The great interest rate ripp off part 2

As President Obama prepares to tackle the economy in his State of the Union address Tuesday, economists and industry executives are sifting through the data.

Wall Street Lower as Earnings Hold Court

By THE ASSOCIATED PRESS 5 minutes ago

Four Dow components reported results on Tuesday. In addition, a monthly housing index showed a decline in prices in November.

U.S. Home Prices Fell for Fifth Month in November

DealBook

Bad Asset Purchase Program Turning a Profit

By BEN PROTESS 7:06 AM ET

Some $9 billion still remains at risk in the Treasury Department program.

Verizon Reports a 2.6% Decline in Quarterly Revenue

By JENNA WORTHAM 8:17 AM ET

The company reported 872,000 new contract customers for the fourth quarter, and said that nearly 75 percent of them purchased smartphones.

Chinese Company Files Suit to Block Sale of Motorola Unit

By DAVID BARBOZA 44 minutes ago

Huawei, a longtime partner of Motorola, said it is concerned that the equipment and technology Motorola is selling to Nokia Siemens includes technologies developed by Huawei.

Food Makers Devise Own Label Plan

By WILLIAM NEUMAN

The food industry said it created a plan at the urging of Michelle Obama, but she gave it only tepid approval.

Post a Comment | Read (40)

Russia Seeks Foreign Investment to Fill Budget Gap

By ANDREW E. KRAMER

Moscow is hoping to attract foreign investors to buy billions in bonds and stakes of state-owned companies.

interestrateripoff · January 25, 2011

http://www.hindecapital.com/docs/hil_reports/Debt_No%20Jubilee7.pdf

victoria_siempre · January 26, 2011

Hi guys

I don't know if you watch RT on freeview at night; I got bored listening to Obama last night.

This is a great program that characterises bankers as fraudsters and financial terrorists, with the serious undertones of the dangers of a global fiat currency. Max Kaiser is like a CAGer on speed.

"

Keiser Report

25.01.2011 03:01

Episode 115

*Max Keiser takes his weekly look at the scandal behind the financial news headlines. Max and co-host Stacy Herbert talk about China’s ultimate yuppies, America’s sheet metal workers’ union and a hundred trillion in new credit. Max also talks to Reggie Middleton of Boombustblog.com about the foreclosure crisis and those lucky enough to miss out on Goldman’s Facebook deal."

http://rt.com/programs/keiser-report/

The sheet metal workers' bit is where they intervene at a Bank of America's (our MBNA friends from the North) shareholder meeting and prompt departure of executives.

x

v

xxxx

interestrateripoff · January 26, 2011

Breaking news

Bank of England split three ways over rise in interest rates

Martin Weale joined Andrew Sentance in voting for a quarter-point increase at this month's gathering of the nine-strong monetary policy committee
39 comments
[*] Ireland reintroduces 90% bank bonus tax

Brian Lenihan, Ireland's finance minister, has performed a U-turn on taxing bonuses

12 comments
[*] RBS and NatWest should be split up, says architect of banks' merger

Royal Bank of Scotland should also sell off insurance business, says Sir George Mathewson

Post your comment
- Barclays to shed up to 1,000 jobs
- BarCap fined £1.1m over handling of clients' money
[*] Citigroup bailout to make $12.3bn profit for American taxpayers

US treasury about to record a healthy profit as it sells remaining stake in Citigroup, rescued for $45bn during the financial crisis
- Crisis 'caused by mismanagement', says US commission

Davos 2011: Britain and eurozone 'still vulnerable to double dip recession'

Nouriel Roubini, one of the few economists to predict the 2007 crash, fears economic weakness in 2011
207 comments
[*] Wrexham & Shropshire rail franchise shuts after severe losses

Britain's most highly rated rail franchise, Wrexham & Shropshire, has collapsed

[*] FSA confirms JJB Sports £455,000 fine

Failure to reveal full details about two acquisitions led to a false market in JJB's shares for nine months, regulator concludes

[*] More business news

[*] Seven charged in carbon trading VAT fraud case

[*] Yahoo threatens more job losses

7 comments

[*] Toyota recalls up to 19,000 cars in UK

interestrateripoff · January 26, 2011

Mervyn King: I see trouble ahead

Sean O'Grady: Bank of England Governor issues dire warning on state of the economy.

James Moore: Is Mr Osborne trying to tip us off a cliff with his deficit shock therapy?

Outlook George Osborne was talking tough yesterday, with a nod to the heroine (Mrs Thatcher) whose name he dare not mention in public in case it upsets the voters. "We will not be blown off course by the weather," he boldly proclaimed, as the economy nosedived into a tailspin.

Google: The search engine that lost its way

The hegemony of Google on the internet is under attack from 'content farms' and other rivals

interestrateripoff · January 26, 2011

Policy split widening at Bank, minutes show

LONDON (Reuters) - Bank of England Governor Mervyn King faces growing opposition in his Monetary Policy Committee as inflation boosts pressure for an early interest rate hike, minutes of the committee's last meeting suggested on Wednesday.

U.S. Fed cautious on recovery, focused on joblessness

WASHINGTON (Reuters) - The Federal Reserve gave the U.S. economy a lukewarm assessment on Wednesday despite recent signs the recovery was strengthening, saying high unemployment still justified its $600 billion (378 billion pounds) bond-buying program.

7:51pm GMT

Cautious CEOs count on BRICs for growth

DAVOS, Switzerland (Reuters) - Global business leaders pinned their hopes on roaring growth in emerging markets at the start of the annual Davos forum on Wednesday but rising inflation and political risks cast a long shadow. | Video

6:56pm GMT

Banks urge UK to slow down liquidity rule phase-in

LONDON (Reuters) - Britain's insistence that its banks meet tough new rules ahead of global deadlines will hit the country's economic recovery, according to a top banking lobby.

6:44pm GMT

Ex-RBS CEO says UK should consider bank break-ups

LONDON (Reuters) - Britain should consider breaking up bailed out lenders Royal Bank of Scotland and Lloyds to boost competition, according to a banker who drove the build-up of RBS.

6:07pm GMT

TalkTalk axes 580 jobs in restructuring

LONDON (Reuters) - Internet and phone provider TalkTalk Telecom Group said Wednesday it was cutting around 580 jobs, or 13 percent of its workforce, in a restructuring to improve margins.

6:27pm GMT

BP, Rosneft to expand strategic alliance

DAVOS, Switzerland (Reuters) - Oil major BP and Russia's top oil producer Rosneft agreed on Wednesday to expand their strategic alliance beyond a share-swap and an Arctic development deal to work in third counties.

7:54pm GMT

Euro optimism builds, crisis strategy in focus

BERLIN (Reuters) - Ireland's government survived a budget vote on Wednesday and a rating agency cautiously welcomed Spain's efforts to shore up its savings banks as market pressure on weaker euro zone states eased and the single currency extended gains.

5:34pm GMT

German budget committee backs A400M funding plan

BERLIN (Reuters) - The German parliament's budget committee on Wednesday agreed to back a deal to rescue the troubled Airbus A400M military transporter plane, but urged the government to sell 13 units of the planned order.

7:27pm GMT

Stocks, oil gain as Obama speech spurs optimism

NEW YORK (Reuters) - World stocks and crude oil rose on Wednesday after U.S. President Barack Obama's pledge to trim deficit spending added to optimism that the Federal Reserve will retain its stimulative monetary policy.

interestrateripoff · January 26, 2011

26 January 2011 Last updated at 19:23

Two MPC members favour rate rise

Bank of England policymaker Martin Weale joined Andrew Sentance in voting for an interest rate rise earlier this month.

Austerity 'could cause recession'

The UK austerity drive could push the economy back into recession, famous investor George Soros warns at a gathering at Davos.

US new home sales in record low

Sales of newly built homes hit their lowest level in 2010 since records began 47 years ago, the US Department of Commerce says.

Davos 2011

Russian leader opens Davos 2011
Global economy 'in recovery mode'
Davos 2011: Day 1 as it happened
India and China dominate agenda
The world’s grandest focus group?
What's the point of Davos?
No regrets on rates

Mervyn King defends the Bank's response to higher inflation

interestrateripoff · January 26, 2011

[/url]

George Soros: austerity cuts risk pushing UK back into recession

George Osborne’s austerity Budget will push the UK back into recession unless the Government eases up on spending cuts, billionaire investor George Soros has warned.

Weale joins Sentance to vote for rate rise

A senior Bank of England policymaker has crossed the floor to call for interest rates to rise, minutes for the Monetary Policy Committee’s latest meeting have revealed.

MPC 'more concerned with high inflation than GDP fall'

Heritage investors shun giant Iraqi gas find

Shares in Heritage Oil unexpectedly plunged by 28pc on the news that it has made Iraq's biggest gas discovery for 30 years.

Iraq's biggest oil and gas fields

Profile: Tony Buckingham

BG finds more oil in Brazil

Federal Reserve concerned over US job creation

The Federal Reserve kept US interest rates at a record low on Wednesday, as the central bank again voiced its concern that the recovery is not creating enough jobs.

Dow Jones breaks through 12,000

IMF chides US for fiscal folly

Massive demand for first Euro bail-out bond

Healthcare Locums suspends its founder

Half of City bankers receive bigger bonus than last year

How can Murdoch 'eliminate' Hunt's fears?

F&C could 'go under if activist investor takes control'

Graduate unemployment hits 15 year high

One-in-five students left university without a job last year as graduate unemployment soared to its highest level since the mid-90s.

interestrateripoff · January 26, 2011

End of an Era of Bankers’ Contrition

By JACK EWING 11:09 AM ET

At the World Economic Forum, top bankers were taking more assertive positions against new regulations.

DealBook's Davos Diary

Fabrice Coffrini/Agence France-Presse — Getty Images

Davos’ Congress Center, site of the World Economic Forum Annual Meeting.

Fed to Continue Bond-Buying Program

By SEWELL CHAN 10 minutes ago

While noting that commodity prices have risen, the Fed cautioned that long-term inflation expectations had been stable.

Dow Touches 12,000 for First Time Since 2008

By CHRISTINE HAUSER 4 minutes ago

Some investors found reasons to be optimistic in Mr. Obama’s proposal to cut corporate taxes and increase spending for education, innovation and infrastructure.

New Home Sales in U.S. Rose in December

Profit Slips as Boeing Delivers Fewer Planes

By REUTERS 9:00 AM ET

The plane maker also predicted a hit to earnings partly from delays to the 787 Dreamliner program.

Beijing Intensifies Effort to Curb Rising Home Prices

By DAVID BARBOZA 12 minutes ago

China’s cabinet ordered cities to tighten the management of land supplies, raise tax rates on the sale of apartments or houses held for less than five years and set price controls for new homes.

DealBook

Former Galleon Trader Pleads Guilty to Insider Trading

By AZAM AHMED

A former Galleon trader, Adam Smith, admitted to using insider information and then destroying evidence following the Galleon founder's arrest in late 2009.

Financial Crisis Was Avoidable, Inquiry Finds

By SEWELL CHAN

A Congressional inquiry said bankers and regulators could have seen the 2008 crisis coming and stopped it.

Illinois Plan for Pensions Questioned

By MARY WILLIAMS WALSH

A novel method of determining pension fund contributions, variations of which have been adopted by other states, is under scrutiny by the Securities and Exchange Commission.

New Details on Troubled F-35 Fighter

By CHRISTOPHER DREW

Officials said that the problems were “readily solvable through engineering adjustments.” Lockheed Martin said it was already making some of the changes.

Toyota Recalls 1.7 Million Vehicles

By HIROKO TABUCHI 6:15 AM ET

The latest move by Toyota to fix design flaws follows other large-scale recalls last year.

Britain’s Economy Stalls, in Setback for Cameron

By JOHN F. BURNS and JULIA WERDIGIER

The slowdown prompted some economists to warn that the country was at increased risk of a “double dip” recession

interestrateripoff · January 26, 2011

http://market-ticker.org/akcs-www?post=178336

Release Date: January 26, 2011

For immediate release

Information received since the Federal Open Market Committee met in December confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions.

Actually, labor market conditions are deteriorating, and the FOMC is lying through its teeth.

Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward.

The housing sector sucks and commodity prices are not "rising", they're shooting the ****ing moon! How many days has cotton been lock-limit up again?

As for credit, the entire reason we're in this mess is too much of it. Yeah, I know, the FOMC wants more. Here junkie, have another hit of crystal meth. Yeah, I know, your teeth are falling out and you look like a crazed zombie (and you might actually be) but heh, it's all I know to suck off more of your money.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.

The actual mandate is for stable prices. Stable means just that - no change. Never mind that all economies are naturally deflationary due to productivity improvement. That fact isn't lost on me, or my readers, but it sure is on the "Cognescenti" in Washington DC and elsewhere.

Either that or they're lying. Pick one.

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

You've done such a great job over the last 100 years, why not continue ****ing it up?

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Heh look Maw, we're gonna all hang together this time......

Dennigers view on the Feds minutes.

What exactly is the long term? The next 1000 years?

interestrateripoff · January 26, 2011

http://finance.yahoo.com/news/Italy-confiscates-euro20-apf-1927243563.html?x=0

Italian authorities have confiscated $20 billion in counterfeit U.S. government bonds.

Authorities say the bonds were of a quality that theoretically could have defrauded financial institutions.

But a stop at a highway rest area where a group of Carabinieri military police were taking a break proved to be the undoing of the group.

A Carabinieri statement said officers did a routine search of the vehicles after the "suspicious" behaviour of the men and found "to their surprise" a briefcase with 40 bonds 0each valued at $500 million.

Officials said Wednesday that U.S. officials confirmed the bonds were counterefeit.

Hilarious that the US can print at will and get the Ben Bernanke to give them money, can't the US govt just accept the help of some professional counterfeiters. This isn't the first time this has happened one wonders how many of the fake unapproved US bonds are in the system.

interestrateripoff · January 26, 2011

http://cbo.gov/doc.cfm?index=12039

For the federal government, the sharply lower revenues and elevated spending deriving from the financial turmoil and severe drop in economic activity—combined with the costs of various policies implemented in response to those conditions and an imbalance between revenues and spending that predated the recession—have caused budget deficits to surge in the past two years. The deficits of $1.4 trillion in 2009 and $1.3 trillion in 2010 are, when measured as a share of gross domestic product (GDP), the largest since 1945—representing 10.0 percent and 8.9 percent of the nation's output, respectively.

For 2011, the Congressional Budget Office (CBO) projects that if current laws remain unchanged, the federal budget will show a deficit of close to $1.5 trillion, or 9.8 percent of GDP. The deficits in CBO's baseline projections drop markedly over the next few years as a share of output and average 3.1 percent of GDP from 2014 to 2021. Those projections, however, are based on the assumption that tax and spending policies unfold as specified in current law. Consequently, they understate the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law.

So that's:

$1.4tr - 2009

$1.3tr - 2010

$1.5tr - 2011

So in 3 years the US govt will have borrowed $4.2tr!!!!

They are just going to keep printing.

interestrateripoff · January 26, 2011

http://market-ticker.org/akcs-www?post=178314

But But But Deficits Were Coming Down!

Uh huh......

For the federal government, the sharply lower revenues and elevated spending deriving from the financial turmoil and severe drop in economic activity—combined with the costs of various policies implemented in response to those conditions and an imbalance between revenues and spending that predated the recession—have caused budget deficits to surge in the past two years. The deficits of $1.4 trillion in 2009 and $1.3 trillion in 2010 are, when measured as a share of gross domestic product (GDP), the largest since 1945—representing 10.0 percent and 8.9 percent of the nation's output, respectively.

Uh, no. First, calendar years guys. Second, here's the chart:

There's the real numbers, from Treasury itself. Those are not estimates, they're actual daily figures.

For 2011, the Congressional Budget Office (CBO) projects that if current laws remain unchanged, the federal budget will show a deficit of close to $1.5 trillion, or 9.8 percent of GDP.

That's $500 billion more than previously estimated. I wrote about it at the time, since when the FICA tax reductions were passed the "contribution" to the deficit (which was easily calculable at about $450 billion, all in) were trivially able to be figured. This of course meant that the alleged $1 trillion would not be $1 trillion, but rather would be $1.5 trillion, and that's if you believe the CBO's alleged "Deficit" numbers, which are bogus - as they account for cost-shifts and off-balance-sheet games.

In point of fact you have to look at the actual numbers "as borrowed"; when you do this you wind up with $1.7 trillion for calendar year 2010, and this means we're rather likely to post a $2 trillion number for calendar year 2011.

That is, if we get away with it, and I don't believe we will. From the Annual Ticker:

We're not going to get away with spending another $450 billion in deficits on top of the $1.6 trillion we blew last year. $2 trillion in deficits? Not a prayer.

The CBO now agrees with me on the size of the deficit. They were late, but better late than never.

The deficits in CBO's baseline projections drop markedly over the next few years as a share of output and average 3.1 percent of GDP from 2014 to 2021. Those projections, however, are based on the assumption that tax and spending policies unfold as specified in current law. Consequently, they understate the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law.

There will be no "expiration" as that term assumes we will get to 2014-2021 before this entire fraudpile blows up in our faces.

That's not going to happen, and the orgasmic reaction you're seeing in the market to the supposed "liquidity-driven rally" is amusing. Let's face reality here folks - liquidity is debt, not growth.

Debt has to be paid back - or defaulted.

Guess which one we'll be doing?

Dennigers take on this.

interestrateripoff · January 26, 2011

No, Really? (FCIC Report)

The actual report will be a book, nearly 600 pages. And no, I won't be able to read it in an hour when it's first released.
But I will read it, and likely will comment on it. It will also make an excellent footnote source, I suspect, for a little project that continues to move forward.....

But the narrative from The NY Times today is interesting nonetheless:

The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the

Federal Reserve
and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

Well that's a start. But the FCIC in general is missing the larger point, which is found here:

More at the link.

interestrateripoff · January 26, 2011

http://www.businessinsider.com/another-fake-bonds-turns-up-in-italy-2009-9

Sep. 22, 2009

Earlier this year there was that bizarre story of the two Japanese "tourists" found with hundreds of billions of presumably fake U.S. bearer bonds. So what happened to them?

Bloomberg: The two men later disappeared and the case is still under investigation. The U.S. government bonds found in the false bottom of a suitcase carried by the men were fake, a U.S. Treasury spokesman said June 18.

And in the meantime:

The U.S. Secret Service is examining more than $100 billion of U.S. government bonds confiscated in northern Italy in August, just two months after $134 billion of allegedly fake securities were seized in a nearby town.

The Secret Service is analyzing whether the bonds taken in August may be counterfeit, said a spokeswoman for the U.S. embassy in Rome. Italy’s financial police in Varese, north of Milan, arrested two individuals carrying the securities in a briefcase, according to a person involved in the case.

The two men currently are in custody as prosecutors in the town of Busto Arsizio carry out their investigation, the person said.

We presume it's all fake again. Still, weird that Italy continues to be the nexus of this bizarre sort of fraud.

Read more: http://www.businessinsider.com/another-fake-bonds-turns-up-in-italy-2009-9#ixzz1CB90AGpc

interestrateripoff · January 26, 2011

http://www.marketskeptics.com/2009/06/confiscated-us-bonds-were-headed-for.html

Monday, June 15, 2009

June 12 (Bloomberg) -- Italy’s financial police said they asked the U.S. Securities and Exchange Commission to authenticate U.S. government bonds found in the false bottom of a suitcase carried by two Japanese travelers attempting to cross into Switzerland.

The bonds, with a face value of more than $134 billion, are probably forgeries, Colonel Rodolfo Mecarelli of the Guardia di Finanza in Como, Italy, said today. If the notes are genuine, the pair would be the U.S. government’s fourth-biggest creditor, ahead of the U.K. with $128 billion of U.S. debt and just behind Russia, which is owed $138 billion.

Chicken feed compared to this one.

interestrateripoff · January 27, 2011

http://www.reuters.com/article/idUSLDE70P26G20110126

Britain's insistence that its banks meet tough new rules ahead of global deadlines will hit the country's economic recovery, according to a top banking lobby.
The British Bankers' Association told UK Finance Minister George Osborne on Wednesday a study of six countries showed Britain well ahead of key rivals in introducing globally agreed bank capital and liquidity rules.

This puts lenders in Britain at a disadvantage to peers in Canada, United States, Germany, France and Australia.

"This is most notable when the UK applies additional requirements to the agreed standards, when it implements them earlier than others, and when it does not use the flexibility that standards permit or not in a manner reflected elsewhere," BBA Chairman Marcus Agius said in a letter to Osborne.

World leaders agreed last November that new bank liquidity rules to absorb short-term shocks won't become mandatory until 2015 but Britain began introducing such a regime in 2009.

The UK Financial Services Authority said in November it would move in line with the global deadline but the BBA said banks were still having to build up liquidity buffers now.

"The very fact that none of the other countries has put in a liquidity regime and we have to hold some billions of pounds in additional liquidity is the first quantum shift in difference," BBA Chief Executive Angela Knight told Reuters.

More at the link.

interestrateripoff · January 27, 2011

http://www.telegraph.co.uk/health/healthnews/8285150/Casualty-units-shut-to-pay-for-private-finance-hospital-contracts.html

Since 2007, more than a fifth of England’s hospital trusts with active PFI hospitals have closed casualty departments, or published proposals to do so. In the same period, only four per cent of trusts without PFI hospitals have closed, or proposed to close, A&E units.

Fewer than a quarter of England’s 168 NHS hospital trusts have significant PFI hospitals in operation. But these trusts account for almost two-thirds of A&E closures or proposed closures.

Health campaigners said there was a “clear connection” between the “inflated” costs of the PFI and the cuts in A&E.

Most trusts insisted there was no connection — not all A&E closures are necessarily done on financial grounds and some are supported by local clinicians.

In recent days, The Daily Telegraph has disclosed how some PFI hospitals – built and operated by the private sector, and effectively rented back to the taxpayer – will end up costing the public purse more than 10 times their capital value.

The new Princess Royal University Hospital in Bromley, south London, cost £118million to build. It will end up costing taxpayers £1.2billion, including facilities management. South London Healthcare, the NHS trust responsible for the Princess Royal, has a second PFI hospital, the Queen Elizabeth in Woolwich.

The trust’s annual deficit was raised to £100million by the two deals. It has closed the A&E unit at one of its non-PFI hospitals, Queen Mary’s in Sidcup.

In internal documents seen by The Daily Telegraph, the trust stated that the “occupation costs” of the PFI hospitals were roughly double those of its non-PFI hospital. A spokesman admitted that its PFI contracts placed “some undeniable restrictions on our flexibility”. But she insisted that the decision to close A&E at Sidcup was “entirely unrelated” to PFI.

Looks like the PFI bad eggs are starting to hatch, the whole idea never made sense apart from a quick political short term boost which allowed vanity projects to be built quickly and it was up to someone else to pick up the cost down the line.

I wonder how long before we see stories about cancer care cut to pay for PFI. It's going to become a political nightmare, luckily none of the politicians that signed all of these deals will ever be held accountable for it all.

interestrateripoff · January 27, 2011

Breaking news

Financial crisis was 'avoidable', says official US report

Bankers, regulators, government, home-owners all to blame for credit crunch, says Financial Crisis Inquiry Commission
106 comments
JP Morgan boss condemns 'banker bashing'

An angry Jamie Dimon tells World Economic Forum that blanket criticism of banking industry is unfair
226 comments
Bank break-up 'will hit taxpayer'

Executives in charge of government's stake in bailed-out banks say taxpayers will suffer if John Vickers recommends that they are split up
21 comments
[*] Japan's credit rating downgraded

Standard & Poor's has cut Japan's rating to AA-, citing concern over the country's high deficit and the threat of deflation
- US economy still struggling, Fed warns

Davos: Bob Diamond on the year ahead

The chief executive of Barclays talks about the 'post-Basel world' and optimism over the US economy
[*] Sarkozy says euro break-up is unthinkable

France's president rejects speculation over the future of the single currency, saying 'we could not possibly entertain the idea' of a break-up

57 comments
- MPC split three ways over interest rates
- Retailers cut equivalent of 10,000 jobs last month
[*] More business news

[*] BSkyB spends £7m on News Corp bid

interestrateripoff · January 27, 2011

http://www.guardian.co.uk/business/2011/jan/27/financial-crisis-avoidable-fcic-report

Wall Street bankers, regulators, government officials and even homeowners all share part of the blame for the 2008 financial crisis, according to a scathing US official investigation into the meltdown published today.

The 545-page Financial Crisis Inquiry Commission (FCIC) report reads like a financial thriller in which there are very few heroes. One chapter on the boom and bust fiasco is entitled "The Madness".

The commission concludes that the crisis was avoidable and was caused by:

• Widespread failures in financial regulation, including the Federal Reserve's failure to stem the "tide of toxic mortgages".

• Dramatic breakdowns in corporate governance, with too many firms acting recklessly and taking on too much risk.

• An explosive mix of excessive borrowing and risk by households and Wall Street.

• Policymakers who were ill-prepared for the crisis and lacked a "full understanding of the financial system they oversaw".

• Systemic breaches of accountability and ethics at all levels. Mortgage-holders took out loans they never intended to pay; lenders made loans they knew the borrowers could not afford.

"As this report goes to print, there are 26 million Americans who are out of work ... Nearly $11tn in household wealth has vanished ... The collateral damage of this crisis has been real people and real communities. The impacts of this crisis are likely to be felt for a generation," the report says.

So far, the 2008 financial crisis has led to few prosecutions. The authors interviewed more than 700 witnesses to compile the report and said they had referred potential violations to the appropriate authorities.

While the crisis was years in the making, it was the collapse of the housing bubble that triggered the 2008 collapse. Trillions of dollars in risky, sub-prime mortgages had been embedded in the system. When the housing bubble burst, the impact was magnified by complex financial derivatives based on those loans, whose risks had been woefully underestimated.

Behind the collapse was the rewiring of Wall Street. From 1987 to 2007, the amount of debt held by financial sector soared from $3tn to $36tn (£1.88tn to £22.5tn). Subprime mortgage loans went from 5% of loans in 1994 to 20% in 2006. At the same time, financial services firms constituted an increasingly disproportionate part of the US economy – 27% of all corporate profits in the US compared with 15% in 1980.

The crisis itself was avoidable – the result of "human action and inaction, not of Mother Nature or computer models gone haywire". And in large part it was led by government mismanagement.

The Federal Reserve played a central role in enabling the crisis. It failed in its duty to set more prudent limits. Financial firms "made, bought and sold mortgage securities they never examined". They invested blindly and did not care if the investments were defective. Compensation "too often rewarded the quick deal, the short-term gain" and "encouraged the big bet", the report concludes.

Aggressive expansion left banks unable to manage their own assets – and few escaped blame.

For Citigroup, singled out for heavy criticism, "too big to fail meant too big to manage". Goldman Sachs multiplied the effects of the collapse of sub-prime loans by funding and creating billions of dollars of bets based on the back of the loans. AIG's senior management was ignorant of the terms and risks of the insurer's $79bn derivatives exposure. It was a "costly surprise" to Merrill Lynch's top managers that their $55bn investment in "super-safe" mortgage securities had resulted in billions of dollars in losses.

Top officials, including Alan Greenspan, the former Federal Reserve chairman, were also blamed. The FCIC said the drive towards deregulation over the past 30 years helped to create the conditions for disaster. "What else could one expect on a highway where there were neither speed limits nor painted lines?" asks the report.

Clearly this whole crisis could and should have been avoided, still it's only a few jobs and a few trillion nothing to worry about.

interestrateripoff · January 27, 2011

http://ftalphaville.ft.com/blog/2011/01/18/461881/the-mechanics-of-irish-euro-printing/

The Irish Independent last week drew attention to a much-missed detail in the execution of Ireland’s emergency loan programme.
As it turns out, the Irish central bank has been partly financing the programme’s loans with the printing of its very own euros.

As the Irish Independent stated:

EMERGENCY lending from the ECB to banks in Ireland fell in December, the first decline since January 2010, but only because the Irish Central Bank stepped up its help to banks.

The Irish Independent learnt last night that the Central Bank of Ireland is financing €51bn of an emergency loan programme by printing its own money.

ECB lending to banks in Ireland fell from €136.4bn in November to €132bn at the end of December, according to the figures released by the Irish Central Bank yesterday.

According to the ECB, the Irish central bank is perfectly within its rights to create its own funds if it deems it appropriate — providing that the ECB is notified.

More at the link.

interestrateripoff · January 27, 2011

http://ftalphaville.ft.com/blog/2011/01/24/466731/buiter-on-europes-secret-liquidity-operations/

Willem Buiter wants you to familiarise yourself with the ELA.
That’s the Emergency Liquidity Assistance that the eurozone’s national central banks (NCBs) are able to provide their local banks under some legal fuzziness in the eurozone. The acronym has managed to grab a few headlines over in Ireland, but for the most part ELAs remains relatively unknown. Soo too, do the details of them.

In theory ELAs are pretty much independent since they’re not (technically) part of eurosystem operations. National central banks can offer them where and when they see fit — as long as they follow a few basic rules. For instance, the ELA has to be consistent with the EU’s Monetary Financing Prohibition. And according to ECB opinions, any ELAs extended should also be temporary, extended to illiquid institutions (not insolvent ones) and against decent collateral.

More at the link.

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