Well, I am happy to be back, after my recent run in with hackers. I have spent the last many hours compiling a truckload of financial news. Holy cow. There is really a lot to report out there in the business world.
So, without further ado, in continuation of my credit-crisis archive series, aka macro-econ updates, I offer you the following word salad. The below links are in mostly in the order I found them, rather than a better way that puts them according to how they make sense. The sense will be made in a looking-back fashion, I reckon, since so little effort was taken to make sense looking forward.
To begin, I'm gonna drop in a link that's completely out of order, just to start with a little bit of forward-looking good news.
Street Cred: Goldman Sachs Buys Into Carbon-Credit Developer
Posted by Jeffrey Ball, October 27, 2008
Jonathan Shieber, of Dow Jones’ Clean Technology Insight, reports:
It looks like the financial wizards at Goldman Sachs are betting that the U.S. government is going to impose a cap-and-trade system for global-warming emissions sooner rather than later, despite the financial crisis shaking up the corridors of power from Wall Street to Washington.
Goldman is announcing today that it will partner with Salt Lake City-based carbon-offset project developer Blue Source LLC. The company, backed by big-time private equity investors First Reserve Corp. and Och Ziff Capital Management Group, sells carbon credits. Neither Goldman Sachs or Blue Source would comment on the size of the investment, other than to say that Goldman would receive a minority stake in the company.
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Political Capital - Who's to Blame edition
Henry Waxman: Alan Greenspan did not do what Congress asked him to do and tha's to regulate the predatory lending of mortgages. When Mr Bernanke came in, he in fact did what needed to be done in that area...
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Companies start competing for bailout money
MARTIN CRUTSINGER | October 26, 2008
WASHINGTON — The bailout is now the hottest lobbying game in town.
Insurers, automakers and American subsidiaries of foreign banks all want the Treasury Department to cut them a piece of the largest government rescue in U.S. history.
The betting is that many with their hands out will be successful, especially with financial markets in a stomach-churning dive and predictions the economy is about to tumble into a deep recession.
These groups argue that the credit squeeze is so severe and the risks to the economy so dire that their industries need financial support as well.
The Treasury is considering requests from a variety of industries, but has not decided whether to expand the program, officials said Saturday.
Lobbying efforts are intensifying...
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Bankers, Brokers Fleeing Wall Street For Fresh Start
VALERIE BAUMAN | October 26, 2008
ALBANY, N.Y. — Bankers and brokers looking to escape the financial meltdown are scrambling to relocate their families, possessions and rarified talent far from Wall Street to places such as Florida, Chicago, Milwaukee, Virginia and Asia.
...
Corporate headhunters say Wall Street's malaise will lead to a permanent talent loss for New York. It could help small boutique firms become bigger players with employees they would never have been able to lure from the city long-regarded as the world's financial capital.
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Bush urges world markets to have patience
-- Johanna Neuman
So today in his weekly radio address, President Bush tried to calm fears about a global recession by defending the federal government's "bold action to stabilize our economy" with a $700-billion bailout. He cautioned against abandoning capitalism or experimenting with socialism.
Open market policies have lifted standards of living and helped millions of people around the world escape the grip of poverty. These policies have shown themselves time and time again to be the surest path to creating jobs, increasing commerce and fostering progress. And this moment of global economic uncertainty would be precisely the wrong time to reject such proven methods for creating prosperity and hope.
Mostly, he urged patience. With world leaders meeting in Washington for an economic summit hosted by Bush on Nov. 15, the president said the government's muscular steps to buttress the market "are beginning to show results, but it will take time for their full impact to be felt."
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Roubini Says `Panic' May Force Market Shutdown
By Alexis Xydias and Camilla Hall
Oct. 23 (Bloomberg) -- Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.
``We've reached a situation of sheer panic,'' Roubini, who predicted the financial crisis in 2006, told a conference of hedge-fund managers in London today. ``There will be massive dumping of assets'' and ``hundreds of hedge funds are going to go bust,'' he said.
Group of Seven policy makers have stopped short of market suspensions to stem the crisis after the U.S. pledged on Oct. 14 to invest about $125 billion in nine banks and the Federal Reserve led a global coordinated move to cut interest rates on Oct. 8. Emmanuel Roman, co-chief executive officer at GLG Partners Inc., said today that as many as 30 percent of hedge funds will close.
``Systemic risk has become bigger and bigger,'' Roubini said at the Hedge 2008 conference. ``We're seeing the beginning of a run on a big chunk of the hedge funds,'' and ``don't be surprised if policy makers need to close down markets for a week or two in coming days,'' he said.
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Nouriel Roubini gives outlook on US and global economy during speech.
Despite the recent policy actions, unfortunately, I think things are gonna get much worse before they get any better..."
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Spending Stalls and Businesses Slash U.S. Jobs
By LOUIS UCHITELLE
Published: October 25, 2008
As the financial crisis crimps demand for American goods and services, the workers who produce them are losing their jobs by the tens of thousands.
Layoffs have arrived in force, like a wrenching second act in the unfolding crisis. In just the last two weeks, the list of companies announcing their intention to cut workers has read like a Who’s Who of corporate America...
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Bailout expanding to insurers
Treasury to take stakes in firms as distress spreads beyond banks
Staff writers Carol D. Leonnig, Lori Montgomery and Peter Whoriskey contributed to this report.
Yesterday, the Financial Services Roundtable, a trade association for the largest financial firms, sent a letter to the Treasury urging the government to consider investments in a broader range of companies, including broker dealers, automobile companies and foreign banks and insurance firms.
Yet progress on the Treasury program remains halting. The roughly 20 regional banks joining it would be added to nine of the largest American banks, including Bank of America, Citigroup and J.P. Morgan Chase, which were forced to accept $125 billion in funding last week. But the Treasury has yet to give federal money to any of the banks because of legal wrangling over the details of the investment agreements.
Assistant Treasury Secretary Neel Kashkari, the official responsible for the program, said in testimony before Congress this week that the next round of banks probably wouldn't get funding for "a few weeks."
Banks that accept government investments must agree in return to issue to the government shares of preferred stock, which pay annual interest of 5 percent, and warrants for shares of common stock, which allow the government to profit as the company's share price rises. Banks also must accept limits on executive compensation and cannot raise dividends without permission.
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Oil Options at $50 Soar After OPEC Cut Fails to Support Prices
By Alexander Kwiatkowski
Oct. 24 (Bloomberg) -- Oil options contracts to sell crude at $50 by December almost tripled today after an OPEC decision to slash production failed to allay concerns that the global economic slump is hurting demand.
The cost of the $50 December 2008 put option, which gives the holder the right to sell oil futures at $50 a barrel, rose as much as 142 percent to $1.50 on the New York Mercantile Exchange, compared with 62 cents yesterday, according to exchange data.
``It certainly seems to me that we could get down to $50 a barrel,'' Adam Sieminski, Deutsche Bank's chief energy economist, said in a Bloomberg Radio interview today. ``You could look at the OPEC cut as a sign of weakness, not strength.''
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Medvedev Hails U.S. Summit Plan
23 October 2008
Russia welcomed an announcement by U.S. President George W. Bush on Wednesday that he would host a summit to discuss the global financial crisis and reforms to prevent it from happening again.
Bush invited leaders of the G20, which includes the Group of Eight as well as key emerging-market countries like China, India and Brazil.
"Russia welcomes the U.S. decision to host the summit," Natalya Timakova, spokeswoman for President Dmitry Medvedev, said in comments confirmed by a Kremlin press office Wednesday.
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Russian default risk tops Iceland as crisis deepens
Russia's financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.
By Ambrose Evans-Pritchard
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U.S. Imposes Sanctions on Russia, China for Supplies to Iran
By Greg Walters
Oct. 24 (Bloomberg) -- The U.S. government imposed sanctions on Russian, Chinese and Venezuelan companies for supplying what it said were materials used in making weapons of mass destruction to Iran, North Korea and Syria.
Companies including Russian state arms exporter Rosoboronexport and the China Shipbuilding & Offshore International Corp. were barred from entering into contracts with the U.S. government, according to a document posted on the Web site of the U.S. Federal Register and dated yesterday.
Sanctions against Rosoboronexport violate international law and will impact relations between Russia and the U.S., Russian Foreign Minister Sergei Lavrov said in remarks broadcast by state television.
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Sarkozy lays out radical state intervention
French president Nicolas Sarkozy has pledged "massive" state intervention to support his country's industry, defiantly ignoring EU competition rules in the biggest shift to dirigiste ideology in 40 years.
By Ambrose Evans-Pritchard
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German banks overexposed in Iceland
New figures confirm German banks were the most heavily exposed to Icelandic borrowers before the recent collapse of that nation's banking system.
Martin Morris
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Financial crisis: Alistair Darling suspected Icelandic banks were in trouble weeks before collapse
The Chancellor Alistair Darling suspected that Icelandic banks were in trouble weeks before their collapse, new documents show.
By Ben Leach
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Russia feels chill winds of the global downturn
If America and the rest of the West is feeling a chill right now, then Russia is positively freezing.
By James Quinn
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Markets braced as Ukraine gets IMF bail-out
Markets are braced for another turbulent week as Ukraine added to growing fears about the world’s economic health after securing a $16.5bn (£10.4bn) emergency loan from the International Monetary Fund yesterday.
By Jamie Dunkley
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We now face Keynesian conditions and need truly Keynesian solutions
Are we all Keynesians now? Two weeks ago, I invoked the ghost of Keynes and there has recently been a flood of references to him, most especially from the Chancellor.
By Roger Bootle
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Brown’s Keynesianism is bankrupt – and will bankrupt us
Almost three months ago, this column described Prime Minister Gordon Brown, and his Chancellor Alistair Darling as "Keynesian". The last decade of Brownite policy, after all, has featured high public spending, irresponsible borrowing and an ever-growing tax-burden.
By Liam Halligan
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Europe on the brink of currency crisis meltdown
The crisis in Hungary recalls the heady days of the UK’s expulsion from the ERM.
By Ambrose Evans-Pritchard
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Germany's Steinbrueck says crisis far from over
(Reporting by Madeline Chambers, editing by Mark Trevelyan)
"We are still in a dangerous situation. I am not going to mislead anyone and say: we have got everything under control."
Asked how long the financial crisis would last, he said:
"The rescue package runs to the end of next year. We will certainly need it that long."
...
"There are landesbanks which are in turbulent waters. We have too many landesbanks and many of them do not have a convincing business model. We need consolidation among the eight landesbanks as has happened among the top institutions in the cooperative banking sector."
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IMF bailout of Iceland is delayed until fate of UK savers’ frozen cash is resolved
Gary Duncan, Economics Editor
October 24, 2008
Stalemate in talks between Iceland and Britain over the fate of the money from UK savers that is frozen in an Icelandic bank was being blamed last night for delaying a bailout of the stricken North Atlantic economy.
The International Monetary Fund is believed to be insisting that Reykjavik’s dispute with London over British savings held in Icesave, the UK offshoot of Iceland’s nationalised Landsbanki, is resolved before it will make a decision on the scale of emergency support for the tiny island nation.
The IMF’s governing executive board was meeting last night to debate a potential rescue package for Iceland, which could total $6 billion (£3.7 billion) and is likely to be backed by several Scandinavian central banks and the Bank of Japan. It would make Iceland the first Western country to receive an IMF loan since Britain went to the fund in 1976.
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I.M.F. Loan to Iceland Moves Ahead
By THE ASSOCIATED PRESS
Published: October 24, 2008
Iceland reached a tentative agreement on Friday with the International Monetary Fund for a $2 billion loan over two years after the country’s banking system collapsed in the global credit crisis.
The government said the deal, which is still subject to approval by the fund’s board in Washington, would also give Iceland immediate access to $830 million to head off a financial threat to its entire economy.
The country’s currency, the krona, has lost half its value since January, and banking transactions to and from Iceland have seized up, leaving its population of 320,000 virtually stranded.
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Iceland leaves British depositors out in the cold
Helen Power and Hildur Helga Sigurdardottir in Reykjavik
October 25, 2008
Geir Haarde, Iceland’s Prime Minister, said yesterday: "Our dealings with Britain over Icesave are not included in the talks. Those will be resolved on another level and we are at present not prepared to commit to British demands apart from those to which we are legally bound."
Iceland’s decision to go ahead without first securing a deal with the UK will come as a blow to the British Government, which has had to spend billions guaranteeing UK savings in Icelandic banks.
The Treasury has become embroiled in an increasingly bitter war of words. This week, Iceland released a transcript of a telephone conversation between Alistair Darling and Icelandic officials, showing that, contrary to Mr Darling’s claims on October 8, Iceland did not categorically refuse to compensate British savers.
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Germany Compiles List of Nazi-Era Jews and Their Fates
The study follows a 1986 compilation, revised in 2005, of the names of the 150,000 German Jews killed in the Holocaust. A greater number of German Jews managed to flee. The Nazis killed an estimated 6 million Jews in Europe.
The German Foundation for Remembrance, Responsibility and Future was founded in 2002 to organize compensation payments to forced laborers under the Nazi regime.
By the end of 2007, the foundation had disbursed 4.37 billion euros from German industries and the state to more than 1.5 million people in 98 countries.
This is a perfect segue to give a mention to the use of 'Godwin's law' in a joking way. The reason so much of this comes back to WW2 tyrants etc, is that the settlements have only begun in the last few years. Just because the war ended for most of us, doesn't mean it ended for all of us. (I say this not as a Jew- I'm not. I say this as a believer in justice.)
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In Beijing, World Leaders Pledge Broad Reform of Financial System
By Ariana Eunjung Cha
Washington Post Foreign Service
Sunday, October 26, 2008; Page A20
SHANGHAI, Oct. 25 -- Leaders from Asia and Europe on Saturday called for new rules for and stronger regulation of the global monetary and financial system at the close of a two-day summit in Beijing as China assumed a leadership role in the crisis.
Chinese Premier Wen Jiabao said the world's economic problems had become so massive that measures beyond the many multibillion-dollar bailout packages announced might be necessary to avert further damage.
"We are very glad to see that many countries have taken measures that have initially proved effective. But this is not enough given the current situation, and more needs to be done," Wen said Saturday, a day after dire corporate earnings reports from all over the world pushed Wall Street to a five-year low.
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So When Will Banks Give Loans?
By JOE NOCERA
Published: October 24, 2008
In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans. But this executive was the first insider who’s been indiscreet enough to say it within earshot of a journalist.
(He didn’t mean to, of course, but I obtained the call-in number and listened to a recording.)
"Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase," he began. "What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop."
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They’re Shocked, Shocked, About the Mess
By GRETCHEN MORGENSON
Published: October 24, 2008
MY hypocrisy meter konked out last week.
Like the boy who cried wolf, corporate and regulatory officials have issued a lot of hogwash over the years. Until recently, investors were willing to believe it. Now they may not be so easily gulled.
Companies, even those in cyclical businesses, routinely told investors that the reason they so regularly beat their earnings forecasts was honest hard work — and not cookie-jar accounting. They were believed.
Politicians proclaiming that the economy was strong and that the crisis would not spread kept our trust.
Brokerage firms insisting that auction-rate securities were as good as cash won over investors — and, as we all know now, that market froze up.
Wall Street dealmakers were fawned over like all-knowing superstars, their comings and goings celebrated. No one doubted them.
Banks engaging in anything-goes lending practices assured shareholders that safety and soundness was their mantra. They, too, got a pass.
Directors who didn’t begin to understand the operational complexities of the companies they were charged with overseeing told stockholders that they were vigilant fiduciaries. Investors suspended their disbelief.
And regulators, asserting that they were policing the markets, convinced investors that there was a level playing field.
Is it any surprise that virulent mistrust seems to own the markets now?
Gretchen Morgenson from a different NYTimes business podcast:
"This week we had an amazing couple of days of congressional testimony that really felt like we were kind of in the twilight zone."
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Global Financial Troubles Reaching Into Gulf States
By DAVID JOLLY
Published: October 26, 2008
Major oil-producing countries had seemed to be insulated from the crisis shaking the foundations of the international financial system. Oil prices rose during the first half of 2008, giving such countries a thick cushion of cash. But a drastic drop in oil prices has left the gulf economies vulnerable. Many oil-rich governments became dependent on high prices.
After reaching a record of more than $147 a barrel in July, prices have collapsed. On Friday, oil futures settled in New York at $64.15 a barrel, falling $3.69 even after OPEC announced that it would reduce production by 1.5 million barrels a day.
"This shows the gulf countries are not immune to the overall problems in the financial system," Olivier Jakob, an oil analyst at Petromatrix in Zug, Switzerland, said during an interview Sunday. "If we get below $60 a barrel, some of these countries will suffer."
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U.S. has plundered world wealth with dollar: China paper
(Reporting by Simon Rabinovitch; Editing by Ken Wills)
"The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar's hegemony to plunder the world's wealth," said the commentator, Shi Jianxun, a professor at Shanghai's Tongji University.
Shi, who has before been strident in his criticism of the U.S., said other countries had lost vast amounts of wealth because of the financial crisis, while Washington's sole concern had been protecting its own interests.
"The U.S. dollar is losing people's confidence. The world, acting democratically and lawfully through a global financial organization, urgently needs to change the international monetary system based on U.S. global economic leadership and U.S. dollar dominance," he wrote.
Shi suggested that all trade between Europe and Asia should be settled in euros, pounds, yen and yuan, though he did not explain how the Chinese currency could play such a role since it is not convertible on the capital account.
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World leaders pledge financial reform as gloom deepens
BEIJING (AFP) — World leaders have vowed to overhaul the global financial system in the face of recession fears, but US President George W. Bush urged nations to "recommit" to free markets despite economic turmoil.
China's Premier Wen Jiabao called for more regulation of the world's financial system , saying after the summit "we need to draw lessons from this crisis."
"We need financial innovation to serve the economy better, however we need even more financial regulation to ensure financial safety."
Wen confirmed China's participation in a crucial summit in the United States on November 15 aimed at tackling the financial meltdown, without specifying which Chinese leader would attend the meeting of 20 industrialised and emerging powers.
The economic turmoil has led to growing criticism of US-style free market capitalism, with French President Nicolas Sarkozy earlier this week saying "the ideology of the dictatorship of the market... is dead."
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China's stalling boom has globe worried
By Clifford Coonan
WHAT GOES up, must come down, a truism repeated more than once in the past few weeks in relation to the Chinese economy. Could the world's fastest expanding major economy, with its annual double-digit expansion fuelled by its voracious appetite for cars and consumer goods, come crashing down, triggering an economic tsunami on a devastating global scale?
There are fears that, as such a huge consumer of the world's natural resources and a potential market for goods and services from the developed world, a serious slowdown in China could cause a nightmare chain reaction around the world.
Last week, the government statistics office in Beijing dropped a bombshell - a long anticipated piece of bad news, but explosive all the same. Third quarter gross domestic product growth had fallen to 9 per cent, compared to 10.1 per cent in the second quarter and 10.6 per cent in the first.
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The Bet That Blew Up Wall Street
Steve Kroft On Credit Default Swaps And Their Central Role In The Unfolding Economic Crisis
Oct. 26, 2008
(CBS) The world's financial system teetered on the edge again last week, and anyone with more than a passing interest in their shrinking 401(k) knows it's because of a global credit crisis. It began with the collapse of the U.S. housing market and has been magnified worldwide by what Warren Buffet once called "financial weapons of mass destruction."
They are called credit derivatives or credit default swaps, and 60 Minutes did a story on the multi-trillion dollar market three weeks ago. But there's a lot more to tell. [video included at link]
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Asia Money Rates Rise as Governments Struggle to Revive Lending
By Garfield Reynolds
Oct. 27 (Bloomberg) -- Asian money-market rates rose amid speculation the global credit crisis is worsening even after governments and central banks pledged to spend trillions of dollars worldwide to revive lending.
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G-7 Warns on Yen's Gain; Japan Ready to Take Action (Update2)
By Keiko Ujikane and Jason Clenfield
Oct. 27 (Bloomberg) -- The Group of Seven industrialized nations expressed concern about ``excessive gains'' by the yen after Japan's currency soared to a 13-year high against the dollar.
The G-7 made an unscheduled statement after a request from Japan, Finance Minister Shoichi Nakagawa said, adding that his government was ready to act if needed. The G-7 fell short of pledging concerted action to halt the yen's advance. Separately, Prime Minister Taro Aso said he'd draft measures to help counter the financial crisis.
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`Out of Control' CEOs Spurned Davos Warnings on Risk (Update1)
By A. Craig Copetas
Oct. 24 (Bloomberg) -- Once upon a time, the World Economic Forum was the ultimate Wall Street jamboree.
Now, in the riptide of the worst financial crisis since the Great Depression, WEF officials and delegates say many of the chief executive officers who gathered in Davos, Switzerland, over the last five years didn't listen to warnings from their peers. Davos organizers also say they failed to play tough with the financial-industry bosses, opting to accept their funding and let them turn Davos into a rave-up for Wall Street excesses.
``The partying crept in,'' says Klaus Schwab, the 70-year- old WEF founder and executive chairman. ``We let it get out of control, and attention was taken away from the speed and complexity of how the world's challenges built up.''
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`Biggest Bubble of Them All' Is Globalization: Chart of the Day
By Michael Patterson
Oct. 24 (Bloomberg) -- The 90 percent tumble in the global benchmark for commodity shipping costs since May exceeded the Dow Jones Industrial Average's plunge during the Great Depression, signaling globalization is ``the biggest bubble of them all,'' Bespoke Investment Group LLC said.
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Surin Says Asia May Finalize Reserves Fund in December
We are going to face this together.
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Auslin Says Asia `Proactive' in Backing EU's Reform Plan
... Obviously Korea is experiencing a major meltdown now and that has worried China and Japan significantly.
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Farm-Credit Squeeze May Cut Crops, Spur Food Crisis (Update1)
By Carlos Caminada, Shruti Singh and Jeff Wilson
Oct. 27 (Bloomberg) -- The credit crunch is compounding a profit squeeze for farmers that may curb global harvests and worsen a food crisis for developing countries.
Global production of wheat, the most-consumed food crop, may drop 4.4 percent next year, said Dan Basse, president of AgResource Co. in Chicago, who has advised farmers, food companies and investors for 29 years. Harvests of corn and soybeans also are likely to fall, Basse said.
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Emerging-Market Stocks, Currencies Drop; Hungary's BUX Slides
By Laura Cochrane
Oct. 27 (Bloomberg) -- Emerging-market stocks tumbled for a fifth day as concern deepened that the global economy will fall into a recession and Ukraine became the latest country to receive help from the International Monetary Fund.
Equity indexes in India, China and the Philippines tumbled more than 6 percent, while Indonesia's rupiah fell 4.4 percent versus the dollar, leading developing nations' currencies lower. Hungary's BUX Index slid 11 percent after the IMF said it will lend Ukraine $16.5 billion and give Hungary ``a substantial financing package'' as the turmoil in global credit markets and recession concerns sweep across eastern Europe.
Investors are selling emerging-market stocks, currencies and bonds as the rout that began with the collapse of U.S. subprime mortgages last year pushes the world toward a recession and lowers the price of commodities that sustain developing economies. The Bank of Korea slashed interest rates by a record today as the nation faces its biggest crisis since requiring an IMF bailout a decade ago.
``The risks associated with emerging markets are quite high,'' said Winson Fong...
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Ukraine Gets $16.5 Billion Loan From IMF; Hungary Next in Line
By Daryna Krasnolutska and John Martens
Oct. 27 (Bloomberg) -- The International Monetary Fund will lend Ukraine $16.5 billion and give Hungary ``a substantial financing package'' as the turmoil in global credit markets and recession concerns sweep across eastern Europe's emerging markets.
The 24-month Ukrainian loan is conditional on parliamentary approval of legislation to support the country's banks, the Washington-based lender said yesterday in a statement. The Hungarian deal was reached in cooperation with European Union.
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Chavez Ambitions in Venezuela, Abroad May Shrink With Oil Price
By Matthew Walter and Steven Bodzin
Oct. 27 (Bloomberg) -- The same tumbling oil prices that led OPEC to slash output last week threaten to send Venezuela's economy into a tailspin, and put an end to President Hugo Chavez's ambitions to expand his socialist revolution at home and abroad.
To cope with plummeting oil revenue, the source of half the government's spending, Chavez may have to cut domestic handouts and foreign aid. The first items likely to go will be arms purchases from Russia, oil subsidies for Cuba, and job- creating local projects such as bridges and subways, economists say.
``You have a country with an oil boom, that doesn't know how to save, doesn't know how to set up productive industries that generate jobs, and goes into debt,'' said Elsa Cardozo, a professor of political science and international relations at the Universidad Central de Venezuela. ``Then oil prices fall and the party ends.''
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Evil Wall Street Exports Boomed With `Fools' Born to Buy Debt
By Mark Pittman
Oct. 27 (Bloomberg) -- Tom Bosh lowered the telephone receiver into its cradle, making a decision on the way down. ``We're not buying any more,'' he told his traders at Bank of New York Co. ``Nothing.''
It was May 2007, and Bosh, who managed $25 billion from the bank's 13th-floor trading room above Times Square, had just hung up on Ralph Cioffi at Bear Stearns Cos. a dozen blocks away. Bosh had invested $50 million in notes from an issuer Cioffi controlled, and he was ready to pull the plug.
``I had a bad feeling,'' Bosh, 45, recalled. ``Cioffi was just bulldogging everyone. He was saying, `These assets are good, the collateral is paying down, and I know more than you.' That type of attitude.''
Bosh's premonition, a month before two of Cioffi's funds blew up, struck a death knell for structured finance, the system Wall Street banks devised to fuel more than two decades of unprecedented borrowing. The system allowed financial companies to lend beyond their capacity and outside the reach of regulators -- until it crashed this year.
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Ocampo says 'speed limit' on securitization was violated.
Interesting format - seems like a hybrid home movie of the architects of securitization.
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FBI Probe of JPMorgan Fees Focuses on Swaps Roiling Muni Debt
By William Selway and Martin Z. Braun
Oct. 27 (Bloomberg) -- Joseph Ambrosini says the deal looked so easy. JPMorgan Chase & Co. bankers told him there was really no risk. All he had to do was sign a public financing contract, and the bank would give $280,000 to his school district in New Castle, Pennsylvania.
``They basically said, unless the world goes under the sea, we'd be in good shape,'' says Ambrosini, the district's business manager.
In September, Ambrosini says, his 3,400-student district went underwater. On Sept. 25, the week after Lehman Brothers Holdings Inc. collapsed, the New Castle Area School District's interest rate on $9.7 million of financing arranged by JPMorgan hit 10.6 percent, more than doubling since the month began, as investors demanded skyrocketing returns for municipal debt.
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European markets slump after sell-off in Asia
AP: Nikkei index hits a 26-year low as financial crisis raises recession fear
LONDON - European stock markets fell heavily Monday after the Nikkei index in Japan closed at its lowest in 26 years as the financial crisis raised recession fears and drove up the yen, piling the pressure on the country’s exporters.
...
"Worries about the impact of the surging yen on Japanese export earnings have hit the Nikkei hard," said Julian Jessop, chief international economist at Capital Economics.
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‘Panic’ in U.S. Futures Rattles Investors Worldwide (Update2)
By Eric Martin and Lynn Thomasson
Oct. 27 (Bloomberg) -- U.S. stock-index futures are becoming less reliable as predictors of market moves.
With equity investors around the world contending with the worst drop since the Great Depression, futures on the Standard & Poor’s 500 Index misstated gains or losses by an average 1.4 percentage point in October, twice the gap in the third quarter, data compiled by Bloomberg show. One of the biggest misses was Oct. 24, when futures fell as much as 60 points, while the index itself dropped 37 points in the first half hour of trading, before closing down 31.
The pre-market readings may be adding to volatility during a month poised to be the worst in the 38-year history of MSCI Inc.’s index for developed countries, investors said. While fundamental concerns about the health of the global economy and solvency of banks are weighing on investors, the false cues are adding to uncertainty, said Arthur Cashin, director of floor operations for UBS Financial Services at the New York Stock Exchange.
"It’s a state of permanent anxiety, because you don’t know where things are going to go," said Cashin, a member of the NYSE for 44 years. "People are scrambling to try to stay up with it, so far unsuccessfully."
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Medvedev Will Visit G20 Summit
Moscow Times
27 October 2008 President Dmitry Medvedev will take part in a Nov. 15 summit in the United States on the global financial crisis, spokeswoman Natalya Timakova said Friday.
Medvedev received an invitation from U.S. President George W. Bush to attend the meeting of leaders from the so-called Group of 20 industrialized and developing nations, Timakova said in comments on the web site of Vesti-24.
"We must actively participate in working out new rules of the game in the world economy," Medvedev said Thursday in a video message posted on the Kremlin web site. "Russia intends to advance its ideas actively," he said.
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Russia draws up plans to revamp world finances
Sun Oct 26, 2008
(Writing by Dmitry Solovyov; editing by Andrew Roche)
MOSCOW, Oct 26 (Reuters) - Russia has drawn up its own proposals to restructure the world financial system, which President Dmitry Medvedev will present at a global summit on the financial crisis next month, a senior official said on Sunday.
U.S. President George W. Bush will host the summit on Nov. 15 in Washington to discuss the causes of the crisis and the principles by which financial regulators and institutions should be reformed.
Shuvalov did not reveal details, but reiterated Russia's general stance: "The currently existing world financial system is inadequate to the conditions in which we live. In the Russian Federation, our leadership has been constantly talking about this in recent years."
Shuvalov said Russia had no plans to isolate itself from the rest of the world during the crisis, stressing that it was part of the global economy. If the world economy declined, Russia's growth would be short-lived, he added.
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Russia teams with China and India to tackle crisis
27.10.2008 - RBC
Russia will consult India and China on measures to combat the global financial crisis, Russian Foreign Minister Sergei Lavrov told reporters today.
"Russia will certainly coordinate its steps with the world’s leading emerging economies," he stressed, pointing out Moscow’s strong ties with India, China and Brazil.
The finance minister of the G20 group of rich and developing nations will gather next month in Sao Paulo, Brazil. Russian and Chinese finance ministers are also scheduled to meet there, according to Lavrov.
"Despite the emergence of new centers of economic growth and financial power, as well as their rising political influence, it is only through joint efforts that we can solve the current crisis and prevent such things from happening in the future," he asserted.
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Iceland says IMF cash not enough
HELSINKI, Oct 27 (Reuters) - Iceland said on Monday that International Monetary Fund (IMF) cash would not be enough to stabilise its ailing economy as it prepared for talks on the financial crisis with its Nordic neighbours.
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