Saturday, September 27, 2008
Part of Maine coast under tropical storm warning
ASTPORT, Maine - A rare tropical storm warning and hurricane watch were posted for parts of the Maine coast on Saturday as Hurricane Kyle roared north toward the region with a threat of conditions similar to one of New England's nor'easter storms.
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"Hurricane season isn't over, " said Maine Emergency Management Agency director Rob McAleer. "It's been a very active season."
It was Maine's first hurricane watch in 17 years, the National Weather Service said. Elsewhere in New England, a hurricane warning was posted for Nantucket Island off the coast of Massachusetts in September 1996, according to the weather service office in Taunton, Mass.
Two to 4 inches of rain had already fallen along some coastal areas by midday Saturday, and the storm was expected to deliver an additional 2 to 4 inches, said Eric Schwibs of the weather service in Gray.
At 5 p.m. EDT, Kyle was centered about 315 miles west-northwest of Bermuda and 485 miles south of Nantucket, Mass., the National Hurricane Center said in Miami.
The storm had top sustained wind near 75 mph and became a Category 1 hurricane Saturday afternoon. It was moving north over the open Atlantic at 23 mph.
Kyle's center was forecast to be near eastern New England or the Canadian Maritime provinces late Sunday, the hurricane center said.
The hurricane center posted a hurricane watch from Stonington, at roughly the center of the Maine coast, to Eastport, on the border with New Brunswick, Canada. A tropical storm warning extended from Port Clyde, about 50 miles northeast of Portland, to Eastport. A tropical storm watch extended from Port Clyde to Cape Elizabeth, an area that includes Portland, Maine's largest city.
A hurricane watch means hurricane conditions, with winds of at least 74 mph, are possible within 36 hours. A tropical storm warning means conditions for that type of storm, with winds of 39 to 73 mph, are expected within the next 24 hours. A tropical storm watch means those conditions are possible within 36 hours.
Kyle could make landfall near Eastport, possibly late Sunday, the hurricane center said.
That would put the storm's strongest wind in New Brunswick, rather than in Maine, which would get conditions more akin to "a garden variety nor'easter," Schwibs said.
The government of Canada issued a hurricane watch and a tropical storm warning for southwestern Nova Scotia, and a tropical storm watch remained in effect for the rest of Nova Scotia and southwestern New Brunswick.
The weather service also issued flood watches for the southern two-thirds of New Hampshire and southern Maine through Sunday evening.
McAleer said the storm's biggest threat in Maine would be the potential for high waves and small stream flooding.
"We urge everyone to pay close attention to weather warnings, and stay away from any flooded roadways, or fast-running streams," McAleer said.
The Coast Guard prepared crews and equipment for the storm and urged boat owners to secure their vessels in anticipation of high wind and seas that could run 10 to 20 feet high off shore.
Eastern Maine's power company, Bangor Hydro-Electric, said it prepared for potential outages and planned to have additional crews on duty.
Thursday, September 25, 2008
Bailout can't hide it; the country is busted
ven leading Republicans in Congress, including presidential nominee John McCain, recoiled from Treasury Secretary Henry M. Paulson's proposal to take absolute power over $700 billion to be borrowed by the federal government and used to purchase every sort of bad debt without ever having to answer for it -- not to the courts, not to regulatory agencies, and only occasionally and incidentally to Congress itself.
The bad-debt bailout would be the biggest government patronage program in history and would amount to declaring martial law over the U.S. financial system and economy. Even if such martial law is necessary, its implementation should be put in democratic hands -- a non-partisan agency with full transparency, statutory standards for its purchases, and close accountability to Congress.
The bad-debt bailout would be the biggest government patronage program in history and would amount to declaring martial law over the U.S. financial system and economy. Even if such martial law is necessary, its implementation should be put in democratic hands -- a non-partisan agency with full transparency, statutory standards for its purchases, and close accountability to Congress.
All the same, even if it can work -- that is, prop up insolvent financial institutions -- the Treasury's proposal is still a proclamation of the collapse of the whole U.S. financial system. Even if some financial institutions are saved, the collapse will manifest itself in other ways, probably ways more damaging to the public. For who cares if Goldman Sachs and Morgan Stanley endure if the issuance of $700 billion more in government bonds drives interest rates
way up, diverts credit from the private economy, devalues the already sinking dollar, and sends commodity prices soaring again?
In that case the financial class will have won another battle in its long war against the producing class. It will be again as was said about the maneuvers of the Second Bank of the United States two centuries ago: "The bank was saved; only the people were ruined."
Injecting throughout the world financial system their bogus and unregulated financial instruments, like collateralized debt obligations and credit-default swaps, the big New York financial houses have taken the world economy hostage. The president and Congress should strive to save the hostages, not the kidnappers.
But the president and Congress have participated eagerly with the kidnappers in the total corruption of the financial system.
They have staffed the regulatory agencies largely from Wall Street and then diminished financial regulation.
They have let the financial houses finance presidential and congressional campaigns.
They have watched haplessly as accounting firms and credit-rating agencies engaged in conflict of interest and failed to do their jobs over and over again even as corporate scandal followed corporate scandal.
They have waged mistaken imperial war not with taxes but with huge amounts borrowed from abroad, making the country hostage to foreign nations, including some with hostile interests.
They have approved the government's falsification of inflation data and its surreptitious suppression of the price of gold so that interest rates could be set below the inflation rate, the government and everyone else could borrow more at lower interest, and the public would not become alarmed by monetary debasement.
Now the U.S. government is conjuring into existence via a few computer keystrokes fantastic, virtually inconceivable amounts of money. Unreal as these amounts are, they will be claims on the real goods and services of the country, and, if the rest of the world wants to keep playing along, which is doubtful, claims on the real goods and services of the rest of the world as well.
The purpose of all this will be to save the people who happen to be in charge of the payments system and to save the propertied class generally. But people without many assets, people who don't earn enough to own housing, people who could gain from lower housing prices and lower prices of everything else, are not even in the government's equation.
The country is simply busted. Its financial obligations are unpayable, its asset prices are illusions, and the great undertaking in Washington and New York is to preserve those illusions rather than face reality. If the price of preserving those illusions is $700 billion -- and of course it is more likely to run into the trillions -- could it really be more expensive to dispense with the illusions now? After all, instead of rescuing financial institutions that disregarded risk, the government just as easily could keep the country going by sending checks to everyone every month -- as it already sends Social Security checks to retirees.
But as long as the government keeps paying ransom, the financial class will keep taking the country hostage.
http://www.journalinquirer.com/articles/2008/09/25/chris_powell/doc48db9d8625518811197071.txt
way up, diverts credit from the private economy, devalues the already sinking dollar, and sends commodity prices soaring again?
Injecting throughout the world financial system their bogus and unregulated financial instruments, like collateralized debt obligations and credit-default swaps, the big New York financial houses have taken the world economy hostage. The president and Congress should strive to save the hostages, not the kidnappers.
But the president and Congress have participated eagerly with the kidnappers in the total corruption of the financial system.
They have staffed the regulatory agencies largely from Wall Street and then diminished financial regulation.
They have let the financial houses finance presidential and congressional campaigns.
They have watched haplessly as accounting firms and credit-rating agencies engaged in conflict of interest and failed to do their jobs over and over again even as corporate scandal followed corporate scandal.
They have waged mistaken imperial war not with taxes but with huge amounts borrowed from abroad, making the country hostage to foreign nations, including some with hostile interests.
They have approved the government's falsification of inflation data and its surreptitious suppression of the price of gold so that interest rates could be set below the inflation rate, the government and everyone else could borrow more at lower interest, and the public would not become alarmed by monetary debasement.
Now the U.S. government is conjuring into existence via a few computer keystrokes fantastic, virtually inconceivable amounts of money. Unreal as these amounts are, they will be claims on the real goods and services of the country, and, if the rest of the world wants to keep playing along, which is doubtful, claims on the real goods and services of the rest of the world as well.
The purpose of all this will be to save the people who happen to be in charge of the payments system and to save the propertied class generally. But people without many assets, people who don't earn enough to own housing, people who could gain from lower housing prices and lower prices of everything else, are not even in the government's equation.
The country is simply busted. Its financial obligations are unpayable, its asset prices are illusions, and the great undertaking in Washington and New York is to preserve those illusions rather than face reality. If the price of preserving those illusions is $700 billion -- and of course it is more likely to run into the trillions -- could it really be more expensive to dispense with the illusions now? After all, instead of rescuing financial institutions that disregarded risk, the government just as easily could keep the country going by sending checks to everyone every month -- as it already sends Social Security checks to retirees.
But as long as the government keeps paying ransom, the financial class will keep taking the country hostage.
http://www.journalinquirer.com/articles/2008/09/25/chris_powell/doc48db9d8625518811197071.txt
Thursday, September 18, 2008
Gold Skyrockets on Global Uncertainty
Free 2 Week Research Trial- Grains, Energy, Metals and more! 3-Month Treasury Yields Effectively Hit 0, Gold Soars
A massive global rally in treasuries is underway, and gold may be headed for its biggest one-day advance in history as global systemic distrust sets in.
Please see Global Financial Seizures Continue, Gold Soars for more details.
US Treasuries
Chart: Bloomberg
Interest rates can only go as low as zero. This may be as close as we get.
Gold Daily Chart
The above chart is as of 1:00 p.m. Central, and is courtesy of BarChart.
The Fed is desperately attempting to free up the system with mammoth injections of short-term repos. Only one problem: No one trusts anything but treasuries and gold.
Inquiring minds may wish to consider Treasury Bull Alive and Kicking for a discussion of which asset classes are likely to do well in a deflationary crash.
Gold stocks are soaring, including Goldcorp (GG), Newmont Mining (NEM) and
U.S. Stocks Plunge as Lending Freezes Up Following AIG Takeove
By Elizabeth Stanton and Lynn Thomasson
Sept. 17 (Bloomberg) -- U.S. stocks tumbled as bank lending seized up in the wake of the government's takeover of American International Group Inc., raising concern that more of the nation's biggest financial companies will fail.
The Standard & Poor's 500 Index lost 4.7 percent, extending its decline from an October record to 26 percent and erasing half its gain from the five-year bull market that began in 2002.
Goldman Sachs Group Inc. and Morgan Stanley, the only remaining independent brokerages on Wall Street, plunged the most ever. General Electric Co., the world's third-biggest company, fell 6.7 percent and U.S. Steel Corp. slid 11 percent. Yields on three-month Treasury bills sank to the lowest since World War II as investors sought the relative safety of government debt, and a measure of corporate borrowing costs surged above the level seen during the crash of 1987.
``It's ugly,'' said Michael Mullaney, a Boston-based money manager for Fiduciary Trust Co., which oversees $10 billion in stocks and bonds. ``It's about the worst I've seen it in 25 years. You have to have free-flowing credit to lubricate the system. That's not happening right now.''
The S&P 500 lost 57.20 points to 1,156.39, the lowest since May 2005 and nearly matching the biggest percentage drop since the September 2001 terrorist attacks. The Dow Jones Industrial Average decreased 449.36, or 4.1 percent, to 10,609.66. The Nasdaq Composite Index sank 109.05, or 4.9 percent, to 2,098.85, a two-year low. Almost 14 stocks fell for each that rose on the New York Stock Exchange.
$3.6 Trillion Erased
About $3.6 trillion of market value has been erased from global stocks this week, triggered by the largest-ever bankruptcy filing by Lehman Brothers Holdings Inc., once the fourth-largest U.S. securities firm. Russia halted stock trading for a second day and poured $44 billion into its three biggest banks in a bid to halt the worst financial crisis in a decade.
Gold and silver surged as investors turned to precious metals as a store of value. Newmont Mining Corp., the largest U.S. gold producer, rose 9.4 percent to $43.25 for the second- biggest gain in the S&P 500.
Investors paid up for protection from further losses. The Chicago Board Options Exchange Volatility Index jumped 20 percent to 36.22, the highest closing level since October 2002. The VIX measures the cost of using options as insurance against declines in the S&P 500.
`Protracted' Battle
Morgan Stanley slid $6.95, or a record 24 percent, to a 10- year low of $21.75 after Oppenheimer & Co. analyst Meredith Whitney and Merrill Lynch & Co.'s Guy Moszkowski reduced their fourth-quarter profit estimates, citing higher funding costs. The lowered forecasts come a day after Morgan Stanley's profit beat estimates.
``We believe Morgan Stanley, along with its peers, will battle a protracted period of negative operating leverage,'' Whitney wrote in a note to clients.
Goldman tumbled $18.51, or 14 percent, to $114.50, its steepest drop ever and lowest price in almost three years. Oppenheimer cut its fourth-quarter earnings estimate to $2.60 a share from $3.45.
The three-month London interbank offered rate, or Libor, rose 19 basis points to 3.06 percent, its steepest gain since 1999.
U.S. Treasury three-month bill rates dropped to as low as 0.02 percent and the so-called TED spread, the difference between what the Treasury pays to borrow for three months and the amount banks charge each other for loans, widened by 0.84 percentage point to 3.02 percent.
AIG Takeover
AIG, the largest U.S. insurer by assets, lost $1.70, or 45 percent, to $2.05 and extended its decline over the past year to 97 percent, after the government said it will receive a 79.9 percent stake in return for an $85 billion loan that analysts said will be repaid by liquidating the company.
``A disorderly failure of AIG could add to already significant levels of financial market fragility,'' according to a central bank statement yesterday.
The S&P 500 Financials Index slumped 8.9 percent as all 86 of its companies retreated.
Banks and brokerages also fell after the Reserve Primary Fund, the oldest U.S. money-market fund, became the first in 14 years to expose investors to losses after writing off $785 million of debt issued by Lehman. Investor redemptions will be delayed as long as seven days, the fund said.
``There's just a massive retrenchment in risk appetite,'' said Robert Stimpson, a money manager at Oak Associates Ltd. in Akron, Ohio, which oversees $1.1 billion. ``We've seen three cornerstones of Wall Street fall by the wayside in the last six months. Is anyone safe? It's a legitimate question.''
Naked Shorts
The Securities and Exchange Commission stiffened regulations against manipulative short-selling after the routs in AIG and Lehman. The new rules force traders to borrow shares before selling them short and make it a fraud for investors to lie to their broker about locating stock to close positions.
Homebuilders across S&P indexes slumped 7.4 percent after the government reported that housing starts dropped 6.2 percent to a 17-year low in August.
Only 21 companies in the S&P 500 gained. SanDisk Corp. surged 39 percent, the most since January 2000, to $20.92. Samsung Electronics Co. made a $5.85 billion hostile bid for the world's largest maker of memory cards used in digital cameras. SanDisk rejected the $26-a-share offer.
Evergreen Solar Inc., not in the S&P 500, rallied the most since June, jumping 19 percent to $5.21. Citigroup Inc. upgraded the maker of wafers used in solar-power panels to ``hold'' from ``sell,'' saying it is a bargain following declines due to disclosure of pacts with Lehman Brothers.
Fall From Record
The S&P 500 started the week with a 4.7 percent tumble, its steepest since the September 2001 terrorist attack, after credit losses forced Lehman to file for bankruptcy protection and Merrill to agree to be taken over by Bank of America Corp. The plunge today was only 0.01 point away from eclipsing that drop.
The S&P 500 has fallen 21 percent this year and is poised to post its first yearly retreat since 2002 after global banks racked up $516 billion in credit losses and asset writedowns stemming from the first nationwide decline in home prices since the 1930s.
The S&P 500 has lost 408.76 points since its Oct. 9 record of 1,565.15. The decline erases more than half of the 788.39- point advance between 2002 and 2007.
Financial shares in the S&P 500 have lost 38 percent as a group this year, led by the tumble in AIG, an 85 percent drop for Washington Mutual Inc. and a 78 percent retreat in National City Corp.
Earnings by companies in the index have declined from the year-earlier period for the past four quarters, and analysts forecast a 3.3 percent decline in the third quarter. As recently as a month ago, the forecast was for an increase, according to estimates compiled by Bloomberg.
The Federal Reserve kept its benchmark interest rate at 2 percent yesterday, citing risks to growth and inflation. Hours after yesterday's meeting, the central bank agreed to the AIG loan.
http://www.bloomberg.com/apps/news?pid=20601087&sid=amrQtoxTGmgU&refer=home
Tuesday, September 16, 2008
Today's Crisis: AIG
Posted Sep 16, 2008 09:56am EDT by Henry Blodget in Investing, Recession, Banking
From ClusterStock.com, Sept. 16, 2008:
The rating agencies finally downgraded AIG last night, which means the company immediately has to come up with $14.5 billion of capital it doesn't have.
The government is trying to broker an astoundingly large loan facility of $70-$75 billion from Goldman and JP Morgan to keep the firm solvent, but this seems a Hail Mary: Goldman and Morgan don't have that kind of money, either.
The consensus is that an AIG bankruptcy would be far worse for the markets than the failure of Lehman. We're skeptical -- so far Lehman's failure has been much easier on the markets than people expected -- but AIG is a hell of a lot bigger. Thus, Paulson and Bernanke have another tough decision to make. Here's hoping they hold fast.
I sat down with Portfolio's Jesse Eisinger to discuss AIG's future and today's Fed meeting.
Also this morning, former AIG CEO Hank Greenberg told CNBC it is in America's national interest that AIG survive, adding an AIG bankruptcy would take "years" to sort out.
http://finance.yahoo.com/tech-ticker/article/60509/Today%27s-Crisis-AIG?tickers=aig,xlf,leh
Lehman collapse means all bets for the financial system are now off
Lehman collapse means all bets for the financial system are now off
By Philip Aldrick, Banking Editor
Last Updated: 7:08pm BST 15/09/2008
Any bank harbouring hopes of an end to the credit crunch had a rude awakening today.
Lehman Brothers' bankruptcy has dealt the money markets another crippling blow, incapacitating them for who knows how long. Since the crunch struck last year, the markets have been in seizure. But, with the careful nursing by governments and central banks, they appeared to be on the slow road to recovery. No longer.
Fears about other banks' exposures to Lehman and renewed uncertainty as to where the crisis may strike next will freeze the wholesale markets up again. The crunch is back with a vengeance.
It's not hard to see why. Lehman's collapse into bankruptcy protection is the biggest corporate debt default in history and, in the complex interwoven world of modern banking, no one properly understands where the risks lie.
Wall Street's titans gathered on Sunday afternoon to start the process of working out their positions by sitting down with other banks and tracking the paths of these impenetrable credit structures. It will take months at the very least for them to establish their "naked" exposure.
Establishing those positions is vital. Last week, for example, David Wright, deputy head of the European Commission internal market unit, noted that regulators still didn't know the full size of global securitised product issuance.
"We have to believe the numbers, " he said. "If we can't, we can't restore confidence." Without confidence, banks will not secure wholesale market funding. As the largest user of the wholesale markets in the UK, HBOS' 30pc share price fall on the London Stock Exchange this morning appeared to reflect those concerns.
What little confidence the markets had restored in recent months has been knocked for six. According to experts, Lehman has $150bn of debt outstanding. By comparison, US telecoms group WorldCom - the largest debt default until today - had $23bn to $30bn (depending on whose estimates you use) when it went bust in 2002.
Lehman bonds and loans that were trading at 80 cents to 90 cents in the dollar last week on fears of collapse are this morning worth little more than 40 cents, according to credit market experts.
In other words, about $70bn of Lehman debt held by other institutions has been wiped out. The holders of that debt, therefore, are facing huge potential losses with untold ramifications of their own.
The scale of the potential crisis is exacerbated by the credit default swap (CDS) markets. CDS's are insurance contracts for holders of corporate debt that guarantee to pay back the loan in the event of the company's bankruptcy.
Most of these products are offered by other banks to low-risk institutions like pension funds. Sandy Chen, a banks analyst at Panmure Gordon, reckons this is "where the real stress will come from".
He estimates that the "CDS market as a whole had notional contracts worth four times greater than the underlying debts issued". By his calculations, which differ slightly to the credit analyst's above, that would make "$350bn in CDS's written on Lehman debts".
Even using a more optimistic valuation of 60 cents in the dollar for the value of the debt, he says this could cost the banks providing the insurance $140bn. By comparison, when the sub-prime crisis struck last year - tipping the markets into seizure - the initial cost was estimated at $200bn, though it has turned out to be multiples more.
Furthermore, Lehman's collapse will flood the market with assets for which there are very few buyers anyway. The banks are already having to writedown their positions on a quarterly basis, often because the valuation of these assets is declining.
With a flood of such securities now expected to deluge the market, prices will tumble further - necessitating more writedowns.
Central banks know it will be touch and go. Hence the $70bn liquidity pool provided by ten of the biggest investment banks for any one of them that needs to tap it.
Hence the decision by the US Federal Reserve to widen the set of assets eligible as collateral for Treasury loans to include all investment grade paper, and to almost double the size of these Treasury loans to $200bn.
Hence the extra £5bn of liquidity the Bank of England is providing the UK money markets.
As CDS contracts are called in and financial counterparties pull back from the money markets, the same funding crunch that did for Northern Rock and Bear Stearns will rear its head. Another even more opaque "unknown" is the "second order implication" for banks - the indirect effect as those banks badly damaged by Lehman start to reel.
As to the size of the counterparty risk - defined as other banks that have complex financial instruments held through Lehman - no analyst or credit market expert could hazard a guess as to the likely cost. Mr Chen said Lehman had $729bn of "notional derivatives contracts" that Lehman believed in May were worth $16.6bn.
Again, any losses will have to be punched into the complex, interlaced banking system to work out where the liabilities ultimately may lie.
At the very least, the collapse of Lehman is potentially as costly as the $200bn initial estimate of the US sub-prime mortgage fall out.
Given where that has left the world's banks - in terms of losses, writedowns, capital raisings and share price falls - there's every reason to be worried.
As Alan Greenspan, the former chairman of the Federal Reserve, said over the weekend: "We will see other major firms fail."
http://www.telegraph.co.uk/money/main.jhtml?MLC=/money/city_news/markets&view=DETAILS&xml=/money/2008/09/15/bcnbank115.xml&CMP=ILC-mostviewedboxMonday, September 15, 2008
Is CNN Getting
Kicked Out Of Russia?
By Yasha LevineeXiled Online
9-15-8- Putin may strip CNN of its Russian broadcasting rights after it refused to air a 30 minute exclusive interview he gave the network.
- You probably didn't know that CNN censored Putin for being just too darn sensible. Yep, it's true. About two weeks ago, Putin gave the network an exclusive 30-minute interview. And you know what happened? Nothing. It was never allowed to air. CNN doesn't know it yet, but that decision might have cost them their Russian broadcasting rights.
- On August 29, Prime Minister Vladimir Putin met with senior political correspondent Matthew Chance for a CNN exclusive interview. "This was unprecedented access to Russia's powerful prime minister, the former KGB spy now increasingly at odds with Washington," an overly dramatic voice-over introduced the segment as Chance and Putin enjoyed pre-game banter and a walk through the courtyard of Putin's palatial Sochi residence. Once seated, Chance didn't waste any time with his provocative questions:
- Matthew Chance: But it's been no secret either that for years you've been urging the West to take more seriously Russia's concerns about international issues. For instance, about NATO's expansion, about deployment of missile defense systems in eastern Europe. Wasn't this conflict a way of demonstrating that in this region, it's Russia that's the power, not NATO and certainly not theUnited States?
- Vladimir Putin: Of course not. What is more, we did not seek such conflicts and do not want them in the future.
- That this conflict has taken place -- that it broke out nevertheless -- is only due to the fact that no one had heeded our concerns.
- I think both you and your -- our -- viewers today will be interested to learn a little more about the history of relations between the peoples and ethnic groups in this regions of the world. Because people know little or nothing about it.
- If you think that this is unimportant, you may cut it from the program. Don't hesitate, I wouldn't mind.
- It was a prescient comment. Not only did CNN delete Putin's historical roundup of relations between Russia, Georgia and South Ossetia going back to the 18th century that followed, the network cut out almost everything else as well. Despite the "unprecedented access" hook, for its U.S. feed, CNN reduced the 30-minute interview into a series of sound bites that seized and ridiculed Putin's crackpot theory that the Republican party started the war to boost McCain's ratings.
- CNN's international audience, enjoying the news from hotel rooms all round the world, got to see a little more of the the footage. But most of it had to do with Russia's ridiculous "non political" decision to ban some American poultry importers from doing business with Russia because of their poor quality control standards. CNN's intentions were clear: Putin must come off looking like a fool. And it seemed Putin gave them the perfect material. Embargoes on dead chickens and global neocon conspiracies? Gosh, what serious self-respecting world leader would start talking this kind of gibberish? Even Ahmadinejaddoesn't sink that low. Well, the chicken meat embargo might have been a little weak, but the neocon conspiracy I'm not so sure about. But more on that later. (You can see the
- Not surprisingly, this didn't go down none too good with the Prime Minister. See, as it turns out, when Putin told CNN he wouldn't mind if they cut some of his comments, he wasn't exactly being honest. Not only did he mind, but he was sovereignly pissed off to find the entire interview censored. After all, he is the one that usually does the censoring. And it's not like he gives out TV interviews every month, or even every year. If I'm not mistaken, the last interview Putin gave to American TV was waaaay back in 2000, when he was on Larry King Live making crude comments about the sinking of the Kursk submarine.
- And then there's the issue of Saakashvili's CNN time. Just in the past month, Saakashvili has appeared a dozen times on the network giving interviews averaging 5 to 10 minutes each. As CNN correctly pointed out, Putin is a former KGB spy, so he knows all the details, down to the nearest second. And that's exactly why he's taken it as a personal insult from CNN's headquarters (and probably more proof of an international media/government conspiracy against him). But he just might have the last word.
- The word on the street here is Putin is out for blood. It's payback time. According to a source with high-level government connections, the Russians are planning punitive actions against CNN. At this point, it is just a rumor, but they are preparing to kick out about half of the half-dozen Western journalists working at CNN's Moscow bureau. Sooner or later they're going to have to apply for a visa renewal and that's when it's gonna go down.They'll be denied, clean and quiet like. We can only pray that the tool Matthew Chance is up for a new visa soon.
- So why did CNN decide to cut the interview? The thing is, Putin came off pretty darn well. Sure, the chicken embargo was embarrassing, but the McCain/neocon conspiracy theory wasn't as crazy as some would want you to believe. Gary Brecher has been saying all along that this little war had the mark of a half-baked neocon plan for world domination. As Gary says, Georgia's move makes no sense at all from a Georgian perspective. Somebody must have told those idiots they'd be safe to retake South Ossetia.And who better than Cheney?
- In general, Putin was able to strike an unusually sympathetic chord during the interview. It sure wasn't anything like the grotesque interview he gave eight years ago, where he made that cruel "it sank"
- So, what parts of Putin did CNN leave on the cutting room floor?
- Putin the anti-Stalinist:
- Therefore, those who insist that those territories must continue to belong to Georgia are Stalinists: They defend the decision of JosefVissarionovich Stalin. [It was Stalin who first split up Ossetia and gave the southern half to Georgia.]
- Putin the caring:
- For us, it is a special tragedy, because during the many years that we were living together the Georgian culture -- the Georgian people being a nation of ancient culture -- became, without a doubt, a part of the multinational culture of Russia.[C]onsideringthe fact that almost a million, even more than a million Georgians have moved here, we have special spiritual links with that country and its people. For us, this is a special tragedy.
- Putin the peaceful:
- You and I are sitting here now, having a quiet conversation in the city of Sochi. Within a few hundred kilometers from here, U.S. Navy ships have approached, carrying missiles whose range is precisely several hundred kilometers. It is not our ships that have approached your shores; it's your ships that have approached ours. So what's our choice?
- We don't want any complications; we don't want to quarrel with anyone; we don't want to fight anyone. We want normal cooperation and a respectful attitude toward us and our interests. Is that too much?
- Putin the conscientious business man:
- Construction of the first gas pipeline system was started during the 1960s, at the height of the Cold War, and for all those years, from the 1960s until this day, Russia has been fulfilling its contract obligations in a very consistent and reliable way, regardless of the political situation.
- We never politicize economic relations, and we are quite astonished at the position of some U.S. administration officials who travel to European capitals trying to persuade the Europeans not to buy our products, natural gas for example, in a truly amazing effort to politicize the economic sphere. In fact, it's quite pernicious.
- It's true that the Europeans depend on our supplies but we too depend on whoever buys our gas. That's interdependence; that's precisely the guarantee of stability.
Financial havoc wallops U.S. dollar and stocks
ONG KONG (Reuters) - Stocks and the U.S. dollar fell sharply on Monday after Lehman Brothers filed for bankruptcy protection, sending safe-haven Treasury debt and gold prices soaring as the financial system bent under severe pressure.
(Advertisement)
U.S. stock market futures were down around 3 percent, pointing to sharply lower open, while major European markets were set for falls of between 3.5 to 4 percent.
Rapid-fire developments on Wall Street, only a week after the U.S. government bailed out Fannie Mae and Freddie Mac, left some analysts literally speechless and sent shockwaves through almost every asset class. The dollar plunged 1.9 percent against the yen, on track for its biggest decline since February 2007, as investors' willingness to take risks evaporated.
"It's a pure flight to quality right now," said Adam Donaldson, head debt strategist at Australia's Commonwealth Bank.
"The big concern is how Lehman and other banks unwind their credit default contracts," he added. "Nobody knows how that will play out."
The price of insurance against default on debt soared, pushing up the iTRAXX Asia ex Japan high-yield index, a measure of credit market stress, to match record highs reached in the run-up to Bear Stearns' collapse in March.
While a lack of confidence felled Lehman, a lack of short-term funding was hurting one of the world's largest insurers American International Group . The firm was asking the Federal Reserve for a bridge loan of $40 billion (22.1 billion pounds), according to the New York Times, an unprecedented move that further battered the dollar and knocked down two-year U.S. government debt yields to a five-month low.
ASIAN STOCKS TUMBLE
Stock markets in Australia, Singapore and Taiwan all dropped 3 to 4 percent, Indian stocks fell 5 percent.
Holidays in most major Asian markets kept volume thin though price action belied a desire to seek safety first and ask questions later.
"The exact ramifications of the liquidation process and the unwinding of positions pertaining to the Lehman situation remain unclear. Hence, over the next 48 hours at least, financial markets are likely to be volatile and tense," said economists with United Overseas Bank in Singapore in a note.
The Swiss franc and yen, currencies associated with stability in times of duress, strengthened, especially against the dollar, which reeled as some in the market speculated the Federal Reserve may have to cut interest rates on Tuesday to shore up the economy from financial fallout.
The U.S. dollar dropped 1.9 percent against the yen at 105.88 yen and was off 1.2 percent against the Swiss franc to 1.1165 francs.
The euro rose by more than a cent against the dollar to $1.4380, up 1.1 percent from late Friday in New York.
In the spot market, gold rose 2 percent to $778.85 an ounce.
FED SUPPLIES LIQUIDITY, NOT CONFIDENCE
The Fed on Monday said it would begin accepting equities as collateral for emergency loans for the first time as it tried to ease the spiralling crisis. The steps would likely help surviving financial institutions to find cash but may not do much to boost global confidence in the U.S. financial system.
"The mere fact that they are forced to do this -- and they may still yet do some more -- indicates the breadth and depth of the trouble that the system is in," said V. Anantha Nageswaran, head of investment research, Asia-Pacific with Bank Julius Baer in Singapore.
In addition, 10 of the world's biggest banks agreed to establish a $70 billion borrowing facility to bolster liquidity.
U.S. Treasury yields, which move in the opposite direction of prices, fell sharply in early Asian trade on Monday and 3-month eurodollar futures surged as dealers priced in the possibility of lower Federal Reserve benchmark interest rates.
The yield on the policy-sensitive two-year Treasury note hit a five-month low of 1.90 percent. The 10-year yield was also at the lowest since April, at 3.52 percent compared with 3.72 percent late on Friday.
Bank of America said it would acquire Merrill Lynch for $50 billion in yet another development that realigned Wall Street. The deal was significant not just because of its price but it showed how the private sector will have to sort itself out and not depend on backing of the U.S. government.
"For many, but not all, this is an impossible lesson to learn in the middle of the worst financial storm since the Great Depression," said Alan Ruskin, chief international strategist with RBS Greenwich in Greenwich, Connecticut.
Australia's benchmark S&P/ASX 200 index fell 1.8 percent, weighed by shares of the country's top banks such as Commonwealth Bank of Australia and Macquarie Group .
Taiwan's TAIEX , the only stock market open in north Asia, dropped 4.1 percent to the lowest since November 2005.
Singapore's Straits Times index was at the lowest since September 2006, down 2.9 percent.
"The financial sector in the region is very volatile now and we don't expect investors' confidence to recover quickly in just a few days or one week," said Alex Huang, a vice president at Taiwan's Mega International Securities.
While the fate of the U.S. financial system loomed in investors' minds around the world, initial reports that Hurricane Ike had not severely damaged infrastructure in Texas knocked benchmark oil prices fall to a six-month low below $99 a barrel.
Oil fell $2.10 to $99.08 a barrel after falling as low as $98.46 -- the lowest since February 26 -- adding to a steady downward trend in prices since mid-July's peak of over $147 a barrel as evidence mounts that high energy costs and a weakening economy are cutting into fuel consumption.
(Additional reporting by Baker Li in TAIPEI and Wayne Cole in SYDNEY; Editing by Lincoln Feast)
Lehman files for bankruptcy protection
NEW YORK (MarketWatch) -- Wall Street awoke to a dramatically changed world on Monday as Lehman Brothers' bankruptcy filing rocked investors and pulled down financial stocks around the globe.
Lehman (LEH:![]()
LEH 0.21, -3.44, -94.4%) on Monday filed for Chapter 11 bankruptcy protection, ending the 158-year-old Wall Street firm's run and rattling the foundation of the global financial system.
Lehman Brothers Holdings Inc
Last: 0.21-3.44-94.37%
12:25pm 09/15/2008
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Lehman said that it will continue business while it explores the sale of its broker and investment-management units and other strategic alternatives.
The news sent the firm's shares tumbling more than 90% Monday morning and shook financial stocks. See full story.
The filing shows that Lehman is closing its doors with more than $600 billion of debt. The bank has total debts of $613 billion against total assets of $639 billion. Its filing with the Bankruptcy Court of the Southern District of New York shows that Lehman had more than 100,000 creditors.
The announcement came after a frantic weekend of negotiations in which potential acquirers backed away from a deal and federal officials balked at committing taxpayer funds to help save the Wall Street giant.
In a statement on its Web site, Lehman said the filing would affect only the parent, Lehman Brothers Holdings, and that its subsidiaries, including Neuberger Holdings LLC, would continue to operate and customers could make trades.
Neuberger assets are separate from Lehman Brothers and won't be subject to Lehman creditors' claims, the company said.
The company said its board approved the bankruptcy filing "in order to protect its assets and maximize value."
Lehman said it would file motions Monday to allow it to continue operating and pay its employees during the bankruptcy reorganization.
Lehman did not say it was filing under the section of federal bankruptcy law that would have led to liquidation.
The company said it is exploring the sale of its broker-dealer operations and will continue exploring the sale of its investment-management division. It will also "consider other strategic alternatives."
The move into bankruptcy came after last-minute talks with Barclays PLC (BCS:![]()
BCS 22.13, -3.05, -12.1%) (UK:BARC: news, chart, profile) and Bank of America (BAC:![]()
BAC 28.57, -5.17, -15.3%) faltered Sunday, leaving few options for the 158-year-old firm. See related story
Barclays PLC
Last: 22.13-3.05-12.11%
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bank of america corporation com
Last: 28.57-5.17-15.32%
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"We confirm that Barclays considered a combination with Lehman Brothers and did not proceed because it was not possible to conclude a transaction in the best interests of Barclays shareholders," Barclays said in a statement issued on Monday.
The failure of one of Wall Street's oldest firms came as the fallout from the U.S. housing collapse and global credit crunch intensified more than a year after problems first surfaced.
The International Swaps and Derivatives Association organized a special trading session to reduce financial risk in the event of a bankruptcy filing Sunday. See related story.
Federal officials have been struggling to organize an acquisition or private-sector bailout of Lehman because of fears that a bankruptcy could cause severe problems in the already fragile financial markets.
But they are anxious not to commit any more taxpayer dollars given the massive bailout of mortgage giants Fannie Mae (FNM:![]()
FNM 0.62, -0.12, -15.9%) and Freddie Mac (FRE:![]()
FRE 0.40, -0.06, -13.0%) last week and the guarantees offered to facilitate the rescue of Bear Stearns (JPM:![]()
JPM 40.03, -1.14, -2.8%) last spring. See related First Take commentary
Fannie Mae
Last: 0.62-0.12-15.95%
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Freddie Mac
Last: 0.40-0.06-13.04%
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JPMorgan Chase & Co
Last: 40.03-1.14-2.77%
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Even as Lehman's rescue efforts faltered, Bank of America agreed to acquire Merrill Lynch (MER:![]()
MER 20.16, +3.11, +18.2%) . Read the Wall Street Journal article.
http://www.marketwatch.com/news/story/lehman-file-under-chapter-11/story.aspx?guid={50D06AF4-0AD5-4B38-8206-D4C8D6E62EC7}
Merrill Lynch & Co., Inc
Last: 20.16+3.11+18.24%
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http://www.marketwatch.com/news/story/lehman-file-under-chapter-11/story.aspx?guid={50D06AF4-0AD5-4B38-8206-D4C8D6E62EC7}
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