Banks and the Temple of Mammon

[Fruitcake]

Just as that small company came out of the great depression to seize the moment some decades later ... yes that little company called I.B.M.

Or even Microsoft.

But this is not about those companies. This is about something far far bigger.

Microsoft, IBM et al are but minnows when compared to the whoe population of various countries, or the asset base (properties, land et al).

Look back along this thread, you will see the quoted figures of the Central USA govt debt. Who is going to pay for this debt? Where is the money going to come from? Printing more cash is not the way to go, look at Zimbabwe.

The core issue is this. Debt has been the fuel that has powered the expansion of economies for decades. While this debt was kept to controllable levels with the ability to repay eveything was fine. What has happened is this debt has been allowed to spiral to a point that it has become a self feeding animal, new debt has been required to keep old debt at bay. Ultimately this has reached a point where a trigger of collapse has occured. What will happen now, is asset prices across the world will recede to a more realistic level. There will be many casualties, and there will be a lot of pain.

Who was responsible for this? The Banks and the Govts.

Returning the Fannie and Freddie debacle, it has been a long time coming. Alan Greenspan warned in 2004 that their rapid growth needed to be curbed because their expansion threatened the financial markets. Shennigans abounded with Fannie overstating its earnings by $10.6 billion from 1998 through 2004, and its chief executive Franklin Raines losing his job. Freddie Mac had understated its profit by nearly $5 billion from 2000 through 2002. Both companies missed earnings filings while their overhauled their books. Now the dwindling number of mortgages, higher foreclosure risk, and a shaky interest rate environment have the companies on the ropes; and investors are beginning to lose faith.

Both firms have stated that they have enough capital to weather the storm and continue to support the USA housing market.

And yet, Fannie has fallen 32% this week and 65% since the beginning of the year. Freddie plunged 47% so far this week and is down 75% since January.

The soothsayers will still say everything will be ok as the Govt will, ultimately, have to bail them out...I have my doubts. The numbers just don't stack up. The Fed is showing its third highest deficit ever, for the first 9 months of this fiscal year, furthermore revenues are weakening while spending is rising....go figure.

[Audax]

And yet, Fannie has fallen 32% this week and 65% since the beginning of the year. Freddie plunged 47% so far this week and is down 75% since January.

The soothsayers will still say everything will be ok as the Govt will, ultimately, have to bail them out...I have my doubts. The numbers just don't stack up. The Fed is showing its third highest deficit ever, for the first 9 months of this fiscal year, furthermore revenues are weakening while spending is rising....go figure.

Cake, you are just awesome. I sat stunned listening to the news today and thought about what you predicted. Another gaping hole in the wall as you would say. How much more pressure is there going to be in the 'system' I wonder.

btw, thanks a million for the quiet word in my shell likes to go short big time on those UK banks. I just wish hadn't cashed my chips (as you like to put it) recently. Not that I'm complaining, made more in those few weeks than the previous 5 years put together!

[bbqpenguin]

the worst part is that when these companies f*ck up like that, our government keeps on supporting them with money. they are not held responsible for their greed and have no compulsion to straighten up their act because they know the government will jyst bail them out if they screw up too bad

[Fruitcake]

Well chalk up another fallen idol.

Glad to see the back of them quite frankly. Another bunch of self serving, smug sanctimonious second raters find themselves out on the street.

There's yet more to come, mark my words. I was right months ago on this very thread when I forecast more rubbish being jettisoned and I am right today.

Just to remind you here is a posting I made back on Tue Mar 18, 2008 8:25 am

admittedly im a little too intoxicated to understand where im going to go with this but....

fruitcake....what kind of impact does the cheap buyout have on shareholders? Also one of the strategies i heard about earlier today was to allow some of the non-performing loans to stay on the books a little longer, though i understand how this can help, is it really a systemic type of change or just a stop gap measure?

Depends which shareholders you are referring to got tonkaed. If you were a Bear Stearns shareholder, having been clever enough to buy in last August, I would imagine you are waking up this Tuesday wondering which truck it was that hit you, worse if you are pensioner who placed a great deal of savings into those shares because this was a ‘blue chip’ investment (always staggers me how these so called blue chip investments are run, but there you go, people have said I was a party pooper for the last 3 years).

If you are a Lehman Brothers shareholder, I would imagine you would be heading for the exit as fast as you could, sure in the knowledge that those on the ‘inside’ i.e. the investment operations, banks etc, had already exited before you, the audience, knew what was happening!

Liquidate those financial services stocks if you are still crazy enough to hold them! Even at the massive loss you sell them for today, it will look like gold to you a few months from now.

[jbrettlip]

B of A, and Citi will be the next to fall. Then we will see riots in the streets!!

[Pedronicus]

I read today that HBOS is close to collapse. I don't think that the next bank to fail will fail due to a lack of spondulicks in the coffers, rather than it was brought to it's knees by speculators.

With all that is going on in the financial markets in the last couple of days, i can't believe that this forum isn't discussing it more.

I'm no expert, but it's certainly more important than any natural disaster / war / conspiracy theory that we normally spend hours shouting about

[Fruitcake]

I read today that HBOS is close to collapse. I don't think that the next bank to fail will fail due to a lack of spondulicks in the coffers, rather than it was brought to it's knees by speculators.

With all that is going on in the financial markets in the last couple of days, i can't believe that this forum isn't discussing it more.

I'm no expert, but it's certainly more important than any natural disaster / war / conspiracy theory that we normally spend hours shouting about

Indeed HBOS are in the 'frame'. I have it on good authority that many other majors are close to the edge.

Speculators may be the catalysts, but the crass stupidity and greed of these idiot people are what has brought us to this point. It is about time we had a good old fashioned crash of Global proportions, to jettison this rubbish if for no other reason. Look at the facts! Lehmans was geared to around 35x in debt to asset ratio!!!!!! (That means they owed $35 for every $1 they actually had) There is absolutely no earthly reason why a Bank should put itself in such a dire position except for greed. No 'old fashioned' Banker would have let such a thing happen. But then we live in a world where second rate morons are allowed to dictate what happens.

I was stunned watching Lehman employees returning from their 5star holidays blubbering about it.....they weren't bloody blubbering when they were sticking their greedy fat snouts in the trough for years pulling huge bonuses out and lording it around like they were the masters of the planet were they? Or when they were going round buying up 2nd and 3rd properties so ordinary working people were priced out of the market all over the place....no indeed, they thought the good times were forever, and like all those that rely on luck, their luck has run out....GOOD!

There's plenty more to be jettisoned....and I for one, am enjoying every moment having liquidated everything I had in Stocks last Autumn, then went short on every Financial stock I could lay my hands on. Long live the new paradigm!!!!! Let's see real talent get to where it should be...at the top.

[HapSmo19]

This is the first I've seen of this thread. Good stuff Fruitcake.

I have a general lack of interest in high-finance but I haven't been able to help watching the "news" channels coverage on this over the past couple of days. I'm waiting for them to say: "And.....that's it folks, you're all broke. Tune in to your local news for breadline locations. Goodnight."

I found an interesting article on this recent debacle.

http://thescotsman.scotsman.com/latestn ... 4494032.jp

[Fruitcake]

This is the first I've seen of this thread. Good stuff Fruitcake.

I have a general lack of interest in high-finance but I haven't been able to help watching the "news" channels coverage on this over the past couple of days. I'm waiting for them to say: "And.....that's it folks, you're all broke. Tune in to your local news for breadline locations. Goodnight."

I found an interesting article on this recent debacle.

http://thescotsman.scotsman.com/latestn ... 4494032.jp

Fascinating article indeed. I was particularly interested to read the following part:

Fuld (erstwhile head of Lehmans) joined the bulge bracket. He was paid $34.5 million in 2005, comprising a base salary of $750,000, a $13.8 million cash bonus, and stock and options worth $19.94 million.

Chuck ("I'm still dancing") Prince left Citigroup with a package said to be worth $40 million. He also received a pension of $1.74 million and another one million stock options – worthless at the time of his departure. Merrill Lynch's Stan O'Neal spent much of last summer perfecting his golf swing, confident that his trusty lieutenants at Merrill could avoid those subprime bunkers. It turned out to be a bad call.

HE WAS ousted last October as the first waves of the credit crunch struck, with a retirement package reckoned at more than $160 million.

Jimmy Cayne, 15 years at the top of Bear Stearns, was said to be on the golf course in June 2006 just as the bank dropped the first of many clangers, with a 10 per cent dive in profits. Worse followed, with the bank having to put up $3.2 billion to try to rescue its imploding hedge fund.

By mid-March last year, when the bank collapsed, Cayne, who would rush from Wall Street by chopper to the private Hollywood Golf Club in New Jersey to play 18 holes before dark, had already relinquished the reins, handing over the chief executive's role to Alan Schwartz.

When Schwartz went cap in hand to the New York Fed for a $30 billion bail-out, Cayne was said to be competing in the North American Bridge Championship in Detroit.

Cayne and his wife, Patricia, sold all their 5.6 million shares in Bear Stearns – worth as much as $1.2 billion in January 2007 – for $61.3 million at the end of March this year. The couple recently bought two adjacent apartments in New York's plush Plaza building for $28.2 million.

He left with a $30 million "golden goodbye" – enough to do up his Park Avenue property and a mock Tudor mansion in Greenwich, Connecticut. But it emerged that the mansion, set in 2.3 acres of land, was surplus to requirements. "It no longer meets his needs,'' said the local estate agent, trying to sell it for $6.15 million. He was forced to cut the asking price.

That's how tough it gets at the top in Wall Street.


Indeed it is about as tough as it gets.

I had a good chortle at the reports coming out regarding the meetings over the weekend about Lehmans. Apparently, the bankers all turned up expecting to be told the Govt was going to bail everything out!! When Hank Paulson, the US treasury secretary, and Tom Geithner, chairman of the New York Fed. told them ‘not a chance’ they all decided to let Lehmans sink….so what they now expect to happen, is they screw around year after year, screw the public, screw the shareholders, screw the system, screw just about everyone else on the planet, then when the day of reckoning arrives, they expect all these people they have screwed to bail them out!!!!! And people ask me why I think these complete buffoons are nothing more than jumped up two bit second rate morons?????

I sit rubbing my hands with glee. I just wish the legal system would start getting involved and bring these guys to book regarding their personal assets as well.

[black elk speaks]

I am glad that you are chortling about the situation, but for me, it is eerily reminiscent of the events preceding of the Great Depression. i don't find it very funny.

[Fruitcake]

I am glad that you are chortling about the situation, but for me, it is eerily reminiscent of the events preceding of the Great Depression. i don't find it very funny.

I didn't say I was chortling about the situation.....I am chortling at seeing all these bankers get their come-uppence.

I did not know you were an Economist...perhaps you could explain further how this is "eerily reminiscent of the events preceding of the Great Depression."

From where I am sitting and viewing the whole debacle, although bad, this has no real relevance to something that happened 80 years ago, when economies were far more protectionist than they are today, not to say tiny by comparison. The great depression was more caused by bubble bursting on stocks, the Bull Market preceding the crash was truly awesome, markets today are, in fact, little higher than they were 10 years ago, than through banks lending each other money and playing pass the parcel. The great depression was also caused by massive crop failures, poor husbandry both in farming and in business and was also a legacy of WW1 which the system still had to rid itself of (you may or may not know that WW1 soaked up around 15% of the western worlds GDP for some years, compare this to what wars are directly costing the West today), on top of this, around 1924 onwards America was the only country, then, able to lend countries like Germany the money to expand their economies (again, after WW1), now when the crash occured, America called in the loans, the Weimar had nothing so the whole thing collapsed very quickly. The system had no world banking corporations such as the IMF, and the system had no real ultimate checks and balances such as it has today, How this situation, which is far more localised to financial institutions, compares to that, I cannot fathom. This is not about whole countries running out of cash....

Joseph Stiglitz, a man I read a lot of, said the crisis gripping financial markets would pose no "short-term systemic risk". I tend to agree with him, he also said a slowdown was highly likely, agreed, but that a repeat of the GD was generally out of the question.

Lastly, but not least, personal wealth today is around 500%+, in real terms, to what it was then. The personal buffer of the average person is far higher.

Notwithstanding all of this, should the blood letting spill out into the main economies, then so be it. The weakest (companies et al) will not survive and the west will emerge leaner and ultimately fitter for it. A quick example of quality, Kelloggs. Their shares are still bouyant and rising, why? Because they are a quality company, strong brand, and will always tend to be survivors thru good times and bad.

Being something of a follower of long term quality rather than short term stellar gain, I have ridden out the setbacks of the 80s and the late 90s with little difference to my portfolio.

Great Depression repeat? Not a chance.

[The1exile]

I am chortling at seeing all these bankers get their come-uppence.

And yet unfortunately the bankers not getting their comeuppance will be the ones short selling on banks about to fail - yet if I judge your attitude towards the workings of the market, they're the ones who deserve it, not the plebs in stuff like retail services departments which will end up laid off. In the words of Mr Pump ("Going Postal", Terry Pratchett), "When Banks Fail, It Is Seldom Bankers Who Starve".

[Fruitcake]

I am chortling at seeing all these bankers get their come-uppence.

And yet unfortunately the bankers not getting their comeuppance will be the ones short selling on banks about to fail - yet if I judge your attitude towards the workings of the market, they're the ones who deserve it, not the plebs in stuff like retail services departments which will end up laid off. In the words of Mr Pump ("Going Postal", Terry Pratchett), "When Banks Fail, It Is Seldom Bankers Who Starve".

Exactly, and that is the reason I said:
"I just wish the legal system would start getting involved and bring these guys to book regarding their personal assets as well."

However, it must be said, that the likes of Lehmans had little or no staff involved in 'retail' banking. Northern Rock did, and those staff, generally, held on to their jobs. As would staff from HBOS. and any other retail bank.

[black elk speaks]

I am glad that you are chortling about the situation, but for me, it is eerily reminiscent of the events preceding of the Great Depression. i don't find it very funny.

I didn't say I was chortling about the situation.....I am chortling at seeing all these bankers get their come-uppence.

I did not know you were an Economist...perhaps you could explain further how this is "eerily reminiscent of the events preceding of the Great Depression."

From where I am sitting and viewing the whole debacle, although bad, this has no real relevance to something that happened 80 years ago, when economies were far more protectionist than they are today, not to say tiny by comparison. The great depression was more caused by bubble bursting on stocks, the Bull Market preceding the crash was truly awesome, markets today are, in fact, little higher than they were 10 years ago, than through banks lending each other money and playing pass the parcel. The great depression was also caused by massive crop failures, poor husbandry both in farming and in business and was also a legacy of WW1 which the system still had to rid itself of (you may or may not know that WW1 soaked up around 15% of the western worlds GDP for some years, compare this to what wars are directly costing the West today), on top of this, around 1924 onwards America was the only country, then, able to lend countries like Germany the money to expand their economies (again, after WW1), now when the crash occured, America called in the loans, the Weimar had nothing so the whole thing collapsed very quickly. The system had no world banking corporations such as the IMF, and the system had no real ultimate checks and balances such as it has today, How this situation, which is far more localised to financial institutions, compares to that, I cannot fathom. This is not about whole countries running out of cash....

Joseph Stiglitz, a man I read a lot of, said the crisis gripping financial markets would pose no "short-term systemic risk". I tend to agree with him, he also said a slowdown was highly likely, agreed, but that a repeat of the GD was generally out of the question.

Lastly, but not least, personal wealth today is around 500%+, in real terms, to what it was then. The personal buffer of the average person is far higher.

Notwithstanding all of this, should the blood letting spill out into the main economies, then so be it. The weakest (companies et al) will not survive and the west will emerge leaner and ultimately fitter for it. A quick example of quality, Kelloggs. Their shares are still bouyant and rising, why? Because they are a quality company, strong brand, and will always tend to be survivors thru good times and bad.

Being something of a follower of long term quality rather than short term stellar gain, I have ridden out the setbacks of the 80s and the late 90s with little difference to my portfolio.

Great Depression repeat? Not a chance.

I don't think that I could be any farther from being an economist if I was a tree stump in a desert. But I have done a little reading about the events that lead up to the GD, as you put it. Serious trade deficits, economic strain from WWI, banks going bankrupt and of course, the dust bowl. Sure, we don't have a shortage of food, but, as we started to feel the pinch earlier this year, if fuel really becomes an issue, we might as well be in a drought. we have all but killed the small family farmer in this country and rely heavily on the trucking industry for shuttling out food across the country. if the energy crisis hits like we fear it will in the coming months, it might as well be a drought.

As for the "bank rolled wealth" that you are talking about? well, I think that most of us americans actually live pay check to pay check. what little bit I have squirreled away in investments is likely taking a nose dive with the rest of the market as I write this post. in my life time, i have never seen anything like the shit going down this week. will have to wait and see i suppose. i am probably just over reacting.

[2dimes]

May we go to the island yet?

[black elk speaks]

articles like this don't make me feel any better.

http://finance.yahoo.com/banking-budgeting/article/105785/Worst-Crisis-Since-1930s-With-No-End-Yet-in-Sight

[Fruitcake]

articles like this don't make me feel any better.

http://finance.yahoo.com/banking-budgeting/article/105785/Worst-Crisis-Since-1930s-With-No-End-Yet-in-Sight

Fascinating article, if a little obvious.

Interesting closing statement about the general economy and its strength, and one I agree with.

Unfortunately, added to all these woes is the way people have driven themselves over the last 25 years. Of all the people I mix with, I can count just 5 who grow their own produce, and that includes me. If more people looked back at the way things were and tried to emulate them, then we would not have many of the issues we have today. I still drive an older car (ok, its a nice older car, but still older) I have not really borrowed money for any consumer item for years. While I watch those around me running about buying everything they can, I have happily settled for what I have around me. After all, how many TVs does a family need? How many vehicles? Why buy produce from supermarkets that can easily be grown at home? Why buy pre packaged, pre washed, pre prepared vegtables when you can pop down the road to the greengrocer (yes they are still about and making a comeback) buy your fresh vegtables and spend an extra 10 minutes in preparing a locally grown, far superior product. I cook all my own meals from fresh (or from frozen that I have created and stored). I cannot understand why people would want to buy pre-prepared.... How many credit cards does one actually need? For years now, many have looked at me like I was mad because I eschewed the fast throw away society (I have bought just 2 TVs in 20 years, ok, they are both top of the range, but then I saved to buy them rather than borrowed to buy a lesser quality). Rather than borrowing to buy fitted Bedrooms, I saved then went around the Antique furniture showrooms and bought from there (it is interesting to note, that I bought good quality Edwardian and Victorian furniture of solid wood, that will still be around long after I have shuffled off, for less than the quotes I was presented with for the so called latest fitted furniture made from MDF and, quite frankly, crap quality).

What is needed is a complete rethink about the culture we live in. People need to realise that just sometimes they cannot have what they want today, but with prudence and forethought can, maybe, have it another time...and if they cannot, hey? Is that so bad? it isn't going to kill them not to have it. Maybe if we all stopped driving ourselves into early graves chasing the next consumer item, or just 'treating ourselves' then we may just be happier, have easier lives and live longer. It comes as no surprise to me that of the EU countries Italy holds the record for the lowest income per capita and yet the longest lifespans. I have many Italian friends living in villages, not very rich, in fact poor by many North european or US standards, but supremely happy. They live well, eat well, enjoy their lives, work as much as they need to, and in all honesty, live idyllic existences. They see the Anglo saxon culture of work hard, play hard, die young (in their minds), as nothing short of complete lunacy. I have to say, as I have got older, I am inclined to agree with them.

I am staggered at some of the insane things people do. I was walking past a 'health club' recently, out of idle curiosity I enquired about membership and was stunned when I was quoted a membership cost. Whatever happened to just keeping fit through walking to the shops, and carrying the bags, as I do, or working in the Garden, growing things, or using the stairs at work rather than the lift...the list just goes on and on, but what do people do? They prefer to spend large amounts of their disposable income on asking someone else to help them do something they should be doing naturally. Why do they do this? Because they have lost sight of what is important.

Reffering back to Banks, and I believe the above is relative to this, they used to be amongst the moral guardians of society, over the last 25 years they have become the complete opposite. Their naked greed has done nothing more than fuel a fire that has raged out of control. Their bonus system is based on short term gain, rather than long term growth. Their whole culture has been based on absolutes when in fact, they should have carried on working in a culture of conditionals. Much like society as a whole.

The system will not collapse completely, and we will survive. What we will all have to do is take a good long look at what we are, what we want, and what we can realistically expect. Then and only then will we all face forward with confidence.

(I'll get off my soapbox now)

[Fruitcake]

May we go to the island yet?

Unfortunately not 2dimes. I am still working towards that day.

[2dimes]

Let me know when I can go, I'm not happy here.

[Fruitcake]

So the Benelux Governments have ridden to the (ahem) rescue of the banking giant ‘Fortis’.

After talks in Brussels led by Jean-Claude Trichet, the President of the European Central Bank, and involving Dutch and Belgian ministers and the bank company’s board, a rescue package of around £8.9 billion was agreed. It looks like Fortis is going to sell its stake in ABN Amro — the source of its current troubles — while its chairman, Count Maurice Lippens, is to resign. That’s the idea Lippy…fall on your sword! One small problem I have though. According to records, Fortis is a venerable institution with a long history, but according to the European Corporate Governance Institute “Count Maurice Lippens is co-founder of Fortis, created in 1990, as the first European cross-border banking and insurance group.”….Nice to know you all have full command of the facts!

Benelux governments are desperate to avoid a panic…aren’t we all!!! The banking and insurance group is Belgium’s largest private sector employer. About half the country’s population bank with it, now that could never happen in the UK….could it?
News of this latest bailout came as turmoil continued to grip the banking sector on both sides of the Atlantic. In London, the UK Government was preparing to nationalise Bradford & Bingley and to sell key parts of it. In the United States, Wachovia continued its own hunt for a buyer, with Wells Fargo and Citigroup locked in a bidding war.

The partial nationalisation of Fortis, whose assets, unsurprisingly, are several times bigger than Belgium’s GDP, was announced just hours after BNP Paribas, of France, and ING, of the Netherlands, had pulled back from talks to buy the group. Those discussions had foundered over guarantees that the suitors were seeking from the Benelux governments against possible future losses in Fortis. You got to hand it to those bankers, even when they are taking a kicking, they still keep on ticking.
BNP, which was reported to have offered €1.60 per Fortis share over the weekend, and ING declined to comment.

So who are the other real Battle Cruisers and who are the inflatable dinghies with a puncture right now? Well hats off to Santander, quickly disposing of their share ABN AMRO within weeks of doing the deal and at a sizeable profit! Smart move, followed by further confirmation, as if one needed it, of the news that the same Santander are buying Bradford and Bingley’s savings book…

One punctured operation could well be Germany’s Hypo Real Estate which was reported to be in talks with the German banking regulator, Bafin, about a financing squeeze. Crikey, if they want to talk about a financing squeeze, they should see my paltry efforts!

Talking of squeezes, I would imagine the news that more than 90,000 trades worth $13.9bn were left unsettled when Lehman filed for bankruptcy is enough to squeeze more than a few. It is expected to take months, even years, to sort through the mess. In the meantime, hedge funds and other financial institutions are expected to writedown billions as a result of the frozen positions.

On a more historical note one wonders about the UK Labour party. Casting about and searching through the heaps of papers in my study I finally managed to find a few snippets from back in 1997 when the incumbent UK Government took over. The manifesto pledge included, alongside some other real pearls of wisdom:

"Labour's housing strategy will address the needs of homeowners and tenants alike.

We will reject the boom and bust policies (of the past) which caused the collapse of the housing market.

We will work with mortgage providers to encourage greater provision of more flexible mortgages to protect families in a world of increased job insecurity.

Mortgage buyers ... require stronger consumer protection, for example by extension of the Financial Services Act, against the sale of disadvantageous mortgage packages. "

hmmm….I think I shall have to wonder on those snippets while enjoying another bottle or two of the vintage stuff.

[PLAYER57832]

Just as that small company came out of the great depression to seize the moment some decades later ... yes that little company called I.B.M.

Or even Microsoft.

But this is not about those companies. This is about something far far bigger.

Microsoft, IBM et al are but minnows when compared to the whoe population of various countries, or the asset base (properties, land et al).

Look back along this thread, you will see the quoted figures of the Central USA govt debt. Who is going to pay for this debt? Where is the money going to come from? Printing more cash is not the way to go, look at Zimbabwe.

The core issue is this. Debt has been the fuel that has powered the expansion of economies for decades. While this debt was kept to controllable levels with the ability to repay eveything was fine. What has happened is this debt has been allowed to spiral to a point that it has become a self feeding animal, new debt has been required to keep old debt at bay. Ultimately this has reached a point where a trigger of collapse has occured. What will happen now, is asset prices across the world will recede to a more realistic level. There will be many casualties, and there will be a lot of pain.

Who was responsible for this? The Banks and the Govts.

And I would say it is far bigger yet.

You see, not matter how you slice it, the REAL bottom line is that while we may have, as Tzor said, plenty of sunshine and other energy, we really do NOT have an unlimited supply of resources.

I know we have mostly been hearing this "same old saw" since th 70's. We heard it, mostly believed it, but then the eighties came ... followed by the nineties and the world had not ended, so the nay sayers were wrong, right?

Sort of. BUT, you have to look beyond economics to see the WHOLE picture and that is where so many of these big business types fail.

If you look at energy in the 70's, for example, you see 2 events really changed things. Finding oil in Alaska was very much part of why we had prosperity in the eighties.

Beyond that, ANY time you talk environmental damage -- be it losses of species, poisoning of people, etc.... you are talking VERY long term and MULTIPLE complex inputs and variables. You think economics is complex? Try ecology. Global warming is the most blatant example. Some scientists have seen this coming for a VERY long time. But, it too 20-30 years to get the message really and truly out to the general population. Even so, many business folks would just as soon ignore it. They cannot control it, so they ignore it or deny it. This is not strictly stupidity (though, yes, I do agree that just because you can make a million does not make you a genius... it does not necessarily make you an idiot, either). It is amazing how the thought of millions in profit can blind one to certain uncomfortable truths.

I won't get into specifics here ... it would take FAR too long and this would get off topic. BUT, I WILL say that the real answer is for folks on Walstreet AND scientists, in the other corner to ALL step out of their narrow boxes, start LISTENING to one another and accept that not only those with a PhD or Millions of dollars backing them have brains and worth. THAT is the real answer.

But ... it is probably also fantasyland!

[Fruitcake]

And here comes the tidal wave

As bad as you think things are in the USA, just watch the Eurozone try to deal with this tidal wave of problems.

The Benelux Governments have ridden to the (ahem) rescue of the banking giant ‘Fortis’.

After talks in Brussels led by Jean-Claude Trichet, the President of the European Central Bank, and involving Dutch and Belgian ministers and the bank company’s board, a rescue package of around £8.9 billion was agreed. It looks like Fortis is going to sell its stake in ABN Amro — the source of its current troubles — while its chairman, Count Maurice Lippens, is to resign. (That’s the idea Lippy…fall on your sword!) One small problem I have though. According to records, Fortis is a venerable institution with a long history, but according to the European Corporate Governance Institute “Count Maurice Lippens is co-founder of Fortis, created in 1990, as the first European cross-border banking and insurance group.”….(Nice to know you all have full command of the facts!)

The partial nationalisation of Fortis, whose assets, unsurprisingly, are several times bigger than Belgium’s GDP, was announced just hours after BNP Paribas, of France, and ING, of the Netherlands, had pulled back from talks to buy the group. Those discussions had foundered over guarantees that the suitors were seeking from the Benelux governments against possible future losses in Fortis. (You got to hand it to those bankers, even when they are taking a kicking, they still keep on ticking.)

Benelux governments are desperate to avoid a panic…aren’t we all!!! The banking and insurance group is Belgium’s largest private sector employer. About half the country’s population bank with it, now that could never happen in the UK….could it?

Well no it could not happen to the extent I believe it will happen across Europe.

The US has a treasury who, ultimately, is responsbile for the financial system.
The UK has a treasury who, ultimately, is responsible for the financial system.
The EU does not have a treasury who, ultimately, is responsible for the financial system.

The US has taken $5 Trillion of debt onto its books in the past few weeks, the UK is in the process of taking a proportionally larger sum onto its books. Both have been political nightmares for those involved, but the EU has no such body.

A Spanish bank failure cant be bailed out by the Euro treasury because it doesn't exist, and if it did, it would eventually be palming the bill off on the entire Eurozone, something its emphatically been denied authority to do.

The Euro cant survive this crisis, it was designed on the understanding it would never face it, Gordo wasn't the only "no more boom and bust" Canute.

Now the real fun starts in Europe....thank the Lord we never got involved in the Euro.

[PLAYER57832]

But wait ... these guys are GENIUSES ... they lay the FOUNDATIONS of our economy and DESERVE every penny they get and then some! We poor working slobs just don't count.. and neither does the guy who finds a cure for cancer, works on the global warming problem ... etc.

Seems like the modern version of "Divine Right". Didn't we do away with thart a few years ago?

[Fruitcake]

So the various great and good around the globe hope to stem the tide with a 0.5% rate cut and a few more billion being pumped into the prostrate patient in the hope this brings said patient round, let's hope so. The signs are not too encouraging so far. But then what do I know, after all these are the crews who brought us here.

But what of recent news?

Well looking around at the debris, I hear that Lehman Brothers laid-off around 4,000 staff between March and September this year, when the firm filed for bankruptcy. Now it transpires recent leavers have been told there are no crumbs left on the table. Severance pay is something that is history. Letters sent to the staff told of Lehman's not being able to provide salary continuations or any other payments, as a result no payment will be forthcoming after October 3rd. I hear that staff are pretty miffed about this.the bonus has gone, the stock options disappeared, and now no severance pay. It almost makes one feel sorry for them.

I also hear that Nomura is likely to lose around 100 of the 170 staff in equity research, sales and electronic trading. The word is they are planning to leave for rival firms, while some former Lehman Executives stand to make some serious bucks for the next few months work helping the Administrators unwind the former Wall Street firm's trades, this bill will apparently be picked up by Nomura. On reflection, forget that feeling sorry for them.

Word has it that Citi CEO Vikram Pandit was all fire and brimstone on Monday. One can only imagine what his darkest thoughts were regarding Wachovia. Pandit told Citi staff that Robert Steel (a great name for a CEO dontcha think), who was Wachovia's CEO, told him they had a deal on the 1st of this month. Poor Pandit then found out about the proposed marriage, of unequal's, to Wells Fargo. It seems our Pandit was saying that Citi saved Wachovia from collapse and wanted some moolah in recognition. Nice to know that straight trading and talking has now taken a seat at the top table at last after all these years and all this heartbreak.

Have you seen the announcement by UBS as it 'repositions' its investment bank? I have and it makes great reading, I think.

Here is one of the Strategic priorities

"Reposition its Fixed Income, Currencies and Commodities (FICC) business around client servicing and facilitation. The Investment Bank will exit Commodities (excluding Precious Metals); substantially downsize Real Estate & Securitization and Proprietary trading; and preserve its core Foreign Exchange, Rates and Credit businesses."

Well I don't know about you dear reader, but I'm seriously pleased that UBS is so on the ball. According to this, UBS are now going to substantially downsize Real estate Securitization and Proprietary trading. Sorry to bring this up chaps, but that decision has kind of been taken out of your hands.

Looking further afield, let's hope the Icelandic problems don't somehow come knocking too close to home here in the UK. I am amazed no one took any real notice back in March of this year when the CDS costs went north for the majority of the Icelandic banking operations. Talking of home, the FTSE is still doing it's best to provide the finance world with the analogous image of a train crash, let's hope the brakes slow it down enough before the buffers are really hit. Oh, sorry, it looks too late.

[got tonkaed]

From what i understood at least it seemed like a fairly sizeable amount of savings was put into icelandic banks. Im not sure how it wouldnt end up being a problem given what seems to be national insolvency on the horizon in iceland.