EU Nations Commit 1.3 Trillion Euros to Bank Bailouts

Oct. 13 (Bloomberg) — France, Germany, Spain, the Netherlands and Austria committed 1.3 trillion euros ($1.8 trillion) to guarantee bank loans and take stakes in lenders, racing to prevent the collapse of the financial system.

The announcements came as Britain took majority stakes today in Royal Bank of Scotland Group Plc and HBOS Plc. The coordinated steps followed a pledge yesterday by European leaders to bolster market confidence as the global economy slides toward recession.

“What it should do is stabilize the banking system,” said Peter Hahn, a fellow at London’s Cass Business School and former managing director at Citigroup Inc. “Will it stop us from having a recession? No, nothing is going to stop us from having a recession.”

Read moreEU Nations Commit 1.3 Trillion Euros to Bank Bailouts

Fed Lets Europe Central Banks Offer Unlimited Dollars, Removes Swap Limits

Fed Releases Flood of Dollars, Market Rates Fall

Oct. 13 (Bloomberg) — The Federal Reserve led an unprecedented push by central banks to flood the financial system with as many dollars as banks want, backing up government efforts to revive confidence and helping to reduce money-market rates.

The European Central Bank, the Bank of England and the Swiss National Bank will offer European banks unlimited dollar funds with maturities of seven, 28 and 84 days at fixed interest rates against “appropriate collateral,” the Washington-based Fed said today. The Fed had capped at $380 billion the currency it would swap with the three central banks.

Global economic leaders have redoubled efforts to unfreeze credit markets and avert the worst worldwide recession in thirty years after last week’s 20 percent slide in the MSCI World Index. Policy makers from the Group of Seven nations are committed to taking “all necessary steps” to stem a market panic, and European and U.S. governments today outlined plans to avoid banks failing.

Read moreFed Lets Europe Central Banks Offer Unlimited Dollars, Removes Swap Limits

JIM ROGERS: GLOBAL BANKERS HAVE UNLEASHED INFLATIONARY HOLOCAUST

Legendary investor Jim Rogers warned during a CNBC interview this morning that global central banks are creating the environment for an inflationary holocaust by their ceaseless overprinting of currency, a measure that isn’t even successful in stabilizing the stock market.

Rogers said that the only solution to the market crisis was to let failing banks and speculators go bankrupt and stop pumping endless amounts of liquidity into the system, labeling it outrageous that responsible investors and taxpayers are being made to bail out crooks on Wall Street.

The way to solve this problem is to let people go bankrupt, Rogers stressed, All of this pumping money into the system is not going to save it – see what the market is saying, its saying we dont buy that, let people go bankrupt, he added.

Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who arent sound and we will start over. This is the way the world has worked for a few thousand years, said Rogers.


Added: Oct: 12, 2008

Source: YouTube

States warned about impending mortgage crisis

Bush administration, financial industry thwarted efforts to curb greed

More than five years ago, in April 2003, the attorneys general of two small states traveled to Washington with a stern warning for the nation’s top bank regulator. Sitting in the spacious Office of the Comptroller of the Currency, with its panoramic view of the capital, the AGs from North Carolina and Iowa said lenders were pushing increasingly risky mortgages. Their host, John D. Hawke Jr., expressed skepticism.

Roy Cooper of North Carolina and Tom Miller of Iowa headed a committee of state officials concerned about new forms of “predatory” lending. They urged Hawke to give states more latitude to limit exorbitant interest rates and fine-print fees. “People out there are struggling with oppressive loans,” Cooper recalls saying.

Hawke, a veteran banking industry lawyer appointed to head the OCC by President Bill Clinton in 1998, wouldn’t budge. He said he would reinforce federal policies that hindered states from reining in lenders. The AGs left the tense hour-long meeting realizing that Washington had become a foe in the nascent fight against reckless real estate finance. The OCC “took 50 sheriffs off the job during the time the mortgage lending industry was becoming the Wild West,” Cooper says.

This was but one of many instances of state posses sounding early alarms about the irresponsible lending at the heart of the current financial crisis. Federal officials brushed aside their concerns. The OCC and its sister agency, the Office of Thrift Supervision (OTS), instead sided with lenders. The beneficiaries ranged from now-defunct subprime factories, such as First Franklin Financial, to a savings and loan owned by Lehman Brothers, the collapsed investment bank.

Read moreStates warned about impending mortgage crisis

Ron Paul added to Louisiana presidential ballot

When Louisiana voters go to the polls to chose a president on Nov. 4, they will find a name on the ballot many might not expect – Ron Paul.

Louisiana will be only one of two states where voters will have the opportunity to pull the lever for Paul, a congressman from Texas who ran unsuccessfully for the Republican presidential nomination. Paul built a wide coalition of grass roots support that helped him raise tens of millions of dollars for his campaign.

Paul has been added to the Louisiana ballot on the top of the Louisiana Taxpayers Party ticket with Barry Goldwater, Jr., a former Republican congressman from California and the son of the late Barry Goldwater, the Republican presidential nominee in 1964.

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Only state intervention can save us now, says Merkel

BERLIN: Only the state can restore trust to financial markets now, German Chancellor Angela Merkel was quoted as saying on Sunday amid reports that Berlin was about to unveil a huge rescue package for its banks.

“Only action by the state is capable of restoring the necessary trust,” Merkel was quoted as saying by the Bild am Sonntag weekly following talks on Saturday in France with President Nicolas Sarkozy.

“In this it is important that countries do not act unilaterally but that we coordinate at European and international level and then implement the measures within our national responsibilities,” Merkel said.

Read moreOnly state intervention can save us now, says Merkel

Ten people who predicted the financial meltdown

The financial events of recent weeks have filled many of us with shock and panic. Surely no one could have predicted that we would be in this mess? Well, actually, they did. Here are ten people who saw the financial meltdown coming…

1. Vince Cable – deputy leader of the Liberal Democrats

Here is a question Mr Cable’s posed to Gordon Brown, then Chancellor, during Treasury Questions back in November 2003: “The growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level. What action will the Chancellor take on the problem of consumer debt?”

Mr Brown did not answer how he would solve the problem, merely replying that: “We have been right about the prospects for growth in the British economy, and the hon. Gentleman (Mr. Cable) has been wrong.”

2. Christopher Wood – chief strategist of CLSA, a broking firm in the Asia-Pacific Market.

In October 2005 Mr Wood wisely declared: “Investors should sell all exposure to the American mortgage securities market.” In an interview in 2007, he said: “Some institutions have been behaving like leveraged speculators rather than banks… The UK economy is heading for a sharp shock. It just remains to be seen how bad.”

3. Founders of www.stock-market-crash.net – website aimed at investors

The writers of this site claim that predicting crashes is, in fact, easy: “One of the greatest myths of all time is that market crashes are random, unpredictable events. The lead up to a market crash is often years in the making. Certain warning signs exist, which characterize the end of a bull market and the start of a bear market. By learning these common warning signs, you can liquidate your investments and prosper by shorting the market.”

Read moreTen people who predicted the financial meltdown

Financial crisis: Countries at risk of bankruptcy from Pakistan to Baltics

A string of countries face the risk of “going bust” as financial panic sweeps Asia, Eastern Europe, and Latin America, raising the spectre of a strategic crisis in some of the world’s most dangerous spots.

Nuclear-armed Pakistan is bleeding foreign reserves at an alarming rate leading to fears that it could default on its loans.

There are mounting fears that Ukraine, Kazakhstan, and Argentina could all now slide into a downward spiral towards bankruptcy, while western banks exposed to property bubble across Eastern Europe have seen their share price crushed.

The markets are pricing an 80pc risk that Ukraine will default, based on five-year credit default swaps (CDS) – an insurance policy on a country being able to pay its debts.

The country’s banking system has begun to break down after years of torrid credit growth; its steel mills are shutting as demand collapses; and the political crisis is going from bad to worse.

Read moreFinancial crisis: Countries at risk of bankruptcy from Pakistan to Baltics

UK: Government to save HBOS and RBS

Government set to become biggest shareholder in top banks as Japanese weigh bid for Morgan Stanley

THE government will launch the biggest rescue of Britain’s high-street banks tomorrow when the UK’s four biggest institutions ask for a £35 billion financial lifeline.

The unprecedented move will make the government the biggest shareholder in at least two banks.

Royal Bank of Scotland (RBS), which has seen its market value fall to below £12 billion, is to ask ministers to underwrite a £15 billion cash call.

Halifax Bank of Scotland (HBOS), Britain’s biggest provider of mortgages, is seeking up to £10 billion.

Lloyds TSB, which is in the process of acquiring HBOS in a rescue merger, wants £7 billion, while Barclays needs £3 billion.

The scale of the fundraising could lead to trading at the London stock market being suspended. This would give time for the market to digest the impact of the moves.

Read moreUK: Government to save HBOS and RBS

Taliban leader killed by SAS was Pakistan officer

British officials covered up evidence that a Taliban commander killed by special forces in Helmand last year was in fact a Pakistani military officer, according to highly placed Afghan officials.

The commander, targeted in a compound in the Sangin valley, was one of six killed in the past year by SAS and SBS forces. When the British soldiers entered the compound they discovered a Pakistani military ID on the body.

It was the first physical evidence of covert Pakistani military operations against British forces in Afghanistan even though Islamabad insists it is a close ally in the war against terror.

Britain’s refusal to make the incident public led to a row with the Afghan president Hamid Karzai, who has long accused London of viewing Afghanistan through the eyes of Pakistani military intelligence, which is widely believed to have been helping the Taliban.

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