Author Topic: Financial fuckery thread  (Read 64033 times)

Cain

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Financial fuckery thread
« on: March 12, 2009, 09:14:45 am »
To stop me from making new ones, since at this rate I'll be making three new threads a day:

http://www.iht.com/articles/2009/03/11/business/small.php

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Small businesses in Europe are failing for want of sums that, in terms of the huge stimulus and bailout packages now being offered by governments around the world, amount to small change.

Suzanne and Marwan Hemchaoui in the British market town of Newbury have a typical story. Their French-style bistro, Le Petit Square, did a good business all through the year-end holidays and through Valentine’s Day in mid-February.

But their bank, where they were clients of 20 years’ standing, canceled an overdraft facility of £20,000, or $27,480, for the bistro and another restaurant back in June — money that the two establishments need now to even out cash flow.

So Le Petit Square is now up for sale.

‘‘They said with a recession looming we were a big risk and just withdrew it,’’ Suzanne Hemchaoui said. ‘‘It’s disheartening that we were with the same bank for so long and that they were so cutthroat with us.’’

Small businesses in Britain employ around 22.7 million people — well over half of the private sector work force — and annually generate some £2.8 trillion in revenue, according to the latest data supplied by the British Department for Business Enterprise & Regulatory Reform.

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In January, Britain introduced plans for its taxpayers to guarantee up to £21 billion of bank lending for small businesses to help firms put in danger by dwindling bank lending.

However, these promised lines of credit are not making their way through the system, according to a survey by the Federation of Small Businesses. Only 8 percent of small businesses said banks were making the loans available to them.


http://www.reuters.com/article/ousiv/idUSTRE52966Z20090310

Quote
NEW YORK (Reuters) - Private equity company Blackstone Group LP CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world's wealth has been destroyed by the global credit crisis.

"Between 40 and 45 percent of the world's wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime."
« Last Edit: March 25, 2010, 08:23:39 pm by Cain »
"The thoughts of all men arise from the darkness. If you are the movement of your soul, and the cause of that movement precedes you, then how could you ever call your thoughts your own? How could you be anything other than a slave to the darkness that comes before? Only the Logos allows one to mitigate that slavery. Only knowing the sources of thought and action allows us to own our thoughts and our actions, to throw off the yoke of circumstance."
- R. Scott Bakker, The Darkness That Comes Before

Elder Iptuous

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Re: UNLIMITED financial fuckery thread
« Reply #1 on: March 12, 2009, 01:00:27 pm »
Ooh! I can sink my teeth into this thread....  :)

Quote
NEW YORK (Reuters) - Private equity company Blackstone Group LP CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world's wealth has been destroyed by the global credit crisis.
"Between 40 and 45 percent of the world's wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime."

So this would be highly deflationary, but if it's just credit, rather than cash, and the only way to get the wheel going again is 'quantitative easing' as they are labeling it in your neck of the woods, don't you think we will be looking at hyperinflation PDQ?

Cain

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Re: UNLIMITED financial fuckery thread
« Reply #2 on: March 12, 2009, 02:27:22 pm »
That's the worry. 

So far, Gilts (British government bonds) have risen in price since the start of the scheme, which suggests it is working...for the moment.  However, that is having its own knock-on effect.  More buyers means lower yields...and pensions are linked to those yields as well, so it could be the case that OAPs will start to suffer very soon.
"The thoughts of all men arise from the darkness. If you are the movement of your soul, and the cause of that movement precedes you, then how could you ever call your thoughts your own? How could you be anything other than a slave to the darkness that comes before? Only the Logos allows one to mitigate that slavery. Only knowing the sources of thought and action allows us to own our thoughts and our actions, to throw off the yoke of circumstance."
- R. Scott Bakker, The Darkness That Comes Before

Elder Iptuous

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Re: UNLIMITED financial fuckery thread
« Reply #3 on: March 12, 2009, 02:46:13 pm »
That's the worry. 

So far, Gilts (British government bonds) have risen in price since the start of the scheme, which suggests it is working...for the moment.  However, that is having its own knock-on effect.  More buyers means lower yields...and pensions are linked to those yields as well, so it could be the case that OAPs will start to suffer very soon.

If/When the 'bond bubble' pops, I've heard it's 'look out below'.  People are piling into something that has negative real returns, and are being created in massive quantities to fund the bailouts?  I think they are going to eventually realize that the 'full faith and credit' of crumbling empires is not really solid ground....
harsh times ahead.

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Re: UNLIMITED financial fuckery thread
« Reply #4 on: March 12, 2009, 02:52:51 pm »
So are there any indications that India/China will be going in as much of a downward spiral?

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Re: UNLIMITED financial fuckery thread
« Reply #5 on: March 12, 2009, 03:01:32 pm »
So are there any indications that India/China will be going in as much of a downward spiral?

Sure.
http://www.thestar.com/News/World/article/597427
China's got probrems, too.

ETA: if our TBills lose too much appeal, China might feel forced to dump them, drowning us both as, the prices burn up faster than dryer lint. right now they're still buying hand over fist to keep them afloat, as i understand it
« Last Edit: March 12, 2009, 03:03:57 pm by Iptuous »

Cain

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Re: UNLIMITED financial fuckery thread
« Reply #6 on: March 13, 2009, 06:52:41 pm »
India has generally been tough on its own financial centres, when hints of crime and corruption and mismanagement have arrived, and has cut out lots of the financial dead wood.  Still, everyone has got hit.

China's "stimulus" seems to be funded by dodgy loans based on even dodgier stocks.  So expect that house of cards to come crashing down.  Although, China's imports have dropped even lower than their exports, so its not all terrible.

Russia is leaning on the Orthodox Church, it is so worried about social unrest.  Opiate of the people and all that.

For today's "you're fucked" links:

China's hooked on a drug called "export-led growth" and needs its supplier to make sure it has its shit together http://www.bloomberg.com/apps/news?pid=20601087&sid=a6KTPb8k2koY&refer=home

Banks and companies did NOT pay FDIC premiums, which is why the FDIC is having major problems right now.  If you or I missed on paying our insurance premiums, we sure as fuck wouldn't get pay outs now, would we?  http://www.boston.com/news/nation/washington/articles/2009/03/11/now_needy_fdic_collected_little_in_premiums/?page=full?ref=fp1
"The thoughts of all men arise from the darkness. If you are the movement of your soul, and the cause of that movement precedes you, then how could you ever call your thoughts your own? How could you be anything other than a slave to the darkness that comes before? Only the Logos allows one to mitigate that slavery. Only knowing the sources of thought and action allows us to own our thoughts and our actions, to throw off the yoke of circumstance."
- R. Scott Bakker, The Darkness That Comes Before

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Re: UNLIMITED financial fuckery thread
« Reply #7 on: March 13, 2009, 07:02:25 pm »
"An important lesson going forward is we need to be building up these funds in good times so you can draw down upon them in bad times."







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Cain

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Re: UNLIMITED financial fuckery thread
« Reply #8 on: March 16, 2009, 10:00:31 am »
Wait, wha?

http://www.guardian.co.uk/politics/2009/mar/16/conservatives-criticise-job-centre-closures

Quote
The government is under fire from the Tories and trade unions for continuing to close jobcentres while unemployment is soaring and expected to top two million when figures are released this week.

Three jobcentres in the south-east, in Brixton Hill, London, Orpington, Kent, and Feltham, Middlesex, are being closed, despite the work and pensions secretary James Purnell telling the Commons before Christmas he had introduced a moratorium to stop the programme which has seen 503 disappear since 2002.

John Horam, Conservative MP for Orpington, said yesterday: "Already the centre is not taking new claimants, who are having to go to Bromley, where they face hours having to queue before they can be seen. I shall be raising this with the secretary of state."

Purnell was attacked by both Theresa May, his Tory shadow, and Mark Serwotka, general secretary of the Public and Commercial Services union, for pushing through earlier closures in areas where unemployment has since risen between 100 and 160%.

Serwotka said: "In some of these rural areas, people are having to spend all day trying to sign on as it involves a round-trip of 20 miles and some claimants have not got their own cars so have to rely on poor bus services. We need to be reopening more jobcentres, not closing them."
"The thoughts of all men arise from the darkness. If you are the movement of your soul, and the cause of that movement precedes you, then how could you ever call your thoughts your own? How could you be anything other than a slave to the darkness that comes before? Only the Logos allows one to mitigate that slavery. Only knowing the sources of thought and action allows us to own our thoughts and our actions, to throw off the yoke of circumstance."
- R. Scott Bakker, The Darkness That Comes Before

Cain

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Re: UNLIMITED financial fuckery thread
« Reply #9 on: March 16, 2009, 10:37:56 am »
Daily Telegraph fail:

http://www.telegraph.co.uk/comment/personal-view/4996305/We-need-more-risk-and-less-regulation-of-the-financial-sector.html

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We need more risk and less regulation of the financial sector

Um, OK?

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Capitalism is based on innovation.

Adam Smith rang.  He said "did you even READ my fucking book?"

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But innovations are not always well understood when they first turn up. People buy too many of them and pay too much for them.

I just want to quote this as evidence the market does not always work perfectly.  This will become important in a minute.

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That is what happened in this crisis. People paid too much for financial products that they didn't understand.

And sold them for too much.  And floated an entire economy on the basis they would keep selling forever and would never drop in price.  Oh, and there was something about lying to investors and firing people who disagreed with that assessment, using things like evidence and projected trends.  So not so much a naive mistake and more like carefully calculated get rich schemes.

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Left to function alone, the market would have punished those that had invested in the companies that lost.

And everyone else, for good measure.  The market approves of collateral damage.

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Companies going bust and investors losing their money are not a "failure of capitalism".

Not even if they are making a yearly profit, yet go out of business due to a lack of credit during more quiet seasons?  Because that's what is happening.

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It is capitalism; and if you don't like it, then you don't like the system.

If you love Communism so much, why don't you live there?

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There was no need for the British government to bail out the banks last autumn.

Apart from that whole "turning into the next Somalia" thing, and everyone knows Somalia is a healthy and functioning market economy, with reported growth in such vital areas as piracy, terrorism, warlordism and mercenary work.

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The wrong policy response – the one adopted – was to reward investor error.

Yeah, those silly investors, believing banking CEOs.  They should have beat them until they told them the truth about the risks they were taking!  Jack Bauer would do no less.

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It saved the capitalists made rich at the expense of private capitalism.

If you hate that so much, why don't you move to Cuba or something, Che?

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Calls for heavy-handed regulation to restrict the actions of banks are the flip-side of acting so as to undermine the market's means to punish poor decision-making.

Yeah, not allowing financially risky decisions with the threat of jail is totally not a punishment when compared to what The Market will do.

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This means there will be less risk-taking in the economy as a whole – less innovation and experimentation, less diversity and dynamism.

I cite the Open Source Movement as proof people cannot innovate without a profit motive.

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We will have an economy that grows more slowly and a society that is less tolerant, offering fewer opportunities for those who have no money but good ideas to get ahead.

Whereas a worldwide economic depression every couple of years won't make people more intolerant or offer fewer opportunities at all.

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The financial sector is unlikely to be able to return to sustained profitability without significant restructuring of a much more radical nature than the current favourites of creating "boring banks" and "bad banks". Governments are now the major shareholders in these institutions, and they should insist upon their restructuring.

Typical commie, looking to the government to solve all your problems.

Quote
Imagine if, instead of all that, we had used £100 billion or £200 billion for tax cuts to stimulate the real economy.

Yeah, but imagine if we had used £300 billion to stimulate the Really Real Economy (for Realness).  Or £400 billion to titillate the Somewhat Less Empheral Economy.  Or, and I will admit we are pushing the boat out here, £500 billion for The One True Objective Economy That No Rational Person Can Deny?  What then, eh?  That's the problem with you Commies, your lack of innovative thinking.

Ye gods, that was the biggest pile of fail I have ever read.
"The thoughts of all men arise from the darkness. If you are the movement of your soul, and the cause of that movement precedes you, then how could you ever call your thoughts your own? How could you be anything other than a slave to the darkness that comes before? Only the Logos allows one to mitigate that slavery. Only knowing the sources of thought and action allows us to own our thoughts and our actions, to throw off the yoke of circumstance."
- R. Scott Bakker, The Darkness That Comes Before

Cain

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Re: UNLIMITED financial fuckery thread
« Reply #10 on: March 17, 2009, 01:21:01 pm »
http://online.wsj.com/article/SB123724826580949187.html?mod=djemalertNEWS

Quote
In response to expected bonus restrictions, officials at Citigroup Inc., Morgan Stanley and other financial institutions that got government aid are discussing increasing base salaries for some executives and other top-producing employees, people familiar with the situation said.....

The discussions are at an early stage, partly because the government hasn't yet issued specific rules on the bonus payments that will be allowed at companies that received TARP aid. The talks also are proceeding cautiously because of the political volatility of pay, bonuses and perks on Wall Street, including outrage over American International Group Inc.'s promise to pay $450 million in bonuses to employees in the insurer's financial-products unit.

[...]

As banks and securities firms wrestle with growing regulation of compensation practices, substantially increasing the base salaries of top employees could become a popular response, some industry officials say. A larger salary would reduce the relative importance of bonuses but also help financial companies increase those payments, since they usually are calculated as a percentage of total annual compensation.

IOW bonuses are entitlements, not rewards for a properly done job.



Also, bonus Buffet financial analysis

http://www.cnbc.com/id/29552618/

Gets interesting at around 6:05
"The thoughts of all men arise from the darkness. If you are the movement of your soul, and the cause of that movement precedes you, then how could you ever call your thoughts your own? How could you be anything other than a slave to the darkness that comes before? Only the Logos allows one to mitigate that slavery. Only knowing the sources of thought and action allows us to own our thoughts and our actions, to throw off the yoke of circumstance."
- R. Scott Bakker, The Darkness That Comes Before

Cain

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Re: UNLIMITED financial fuckery thread
« Reply #11 on: March 17, 2009, 01:30:42 pm »
Purnell has a plan to bring in a "workfare" system like the one in the US, which essentially means making the unemployed into a pool of cheap, serviceable labour for the corporate giants.  In his white paper on the topic, he suggested the government create partnerships with industry giants who would pay such workers (well) below minumum wage, and also get subsidies from the government for taking them off their hands.

My paranoid thinking is that by hyping the fear of an uprising of the unemployed over the summer, and the violence that will no doubt ensue, Parliament will use the emergency to push through such laws to get the poor "off the streets" and other such meaningless slogans which will expand government power and enrich the companies many MPs lobby for in their spare time.  If that is the case, shutting down job centres is necessary, to achieve the critical mass of unemployed people needed to cause such protests and violence.
"The thoughts of all men arise from the darkness. If you are the movement of your soul, and the cause of that movement precedes you, then how could you ever call your thoughts your own? How could you be anything other than a slave to the darkness that comes before? Only the Logos allows one to mitigate that slavery. Only knowing the sources of thought and action allows us to own our thoughts and our actions, to throw off the yoke of circumstance."
- R. Scott Bakker, The Darkness That Comes Before

Cain

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Re: UNLIMITED financial fuckery thread
« Reply #12 on: March 17, 2009, 01:44:27 pm »
More doom:

http://www.guardian.co.uk/business/2009/mar/15/job-centres-unemployment-vacancies

Quote
Startling new figures have revealed that on average there are 10 jobseekers for every vacancy advertised in the UK. In one area of the south-east, 60 workers are available for each job.

Follow the money:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPzu3EtQ99Jk&refer=home

Quote
“I was happy to see that AIG finally handed over the counterparty information we’ve been requesting for months,” said Representative Elijah Cummings, a Maryland Democrat on the House Oversight Committee. “However, I am deeply concerned that Goldman Sachs received so much money from AIG considering the relationships between the two companies. We will certainly be investigating this further to ensure that this is merely a coincidence.”

Gangmasters are back in fashion:

http://www.guardian.co.uk/business/2009/mar/15/gangmasters-asylum-seekers

Quote
n Southall, where most of the workers are of Indian, Pakistani or East African origin, some claimed they had fallen victim to sharp practices at the hands of gangmasters, but had no recourse because they were working illegally.

Balbir, a tall, turban-wearing Sikh with a grey beard, has sought work from this car park for the past four months after losing his meat-packing job. Last month, he was driven to a butcher in Harrow where he was told he would be given a day's "trial" as a meat packer.

"I worked for nine hours without a break. At the end of it, they told me I had not got the job and refused to pay me," he said.

Another Sikh regular, who admitted to working illegally, said that his wages of £4.50 an hour were docked because he did not have his own tools for working on a building site in Ealing.

"I was told that I had to hire my tools for £1 an hour. I couldn't argue. There was no point," he said.

Some, however, are only too pleased to have an opportunity to work, despite the poor wages and conditions. Sukki, 42, said that last week he was taken in a white van to a factory unit in Southall where he butters bread for sandwiches which are sent to shops and petrol stations up and down the country.

He worked an 11-hour shift for six days a week and earned just £2 an hour, little more than a third of the national minimum wage of £5.73.
"The thoughts of all men arise from the darkness. If you are the movement of your soul, and the cause of that movement precedes you, then how could you ever call your thoughts your own? How could you be anything other than a slave to the darkness that comes before? Only the Logos allows one to mitigate that slavery. Only knowing the sources of thought and action allows us to own our thoughts and our actions, to throw off the yoke of circumstance."
- R. Scott Bakker, The Darkness That Comes Before

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Re: UNLIMITED financial fuckery thread
« Reply #14 on: March 17, 2009, 04:21:34 pm »