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As Credit Crunch II looms, we must learn to escape risk of moral hazard For all those people belly aching about bank bonuses and dodgy mortgage lending in recent days, a speech by the Governor of the Bank of England addressing reform of the banking system ought to have been a highlight of the week. By Damian Reece Published: 9:57PM BST 20 Oct 2009 Comments 2 | Comment on this article But as Mervyn King told his Scottish business audience last night: "If our response to the crisis focuses only on the symptoms rather than the underlying causes of the...

Amongst the other topics for discussion on his daily talk radio show (The Good Day Show) on Tuesday morning this week, Doug Stephan and one of his co-hosts, Roberta Facinelli, highlighted the benefits of putting MBE-barter to good use. Featured ‘live via phone’ was Merchants Barter Exchange (MBE) founder and President, Steve Bolles, as a guest and expert on barter.

The Ascent of Money Episode 3: Risky Business ASCENT OF MONEY In “Risky Business,” episode three of the four-part THE ASCENT OF MONEY, economist and historian Niall Ferguson examines the roots of the insurance industry in Europe; how disasters like Hurricane Katrina expose problems in risk management; how countries like Japan and Chile manage risk for their citizens; and the great rewards that can be accumulated through risk with hedge funds. http://video.pbs.org/video/1173188365

I am an amateur economist. But, one doesn't need years of schooling to be a better "economist" than Ben Bernanke. One merely needs to take the blinders off and release common sense. A broad background in law, economics and history helps, but it is not absolutely necessary. Economics is the study of human nature as it applies to money. So, it is precisely those who are narrowly educated, like some professional economists who don't study enough history, take an intensely academic viewpoint on things, and who don't understand fundamental human nature, who get things wrong. A narrowness of outlook and...

Though some economic measures are improving, the financial crisis "is far from over" and "appears to be taking root in the larger economy." This, despite the government's commitment to spend trillions of taxpayer dollars on a massive bailout of the financial system. These were the findings released in a report today by the Congressional Oversight Panel, the body charged with overseeing the government's Troubled Asset Relief Program, the $700 billion plan aimed at bailing out the country's financial sector. "We still have a long way to go. A very long way," Elizabeth Warren, the Harvard Law School professor who chairs...

Credit Crunch, Global Recession Encourages Rent Of Cost-Effective Virtual Office Space By Monique Lester and Joel LeydenUnited Kingdom News Agency London --- March 2, 2009...... As the worlds financial markets collapse, owners and renters of virtual office space are looking at a brighter, healthier future. While world governments from London, New York and Tokyo to Toronto, Paris and Jerusalem stream billions into the financial and banking systems to avoid a financial catastrophe and with all the uncertainty, doom and gloom surrounding the markets, Simeon Howard, sales manager of City Office remains confident about the future. “The world is more connected...

Governmental price controls are problematic in two ways. For one, prices of goods reached naturally in the marketplace are essential signals that producers rely on in order to give consumers what they want. When governments seek to block out the message of the market, future scarcity is a certainty due to the inability of producers to achieve the profits that would normally prevail, and which give them the incentive to produce what we want to begin with. Worse, when governments seek to control prices during periods of crisis, there’s a certain misallocation of goods that similarly leaves the consumer worse...

Note: Start at the bottom and read up. The Credit Crisis Timeline 27 Jan 2009 This timeline provides a daily update on who's buying who, collapses within the global financial markets as well as national and international rescue plans. The information here is based on news sources including the BBC website and the Financial Times.27 JanuaryIceland’s government collapsed following political turmoil prompted by the global financial crisis. The Japanese government threw a US$16.7bn lifeline to companies threatened by the global financial crisis, to try to shield the shrinking economy from more job losses and bankruptcies. ING, the Dutch banking and...

With the inauguration of Barack Obama imminent, all eyes are focused on Washington. Questions abound. Will there be enough security at the inaugural? How will he handle the Gaza situation, the war on terror? What about the Supreme Court nominations? All of these are important, but of more immediate impact is, what will his approach be towards the economy? To answer this, let us look at what has been done so far. We have the TARP program -- the vote that is widely credited with sinking John McCain in the polls and giving Obama the Presidency. This bill, rushed through...

‘The story that I have to tell is marked all the way through by a persistent tension between those who assert that the best decisions are based on quantification and numbers, determined by the patterns of the past, and those who base their decisions on more subjective degrees of belief about the uncertain future. This is a controversy that has never been resolved.’ — FROM THE INTRODUCTION TO ‘‘AGAINST THE GODS: THE REMARKABLE STORY OF RISK,’’ BY PETER L. BERNSTEIN THERE AREN’T MANY widely told anecdotes about the current financial crisis, at least not yet, but there’s one that made...

Only full disclosure of toxic debts will get the West moving again It has been a year of financial explosions. By Liam Halligan Last Updated: 5:44AM GMT 29 Dec 2008 Comments 24 | Comment on this article The commercial pillars holding up the Western world - banking prudence and sound credit - have been smashed to smithereens The "advanced" nations are now flirting with economic collapse. The emerging economies have also suffered "collateral damage" – the West's "sub-prime" debt bombs now threatening the stability of global commerce. The developed world is on course to contract by 1.1pc during 2009. That...

The run up to Christmas, 2008 has seen e-commerce become the focus for retailers across the UK. In the light of rising costs and consumers reigning in their spending to save money, the Internet is now seen as the place of choice for consumers, for comparisons and significant savings. Internet marketing for e-commerce sites has become the chosen method of promoting retail businesses. “With Internet marketing and digital advertising budgets increasing, traditional advertising is being replaced by cost-effective, targeted, digital advertising and marketing campaigns”, states Joel Leyden, President of London SEO Marketing. Leyden, who has provided commercial, non-profit and governmental...

Video link: Many banks don't have enough money to survive in 2009, but mergers will keep their brands alive, said Ralph Silva of TowerGroup.

Gulf's woes bode ill for the oil and gas we need Carl Mortished: World briefing Alistair Darling's Pre-Budget Report on Monday contained at least one item that raised not a flicker of attention at Westminster but which will have been keenly noticed far away in the Gulf: he has decided that Islamic bonds will not form part of the Government's borrowing programme in the near future. The scrapping of Britain's first sukuk (a loan instrument that complies with Islamic strictures on the immorality of interest) will be seen as a slap in the face, a cold shoulder at a time...

More customers resume using old-fashioned cash By ANNE D'INNOCENZIO – 1 day ago NEW YORK (AP) — Cash or credit? For more Americans, who have already maxed out their credit cards or are just trying to manage their spending better in the tough economy, the answer is increasingly the old-fashioned one. Retailers like Wal-Mart Stores Inc., Target Corp. and J.C. Penney Co. are noticing a marked shift away from credit cards in favor of cash and debit cards. A big factor is less credit available as major card issuers cut spending limits and raise fees even for customers who pay...

Double standards in the West GLOBAL TRENDS WITH MARTIN KHOR The global crisis has entered the phase of recession in the real economy. Recent actions of Western countries contrast sharply with the advice they gave Asian countries a decade ago, revealing clear double standards. IN THE past fortnight the leaders of the United States and Europe have announced one remarkable policy after another to save their financial institutions and system from ruin. The measures have to some extent stemmed the haemorrhage in the system, giving some breathing space to the banks and other institutions in many countries. In Iceland, however,...

One frequently overlooked provision of the Bailout Act is that it gave the Federal Reserve permission to pay interest on bank reserves immediately, rather than in 2011. The Fed therefore announced last Monday, October 6, that it would begin doing so this past Thursday, October 9. Here is the Fed press release. The long-run rationale for this change is to permit the Fed to hit its target Federal funds interest rate more reliably, and other central banks throughout the world have already implemented this reform. The short-run rationale is that troubled banks will now be earning interest on their reserve...

Bodies of the dead not being buried in echo of Winter of Discontent as effects of credit crunch spread across Britain By Glen Owen Last updated at 1:24 AM on 12th October 2008 The spectre of the Winter of Discontent threatened to return to haunt Labour last night after funeral directors revealed that the burial of 'hundreds' of bodies is being delayed for financial reasons. In a bleak new sign of the growing economic crisis, hard-up families are having to wait more than two months before receiving Government money for funerals. Organisations representing undertakers accused the Government of putting them...

Burger bars and budget stores: Credit crunch winners who are in the money 'I can't remember us ever being this busy,' said the chef as he prepared another Pepperoni Passion at the Domino's Pizza takeaway in southwest London. By David Harrison Last Updated: 12:27AM BST 05 Oct 2008 Domino's has seen half-year profits soar by more than a third to £8.3 million compared with last year Photo: PA "We used to envy the restaurant over the road because it was always packed with people spending lots of money. But now everybody seems to want to order in pizzas or have...

Credit freeze chills Chicago By Steve Daniels, Paul Merrion and H. Lee Murphy Oct. 04, 2008 The choking credit market is causing pain in just about every nook of Chicago's economy, squeezing businesses and consumers alike. From manufacturers to car dealers to big publicly traded firms, companies that rely on borrowed money to buy inventory, expand facilities and strike deals are having trouble tapping credit markets — and paying more when they do. Richard Hoster, president and co-owner of Smith & Richardson Inc., a maker of machine parts in west suburban Geneva, was recently told by Harris Bank that his...

From Times Online October 3, 2008 US banks borrow record amount from Fed Catherine Boyle US banks borrowed a record $367.8 billion (£208 billion) a day from the Federal Reserve in the week ended October 1. Data from the US central bank shows how much financial institutions are relying on the Fed in its role as lender of last resort as short-term funding becomes almost impossible to find elsewhere. Banks' discount window borrowings averaged $367.80 billion per day in the week ended October 1, nearly double the previous record daily average of $187.75 billion last week. With interbank lending and...

Do NOT believe the so-called credit crunch! Here is just my personal experience regarding the so-called credit crunch breathlessly tossed out by MSM and Wall Street fat cats! I work for a small commercial bank, in my humble opinion, there is NO credit crunch, there is crappy credit all over the place!! Banks are desperate to lend money to any company with some reasonalbe results. There is no doubt the economy is slowing down, and the profit of many of our clients is down. The lending criteria is not being tightened as many of those idiotic pundits want you to...

Oil prices tumbled more than $6 a barrel Monday, briefly slipping below the $100 level as traders bet that global demand for petroleum products will keep falling despite a planned $700 billion U.S. financial bailout. A stronger dollar also weighed on crude prices as investors who bought oil and other commodities as a hedge against inflation sold their contracts. Light, sweet crude for November delivery fell as low as $99.80 a barrel in morning trading on the New York Mercantile Exchange before edging up slightly to $100.28, down $6.61. The contract fell Friday $1.13 to settle at $106.89. Crude has...

That would be the BEST long-term solution for this credit crisis. Let the damn thing collapse. That way capitalism will do it's job of clearing the fraudulent and foolish out of the system, leaving it in much healthier shape in the long run. In 1929 people were jumping out of windows. That sobering sight went a long way to impose discipline and responsibility on others. As a result, we had 50+ years of sane markets, sane credit strategies, and sane investment strategies. It's time to see people jumping out of windows again, so today's players will have discipline and responsibility...

Washington Mutual bank explores takeover possibilities: report Thu Sep 25, 10:00 AM ET The troubled US bank Washington Mutual has approached certain private equity firms as possible candidates to take it over, the Wall Street Journal reported on Thursday. The private investment groups approached include Carlyle Group and Blackstone Group, which may team up with Texas billionaire Gerald Ford, the daily said, citing sources familiar with the matter. Questions have arisen over Washington Mutual's future since last week's dramatic collapse of investment giant Lehman Brothers and the government rescue of insurance group AIG.

An American Meltdown by: Irene Warren, September 17, 2008 America is on the verge of having “the largest municipal bankruptcy ever,” said David R. Kotok, Chairman and Chief Investment Officer of Cumberland Advisors, while at the American Enterprise Institute (AEI). AEI released a report to show just what financial state Alabama is actually in. “Jefferson County, Alabama has to declare bankruptcy. The county needs protection from creditors, from bankers, from politicians-and from itself,” AEI found. “Jefferson County has issued $3.2 billion in adjustable-rate sewer bonds. Jefferson County, in an attempt to hedge its interest rate risk-entered into $5.8 billion of...

Wall Street is a financial Head-Smashed-In, where ego carries the hordes over the precipice Carl Mortished: World business briefing Head-Smashed-In is a buffalo jump in Alberta, Canada, a communal kill site where the Plains Indians drove herds of North American bison off the edge of a cliff. Over thousands of years, the Plains tribes developed the skill of goading buffalo towards a precipice. As the animals thundered towards the drop, those in front would try to stop but the sheer weight of the stampeding herd pressing from behind would force the buffalo over the edge. Unesco has designated the buffalo...

Capitalism and the credit crunch By Samuel Brittan Published: September 11 2008 18:33 | Last updated: September 11 2008 18:33 What does the great credit crunch do to the case for competitive capitalism? Many revisionist left-of-centre politicians not only have risked their careers to make the case for market forces, but have also had to jettison their deepest lifetime convictions. Are they now to stand on their heads and say they have been wrong all along? And if they did so, where would they turn? Even if in the end we suffer no more than an average post-second- world-war recession...

September is the cruellest month Gerard Baker: American View For financial markets, if not for poets, September is the cruellest month. It may only be curious coincidence, but the durability and reliability of the September Curse is striking. Since 1929, US stock prices have declined in September on average by more than in any other month - down by 1.2 per cent, compared with a gain of 0.6 per cent for all months of the year. And, in case you were wondering, that's not because the average of all those 80 Septembers has been driven lower by one or two...

Hedge funds face struggle for survival LORI McLEOD AND ANDREW WILLIS Monday, September 01, 2008 Black clouds have been building over the hedge fund industry for much of the year, and a storm could break in coming weeks as investors receive their second set of lousy monthly results from funds that are meant to do well in good markets and bad. A series of challenges, some unrelated to the hedge funds' investment strategies, have combined to create lower returns and investor redemptions. Industry experts expect some funds will be forced to close down as clients walk away. The single biggest...

Atticus hit hard by credit crunch By James Mackintosh in London Published: August 31 2008 23:35 | Last updated: August 31 2008 23:35 Atticus Capital, one of New York’s most powerful hedge funds, has lost more than $5bn (€3.4bn) this year, as its record as one of the world’s top performing money managers was damaged by the credit crunch. The firm’s two flagship funds fell by a quarter and almost a third by the end of August, marking among the biggest losses in dollar terms ever recorded by a hedge fund. This was as a result of its strategy of...

Warning: Worldwide wipeout ahead Think US stocks are on a life raft? Look around the globe, where seas are much rougher. This is serious, folks. Brace for a brutal riptide of more economic upheaval. By Jon Markman It barely seems possible that anyone is more pessimistic about corporate earnings prospects than American shareholders right now, with the U.S. stock market down almost 15% for the year and the banking system coming unglued before our eyes. Yet if you take a moment to look around the world, you may be surprised to learn that U.S. stocks are the picture of health...

Sharp US money supply contraction points to Wall Street crunch ahead By Ambrose Evans-Pritchard Last Updated: 6:02am BST 19/08/2008 The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months. Data compiled by Lombard Street Research shows that the M3 ''broad money" aggregates fell by almost $50bn (£26.8bn) in July, the biggest one-month fall since modern records began in 1959. "Monthly data for July show that the broad money growth has almost collapsed," said Gabriel Stein, the group's leading monetary economist. advertisementOn a...

An economic Cassandra whose predictions are coming true By Stephen Mihm Saturday, August 16, 2008 NEW YORK: On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and...

A declining Europe must focus on the nitty-gritty By Leif Pagrotsky Published: August 14 2008 19:20 | Last updated: August 14 2008 19:20 At this time of failures in Iraq and on Wall Street, when the US has lost its role as model and inspiration for policymakers and others around the world, a golden opportunity has arisen for Europe to offer an alternative to look up to and find inspiration from. But Europe is not in good shape. It is not just about the Irish vote. The Irish referendum on the Lisbon treaty in June is merely a scapegoat for...

A Word Here, A Word There BY FRANK BARBERA, CMT What a ridiculous sham. Every few weeks the financial community ‘heart beat’ stops for a few seconds to find out what pronouncements will be handed down from the mount at the latest Federal Reserve meeting. Every few weeks, the parsing begins dissecting each word to see if anything has been omitted, or added, or changed from the prior meeting's text. Immediately, all kinds of wild trading ensues, in some cases, even before any sane person has had a chance to read and digest the intended meaning of the words. It...

Buckle Up With transparency and truth in short supply, caution is warranted BY TONY ALLISON Investor Jim Rogers minced few words, as usual, when asked about the U.S. Treasury Department's plan to shore up Fannie Mae and Freddie Mac. “It is an unmitigated disaster”, said Rogers. “Taxpayers will be saddled with debt if Congress approves (U.S. Treasury Secretary) Henry Paulson's request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac.” "These companies were going to go bankrupt if they hadn't stepped in to do something, and they should've gone bankrupt with all of...

UK economy heads for ‘horror movie’ David Smith and Dominic O’Connell BRITAIN is facing an “economic horror movie” because of a “toxic mixture” of a moribund credit market and volatile oil prices, according to a leading forecasting group. The Ernst & Young Item club, which uses the Treasury’s economic model, will argue in a report tomorrow that the economy will struggle to avoid recession. This comes as a survey by the Institute of Directors shows that business confidence has slumped to the lowest level ever recorded, with company chiefs increasingly gloomy about the investment climate. These reports follow an interview...

Honor Your Word, or This Banker May Call Mom By RON LIEBER Just a few years ago, it was easy to write off the local community bank as a relic, a quaint reminder of an age when you actually needed to visit a branch to manage your money. Who needed a local banker when a mortgage broker could easily connect you with financing from some faraway lender? Internet banks offered savings accounts with interest rates far superior to community banks’ pathetic payouts, and brokerage firms created fee-free checking accounts. Like many of you, I suspect, I haven’t set foot in...

Boom times for American pawnbrokers as rich hit hard times Chris Ayres “I need $3,000,” Tito Vazquez, 45, says as he looks at his gleaming Harley-Davidson motorcycle. “But the economy's a mess right now and my credit cards are all maxed out.” Which brings him here, to Collateral Lender, a few blocks east of ultra-posh Rodeo Drive, in Beverly Hills. In short, it is a pawn shop. Like most pawn shops in Los Angeles - home to not one but two failed mortgage lenders, Countrywide Financial and IndyMac Bank - it is doing a roaring trade. For Mr Vazquez, that...

They Still Don’t Get It By John Riley Chief Strategist 07/02/08 On June 29, in the prestigious Financial Times, Former Treasury Secretary and Harvard University President, Larry Summers wrote an article which shows that policy wonks don’t really understand the problems in our financial markets. His article, “What we can do in this dangerous moment” starts out great and I had hopes that maybe after years of toiling next to Greenspan, he rejected the Maestro's views and had seen the light. He hasn’t. (Dr. Summers quotes will be in blue italics.) “It is quite possible that we are now at...

Study Finds Flawed Practices at Ratings Firms By MICHAEL M. GRYNBAUM The analyst at the credit ratings agency was blunt: “Let’s hope we are all wealthy and retired by the time this house of cards falters.” That candid assessment, sent by e-mail to a colleague in December 2006, referred to the market for certain investments linked to subprime mortgages — investments that were assigned top AAA ratings from major agencies, only to later plummet in value. That e-mail message and dozens like it were disclosed Tuesday in a blistering 37-page report issued by the Securities and Exchange Commission, which confirmed...

Bank losses from credit crisis may run to $1,600bn, warns Bridgewater By Ambrose Evans-Pritchard Last Updated: 1:59am BST 08/07/2008 Bridgewater Associates has issued an apocalyptic warning to clients that bank losses from the worldwide credit crisis may reach $1,600bn (£800bn), four times official estimates and enough to pose a grave risk to the financial system. The giant US hedge fund said that it doubted whether lenders would be able to shoulder the full losses, disguised until now by "mark-to-model" methods of valuing structured credit. "We are facing an avalanche of bad assets. We have big doubts as to whether financial...

Shadow boxing the apocalypse Commentary: Veteran Schultz says we're in 'major global upheaval' By Peter Brimelow, MarketWatch Last update: 12:33 a.m. EDT July 7, 2008NEW YORK (MarketWatch) -- The eponymous octogenarian editor of the International Harry Schultz Letter may be settling down. But he's settling down in apocalypse mode. Well over (ahem!) 30 years ago, late for an interview with Harry Schultz for the old Financial Post of Canada, I was sitting on a bollard by an Amsterdam canal, wondering why the devil the directions I had to his latest eyrie were mysteriously incomplete, when my attention was caught by...

China's premier urges US to stabilise dollar AFP - Tuesday, July 1 BEIJING (AFP) - - Chinese Premier Wen Jiabao has again called on the United States to stabilise the dollar, warning the greenback's decline was posing threats to the global economy. "China is taking measures to safeguard its stable economic development," Wen said during a meeting with visiting US Secretary of State Condoleezza Rice on Monday, according to a statement posted on the foreign ministry's website. "(We) hope the US will overcome its subprime crisis soon and stabilise the exchange rate of the US dollar, which is significant to...

Central Bankers Warn of 'Tipping Point' By PAUL HANNON and NINA KOEPPEN July 1, 2008 BASEL, Switzerland -- The global economy may be close to a "tipping point" that could see it enter a slowdown so severe that it transforms the current period of rising inflation into a period of falling prices, the Bank for International Settlements said Monday. In its annual report, the central bank for central banks said the impact of rising food and energy prices on consumers' incomes, combined with heavy household debts and a pullback in bank lending, may lead to a slowdown in global growth...

Global markets reel after first-half carnage By Michael Mackenzie in New York, Javier Blas in London and Andrew Wood in Hong Kong Published: June 27 2008 18:58 | Last updated: June 27 2008 22:26 Global equities were on Friday heading for their worst first-half performance in 26 years after a week in which oil surged to a record and there were renewed worries about the health of the financial system and ­global growth. A high of $142.99 a barrel for oil sparked a tumble in Asian markets and selling in Europe and New York. The Dow Jones Industrial Average on...

Bond insurers want $125bn of cover wiped out By Aline van Duyn in New York Published: June 22 2008 23:30 | Last updated: June 22 2008 23:30 Bond insurers such as Ambac, MBIA and FGIC are talking to banks about wiping out $125bn of insurance on risky debt securities in what could be the only way to limit the financial damage surrounding the bond insurers.

Prepare for change as world tilts to the east American Account Irwin Stelzer “THIS too shall pass,” King Solomon’s advisers told him to engrave on a ring, and refer to it whenever he felt depressed. Or so the legend goes. Not a bad idea for bankers beset by still more dodgy paper to write off, for shareholders at loss-making Lehman Brothers and ailing Morgan Stanley (first-quarter earnings down 58% year-on-year), and for homeowners as they watch the equity in their homes evaporate. Some of our current crises will indeed pass. However, it would be a mistake to believe that when...

OH DEAR, it was not meant to be like this. The European Central Bank (ECB), widely praised for providing banks with ample liquidity during the credit crunch, now has a problem: how to encourage banks to place freshly created asset-backed securities (ABS) with investors, rather than dumping them, like so much radioactive waste, in its vaults. The ECB accepts a wide range of assets, including those such as ABS for which there is temporarily very little trading, as collateral in its refinancing operations. Provided the tranche of securities is the most senior, and rated A- or above, the ECB will...