ARE THE PIRATES SITTING ON A BOMB?

BREAKING FRIDAY MORNING: CLOSE AIDE SAYS OBAMA WILL PICK HILLARY

MARKET DROPS AGAIN, ANOTHER 5 %
WHERE DID THE TRILLIONS GO?
CITIGROUP BLUES

I began the day on Thursday in snowy Rochester for an academic conference on the role of credit unions which seem poised to present themselves as a real alternative to failing banks and discredited financial institutions. Robert Manning of RIT explained why this is a consumer-led recession and showed how more and more Americans fallen into the debt trap. He is launching a new responsible debt relief initiative. Check out their new website: www.debtrelief.org

I will be writing more about this but on day of more financial distress, where the whole debate over help for the auto industry went off the rails because it was revealed that the execs flew to DC on private planes?a sidebar and distraction?when it seemed clearer than ever that Congress is paralyzed, and Paulson is useless, I was impressed to find a whole industry making sense and working on behalf of the consumer. More to come. In the meantime, check out the publications of the Filene Research Institute which offers many reports and studies on credit unions and their innovative initiatives. filene.org/

ANOTHER MARKET MELTDOWN

Market drops another 5% on reports of a rejection Auto bailout?.earlier

LONDON/WASHINGTON (Reuters) – Fears of a deep, long global recession intensified on Thursday as markets hit new lows in alarm at reports of record U.S. job losses, oil prices plunging below $50 a barrel and worry that U.S. automakers would not get a bailout from Washington

FT: Fear of severe downturn grips world markets

Fears of a severe global recession gripped financial markets on Thursday, sending interest rates to record lows and driving down US stock prices to their worst close in more than a decade.

ROUBINI’S RGE MONITOR: “As consumption provides 71% of U.S. GDP, a consumer recession could result in the worst recession since World War II, starting with a minimum 5% GDP contraction in Q4 2008 and ending at least 3 times as long and deep as the previous two recessions. To make matters worse, the market’s loss of confidence in policymakers despite aggressive policy actions will keep financial losses mounting. “

PAUL KRUGMAN NYT:

How much can go wrong in the two months before Mr. Obama takes the oath of office? The answer, unfortunately, is: a lot. Consider how much darker the economic picture has grown since the failure of Lehman Brothers, which took place just over two months ago. And the pace of deterioration seems to be accelerating.

Most obviously, we’re in the midst of the worst stock market crash since the Great Depression: the Standard & Poor’s 500-stock index has now fallen more than 50 percent from its peak. Other indicators are arguably even more disturbing: unemployment claims are surging, manufacturing production is plunging, interest rates on corporate bonds – which reflect investor fears of default – are soaring, which will almost surely lead to a sharp fall in business spending. The prospects for the economy look much grimmer now than they did as little as a week or two ago.”

WHERE DID THE MONEY GO?

Nick Van Hoffman, The Nation: $2 Trillion Handed out by Paulson and Bernanke, But Who Got It, Nobody Knows

With his latest policy switch to buying stock in banks and other companies, Henry Paulson has more zigs and zags to his credit than a fox trying to escape a pack of hounds.

The fox and the hounds, of course, have a clear idea of what they want to do and how they want to do it, which is more than you can say of Paulson. Sums of incalculable size are being spent or pledged by Paulson and his playmate, Ben Bernanke, chairman of the Federal Reserve Board, and nobody outside their organizations, or maybe inside them either, knows who got what, how much they got, and under what conditions they got it.

In the past couple of months Bernanke has loaned out $2 trillion to unnamed companies under eleven different programs and all but three of them were slapped together in the past fifteen months of financial crisis.

To repeat, we do not know who got this money or what collateral was put up in return for the loans or what conditions were attached to them.

The sums involved are almost three times as large as Paulson’s $700 billion muddled bailout efforts that Congress voted for last month. Bernanke does have the legal authority to pass out these trillions without Congressional authorization and without explanation, but secrecy breeds suspicion and loss of confidence.

NAOMI KLEIN: “ITS BORDERLINE CRIMINAL

MY ANALYSIS ON THE REAL NEWS – WATCH HERE

GOOD READ: MICHAEL LEWIS, THE DEATH OF WALL STREET

DEBT MAN WALKING

iTulip’s Eric Jantzen: A “DEPRESSION ALL BUT CERTAIN

Unemployment by industry: Recession or depression?

Friday the Labor Department disgorged a mountain of ugly unemployment data. Another”surprising” jump in joblessness made headlines..

iTulip has observed and analyzed changes in the US economy for over ten years. In the current economic cycle, since 2006 we have focused on median duration of unemployment to give us early warning of rising unemployment.

Here we extend that analysis to point us to where unemployment is headed overall and also delve into 14 major industry sectors, including one you work in, to fine tune our forecast. There is no doubt in our minds that this is The Big One – a depression is all but certain unless the US develops and executes a post WWII scale stimulus plan starting in 2009, but the structure of that stimulus is critical to avoid turning the US into a sclerotic economy dominated by large corporations and big government. In any case, we forecast 10 million jobs lost by the end of next year

WHY THE GOP OPPOSED THE AUTO BAILOUT

Dr. J.’s Commentary: Why the Republicans Want to Kill GM

Remember the original bailout package? Yes, that one was some years ago for some hedge fund or funds. The Republicans were all for that one. Several billions. Then there was the bailout/buyout package for Bear Stearns. Billions more. Lehman Bros. wasn’t so lucky (but then again it’s primarily Goldman Sachs folks who populate this Treasury Dept., not Lehman folks). Then came the broader financial sector $700 billion bailout, the first draft of which was essentially written on the back of a paper napkin. (OK, that’s an exaggeration. It was actually two-and-a-half typed pages long.) That package eventually got into a very long bill. It was eventually passed to help the investment banking sector recover from its excesses of greed in the process of securitizing mortgage loans.

The process was enabled, courtesy of McCain’s Treasury Secretary-designate Phil Gramm and the repeal of the New Deal Era Glass-Steagal Act. It had separated investment and commercial banking to forestall exactly the kind of financial meltdown that has occurred over the past six months, courtesy of investment banks not being required to have the reserves to back up mortgage loans at anywhere near the level commercial banks are still required to hold. And then there is AIG, running through government funds at a great rate, currently around $150 billion. Boy those resort/spa costs are high, aren’t they? No problem there for the Republicans.

And so comes along the U.S. auto industry, especially General Motors. As a result of really bad management, focusing on immediate profitability and not caring much about the long run until very recently, it’s in a very bad way, with both GM and Chrysler facing possible bankruptcy without Federal government assistance. AIG, an insurance company, mind you, that made some very bad decisions on what to insure, gets $150 billion. The U.S. auto industry, which directly and indirectly employs an estimated 3 million people wants an extra (and paltry) $25 billion beyond the loan it is already getting to help it retool for fuel-efficient cars, wants $25 billion more to help it get to the time when it can start producing modern cars in significant numbers. And all of a sudden the Republicans are saying no. So why, you might ask?

Part of the answer does lie in the standard reasons given. Many U.S. automaker workers live in Ohio, Indiana, and Michigan and those states seem to be gone from the red group to the blue for quite some time to come, the racist messages that the Republicans used to win over those “Reagan Democrats” for the last 30 years to the contrary notwithstanding. That may be true in part, but there are U.S. automaker plants in other parts of the country, and certainly the suppliers and especially the dealers are all over the country. So that one doesn’t hold much water.

The Republicans’ own answer is, well if you bail out one industry, how do you pick and choose among the others that might/will start lining up. So let’s just let the auto industry go. Anyway, the free market should just be allowed to work, and the companies, well actually just Chrysler and GM, apparently, should just be allowed to go bankrupt and they will come out of it just fine. Well, they picked and chose among the financial sector companies, so that one doesn’t hold much water either.

CONGRESIONAL RESEARCH SERVICE: THE GLOBAL DIMENSIONS OF CRISIS

INVESTMENT NEWS: CITIGROUP: GOING DOWN?

Citigroup Inc.’s stock price nose-dived 23% yesterday in the steepest percentage decline ever for the Wall Street giant, which has lost a third of its market value in the past three days.

The New York-based bank’s dismal performance yesterday came after it announced that it will buy the remaining $17.4 billion in assets held by its structured investment vehicles, which were casualities of the global credit crunch

Despite the negative state of Citigroup, which is coming off four straight quarterly losses (InvestmentNews, Oct. 16), Saudi Arabian Prince Alwaleed bin Talal expressed confidence in the bank today by announcing plans to increase his stake in the company from less than 4% to 5%.

NAKED CAPITALISM ON CITI:

“Citigroup’s stock price fell another 26% today to $4.71, bringing the week’s decline to 50%. The Wall Street Journal reports that the sudden decay is driving management to consider a radical restructuring of the company or an outright sale, moves that were deemed by management to be off the table as of a mere week ago.

There are apparently rumors circulating that Citi is on the verge of bankruptcy.

Moreover, as AIG, which unlike Citi, has lot of desirable assets, found that there were no buyers. Financial institutions are too capital starved to be sticking their necks out now, and private equity firms cannot meet their target returns without leverage, which they cannot get right now. And who pray tell would buy the entire bank? Citi is so large that any acquirer runs the risk of at least a partial reverse takeover. And do not say JP Morgan. That bank is already too large to fail, and merging with Citi would greatly increase systemic risk in the long term.

The Journal also notes that Citi contends that evil shorts are behind the fall in the stock. It’s blindingly obvious that the latest deterioration in financial stocks was kicked off by Henry Paulson’s statement last week that the TARP would in fact not be used to buy troubled assets, which in turn led to a plunge in mortgage-related instruments.

The salient feature of the current financial crisis is that it was not caused by some external shock like OPEC raising the price of oil or a particular country or financial institution defaulting. The crisis was generated by the financial system itself. This fact-that the defect was inherent in the system -contradicts the prevailing theory, which holds that financial markets tend toward equilibrium and that deviations from the equilibrium either occur in a random manner or are caused by some sudden external event to which markets have difficulty adjusting. The severity and amplitude of the crisis provides convincing evidence that there is something fundamentally wrong with this prevailing theory and with the approach to market regulation that has gone with it. To understand what has happened, and what should be done to avoid such a catastrophic crisis in the future, will require a new way of thinking about how markets work.

Comment on this post…

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Media Policy Now Part Of The Political Debate; Waxman Beats Dingell

DIGELL OUT, WAXMAN IN

The Democratic Caucus voted Thursday for California Rep. Henry
Waxman to replace Michigan Rep. John Dingell as chairman of the House Energy & Commerce Committee, which oversees the FCC, the DTV transition and other communications issues.

IWANTMEDIA.COM: Media Stocks Hit New Lows in Market Meltdown
Hollywood Reporter
Wednesday’s Dow slide pushed the shares of News Corp., Viacom, CBS and Sony to 52-week lows, and Disney and Time Warner closed near their lows for the year. With just over a month of trading to go in 2008, media biggies have lost tens of billions of dollars in market value.

DEBATING COMMUNICATIONS POLICY

Right wing sees plot by Obama to Squelch their talk radio:

Get ready for an unprecedented government assault upon the First Amendment. President Obama will be at the heart of it. using his version of the “Fairness Doctrine”.

In 1949, the Federal Communications Commission created the “Fairness Doctrine,” which mandated that federally-licensed radio and television stations “provide a reasonable opportunity for the presentation of contrasting viewpoints” on “vitally important controversial issues.” Rather than be deluged with demands for air time by aggrieved listeners, the broadcasters generally opted not to cover controversial issues, thereby leaving the public less informed.

In 1987, President Reagan’s FCC jettisoned the Fairness Doctrine, and conservative talk radio grew like topsy, unencumbered by the logistical nightmare of determining what is “controversial” and what is “fair.” Rush Limbaugh’s meteoric, syndicated rise is directly attributable to this repeal, as radio stations were freed to air what listeners wanted to hear without airing what few wanted to hear. If you think that’s unfair, check out how Air America is doing.

Limbaugh even today correctly says, “Don’t me ask for equal time; I am equal time. I am the rebuttal to the liberal, mainstream, drive-by media.”

With the Democrats now set to control the Presidency and both houses of Congress, Speaker Pelosi and Majority Leader Reid say they want to bring back the Fairness Doctrine to stifle conservative talk radio’s criticism of the Democrats.

Barack Obama, however, in June 2008, , stated that he opposes bringing back the Fairness Doctrine, through his Press Secretary Michael Ortiz: “He considers this debate to be a distraction from the conversation we should be having about opening up the airwaves and modern communications to as many diverse viewpoints as possible.” [emphasis added]

Obama knows that exhuming the Fairness Doctrine would be a frontal assault upon the First Amendment that would evoke a Boston Tea Party-like response from listeners of Limbaugh, Hannity, Ingraham, Beck, and other conservative talk hosts who would be dropped rapidly from many if not all stations. Glenn Beck has warned that if the Fairness Doctrine comes back, he’ll be off the air.

Obama is way smarter than that. What he has in mind is a much more indirect way to accomplish the demise of conservative talk – America’s last town hall. What he has in mind is an indirect and far more means to accomplish the demise of conservative talk – America’s last town hall. The analogy is to the proverbial frog in the pot of water. Put him into boiling water, and out he’ll hop. Instant Boston Tea Party.

SPJ ASKS OBAMA TO PASS SHIELD LAW

SPJ Urges President-elect Obama to continue support for media shield law

INDIANAPOLIS ? The Society of Professional Journalists, the nation’s most broad-based journalism-advocacy organization, encourages President-elect Barack Obama to make good on a campaign promise to support a bill that would protect journalists and their confidential sources.

The Free Flow of Information Act, informally known as the Federal Shield Law, would protect journalists who choose not to reveal their confidential sources, even when compelled by court action. A notable exception is when such information compromises national security. While campaigning for the Democratic presidential nomination in April, Obama said during the annual meeting of the Associated Press that he supported the proposed legislation. He became a cosponsor of S. 2035, the bill’s number in the Senate, on April 14, 2008. Links to several news articles that highlight Obama’s support are included at the end of this release.

“We call on the President-elect to make good on his campaign comments that he will continue to support the passage of a federal shield law,” SPJ President Dave Aeikens said. “This is a critical piece of legislation to continue to assure the flow of information.”

The legislation passed in the House of Representatives by an overwhelming bipartisan margin but it stalled in the Senate in late July when it failed to receive the 60 votes required to end debate and force a final vote. Most recently, the bill could have been voted upon during the current “lame duck” session of Congress<

OVERLOAD!
Journalism’s battle for relevance in an age of too much information
By Bree Nordenson

REUTERS: FEWER MEDIA RESTRICTIONS IN CHINA

Chinese media’s increased reporting of protests over land, labour and investment issues reveals an attempt by the government to manage the impact of bad news by acknowledging it, sources said on Thursday.

Propaganda authorities have issued a writ authorising news organisations to report on unrest, rather than allow rumours to take hold among Chinese worried about the impact of the global financial crisis on the mainland’s economy.

Strikes by taxi drivers and protests by newly laid-off workers have been reported regularly, as have riots in northwestern Gansu province this week and a mass petition in Beijing.
“The Chinese government has started to loosen its control on the negative information,” an academic source close to propaganda authorities told Reuters.

“They are trying to control the news by publicising the news,” said the source, who declined to be named.

The shift, if continued, would be a bold move for China, which only legalised the reporting of the death toll from natural disasters in 2005.

PAMELA WRITES RE CHENEY INDICTMENT

Hello,

I feel strongly that this story has merit. Not a word seems to be mentioned about it on network news. I was told about it by a judge friend of mine who practices in Texas when the story first came to light. She told me, “ you won’t see this in the news anytime soon!” She was right! THAT is a crime! As US citizens, we deserve to be informed, especially when our VP has been officially indicted for crimes having to do with prisons, the care and abuses of prisoners in our federal penal system and profiting from those prisons!! This investigation has been going on for a very LONG time!

Please, YOU take the time to be informed citizens. Pay attention online to what transpires tomorrow, Friday, at 10:30 AM CST, in the Willacy County Courthouse, South Texas! If they bury this case, our nation suffers, we suffer as her citizens.

FIND OUT ABOUT THE SURVIVORS CORPS FOR RETURNING VETERANS

THANKS TO THE NATIONAL ARTS CLUB

For hosting a book party last night for my PLUNDER. We had very little time to organize it but somehow about 80 people showed. Sorry if we didn’t reach everyone, but it was quite interesting because it seems as if everyone is not being impacted by the crisis. Several people volunteered to help me get the book out there.

Fingers crossed.

PLUNDER REVIEW BY JOHN MANHOLD

This book examines, in minute detail, the multitudinous factors that have led to the chaotic meltdown of the financial markets of the world. It presents a panoramic picture of how the unbridled greed of brokers, bankers, Real Estate operators, credit card companies and the government itself, with its ineffectual committees, and/or inattention, have led the world to the brink of disaster. There is not an area that is not touched upon, from the inefficient planning and regulation of building in areas of California that long have been known to be prone to raging fires, to dissection of the causes of the sub-prime mortgage schemes and the demise of Bear Sterns, AIG and other financial giants. Schechter examines the acts of greed and malfeasance of these financial service sectors and of the men who ran them.

He explores the marginally legal, but highly unethical, ploys used by some to plunder the unsuspecting public, as well as the outright fraud and financial deceit employed by others to place millions of people in positions from which, for many, recovery is totally impossible.

This book, with its revelations of incident upon incident of unrestrained and unregulated greed and wrongdoing, actually reads more like a novel that would be most enjoyable, if it were not for the startling reality of what is happening to our world. Danny Schechter’s Plunder is a book that everyone should read, and hope that the elected representatives of our country, and of the world, will put away their petty politics, their personal agendas and their subliminal, if not overt, greed, to collectively find a way out of this financial morass that has been brought about by these very acts.If they cannot find such a path, life, as we know it and have lived it, will no longer exist.

I think he likes it.

Have a good weekend. Comments to dissector@mediachannel.org

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