pursuit of wealth.
Khusro
Saturday, September 13, 2008
The Financial crises continues
I reproduce my comments from June 21, 2008 made to this group.
"Today Bear Sterns has gone under, Lehman brothers is a candidate to go under and Citibank and Merril Lynch are tottering to save themselves. The CEOs of these and most other financial institutions have been fired. The share prices have been halved and the bad news every quarter continues to surprise every one by its severity."
Today Lehman is desperately looking for a bail out, just two months after I identified it as being bankrupt. Freddie Mac and Fannie May have been nationalized.
In the last twelve months Lehman has gone from $ 60 to $4. Merril from $ 70 to $ 18 and Citi from $ 45 to $ 18. A new company is showing signs of distress which was not on my list and this is AIG, the world largest Insurance company.
AIG has gone from $ 60 to $ 12. Washington Mutual has gone from $39 to $3.
The question my daughter used to ask when ever we took a trip was " are we almost there?" My answer would be for the financials not by a long shot. The Government was hoping that after the Bear Sterns bailout there would be no more. Then came Freddie and Fanny and now Lehman looms on the horizon with possibly Merrill to follow. The degree of denial within the administration as to how serious this crises is, is phenomenal. A Republican administration whose ideology is to let the market forces take their victims is bailing out Financial Institutions right left and center.
Bear Sterns and Lehman were not fly by night institutions. Bear Sterns was founded in 1923 and Lehman in 1850. These were venerable institutions who fell prey to the greed of the market place. While the war on terror is taking a toll of the US Overseas, Runaway Capitalism is eating away at it's innards. November seems very far away to wait for a change of Administration but what if the Presidential candidates are equally living in the last century?
No body seems to recognise that the values that this country was founded on
have been thrown out of the window in the interest of showing short term results for major corporations. Nobody seems to realize that a whole new world has emerged outside the shores of the US which is not beholden to the US and which is getting ready to drop its dependence on the US as fast as it can. If you don't believe me read Fareed Zakaria, " The post American world", read Naomi Klein's, " The rise of disaster Capitalism".
If any one thinks that taking over Financial Institutions with taxpayer money or replacing Chief executives is the answer, then we are looking at throwing billions of dollars down the drain. The system is broken. The checks and balances are not working. Fraud has become systemic, the regulators have become part of the problem. Every day the US is beginning to look like a third world country. Governance has become the big issue.
There are plenty of red flags blinking all over the Economy but a state of emergency has not been declared. if it was how would we pursue the so called "war on terror", how could we stand up to the Russians, how could we justify attacking Iran? How can we pretend that we are still in charge?
Khusro
"Today Bear Sterns has gone under, Lehman brothers is a candidate to go under and Citibank and Merril Lynch are tottering to save themselves. The CEOs of these and most other financial institutions have been fired. The share prices have been halved and the bad news every quarter continues to surprise every one by its severity."
Today Lehman is desperately looking for a bail out, just two months after I identified it as being bankrupt. Freddie Mac and Fannie May have been nationalized.
In the last twelve months Lehman has gone from $ 60 to $4. Merril from $ 70 to $ 18 and Citi from $ 45 to $ 18. A new company is showing signs of distress which was not on my list and this is AIG, the world largest Insurance company.
AIG has gone from $ 60 to $ 12. Washington Mutual has gone from $39 to $3.
The question my daughter used to ask when ever we took a trip was " are we almost there?" My answer would be for the financials not by a long shot. The Government was hoping that after the Bear Sterns bailout there would be no more. Then came Freddie and Fanny and now Lehman looms on the horizon with possibly Merrill to follow. The degree of denial within the administration as to how serious this crises is, is phenomenal. A Republican administration whose ideology is to let the market forces take their victims is bailing out Financial Institutions right left and center.
Bear Sterns and Lehman were not fly by night institutions. Bear Sterns was founded in 1923 and Lehman in 1850. These were venerable institutions who fell prey to the greed of the market place. While the war on terror is taking a toll of the US Overseas, Runaway Capitalism is eating away at it's innards. November seems very far away to wait for a change of Administration but what if the Presidential candidates are equally living in the last century?
No body seems to recognise that the values that this country was founded on
have been thrown out of the window in the interest of showing short term results for major corporations. Nobody seems to realize that a whole new world has emerged outside the shores of the US which is not beholden to the US and which is getting ready to drop its dependence on the US as fast as it can. If you don't believe me read Fareed Zakaria, " The post American world", read Naomi Klein's, " The rise of disaster Capitalism".
If any one thinks that taking over Financial Institutions with taxpayer money or replacing Chief executives is the answer, then we are looking at throwing billions of dollars down the drain. The system is broken. The checks and balances are not working. Fraud has become systemic, the regulators have become part of the problem. Every day the US is beginning to look like a third world country. Governance has become the big issue.
There are plenty of red flags blinking all over the Economy but a state of emergency has not been declared. if it was how would we pursue the so called "war on terror", how could we stand up to the Russians, how could we justify attacking Iran? How can we pretend that we are still in charge?
Khusro
Thursday, September 11, 2008
The need for a Dialogue with God
The need for a dialogue with God.
God is talking to us, all the time, the question is are we listening? God is not only talking to us, He is answering the questions that we are asking of Him. Because we all have questions, important questions which we don’t know the answer of but only when we are intense , when we are serious about those questions , then an answer will come.
Again, It is a question of faith. We are subconsciously addressing those questions to Him and it is our desire to learn that raises these questions in the first place.
We have to be in a mode of learning rather than in a mode of complaining. When we complain too much it is a symptom of not taking the responsibility to learn and not accepting Gods will.
God wants us to partner. Without the partnership without associating every thing with Him, without seeking out what God’s will is for us, how will we know where to go?
( Example of a navigation system.)
God is talking to us, all the time, the question is are we listening? God is not only talking to us, He is answering the questions that we are asking of Him. Because we all have questions, important questions which we don’t know the answer of but only when we are intense , when we are serious about those questions , then an answer will come.
Again, It is a question of faith. We are subconsciously addressing those questions to Him and it is our desire to learn that raises these questions in the first place.
We have to be in a mode of learning rather than in a mode of complaining. When we complain too much it is a symptom of not taking the responsibility to learn and not accepting Gods will.
God wants us to partner. Without the partnership without associating every thing with Him, without seeking out what God’s will is for us, how will we know where to go?
( Example of a navigation system.)
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