Links 1/22/08 « naked capitalism

Thursday, January 22, 2009

Links 1/22/08

New evidence on Antarctic warming BBC

How to move a boat without an engine, paddles or sails Network World

A New Meme: Blame It on Beijing (and Seoul, and Riyadh…) Menzie Chinn. This is a useful post, but where has Chinn been? The Fed has been pushing the “savings glut is the problem” line for years, and even the FT’s Martin Wolf has been saluting for the last eighteen months (but then again, the UK has a more acute version of the US ailment). But to his credit, Chinn kneecaps the hoped-for party line.

Questions for Mr. Geithner New York Times (hat tip reader Doug W). Late to this, but it is still a good list.

What if Uncle Sam Takes Over Your Bank? Wall Street Journal. Sign of the times.

A stimulus we can believe in Models and Agents

Bailouts: catching a falling knife Ed Harrison

How Green Is My Orange? New York Times

Political Interference Seen in Bank Bailout Decisions Wall Street Journal (hat tip reader Steve). And there was gambling in Casablanca too.

America’s banks need to hold a yard sale Meredith Whitney, Financial Times. “One constant question I get from investors, who need somewhere to put their money, is: if I had to own something, what would it be? I am not very helpful to them at the moment as my answer is that I would own nothing. “

End of an era: crunch blows $525bn hole in hedge funds Guardian

Government prevented from taking Barclays stake by deal with Abu Dhabi Times Online. Ooh, this is a real mess.

Antidote du jour:

14 Comments:

Jeff65 says:

January 22, 2009 at 2:09 am

http://www.moneyweek.com/investments/precious-metals-and-gems/is-the-gold-market-really-rigged-14501.aspx

Jesse posted this article on his site with his commentary. Looks like a sure fire scheme to get rich.

Richard Kline says:

January 22, 2009 at 4:34 am

Panda: “I had it all, once . . . Hedges; balloons; applause; tender shoots. And then, I got too smart; I thought, ‘Real estate, that’s my ticket to the Big Time.’ And now, what have I got. A rotting shell, on an untraveled byway. I asked, ‘Where’s _my_ bailout, Twolegs?’ And they said, you’re a forager, so root, wog, or die, and preferably elsewhere” . . . . Buddy, can you spare a lime?”

Richard Smith says:

January 22, 2009 at 4:41 am

Can’t fault Diamond and Varley for commitment, can we?

I do hope the exact terms of Barflays’ death spiral financing deal with AD get published. It would be interesting to see just how wildly HM Gov’t would have to pay for a controlling stake at today’s share price of 65p. Never mind a lower one.

Ticklish judgement for HM Gov’t if BARF gets right to the brink: whether the political risk of overpaying outweighs the economic risk of letting it go bankrupt before taking control.

Love it.

Anonymous says:

January 22, 2009 at 4:44 am

Some great links today. I really enjoyed Chin’s write-up on the “savings glut”. Some good comments as well.

On an amusing note, the WSJ article on nationalization, although overall fairly well done, still had just a scent of ideology…

“Has nationalization ever worked before?

It has a mixed record. Sweden took over its banks, restored them to health and privatized them again. France nationalized its banking sector, privatized it again by selling it into private hands and now may be in the process of another wave of nationalization. In the U.S., the government took over hundreds of institutions during the savings-and-loan crisis a couple of decades ago. It aggressively sold off bad assets, and the experiment is now regarded as a success.”

Excuse me, which one of those three examples qualifies as a failure in this “mixed record”?

Anonymous says:

January 22, 2009 at 6:56 am

If it was a “foreign” savings glut then what happened to the US savings ?

The musical chairs dance around the real issues continues but at least we are getting closer to finally stating the obvious.

Bad trade policy allowed mercantilist nations to hollow out American jobs.

Meanwhile the Federal Reserve, at the behest of the Bushkiites and their banking masters, destroyed the domestic savings incentive with low risk adjusted yields, forcing savers into the crooked world of real estate, stocks, commodity futures, and junk bonds. The Fed instigated a credit bubble, initiated and sustained with a malfeasant policy of non-regulation, which in the end, served up to Americans’ their own savings in the form of debt and risk exposure. In a desperate attempt to sustain their long term lifestyle spending in a world of open looting by organized crime in the form of the banking industry.

Oh yea, the mercantilists and oil exporters lent their “free trade” dollar hoard back into the fiasco. Can’t let the American consumer collapse until the off-shore transition to market dominance is complete. But the foreign dollar recycling appears to be just the gravy on the meal of the American Middle class.

Fire Bernanke, now.

Anonymous says:

January 22, 2009 at 7:36 am

A comment on:
“A New Meme: Blame It on Beijing (and Seoul, and Riyadh…)”

One of the most obvious and glaring questions no Analyst has ever addressed is that a Dollar held by the Chinese is worth less than a dollar held by an American. It’s very simple: the Chinese wanted to buy UNOCAL but the deal was prevented. See below. This then begs the question: what else are the Chinese not allowed to buy other than “defense” related industries, which by itself must be at least 20% of the American economy.

So, it is indisputable that the Chinese are holding US $$ that are already devalued because there are purchases which they cannot make with them in the US and probably elsewhere.

This also strikes to the heart of the fraud of Globalization and so-called Free Trade. For the Chinese at least, their Globalization and Free Trade is restricted in the US since they can only make certain purchases with their unequal US $$.

So, Analysts, does anyone have any idea of how much a Chinese held US $ is therefore devalued?
Just another reason for them not to hold the US $.

This may also explain why the Chinese have not really tried to buy anything of significance in the US with their bloated US $ reserves. They know there is a proscribed list for them.

Certainly, the Chinese are discriminated against Globally since other Nationalities, like British, Australians can buy US assets without an outcry.

Some Free Trade System!

UNOCAL STORY:

Chinese Unocal bid a security threat, says Senior Fellow
http://www.c4ads.org/node/164

212213 says:

January 22, 2009 at 8:25 am

“Government prevented from taking Barclays stake by deal with Abu Dhabi Times Online. Ooh, this is a real mess.”

Doesn’t the UK have bankruptcy laws that allow a company to wipe out shareholders and rights to acquire stock?

Anonymous says:

January 22, 2009 at 8:41 am

Given Barclays importance (and their huge derivatives portfolio), a bankruptcy filing would be off the table. That Times Barclays story is potentially huge. I will be following it actively.

212213 says:

January 22, 2009 at 9:16 am

“Given Barclays importance (and their huge derivatives portfolio), a bankruptcy filing would be off the table. That Times Barclays story is potentially huge. I will be following it actively.”

If the UK govt protects customers, and counterparties — BUT NOT ANY CDS COUNTERPARTIES, why is bankruptcy off the table? People have continued to do business, and even trade with, bankrupt companies in the past.

Stephen Lins says:

January 22, 2009 at 9:22 am

Is there any way to forward Edward Harrison’s blog post to Geithner and Obama? Oh well, it’s probably inevitable that they will go down basically the same route as Bush did, propping up the current system while complaining that the banks aren’t lending enough money. They can’t and they shouldn’t be lending much, as Edward explains. Of course, the Obama effort will have better “optics” (P.R.) and will be more transparent, for all the good that will do.

Patrick says:

January 22, 2009 at 9:30 am

Then again, now could be the perfect time for a hedge-fund to start up and trade the chaos of these markets, make a killing off old funds using broken semi-automated systems and basically giving their money away to intuitive human traders.

Anonymous says:

January 22, 2009 at 12:07 pm

212213 – CDS exposure is only part of the Barclays portfolio. An event of default by Barclays would – I think indisputably – trigger a global financial meltdown, affecting many nonfinancial corporations.

fresno dan says:

January 22, 2009 at 12:26 pm

“
A New Meme: Blame It on Beijing (and Seoul, and Riyadh…)”
Does anyone know of a site or reference that explains the relationship between how interest rates are set by the Federal Reserve and supply and demand for such Federal Reserve denominated assets? I have always thought the Fed just decides that we need low interest rates and presto: low interest rates. Or high interest rates -Volker- Presto: 18 %. There is supply and demand going on?

212213 says:

January 22, 2009 at 12:39 pm

“CDS exposure is only part of the Barclays portfolio. An event of default by Barclays would – I think indisputably – trigger a global financial meltdown, affecting many nonfinancial corporations.”

Lobbyists for financial companies often ask for legislation, rule changes, or bailout money by claiming if they don’t get it, it will cause a crisis/meltdown. Where is the evidence that Barclays couldn’t be put into receivership, conservatorship, or a non-liquidating bankruptcy? Bare assertions prove nothing, even if they are asserted with confidence by peopl holding fancy credentials.

Why couldn’t such a regulatory seizure work if customers and counterparties were protected by a guarantee by the UK (but no protection for CDS holders), and the Eugene Fama approach was applied to restructure Barclays debt?

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