Free Republic

The maker of snack cakes including Twinkies, Ho Hos, and DingDongs has filed for Chapter 11 bankruptcy protection. But a company spokesperson has assured that production of the famous cream-filled treat will continue as usual for now.“Throughout the proceeding, we’re going to operate business as normal,” said Hostess spokesman Erik Halvorson, according to CNNMoney. “They’ll keep making Twinkies.”Hostess declared bankruptcy for the first time in 2004, and didn’t emerge until 2009, an unusually long time for the situation. Even more unusual is the second Chapter 11 filing (or “Chapter 22,” in some legal circles) so soon after.Hostess blames unions and...

BRUSSELS—European Central Bank (ECB) chief Mario Draghi said on Thursday (12 January) after a monthly board meeting that he will keep up a "temporary" program of cheap loans for EU banks because it has "prevented a more serious credit crunch." The ECB also kept the interest rate at 1 percent following a decrease from 1.25 percent in November. "The provision of liquidity will continue to support euro-area banks and thus economic recovery. Our non-standard measures had a substantial contribution to improving the financial situation of banks," Draghi said during a press conference in Frankfurt. … Draghi highlighted the need to...

Media propagandists continue to advance the Democratic Party line. On December 21, Bloomberg News breathlessly reported, "The leading Republican candidates for president have embraced an explanation of the financial crisis that has been rejected by the chairman of the Federal Reserve, many economists and even three of the four Republicans on the government commission that investigated the meltdown." Reporter David J. Lynch further explained, "Both former House Speaker Newt Gingrich and former Massachusetts Governor Mitt Romney lay much of the blame on U.S. government housing policies, saying they led to the real estate crash that almost brought down the banking...

Estonia is the euro's newest member and also has the eurozone's fastest growing economyMost European leaders would be delighted if their economy was growing as fast as Estonia's.The small Baltic state's economy is forecast to have grown by 8% during 2011, according to the EU's official statistics body. That's more than five times faster growth than the European Union as a whole. But Estonia is still regaining the ground it lost during a financial crisis that struck it and its Baltic neighbours in 2008-9, when a property bubble burst spectacularly, causing the economy to shrink and unemployment to rocket to...

The day before Christmas, Joe Nocera did it again—wasted a perfectly good column with another attack on us, Peter Wallison and Ed Pinto. It’s worth reading for what it says about the Left’s current situation. According to Nocera, we “almost single-handedly” have created a “myth that Fannie Mae and Freddie Mac caused the financial crisis.” Those who have fallen for this myth, according to Nocera, include congressional Republicans and the Wall Street Journal’s editorial page. It’s somewhat implausible that two guys at a Washington think-tank, arguing that the financial crisis was caused by government housing policy, could create a...

The sum of overnight deposits at the European Central Bank (ECB) is often considered to be an indicator of the level of fear brewing within the financial sector. The greater the degree of distrust between banks, the more money banks tend to deposit on a daily basis with the ECB, where interest rates are low, but deposits more secure. This week has seen the level of deposits at the ECB's overnight facility rise to close to €412 billion ($538.4 billion)—the greatest amount seen since the euro's introduction, and representing a single overnight increase on Monday of €65 billion. The previous...

There are clear signs of a liquidity crunch in the asset markets right now, and the question I keep hearing is, Is this 2008 all over again? No, it’s worse. Much worse. In 2008 there was a lot more faith and optimism upon which to draw. But both have been squandered to significant degrees by feckless regulators and authorities who failed to properly address any of the root causes of the first crisis even as they slathered layer after layer of thin-air money over many of the symptoms. Anyone who has paid attention knows that those "magic potions" proved to...

Trade finance is drying up amid the financial crisis, threatening jobs and economic growth, trade sources warned Saturday. Banks like Credit Agricole and BNP Paribas -- two of the 25 financial institutions most active in such financing -- have recently reduced their trade financing business, said a trade source on the sidelines of a World Trade Organization ministerial conference. ... More than 90 percent of commercial transactions in the world require such credit, but the current crisis is forcing banks to hold on to capital and liquidity, leading to the lending market drying up and making credit more expensive.

Nobel Prize–winning economist Vernon Smith on the financial crisis, Adam Smith’s underrated insights, and his journey from socialist to libertarian “I remember the ’30s like it was yesterday,” says economist Vernon Smith. And he’s not kidding. In 1935, when the future Nobel Prize winner was 7 years old, his family decamped to their Kansas farm to wait out the hard times. “On the farms,” Smith explains, “you can eat.” His parents only made it to eighth grade, but “they were people who read,” and they expected their son to go to college. They got their wish—and then some. Smith’s higher...

NEW YORK (CNNMoney) -- Another trading day and another low for Bank of America's stock. Shares of Bank of America dropped more than 3% Tuesday, hitting a new 52-week low of $5.03 -- its lowest level since March 12, 2009. After the close of trading Tuesday, Bank of America was one of 37 financial institutions downgraded by S&P. Beyond the S&P downgrade, trading could become even more complicated in Bank of America's stock, if it falls below $5. Under that threshold, many broker-dealers will not allow investors to buy or short a stock on margin, according to a spokesperson for...

David P. Goldman, writing as Spengler in the Asia Times, diagnoses the heart of the Wall Street crisis, and lays out the solution to the rot in our financial markets. This is an important article to read and digest.Goldman was himself an executive at Credit Suisse, and saw firsthand the generation of profit-making deals in the slicing, dicing, and resale of elements of risk associated with large bundles of individual home mortgages packaged as securities. In his customary clear-eyed, data-rich style, Goldman explains how it all works, and where it went wrong. The ratings agencies - Moody's, Standard and...

"There is definitely going to be another financial crisis around the corner," says hedge fund legend Mark Mobius, "because we haven't solved any of the things that caused the previous crisis." We're raising our alert status for the next financial crisis. We already raised it last week after spreads on U.S. credit default swaps started blowing out. We raised it again after seeing the remarks of Mr. Mobius...he pointed to derivatives, the financial hairball of futures, options, and swaps in which nearly all the world's major banks are tangled up. Estimates on the amount of derivatives out there worldwide vary....

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It should be clear that among the causes of the recent financial crisis was an unjustified faith in rational expectations, market efficiencies, and the techniques of modern finance. That faith was stoked in part by the huge financial rewards that enabled the extremes of borrowing, the economic imbalances, and the pretenses and assurances of the credit-rating agencies to persist so long. A relaxed approach by regulators and legislators reflected the new financial zeitgeist. All the seeming mathematical precision that was brought to investment, all the complicated new products, including the explosion of derivatives, that were intended to diffuse and minimize...

Everybody knows that California’s economy has struggled mightily since the 2008 financial crisis and subsequent recession. The state’s current unemployment rate, 12.1 percent, is a full 3 percentage points above the national rate. Liberal pundits and politicians tend to blame this dismal performance entirely on the Great Recession; as Jerry Brown put it while campaigning (successfully) for governor last year, “I’ve seen recessions. They come, they go. California always comes back.” But a study commissioned by City Journal using the National Establishment Time Series database, which has tracked job creation and migration from 1992 through 2008 (so far) in...

Could the Euro Trigger A 2008-Like Crash? Si, Oui, Yes.If we dispense with all the fancy stuff, we end up with a simple see-saw with the euro and global equities on one end and the much-hated U.S. dollar on the other.If we scrape away the ever-hopeful headlines predicting a new figurehead lackey or another vote will magically fix Greece, Italy, the euro, Europe's crumbling banks, etc., the global stock markets can be distilled down to one chart. And here it is: a see-saw with the U.S. dollar on one end and the euro and equities on the other. I know the...

What Iceland Teaches Us: “Let Banks Fail” Agence France-Presse notes: Three years after Iceland’s banks collapsed and the country teetered on the brink, its economy is recovering, proof that governments should let failing lenders go bust and protect taxpayers, analysts say.***“The lesson that could be learned from Iceland’s way of handling its crisis is that it is important to shield taxpayers and government finances from bearing the cost of a financial crisis to the extent possible,” Islandsbanki analyst Jon Bjarki Bentsson told AFP.“Even if our way of dealing with the crisis was not by choice but due to the inability...

Cardinal Peter K. A. Turkson and Monsignor Mario Toso, President and Secretary of the Pontifical Council for Justice and Peace at the Vatican, released a note last week entitled "Towards Reforming the International Financial and Monetary Systems In the Context of Global Public Authority." The PCJP shares its reflections on the demands that integral development, globalization and the financial crisis make on society. It expresses the considered opinions of its authors and the Council. As with all communique's involving Catholic Social Doctrine, this one focuses on the common good and human dignity, the pillars on which CSD conceptually rests. Like...

CHARLOTTE, North Carolina (Reuters) - Bank of America Corp employees are flooding rival companies with resumes as a major cost-cutting program gets under way at the second-largest U.S. bank. Competitors say they are getting an influx of calls, emails and LinkedIn connection requests as the bank embarks on a plan to slash 30,000 jobs over the next few years. The employees are scouting jobs in retail, commercial and investment banking, bankers and recruiters said. "It's definitely picking up," said a senior executive at a rival consumer bank.

Gretchen Morgenson and Joshua Rosner have written a devastating critique of the public-private partnership that was aimed at putting Americans, including unqualified Americans, into their own homes. This government-sponsored, corporation-endorsed alliance lay at the root of the financial crisis. Their book is timely as the hallowed notion of public-private partnerships--the goodness of which is beyond question in government, academic, policy and even some corporate circles--represents policy makers' ideal for achieving social and political objectives in contemporaryAmerica. Noman says caveat emptor! The story traverses similar territory to that covered by Peter Schweizer's "Architects of Ruin," and Thomas Sowell's "The Housing Boom...