Credit Crunch

Flashback: The Wile E Coyote Government

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Why does the American government consistently fail to foresee the future results of its own actions?

Because it is incompetent.

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My take on that is, that it is impossible to be that much incompetent! This is an ‘intentionally incompetent’ elite puppet government that is looting the taxpayer until there is nothing left.

The government is ‘channeling’ taxpayer money through their friends on Wall Street into the hands of the elite behind the scenes (that control the US government, the Federal Reserve, Wall Street and the media), thereby bankrupting America and destroying the US dollar.

This is a controlled demolition.

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It is managing the financial crisis Wile E Coyote style.


Added: 25. September 2008

US Economy: This is No Recession. It’s a Planned Demolition

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Must-read.

See also RBS chief credit strategist issues red alert on global stock markets

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Bernanke has pulled out all the stops.

Credit is not flowing. In fact, credit is contracting. That means things aren’t getting better; they’re getting worse. When credit contracts in a consumer-driven economy, bad things happen. Business investment drops, unemployment soars, earnings plunge, and GDP shrinks. The Fed has spent more than a trillion dollars trying to get consumers to start borrowing again, but without success. The country’s credit engines are grinding to a halt.

Bernanke has increased excess reserves in the banking system by $800 billion, but lending is still slow. The banks are hoarding capital in order to deal with the losses from toxic assets, non performing loans, and a $3.5 trillion commercial real estate bubble that’s following housing into the toilet. That’s why the rate of bank failures is accelerating. 2010 will be even worse; the list is growing. It’s a bloodbath.

The standards for conventional loans have gotten tougher while the pool of qualified credit-worthy borrowers has shrunk. That means less credit flowing into the system. The shadow banking system has been hobbled by the freeze in securitization and only provides a trifling portion of the credit needed to grow the economy. Bernanke’s initiatives haven’t made a bit of difference. Credit continues to shrivel.

The S&P 500 is up 50 percent from its March lows. The financials, retail, materials and industrials are leading the pack. It’s a “Green Shoots” Bear market rally fueled by the Fed’s Quantitative Easing (QE) which is forcing liquidity into the financial system and lifting equities. The same thing happened during the Great Depression. Stocks surged after 1929. Then the prevailing trend took hold and dragged the Dow down 89 percent from its earlier highs. The S&P’s March lows will be tested before the recession is over. Systemwide deleveraging is ongoing. That won’t change.

No one is fooled by the fireworks on Wall Street. Consumer confidence continues to plummet. Everyone knows things are bad. Everyone knows the media is lying. Credit is contracting; the economy’s life’s blood has slowed to a trickle. The economy is headed for a hard landing.

Bernanke has pulled out all the stops. He’s lowered interest rates to zero, backstopped the entire financial system with $13 trillion, propped up insolvent financial institutions and monetized $1 trillion in mortgage-backed securities and US sovereign debt. Nothing has worked. Wages are falling, banks are cutting lines of credit, retirement savings have been slashed in half, and home equity losses continue to mount. Living standards can no longer be bandaged together with VISA or Diners Club cards. Household spending has to fit within one’s salary. That’s why retail, travel, home improvement, luxury items and hotels are all down double-digits. The easy money has dried up.

According to Bloomberg:

“Borrowing by U.S. consumers dropped in June for the fifth straight month as the unemployment rate rose, getting loans remained difficult and households put off major purchases. Consumer credit fell $10.3 billion, or 4.92 percent at an annual rate, to $2.5 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $5.38 billion in May, more than previously estimated. The series of declines is the longest since 1991.

A jobless rate near the highest in 26 years, stagnant wages and falling home values mean consumer spending… will take time to recover even as the recession eases. Incomes fell the most in four years in June as one-time transfer payments from the Obama administration’s stimulus plan dried up, and unemployment is forecast to exceed 10 percent next year before retreating.” (Bloomberg)

What a mess. The Fed has assumed near-dictatorial powers to fight a monster of its own making, and achieved nothing. The real economy is still dead in the water. Bernanke is not getting any traction from his zero-percent interest rates. His monetization program (QE) is just scaring off foreign creditors. On Friday, Marketwatch reported:

“The Federal Reserve will probably allow its $300 billion Treasury-buying program to end over the next six weeks as signs of a housing recovery prompt the central bank to unwind one its most aggressive and unusual interventions into financial markets, big bond dealers say.”

Right. Does anyone believe the housing market is recovering? If so, please check out this chart and keep in mind that, in the first 6 months of 2009, there have already been 1.9 million foreclosures.

delinquencies-and-foreclosures

The Fed is abandoning the printing presses (presumably) because China told Geithner to stop printing money or they’d sell their US Treasuries. It’s a wake-up call to Bernanke that the power is shifting from Washington to Beijing.

That puts Bernanke in a pickle. If he stops printing; interest rates will skyrocket, stocks will crash and housing prices will tumble. But if he continues QE, China will dump their Treasuries and the greenback will vanish in a poof of smoke. Either way, the malaise in the credit markets will persist and personal consumption will continue to sputter.

Read moreUS Economy: This is No Recession. It’s a Planned Demolition

Dubai: Real Estate Down 50% From Peak

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“Saud Masud, a real-estate analyst at UBS, said a decelerating price fall doesn’t necessarily point to market recovery. “The underlying trends are not supportive of a recovery in the market anytime soon,” he said.”

Related article:  In Dubai, guest workers are stranded without jobs

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Property prices in Dubai are down 50% from their peak in the third quarter of 2008.

DUBAI — Home values in Dubai have fallen by about half from their peak late last year in the wake of the global real-estate slowdown, a widely watched index of Dubai property prices showed Monday.

Property prices in the emirate, which had been driven sharply higher in past years as foreign investors snapped up real estate, have been sliding since the third quarter of 2008.

Read moreDubai: Real Estate Down 50% From Peak

IMF: Credit crunch cost more than $10 trillion

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… and this is not over yet. The worst is yet to come. This crisis has only just begun, no matter what they tell you.

– Quotes from the Great Depression

no-bailout-for-the-people_too-small-to-save Government bank bail-outs have been controversial in the US

The global credit crunch has cost governments more than $10 trillion, the International Monetary Fund (IMF) says.

The IMF says that rich countries have provided $9.2tn in government support for the financial sector, while emerging economies spent $1.6 tn.

About $1.9tn represents up-front expenditure, while the rest is made up of guarantees and loans.

Governments are likely to recover most of these sums when the world economy recovers, but big deficits will stay.

The financial bail-out costs include:

  • Capital injections: $1.1tn
  • Purchase of assets: $1.9tn
  • Guarantees: $4.6tn
  • Liquidity provision: $2.5tn

Read moreIMF: Credit crunch cost more than $10 trillion

EU Governments Approved $5.3 Trillion For Bank Rescue Costs, More Than German GDP

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A pedestrian walks past the Bank of England in London’s financial district, in London, U.K., on Jan. 8, 2009. Photographer: Chris Ratcliffe/Bloomberg News
June 12 (Bloomberg) — European governments have approved $5.3 trillion of aid, more than the annual gross domestic product of Germany, to support banks during the credit crunch, according to a European Union document.

The U.K. pledged 781.2 billion euros ($1.1 trillion) to restore confidence in its lenders, the most of any of the 27 EU members, according to a May 26 document prepared by officials from the European Commission, the European Central Bank and member states and obtained by Bloomberg News. Denmark, where 13 of the country’s 140 banks were bailed out by the central bank or bought by rivals last year, committed 593.9 billion euros.

The measures, designed to save banks and revive economic growth, surpass Germany’s $3.3 trillion economy, the region’s biggest. They also helped to widen the Euro area’s budget deficit to the most in three years in 2008. The commission, the EU’s executive arm, is seeking to create the first EU-wide agencies with rule-making powers to monitor risk in the economy after the crisis led to $460 billion of losses and writedowns across the continent, according to data compiled by Bloomberg.

“The operating environment for banks is likely to remain challenging, in particular in respect of credit losses linked to their loan portfolios,” according to the document, produced by the EU’s Economic and Financial Committee. The draft document, partially entitled “the effectiveness of financial support measures,” will be debated at the next meeting of EU leaders on June 18-19 in Brussels.

Government Pledges

EU governments approved about 311.4 billion euros for capital injections, 2.92 trillion euros for bank liability guarantees, 33 billion euros for relief of impaired assets and 505.6 billion euros for liquidity and bank funding support, a total of 3.77 trillion euros, the document shows.

The U.S. government and the Federal Reserve had spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, as of March 31.

Read moreEU Governments Approved $5.3 Trillion For Bank Rescue Costs, More Than German GDP

As credit markets froze, banks loaned millions to insiders

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CHARLOTTE, N.C. — Banks nationwide hold $41 billion in loans to directors, top executives and other insiders, a portfolio that experts say should be stripped of secrecy.

Insider lending to directors is particularly troublesome because it could cloud the judgment of people charged with protecting shareholders and overseeing bank management, the experts say.

At Charlotte-based Bank of America, those loans more than doubled last year, to $624.2 million — the biggest dollar jump in the country. The largest of them likely went to three directors or their companies. The surge came during the third quarter as credit markets froze, the government prepared to infuse banks with billions in tax dollars and the board approved the purchase of troubled Merrill Lynch.

Bank of America ranked fourth on the list of biggest insider lenders. At the top was JPMorgan of New York, which held $1.48 billion in insider loans, mostly by directors or their companies.

Read moreAs credit markets froze, banks loaned millions to insiders

The Obama Deception

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See also: Ron Paul: Obama Foreign Policy Identical To Bush


1:51:21 – 12.03.2009
Source: Google Video

Meredith Whitney: Credit cards are the next credit crunch

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(Reuters) – Prominent banking analyst Meredith Whitney warned that “credit cards are the next credit crunch,” as contracting credit lines will lower consumer spending and hurt the U.S. economy.

“Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is underappreciated is the role of credit-card availability in that spending,” Whitney wrote in the Wall Street Journal.

She said though credit was extended “too freely over the past 15 years” and rationalization of lending is unavoidable, what needs to be avoided was “taking credit away from people who have the ability to pay their bills.”

Whitney said available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone, and she estimates over $2 trillion of credit-card lines will be cut within 2009, and $2.7 trillion by the end of 2010.

“Inevitably, credit lines will continue to be reduced across the system, but the velocity at which it is already occurring and will continue to occur will result in unintended consequences for consumer confidence, spending and the overall economy,” Whitney said.

Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon, she said.

“Lenders, regulators and politicians need to show thoughtful leadership now on this issue in order to derail what I believe will be at least a 57 percent contraction in credit-card lines,” she said.

Read moreMeredith Whitney: Credit cards are the next credit crunch

How top financiers paid themselves £1bn before the wheels fell off

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A dozen senior bankers whose influence has shaped the financial world gave themselves pay awards valued at more than £1bn before the credit crunch spectacularly exposed the fragility of the profits they appeared to have secured for shareholders.

Although seemingly profitable during the boom, these same banks have since revealed losses, write-downs and emergency capital injections totalling more than £300bn.

In Britain, they include Barclays executives John Varley and Bob Diamond, who between them took more than £50m of awards in the past four years.

But the biggest winners were on Wall Street where Stan O’Neal – who was pushed out of Merrill Lynch in 2007 after shock losses from sub-prime mortgage investments made him one of the first high-profile casualties of the crisis – received pay, bonuses, stock and options totalling $279m (£196m) for less than nine years’ service. This is the highest amount for any Wall St executive in the Guardian’s study.

The figures are based on annual proxy statement filings in the case of US bank executives. These include a projection by the banks of the likely future value of stock and option awards. If such awards have not been cashed in they will have depreciated in value along with relevant bank share prices. Data for UK bank directors only values share-based awards that have been cashed in and therefore makes comparisons difficult.

The US bankers include Dick Fuld who presided over the collapse of Lehman Brothers – the world’s biggest ever corporate failure, which sent shockwaves throughout the global banking system last September. Fuld received annual awards totalling $191m from 1999 to 2007. The tally includes stock and options valued at the time at $111m.

Jimmy Cayne, the long-serving boss of Bear Stearns, also makes the list. Cayne received pay awards valued at $233m before Bear Stearns became the first big Wall Street investment bank to effectively fail, when it was forced to seek an emergency Federal Reserve loan in March last year.

Former US treasury secretary Hank Paulson, charged by George Bush with marshalling the $700bn taxpayer bailout efforts, had been another central Wall St figure – chairman and chief executive of Goldman Sachs – until joining the US government three years ago. Paulson’s taxpayer-funded troubled assets relief programme is in the process of handing out tens of billions of dollars each to firms including Goldmans, Morgan Stanley and Citigroup. Paulson’s pay awards from Goldmans totalled $170m over eight years.

His successor Lloyd Blankfein took home $231m over eight years. Fellow Goldman executive and later Merrill Lynch boss John Thain received $94.9m over six years, while Citigroup boss Sandy Weill and his successor Chuck Prince received $173m and $110m respectively over seven years.

Britain’s top five banks made two-year pre-tax profits of £76bn for 2006 and 2007 after credit and housing boom years combined with ever more exotic financial instruments to push their earning power to unprecedented heights.

Wednesday 28 January 2009
Simon Bowers

Source: The Guardian

ANOTHER £100BN BAIL-OUT FOR ‘INSOLVENT’ BANKS

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The emergency bail-out will total more than £100 billion

GORDON Brown will announce a further emergency bank bail-out totalling more than £100billion next week, it emerged last night.

The desperate measure, which will raise the taxpayer’s liability to more than £250billion, came as a report warned that Britain’s banks are technically insolvent.

The report, from analysts at Royal Bank of Scotland, said the credit crunch showed little signs of easing. In an indication of the extent of the problem, the report was titled Living on a Prayer.

Banks had so little cap­ital to lend, they were effectively insolvent, it said. It was a situation “not unusual” in an economic downturn, but showed little sign of abating in the coming months.

The Treasury and Downing Street refused to discuss the bail-out plan yesterday.

But details leaked out after the Prime Minister met Bank of England governor Mervyn King and Financial Services Authority chairman Lord Turner at Number 10.

Treasury sources indicated that an extra £108billion of public money will be used to guarantee loans and mortgages. Officials will be hammering out details over the weekend.

Read moreANOTHER £100BN BAIL-OUT FOR ‘INSOLVENT’ BANKS

£100bn bid to end home loan misery: Darling to guarantee new mortgages

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Alistair Darling is expected to back a plan to effectively underwrite the majority of new mortgages in the UK

ALISTAIR Darling is set to back a £100bn gamble with taxpayers’ cash in a desperate bid to kick-start the struggling mortgage market. The Chancellor’s plan involves effectively underwriting the majority of new mortgages in the UK to encourage big investors to give badly needed money to lending banks.

The proposed scheme means the UK Government would guarantee mortgage bonds, where banks parcel up individual home loans and sell them to investment firms. When the system works properly, banks have a source of money to loan to customers and investors get a return.

Related articles:
– Darling closes in on plan to kick-start bank lending (Times)
– Downturn escalates on both sides of the Atlantic (Telegraph)

But with many investors currently reluctant to risk their money on mortgages, Darling is preparing to guarantee the value of mortgage bonds to get the cash flowing again.

The total value of new mortgages involved has been estimated as up to £100bn, leading to claims last night that the scheme poses too many risks to taxpayers while offering too few rewards. And the new measures, coming on top of a £500bn scheme to guarantee banks’ borrowing and the £12bn cut in VAT announced in October, will raise further fears over the extent of the Government’s spending in the face of the credit crunch.

Read more£100bn bid to end home loan misery: Darling to guarantee new mortgages

The Great Credit-Crunch Hoax of 2008

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Remember the credit crunch? Of course, you do. We’d never seen anything like it, or so the highest financial authorities and their lapdogs in the news media told us – not in a cool, calm, and collected way, either, but in a breathless delivery that suggested imminent economic doom unless the government immediately undertook to “do something.” Which it did, of course, on a scale never before witnessed in U.S. history.

So, looking back, as people are prone to do at this time of year, we can clearly see the telltale signs of the financial disaster that struck the financial markets last autumn: the terrible credit crunch, the “frozen” credit that portended a complete economic “meltdown” unless the government took drastic measures to head it off. (The government’s spokespersons and the media’s talking heads never got straight whether the thing was very cold or very hot, as they reached for horrifying metaphors in all directions at once.)

But, wait, something is terribly wrong in the statistical record! The devastating credit crunch, the greatest threat to this country since the Russians exploded an H-bomb, the most menacing economic event since the stock-market crash of 1929, the . . . (sputter) . . . (sputter) . . . (words fail me in the face of such terrors as it evoked in the minds of government ministers and financial titans of all stripes) . . . . Well, I am rather embarrassed, on behalf of all these giants of the ruling elite, to inform you that in retrospect the Monster from Lack-of-Liquidity Lagoon doesn’t really show up as such in the most relevant statistical series.

Probably the most important measure of credit-market conditions is the amount of commercial-bank credit outstanding. These figures show that although the middle part of 2008 does stand out in the long view, it does so not by virtue of credit’s frightening contraction, but only by virtue of its hitting a six-month plateau from April through September.


Click here or on the graph to enlarge

At no time during that interval, however, did the amount of commercial-bank credit outstanding fall below the amount outstanding at the beginning of the year. In short, credit was actually ample, indeed, at an all-time high; it simply stopped growing as usual for six months, stuck at about $9.4 trillion, while one Wall Street wizard after another told NPR that “no money is moving, the credit market is completely shut down” or some such cock-and-bull story.

Read moreThe Great Credit-Crunch Hoax of 2008

UK’s refinancing timebomb

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CORPORATE BRITAIN is facing a refinancing timebomb this year as more than £50 billion of bank debt expires during the biggest credit crunch in global history.

The soaring cost of capital and the paucity of available debt financing will squeeze even blue-chip companies which need to renew or restructure existing loan facilities.

According to the ratings agency Standard & Poor’s, a £140 billion debt mountain needs to be refinanced in the UK between now and 2011. Meanwhile, a cumulative total of €1.6 trillion (£1.5 trillion) of debt rated by S&P will mature across Europe between now and then.

Read moreUK’s refinancing timebomb

Once Booming Dubai Goes Bust

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CBS Evening News: Following Wave Of Speculation, Real Estate Collapses In Middle East’s Capital Of The Ultra-Rich


Downturn In Dubai: The worldwide economic crisis has even struck the once-booming oil city of Dubai. As Sheila MacVicar reports, developers and investors are now facing a financial standstill due to mass overexpansion.


The Palm Jumeirah, Dubai, the world’s biggest artificial island. Home prices there are down 40 percent in the last year. Photo: ThePalmJumeirah.

(CBS) Over the years, booming oil prices helped turn Dubai into a land of opportunity and playground for the ultra rich.

But that was then and this is now. And as CBS News correspondent Sheila MacVicar reports, even Dubai is feeling the pinch of the worldwide economic crisis.

Related articles:
– Dubai dream turns sour (The Straits Times)
– Owner of Dubai landmarks eyes float (The Telegraph)
– Dubai Bonds Signal Economic “Depression,” ING Says (Bloomberg)

The gulf city state’s property prices went up as fast and as high as the towering buildings. But reality has suddenly intruded.

One investor said it was as if someone had thrown a switch, as the global credit crunch slammed a city that was, in effect, the world’s biggest construction site

It took just 20 years for Dubai to go from a desert outpost with a handful of office towers to a world metropolis, where one fifth of the world’s cranes operate, and property became a very hot commodity, with some people playing real estate the way others play poker.

Read moreOnce Booming Dubai Goes Bust

British banks may face second credit crunch in the New Year

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Rising unemployment may prompt new capital raisings

The worsening economic slowdown is increasing fears that Britain’s banks will have to raise still more capital next year in a market starved of investors.

Investment bankers are preparing for a second round of capital raising by UK lenders on top of the £65bn already declared. Having rebuilt their balance sheets after toxic debt writedowns, the banks face an increasingly dire economic outlook that threatens to take ordinary loan impairments from individuals and businesses to levels not seen since the early 1990s.

Under those worst-case conditions, impairment charges at the domestic banks – Barclays, Royal Bank of Scotland and the combined Lloyds Banking Group – could hit £60bn next year, according to Credit Suisse analysts.

“There could be a second credit crunch for banks, with a whole new round of writedowns late in 2009 as the economy filters back to banks,” a senior investment banker said. “They have so far only provisioned for the credit crunch – so they will need to undertake a whole new round of capital raising.”

A trading update earlier this year from HBOS, which will be bought by Lloyds next month, made grim reading for the sector. Impairments from commercial and residential property shot up, and the bank warned of more bad news to come as unemployment, the biggest driver of bad debts, continues to rise.

Read moreBritish banks may face second credit crunch in the New Year

Families turning to insurance fraud to beat credit crunch

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Hard-up families are increasingly turning to insurance fraud to help see them through the credit crunch.

Insurers have seen an 80 per cent increase since last year in the number of bogus household and vehicle claims, many of which are being made by middle-class families struggling to pay their bills.

Typical scams include householders hiding their valuables and staging a burglary in an attempt to claim thousands of pounds in cash, or dropping their old television down the stairs so they can claim for a new flatscreen model.

In 2007 the insurance industry detected 91,000 frauds, which is set to rise to more than 160,000, in 2008.

Fraud costs the insurance industry an estimated £1.6 billion every year, adding £40 to the average annual household premium.

Read moreFamilies turning to insurance fraud to beat credit crunch

Hyperinflation and then The Second Great Depression

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A future out of control, bankrupt financial institutions trying to hold on, limitation on credit severely limits ability of the economy to start up again, debt totally embraces our lives, handouts a state secret, soon cash infusions wont work for banks anymore, banks hold too much toxic garbage to even know if they are solvent. We are now 17 months into a credit crisis that continues to expose the corruption and incompetence of government, banking, Wall Street and transnational corporations. The situation has not stabilized and it won’t anytime soon. All we see are sweetheart deals for elitist corporations for which American taxpayers will pay for years to come. The future of our nation is totally out of control. For the last eight years our economy has been running on something for nothing, lies and deceit. The result will be hyperinflation and then the Second Great Depression.

Read moreHyperinflation and then The Second Great Depression

Fears of a million layoffs a month in corporate America

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As many as a million American jobs could be lost every month by next spring as businesses struggle to raise capital in financial markets consumed by fear, according to a new analysis.

November was the worst month in the US labour market since the oil crisis of 1974, as more than 500,000 US workers were laid off, according to official figures released on Friday.

But Graham Turner, of consultancy GFC Economics, says the rising cost of corporate debt is now flashing a red warning signal that far worse is to come over the next few months and job losses are heading for levels last seen in the 1930s Great Depression.

Corporate bond yields have rocketed since the credit crisis began as investors flee risky assets in search of safe havens such as US Treasuries. That effectively means many firms are being forced to pay eye-watering interest rates to borrow funds.

Turner says when the gap between the yield on high-risk company bonds and US Treasuries widens sharply, unemployment tends to shoot up – and current credit conditions are pointing to a doubling in the pace of layoffs, to more than a million workers a month, by spring.

‘The correlation is holding up all too well,’ he said. ‘It’s very disconcerting.’ He added that the pace of layoffs already happening in the US ‘is indicative of panic’. During the 1970s oil crisis the panic was relatively short-lived, he says. ‘But the worry now is that this will just roll on and on.’

Read moreFears of a million layoffs a month in corporate America

Profiles in Panic: The World of the Rich Collapses

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With Wall Street hemorrhaging jobs and assets, even many of the wealthiest players are retrenching. Others, like the Lehman Brothers bankers who borrowed against their millions in stock, have lost everything. Hedge-fund managers try to sell their luxury homes, while trophy wives are hocking their jewelry. The pain is being felt on St. Barth’s and at Sotheby’s, on benefit-gala committees and at the East Hampton Airport, as the world of the Big Rich collapses, its culture in shock and its values in question.


Illustrations by Barry Blitt.

A snapshot: East Hampton, late summer, a lawn party at a house on the ocean overlooking the dunes. The host is a prince of private equity known for dressing well. One of his guests is Steven Cohen, the publicity-shy billionaire whose SAC Capital, with $16 billion under management, is perhaps the most revered of the 10,000 or so hedge funds spawned by this giddily rich time. Nearby is Daniel Loeb, of Third Point, one of the better-known “activist” hedge funds, who hopes to move soon into a 10,700-square-foot, $45 million penthouse at l5 Central Park West, a Manhattan monument to the new gilded age. Gliding easily between them is art dealer Larry Gagosian, so successful at selling Bacons and Serras to Wall Street’s new titans-including to Cohen-that he now travels in his own private jet and has his own helicopter to take him to it.

Read moreProfiles in Panic: The World of the Rich Collapses

JPMorgan Chase to cut 9,200 jobs at Washington Mutual

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Reporting from New York — JPMorgan Chase & Co. said Monday that it would cut 9,200 jobs at Washington Mutual Bank, which it acquired Sept. 25 after WaMu became the nation’s largest bank to fail amid the continuing credit crisis.

The most cuts will come at Washington Mutual’s Seattle headquarters, where 3,400 pink slips are going out, and at the bank’s San Francisco center, where 1,600 jobs are being eliminated, JPMorgan spokesmen said.

The other 4,200 firings will be spread throughout the United States, with fewer than 300 in Southern California, they said.

No branch closures are planned in California as JPMorgan integrates Washington Mutual, so retail customers in the state will continue to see the same faces as always, the spokesmen said.

Read moreJPMorgan Chase to cut 9,200 jobs at Washington Mutual

1.5 Million Job Cuts So Far This Year, Factory Slump Probably Worsened: U.S. Economy Preview

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Nov. 30 (Bloomberg) — The recession engulfing the U.S. economy deepened this month as employers slashed more jobs and manufacturing contracted at the fastest pace in a quarter century, economists said before reports this week.

Payrolls shrank by 320,000 workers in November, the biggest one-month drop since the 2001 terrorist attacks, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department’s Dec. 5 report. The jobless rate may have jumped to 6.8 percent, the highest level since 1993.

Employment may keep deteriorating as the credit crunch continues to bite, with Goldman Sachs Group Inc. analysts forecasting a 9 percent unemployment rate by late 2009. The worsening outlook prompted President-elect Barack Obama to craft a plan to save or create 2.5 million jobs in two years to stave off what he called a “crisis of historic proportions.”

“All signals point to a very weak labor market and further weakening,” said Dean Maki, co-head of U.S. economic research at Barclays Capital Inc. in New York. “We should expect a large stimulus program shortly after Obama takes office.”

The 11th consecutive drop in payrolls would follow a 240,000 decline in October and bring the total number of jobs eliminated so far this year to 1.5 million. Factories probably reduced staff by 80,000 workers, according to the survey median.

The jobless rate was 6.5 percent in October.

Read more1.5 Million Job Cuts So Far This Year, Factory Slump Probably Worsened: U.S. Economy Preview

U.S. Unveils New Programs to Ease Credit

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Related article: Fed Pledges Top $7.4 Trillion to Ease Frozen Credit


Treasury Secretary Henry M. Paulson Jr. spoke at a news conference at the Treasury Department on Tuesday in Washington.

The federal government unveiled $800 billion in new loans and debt purchases on Tuesday, hoping another infusion of cash can help unfreeze troubled credit markets and make borrowing easier for homebuyers, small businesses and students.

The Federal Reserve said that it would buy up to $600 billion in mortgage-backed assets from the government-sponsored mortgage finance giants Fannie Mae and Freddie Mac. The agency would also buy up to $100 billion in debt directly from the companies and up to $500 billion in mortgage-backed securities.

“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” the Federal Reserve said in a statement.

Separately, the Fed and Treasury Department announced a $200 billion program to ease commercial lending on debts like student loans, car loans or business loans. The Fed would lend up to $200 billion to holders of asset-backed securities supported by car loans, credit card loans, student loans, and business loans guaranteed by the Small Business Administration.

Read moreU.S. Unveils New Programs to Ease Credit

Fed Pledges Top $7.4 Trillion to Ease Frozen Credit

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We will see hyperinflation, the dollar will fail and then the US will fail.
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Henry Paulson, U.S. treasury secretary, left, and Ben S. Bernanke, chairman of the U.S. Federal Reserve, look through their notes before a hearing of the House Financial Services Committee in Washington, Nov. 18, 2008. Photographer: Jim Lo Scalzo/Bloomberg News

Nov. 24 (Bloomberg) — The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”

Read moreFed Pledges Top $7.4 Trillion to Ease Frozen Credit