And since we have entered the realm of the mystical and spiritual: I find it really bad Karma that Paulson is talking about profits on our investments, and people (on NPR) are saying that with LIBOR looking better, the rest of the economy doesn’t look too bad. And look! Here is Mr. Bernanke with a new rescue package!

Seems like every time they start saying that we are past the worst the bottom falls out. I haven’t really looked that closely, but it seems like our cycle is down to about 3 weeks long: depth of disaster to Pollyanna pronouncements.

From Wiki

I always thought Cynic was a dog that was kick because it barked to much about social, political and economic reality.

Could be wrong.

“The Cynics were an influential
group of philosophers from the ancient school of Cynicism. Their philosophy was that the purpose of life was to live a life of Virtue in agreement with Nature. This meant rejecting all conventional desires for wealth, power, health, and fame, and by living a life free from all possessions. As reasoning creatures, people could gain happiness by rigorous training and by living in a way which was natural for humans. They believed that the world belonged equally to everyone, and that suffering was caused by false judgments of what was valuable and by the worthless customs and conventions which surrounded society. Many of these thoughts were later absorbed into Stoicism.”

As I understand it, banks are still giving L/Cs to buyers of goods. The problem is that the sellers’ banks will not accept L/Cs from the buyers’ bank (ie, Paribas is not accepting L/Cs from Citi). So this is another example of banks not being willing to trust each other.

BDI fell again, slightly, today, which suggests this is not getting any better, and even if it does improve, it may not do so quickly enough to put a dent in trade separate and apart from supply and demand factors.

The financial irony is the response by Hiero:
“Give me a place to stand on and with a lever I will move the whole world,”

Kind of sounds like Wall Street’s motto.

I fear that we have no place to stand and the earth will move us.

Substitute economy for earth.

Seriously, what are the expectations that the letter of credit crises will evolve or evaporate quickly? What is behind it? There has got to be more to this.

Apologies, pretty much off topic here.

Ireland, the Dead Celtic Tiger (the corpse is beginning to stink).

The Government has just withdrawn GUARANTEED health care for those over seventy years old.

Do you, or any of your readers, have an opinion on this list. It seems that the credit community (the Credit Market) has already made up its collective mind.

Irish banks are in some very bad company here.

Are these numbers correct?

From Money Week via Bloomberg

Apologies for the length of the list.

But if every bank in Ireland is bankrupt what now?

Worst CDS Ratings:
1. Kaupthing 833.3 Iceland BANKRUPT
2. Kazkommerts 766.7 Kazakhstan BANKRUPT
3. Glitnir Bank 757.5 Iceland BANKRUPT
4. IKB 612.4 Germany BANKRUPT
5. Landsbanki 604.6 Iceland BANKRUPT
6. Banca Italease 397.0 Italy
7. VTB Bank 332.5 Russia
8. Anglo Irish Bank 322.7 IRISH
9. HBOS 236.7 UK
10. Sberbank 221.3 Russia $37Bn injection
11. West LB 212.5 Germany
12. UBS 209.0 Switzerland
13. Natixis 205.0 France
14. Bank of Ireland 202.5 IRISH
15. Allied Irish Banks 195.8 IRISH
16. Dexia 195.0 Belgium/France
17. RBS 191.7 UK
http://www.moneyweek.com/personal-finance/credit-default-swaps-how-to-spot-the-riskiest-banks.aspx

There is possibly another dynamic at work. If we don’t see more banks taking each other’s letters of credit soon, the tight credit feeds in an ugly way into the downturn. The collapse in trade becomes real, not a short-term anomaly. This could be Smoot Hawley on steroids. And I am amazed that no one in the officialdom seems to be taking note. But then again, the shipping industry does not have much representation among DC lobbyists.

Since I have been one of the ones harping on this theme, and other bank exposures that have yet to be fully written down, I did not want to appear self-congratulatory.

And one can argue that the loan prices reflect distressed sales, since hedge funds are making liquidations in a variety of markets, not fundamental values (although I have some trouble with that argument).

Why Loan Sharks Can’t Make Money
By mark.gimein
Created 10/16/2008 – 5:07pm

A credit crisis is upon us, the economy is tanking, and more people are finding themselves short of work, short of cash, and with fewer places to get it. You’d think that somebody in the business of giving out payday loans-the closest thing to legal loan-sharking the financial world has invented-would be taking in money hand over fist. But you’d be wrong. In fact, the country’s biggest payday-loan operator, Advance America [1], is doing miserably.

Advance America [2] charges $17.50 as its fee on a two-week $100 advance; that comes out to an annual rate of 456.25 percent. It’s about par for the course for the industry. Online, you’ll find fees of $18.62 and APR figures of about 600 percent. All the decimal points and percentages make payday loans look more banklike, but you can see the origins of the business in the simple old loan-shark’s equation of “six for five”: You pay back $6 for every $5 you borrow.

…….

We’ve yet to see what lesson lenders draw from the subprime debacle. One possibility is that they will conclude that they need to stay away from any but the safest borrowers at all costs-that seems to be the direction they’re heading in. And it’s likely to be bad news for the economy. That’ll mean less credit for those at the bottom and higher rates for everyone else. Another possibility, however, is that lenders will be very careful about raising rates in the hope that borrowers will be more likely to repay more affordable loans.

Then they will run less risk of crossing what looks like the “fairness threshold” at which borrowers throw up their hands and give up. They might conclude, in other words, that they want to stay as far away from the payday-loan/sky-high-rate model as they can. That would take a little bit of rethinking of interest rates and risk from the credit industry. But then, it sure feels like this is a good time for some rethinking, doesn’t it?

Full article

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“The cynics’ view appears to have been borne out by the price plunge last week as recounted in the Financial Times:”

Cynics? This may merely be semantics to you, but it would have been better had you referred to those whose prognostications have been accurate, as realists, (with pardons to the memory of the late George Santayana who said “The only realists are idealists”) since they seem to be in tune with events. Cynics are merely in tune with human nature.