Investment banks are borrowing from Fed

NEW YORK (Reuters) – Investment banks Goldman Sachs Group Inc , Lehman Brothers Holdings Inc and Morgan Stanley are testing a new program that allows investment banks to borrow directly from the Federal Reserve, according to people at the banks.In a bid to stabilize jittery markets, the Fed said on Sunday that it would allow investment banks to borrow from its discount window using a wide range of investment-grade securities as collateral.

(Hey, hey lets spend all our money and then just ask Uncle Bernanke for a few more billions.
Come on guys lets do that. Uncle Bernanke can print a few billions for us if we are broke.
Good to have him around. Life is so good. – The Infinite Unknown
)

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Venezuela’s state-run oil company begins demanding payment in euros as US dollar weakens

CARACAS, Venezuela: Venezuela’s state-run oil firm is starting to demand payment in euros a measure aimed at protecting revenues from a weakening U.S. dollar, Venezuela’s oil minister said Tuesday.

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The Federal Reserve Is Destroying America

It is incredible to see the rampant devaluation of the U.S. Dollar. The Federal Reserve just hours ago made a rare cut of 25 basis points during the weekend which will cause even more inflation. Gold immediately moved up $20 an ounce and the U.S. Dollar Index plunged under 71 in international trading. If this type of market activity continues the U.S. Dollar will have no value in a few months. While it is probably unlikely that we will see a hyper-inflationary collapse of the U.S. Dollar within the next few months, these policies are entirely unsustainable. If the Federal Reserve does not move to defend the value of the U.S. Dollar we will eventually see a hyper-inflationary collapse and worldwide financial turmoil. This view is also shared by other well respected financial analysts. Peter Schiff recently raised concerns about a hyper-inflationary collapse of the U.S. Dollar, Robert Reich a former Clinton cabinet member believes we are facing a depression and Alan Greenspan the man who caused this whole mess wrote in the Financial Times stating that we are facing the worst financial crisis since World War II. What’s amazing is that the Federal Reserve isn’t even trying to protect the U.S. Dollar because all they care about is saving the power of their private banking cartel. They don’t care about the U.S. Dollar nor do they care about the country itself. They are destroying this country through their actions and there needs to be an investigation into the controllers of this bank.

Alan Greenspan saying that we are facing the worst financial crisis since World War II is like a killer returning to the scene of their crime and explaining the results of their crime. Greenspan recently told nations in the Gulf to drop their currency pegs to the U.S. Dollar which encouraged a further drop in the U.S. Dollar. Greenspan’s Financial Times article will cause an even greater acceleration in the collapse of the currency. As the former head of the Federal Reserve, his comments still hold a great deal of importance with people around the world. This means that his comments can literally move the value of the U.S. Dollar one way or another. It is incredibly sick how Greenspan can get away with creating the current crisis we face with his low interest rate policies earlier this decade and analyze the problems that are occurring today that were a result of his own policies with no criticism from the corporate controlled media.

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Wall Street fears for next Great Depression

Wall Street is bracing itself for another week of roller-coaster trading after more than $300bn (£150bn) was wiped off the US equity markets on Friday following the emergency funding package put together by the Federal Reserve and JPMorgan Chase to rescue Bear Stearns.

One UK economist warned that the world is now close to a 1930s-like Great Depression, while New York traders said they had never experienced such fear. The Fed’s emergency funding procedure was first used in the Depression and has rarely been used since.

A Goldman Sachs trader in New York said: “Everyone is in a total state of shock, aghast at what is happening. No one wants to talk, let alone deal; we’re just standing by waiting. Everyone is nervous about what is going to emerge when trading starts tomorrow.”

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Dollar’s nosedive stirs joint intervention jitters

TOKYO (Reuters) – The dollar’s sharp slide to 13-year lows against the yen and fresh all-time lows versus the euro on Monday is stoking jitters about the possibility of joint central bank intervention to prop up the dollar.”The speed of the slide in the dollar/yen is so rapid that U.S. action alone can no longer stop the dollar’s downward trend,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investment.

“The time is ripe for coordinated intervention by U.S., European and Japanese authorities.”

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Foreign investors veto Fed rescue

As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures.

Asian, Mid East and European investors stood aside at last week’s auction of 10-year US Treasury notes. “It was a disaster,” said Ray Attrill from 4castweb. “We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed.”

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Banks face “new world order,” consolidation: report

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NEW YORK (Reuters) – Financial firms face a “new world order” after a weekend fire sale of Bear Stearns and the Federal Reserve’s first emergency weekend meeting since 1979, research firm CreditSights said in a report on Monday.

More industry consolidation and acquisitions may follow after JPMorgan Chase & Co on Sunday said it was buying Bear Stearns for $236 million, or $2 a share, a deep discount from the $30 price on Friday and record share price of about $172 last year.

“Last evening the Bear Stearns situation reached a crescendo, as JPMorgan agreed to acquire the wounded broker for a token amount of $2 per share,” CreditSights said. “The reality check is that there are many challenged major banks, brokers, thrifts, finance/mortgage companies, and only a handful of bona fide strong U.S. banks.”

Read moreBanks face “new world order,” consolidation: report

Gulf central banks urged to sever links with tumbling US dollar

Pressure is mounting on central banks in the Gulf to fight surging inflation when they meet on Wednesday by severing the link between their currencies and the tumbling US dollar.Officials in Qatar and the United Arab Emirates have denied rumours of an imminent decoupling, but investors are betting on reform and are rushing to buy local currencies as investment banks issue fresh calls for revaluation.

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Biggs’s Tips for Rich: Expect War, Study Blitz, Mind Markets

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Jan. 30 (Bloomberg) — Barton Biggs has some offbeat advice for the rich: Insure yourself against war and disaster by buying a remote farm or ranch and stocking it with “seed, fertilizer, canned food, wine, medicine, clothes, etc.”

The “etc.” must mean guns.

“A few rounds over the approaching brigands’ heads would probably be a compelling persuader that there are easier farms to pillage,” he writes in his new book, “Wealth, War and Wisdom.”

Biggs is no paranoid survivalist. He was chief global strategist at Morgan Stanley before leaving in 2003 to form hedge fund Traxis Partners. He doesn’t lock and load until the last page of this smart look at how World War II warped share prices, gutted wealth and remains a warning to investors. His message: Listen to markets, learn from history and prepare for the worst.

“Wealth, War and Wisdom” fills a void. Library shelves are packed with volumes on World War II. The history of stock markets also has been ably recorded, notably in Robert Sobel’s “The Big Board.” Yet how many books track the intersection of the two?

Read moreBiggs’s Tips for Rich: Expect War, Study Blitz, Mind Markets

Going Bankrupt: The US’s Greatest Threat

The military adventurers of the George W. Bush administration have much in common with the corporate leaders of the defunct energy company Enron. Both groups of men thought that they were the “smartest guys in the room”, the title of Alex Gibney’s prize-winning film on what went wrong at Enron. The neo-conservatives in the White House and the Pentagon outsmarted themselves. They failed even to address the problem of how to finance their schemes of imperialist wars and global domination.

Read moreGoing Bankrupt: The US’s Greatest Threat

Endgame: Unregulated Private Money Creation

The Financial Tsunami, Part IV.What had emerged going into the new millennium after the 1999 repeal of Glass-Steagall was an awesome transformation of American credit markets into what was soon to become the world’s greatest unregulated private money creation machine.

The New Finance was built on an incestuous, interlocking, if informal, cartel of players, all reading from the script written by Alan Greenspan and his friends at J.P. Morgan, Citigroup, Goldman Sachs, and the other major financial houses of New York. Securitization was going to secure a “new” American Century and its financial domination, as its creators clearly believed on the eve of the millennium.

Read moreEndgame: Unregulated Private Money Creation

Microsoft seeks patent for office ‘spy’ software

Microsoft is developing Big Brother-style software capable of remotely monitoring a worker’s productivity, physical wellbeing and competence.The Times has seen a patent application filed by the company for a computer system that links workers to their computers via wireless sensors that measure their metabolism. The system would allow managers to monitor employees’ performance by measuring their heart rate, body temperature, movement, facial expression and blood pressure. Unions said they fear that employees could be dismissed on the basis of a computer’s assessment of their physiological state.

Read moreMicrosoft seeks patent for office ‘spy’ software

Hair of the Dog

Are you at all suspicious? Does it sound too good to be true? Here we are, plunging into a recession. The proximate cause is irresponsible mortgage loans made to people who can’t pay the money back. The deeper cause is, at least in part, years of too much borrowing and spending by Americans, both as individuals and collectively through the government. But behold: there is-oh, joy!-bipartisan agreement on a solution. Although quibbling over the details, everyone-Republicans and Democrats, the White House and Congress, all the presidential candidates-agrees that what we need is a “fiscal stimulus.”In other words, the government should go out and borrow even more money and pass it around for us to spend. The experts caution that for maximum stimulus effect, we must be sure to spend it immediately. No squirreling it away for a rainy day. In drinking circles, they call this hair of the dog: to cure a hangover, you have another drink.

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Foreigners buy stakes in U.S. at record pace

Last May, a Saudi Arabian conglomerate bought a Massachusetts plastics maker. In November, a French company set up a new factory in Adrian, Michigan, adding 189 automotive jobs to an area accustomed to layoffs. In December, a British company bought a New Jersey maker of cough syrup.For much of the world, the United States is now on sale at discount prices. With credit tight, unemployment growing and worries mounting about a potential recession, American business and government leaders are courting foreign money to keep the economy growing.

Foreign investors are buying aggressively, taking advantage of American duress and a weak dollar to snap up what many see as bargains, while making inroads into the world’s largest market.

Last year, foreign investors poured a record $414 billion into securing stakes in U.S. companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm.

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Dobbs: Our leaders have squandered our wealth

NEW YORK (CNN) — President Bush’s assurances that we’ll all be “just fine” if he and Congress can work out an economic stimulus package seem a little hollow this morning.Much like Federal Reserve Board Chairman Ben Bernanke’s assurances last May that the subprime mortgage meltdown would be contained and not affect the broader economy. And it seems Treasury Secretary Henry Paulson has spent most of the past year trying to influence Chinese economic policy rather than setting the direction of U.S. economic policy.

There is no question that Bush, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid will quickly come up with an economic stimulus package simply because they can no longer ignore our economic and financial crisis. That economic stimulus plan will amount to about 1 percent of our nation’s gross domestic product, an estimated $150 billion.

But all of us should recognize that the stimulus package will be inadequate to drive sustainable growth in our $13 trillion economy. An emergency Fed rate cut and an economic stimulus plan are short-term responses to our complex economic problems, nothing more than bandages for a hemorrhaging economy.

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Darker Days Ahead?

Robert Reich warns a recession, or worse, could be coming.

Think the last few days have been bad for Wall Street and the rest of the world’s markets? Hang on, things are probably going to get worse, says Robert Reich, President Clinton’s former secretary of Labor and author of the recent book “Supercapitalism: The Transformation of Business, Democracy and Everyday Life.” According to Reich, who currently teaches public policy at the University of California, Berkeley, the United States might even be headed toward a depression.

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Reich: 'Now we have a mess on our hands. Bernanke has the only
       pooper-scooper in town, but it is too small for the job.'

Read moreDarker Days Ahead?

Drought could close nuclear power plants

Southeast water shortage a factor in huge cooling requirements

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LAKE NORMAN, N.C. – Nuclear reactors across the Southeast could be forced to throttle back or temporarily shut down later this year because drought is drying up the rivers and lakes that supply power plants with the awesome amounts of cooling water they need to operate.

Utility officials say such shutdowns probably wouldn’t result in blackouts. But they could lead to shockingly higher electric bills for millions of Southerners, because the region’s utilities could be forced to buy expensive replacement power from other energy companies.

Already, there has been one brief, drought-related shutdown, at a reactor in Alabama over the summer.

“Water is the nuclear industry’s Achilles’ heel,” said Jim Warren, executive director of N.C. Waste Awareness and Reduction Network, an environmental group critical of nuclear power. “You need a lot of water to operate nuclear plants.” He added: “This is becoming a crisis.”

Read moreDrought could close nuclear power plants

America’s economy risks mother of all meltdowns

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“I would tell audiences that we were facing not a bubble but a froth – lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy.” Alan Greenspan, The Age of Turbulence.

That used to be Mr Greenspan’s view of the US housing bubble. He was wrong, alas. So how bad might this downturn get? To answer this question we should ask a true bear. My favourite one is Nouriel Roubini of New York University’s Stern School of Business, founder of RGE monitor.

Recently, Professor Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*. At that time, his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”**. The characteristics of this scenario are, he argues: “A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe.”

Prof Roubini is even fonder of lists than I am. Here are his 12 – yes, 12 – steps to financial disaster.

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US banks borrow $50 bn via new Fed facility

US banks have been quietly borrowing massive amounts of money from the Federal Reserve in recent weeks by using a new measure the Fed introduced two months ago to help ease the credit crunch.

The use of the Fed’s Term Auction Facility, which allows banks to borrow at relatively attractive rates against a wider range of their assets than previously permitted, saw borrowing of nearly $50bn of one-month funds from the Fed by mid-February.

Source: Financial Times
By: Gillian Tett, Feb 18, 2008

Already we have riots, hoarding, panic: the sign of things to come?

The spectre of food shortages is casting a shadow across the globe, causing riots in Africa, consumer protests in Europe and panic in food-importing countries. In a world of increasing affluence, the hoarding of rice and wheat has begun. The President of the Philippines made an unprecedented call last week to the Vietnamese Prime Minister, requesting that he promise to supply a quantity of rice.

Read moreAlready we have riots, hoarding, panic: the sign of things to come?

Confidence Plunges, Inflation Rate Soars

Consumer Confidence Plunges While Wholesale Inflation Rises at Fastest Pace in 26 Years

WASHINGTON (AP) — In more bad economic news, consumer confidence and home prices posted sharp declines while higher costs for such basics as food, energy and medicine left wholesale inflation rising at a pace unseen since late 1981.

The new reports Tuesday documented the latest in a series of blows to the economy as a prolonged housing downturn has pushed the country close to a recession.

Read moreConfidence Plunges, Inflation Rate Soars