Global Bailout Linkfest
Lots of news breaking this weekend on the coordinated, global bank recapitalization and bailout. Here are a few headlines
(use the comments section to add any I missed . . .)
Crisis Response
• EU Nations Commit 1.3 Trillion Euros to Bank Bailouts (Bloomberg)
• Paulson to Meet With U.S. Bank Chiefs (WSJ)
• RBS, HBOS, Lloyds Get 37 Billion-Pound U.K. Bailout (Bloomberg)
• EU Writes Menu of Options (WSJ)
• Fed Says ECB, Others to Offer Unlimited Dollar Funds (Bloomberg)
• German Bailout Likely to Be Over $400 Billion (WSJ)
• Ireland guarantees six banks’ deposits (FT)
• IMF Speeds Access to Funds as Emerging Markets Buckle (Bloomberg)
• UK banks thrown £400bn lifeline (FT)
• Australia Guarantees of Deposits, Promises Funds (WSJ)
• White House Overhauling Rescue Plan (NYT)
• Europe Vows Bank Support, Bids to Stop Financial Rot (Bloomberg)
• Despite New Policies, Worse Crisis (Barron's)
• Morgan may benefit from latest Treasury plans (Marketwatch)
• Fannie, Freddie to Buy $40 Billion a Month of Troubled Assets (Bloomberg)
• Paulson Says Will Buy Bank Equity `Soon as We Can' (Bloomberg)
• World's Financial Leaders Vow to Unite (WSJ)
• IMF in global 'meltdown' warning (BBC)
• G7 outlines broad but vague plan to combat crisis (Marketwatch)
Good Advice
• Gordon Brown: We must lead the world to financial stability (The Times)
• PAUL VOLCKER: We Have the Tools to Manage the Crisis (WSJ)
• ALAN S. BLINDER: Got $700 Billion? Sweat the Details (NYT)
• Mankiw: Wanted: A Good Bernanke Speech
• Roubini: Our Choice
• Me: Fix the Credit Problem, Not its Symptoms (TBP)
• Luigi Zingales: Plan B
• Willem Buiter: A damp squib from the G-7 in Washington DC (FT)
• Fixing Housing & Finance: 30/20/10 Proposal (The Big Picture)
• Why We Should Let Housing Prices Keep Falling (Economix)
• How To Keep Americans In Their Homes (Forbes)
• How will a capitalization plan actually work? (Marginal Revolution)
• Plan "B"
What has to be the oddest article "fix" article I've come across:
Post Mortems
• The Anatomy of Fear (Newsweek)
• Party Like It's 1929 (The Big Money)
• U.K. banks may unveil capital plans Monday (Marketwatch)
• EUROPEANS WERE GLOATING ABOUT THE AMERICAN FINANCIAL CRISIS. NOT ANYMORE (Slate)
• U.S. Missteps Are Evident, but Europe Is Implicated (NYT)
• Why do stocks keep falling? The experts weigh in (USA TODAY)
• Cost of U.S. Crisis Action Grows, Along With Debt (Bloomberg)
• Joseph Stiglitz: "Are Economists to Blame for the Crisis?" (Video)
• Not So Wonderful Now: Looking for someone to blame in the worsening crisis? Let's go back to Bedford Falls. (Washington Post)
• Is the European Credit Crisis Our Fault? (Slate)
(NOT REALLY—THEY WERE DUMB ENOUGH TO BUY THE MORTGAGES)• Regulators in Need of Rehab (NYT)
• Blame Game (Aleph Blog)
• The Bernanke conundrum (Interfluidity)
• Radio Economics: Four Fundamental Questions about the Crisis (podcast)
• HBOS Crisis Nearly Wiped Out Virgin Airlines (Sky News)
Collateral Damage
• America the Banana Republic (Vanity Fair)
• Iceland seizes Kaupthing as meltdown continues (Times)
• A Potential Merger Weighs on Detroit (NYT)
• Morgan Stanley Climbs in Germany on Mitsubishi UFJ Discussions (Bloomberg)
• G.M. and Chrysler Explore Merger (NYT)
• GM Approached Ford About Merger (WSJ)
• Down in the Valley (Newsweek)
• Is That the Sound of the Silicon Valley Web 2.0 Bubble Bursting? (Business Week)
• More Failed Bank Information (FDIC)
• How high is financial risk today? (MacroBlog)
• Iceland PM asks public not to take out lots of cash (Reuters)
Trading & Markets
• History Provides Perspective Amid Carnage (WSJ)
• Closer to the Bottom (Barron's)
• Those With Sense of History May Find It’s Time to Invest (NYT)
• How Oversold? Very Oversold. (MarketBeat)
• SPX Comparison: 1982-87 vs 2002-08
• George Soros on Markets (Video)
• 10 Bullish Charts, Signals, Indicators (TBP)
• What History Tells Us About the Market (WSJ)
• How Cheap Are Stocks? (Economix)
• The Dow's Worst Week Ever (Barron's)
• Five Days, 1900 Points, and No Solution (MarketBeat)
• The Business Panic of 33 A.D.
Related Stupidity
• SEC Announces Extension of Emergency Short Selling Orders and Related Action
• Failing Lehman in $100m payout plan (The Times) Lehman board signed off on more than $100m in payouts to five top executives just three days before the bank went bankrupt.
• Just when you thought our leaders couldn't possibly get any dumber, Doug Kass passes along this rumor: "The Administration/Treasury is actively considering the closing of the U.S. Stock Market to allow for a "time out" and for further economic moves to be finalized." Welcome to Soviet Union!
That's all from a gorgeous Fall weekend, where we will be tuned into the latest developments unfolding in the credit crisis.
Got a comment, suggestion, link idea? Or do you just have something on your mind? The linkfest loves to get email! If you've got something to say, send email to thebigpicture [AT] optonline [DOT] net.
Sunday, October 12, 2008 | 09:15 AM | Permalink
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Comments
First!
How can things be so bad when I am listening to #9 Dream on my radio?
Posted by: Phil Spector of Deflation | Oct 12, 2008 9:28:10 AM
Well, went to Nouriel's web site this morning, and watched his telephone interview on Bloomberg. This man has been so right, but with such a depressing forecast that I have an idea.
There was an old pop song years ago about a fellow having problems, all of you have heard it...it began "We gotta get you a womannnnnn...."
...I'm just sayin'...
@Leftback:
Going to take the labs swimming today since they didn't get to go canoeing yesterday..let me know if you want to continue our wager about the markets next week...I'll check back tonight..
Posted by: Bruce in Tennessee | Oct 12, 2008 9:29:07 AM
So, the no shorting financials lifted for two days and now it is back on?
Did I read that right?
Are you kidding me, that is going to break a few ETFs again.
How do you play in a game when the rules keep changing?
Posted by: Rich Shinnick | Oct 12, 2008 9:41:40 AM
How do you play in a game when the rules keep changing?
Posted by: Rich Shinnick | Oct 12, 2008 9:41:40 AM
Rich:
NEWS FLASH: These are the FIRST TIME EVER that 'the rules' have Changed.
(and, no, I don't mean 2nd, and, yes, I mean no offence..)
Posted by: Mark E Hoffer | Oct 12, 2008 9:54:50 AM
EU's leaders are meeting in France at the moment. Their intention is to prepare a British-type capital injection to major banks on national basis. That would mean that national goverments would get a share majority in some banks with the right to nominate the executives.
Again this is different of what Paulson has aimed. According Paulson's plan the U.S. goverment is getting nonvote shares only. So Paulson is still preferring the shareholders to the taxpayers. I'm astonished. Such bad policy would simply not be possible in Finland, in other nordic countries, or in the most of European countries.
Posted by: Our man in Helsinki | Oct 12, 2008 9:58:46 AM
There's been a lot of talk here comparing this bear market with others, NYT has a nice graph doing just that:
Posted by: Gary | Oct 12, 2008 10:02:47 AM
I agree completely with Rich. This is insane, you just can't trade this.
I was afraid of this on Friday, that there would be all kinds of global coordinated stupidity over the weekend. I am going to take two days off and play golf.
I have trader fatigue anyway (is anyone else feeling a little fried?), I actually removed myself from all media for 24 hours yesterday. I'll see where the markets are, whether we are getting nationalized and what the rules are next week or the week after. I am going to stay short junk bonds and short the 10-year.
I guess it's not all bad. I am hearing that there is a nice shadow market developing in distressed high end housing in Greenwich, Conn. BTW, the general consensus is that there are a lot more hedge fund failures and redemption waves in our future.
The far out of the money puts that I thought were a doomsday lottery ticket will buy burgers for Bruce for a long time. Bruce, for the time being I will bet you that I can break 90 if my putter is working... good luck everyone.
Posted by: leftback | Oct 12, 2008 10:09:04 AM
Whilst time might be of the essence, there is no viable solution without « banks recapitalisation » that implicitly requires a true recognition of the net assets value.
The models must be consistent among each others otherwise there will be no inter banks lending.
Posted by: Philippe | Oct 12, 2008 10:09:37 AM
Barry,
Ben Stein finally gets it!!!
"The standard advice would be to buy when the market is down, and it’s probably good advice. But only “probably” because we have no idea how far down we’ll go or how long it will take to recover. Maybe it is better to be liquid now. But then again, maybe not. Uncertainty and fear rule.
Frankly, I don’t know the answer. I just know that for a long time, we have paid Wall Street “experts” unimaginable sums for preparing for our retirement. They still have our money, and we have ashes. And I wonder whose side government is on, which is a bad thought to have, and I wish I didn’t have it. As the song goes, there is revolution in the air."
http://www.nytimes.com/2008/10/12/business/12every.html?_r=1&ref=business&oref=slogin
Posted by: gloomy | Oct 12, 2008 10:10:52 AM
At this point, shouldn't the government just hand over the policy decisions to Roubini? He's been right about everything so far. I pray the gov't accepts his suggestion that a triage of financial institutions must take place, as opposed to pumping capital into banks that are already insolvent.
Posted by: Adam | Oct 12, 2008 10:16:08 AM
Adam: before this is over Roubini will have gone from crank to Messiah. They are getting the message, certainly the British and German government seems to be moving in the direction of injecting capital, and that will force triage on them in the end. Imagine that - capitalism involves failure!
There are big problems in the EU because it was not designed to deal with complete collapse in the weaker economies and the inflation hawks both in Germany are only slowly getting to grips with the crisis.
Posted by: leftback | Oct 12, 2008 10:35:47 AM
I'm not an economist, and reading the news lately has been sort of like getting a crash course in banking by little bits and pieces scattered across a number of articles. What books out there would give me the background to understand what's going on?
Posted by: rachel | Oct 12, 2008 10:37:57 AM
Jim Rogers: Cash is King
http://www.youtube.com/watch?v=xIsHD7nwTbU
Posted by: Kenneth Hoag | Oct 12, 2008 10:49:29 AM
New link: Australia to guarantee all bank liabilities (not just deposits) for 3 years. This after the Australian government claimed Aussie banks are safe.
http://www.smh.com.au/news/national/rudd-guarantees-700b/2008/10/12/1223749845710.html
Posted by: dc | Oct 12, 2008 10:49:56 AM
If they close the markets, there would probably have to be a bank holiday as well, and if the ATM's stop working it would be much worse for public confidence than the gas lines back in the 70's.
It would also be a disaster for Obama's prospects, because the electorate would write in Gus Hall (despite his being dead for a few years).
Posted by: Roger Bigod | Oct 12, 2008 10:50:48 AM
A little off topic(I HOPE!). I stumbled upon this this morning and it makes for fascinating reading. Jack London chronicling his 'adventures' in the East London slums circa 1902. Wow! You talk about living the life. This will make you thankful for what we have(Or I suppose HAD as of this week, no?)
He wants to go left in this book but has so far resisted up to about chapter 10. Some great pics to go along with the story too
Posted by: DavidB | Oct 12, 2008 11:11:43 AM
Roger:
I've been advising others for awhile to keep at least a few hundred bucks stashed around the house in case of a black swan.
ATM unavailability could be caused by a number of things, including Black Swans:
1. an internet outage caused by accident or design;
2. a hurricance (after Ike, atm's in much of Houston were out for days. Same for Katrina and Gustave in La.);
3. an extended local power outage;
4. a power or connectivity outage that afects not necessarily your area but the datacenter for the atm as during Tropical Storm Allison when my ATM in New Orleans wouldn't work because downtown Houston was flooded;
5. Your bank goes under and it takes the FDIC a few days to fix it. Or, you have a date late Friday night when the FDIC steps in;
6. Real Black Swans. The first 5 aren't really Black Swans because I can foresee them.
Of course, I've been too lazy to get cash for myself. Maybe I'll do it today. And, please, make a note somewhere memorable of where you stash the cash.
Then you just have to hope that whomever you deal with during the outage will be capable of taking cash.
Posted by: Mike in NOLa | Oct 12, 2008 11:18:49 AM
When the going gets tough time to turn more to socialism mainly to socialize the losses from wanton greed onto middle class Americans.
BOL in the United Socialist State Republic of America banana republic courtesy of George Bush and the bananas.
Posted by: km4 | Oct 12, 2008 11:24:57 AM
I'm not an economist, and reading the news lately has been sort of like getting a crash course in banking by little bits and pieces scattered across a number of articles. What books out there would give me the background to understand what's going on?
Posted by: rachel | Oct 12, 2008 10:37:57 AM
rachel,
right you are, that, all you'll see in the MSM, is pebble after pebble tossed into the pond..if they threw the 'whole rock', the pond would dry out..
try www.mises.org and take a peek around. their articles are, fairly, well-written, and understandable..
they cover many aspects of the this story, re: 'banking'
Posted by: Mark E Hoffer | Oct 12, 2008 11:25:04 AM
My hobo gut says that the stocks market will fall though another hole in the floor and have one more good earthquake, followed by some decent aftershocks. Then the serious noise will only come from talking heads on TV and in print. Of course, new, bad information will invalidate this and send everything down even more.
My sociopathic side is looking six months down the road at the huge amount I will eventually make when the markets recover. If you made some decent stock picks in 2003 and sold when the market first ran out of steam, then you would be sitting pretty.
Remember, a 50% fall requires a 100% gain to go back to old levels. If it recovers only 50%, that is equivalent to a 25% decrease from the top. In some areas, a 50% gain from today's levels is to be expected over a fairly short time. And since the market will not travel in a straight line up, some good timing decisions will really goose profits up.
Having said that, the 2002-2003 bottom lasted a year and only an idiot will catch a falling knife in this one.
Also, when the market peaks again in 2015 or thereabout, the crash then might be one that makes today look like good times. The liquidity being pumped in today may have an unintended consequence or two, you think?
Posted by: dead hobo | Oct 12, 2008 11:25:28 AM
Mike,
I'm not worried about you. Improvisation was invented in NO, so you have a strong tradition to work with.
Posted by: Roger Bigod | Oct 12, 2008 11:32:27 AM
all y'all:
this YouTube is worth the 10 minutes:
http://www.youtube.com/watch?v=4dpJL6ANnV0
a succinct primer, the 'whole rock', on our schema of fiduciary media..
btw, I'll offer U$D 10 000 to anyone that can substantively disprove it.
as always, we'll clear through BR.
Posted by: Mark E Hoffer | Oct 12, 2008 12:02:21 PM
the YouTube link, on 2x check, is balky..
can be seen here, as an inbed: http://whatreallyhappened.com
post title: US Economy Collapsing, 12 OCT 2008
Posted by: Mark E Hoffer | Oct 12, 2008 12:07:15 PM
Deadhobo:
Think you have it about right. The tricky part will be picking the post crash winners since the economy will be changed dramatically.
Roger:
Thanks for the vote of confidence but I wasn't the one stuck in a hospital for four days after Katrina. My wife did some very good improvising. But, I was glad that I had made her put a couple of hundred in cash in her purse before the storm, even though we only lived a mile away and we had spent the night after the storm at the house and thought the worst was over. BTW, didn't mean to imply that I didn't have a wad of cash during the hurricanes. That's easy; it's the unexpected that can get you.
Posted by: Mike in NOLa | Oct 12, 2008 12:49:07 PM
As to Jim Rogers, he tells the WSJR's effusive Maria Bartiromo where he is investing:
"I've been buying the Swiss Franc, and I've been buying the Japanese Yen, because it has been beaten down by the Carry Trade, which will reverse. I've been buying China and Taiwan. I've been buying agricultural commodities."
"I'm shorting the United States government long bond, because there is going to be a lot more inflation and a lot more debt coming from the government."
Posted by: VJ | Oct 12, 2008 1:18:41 PM
