Banks Borrow Record $437.5 Billion Per Day from Fed
October 17th, 2008Via: Reuters:
Financial institutions ran to their lender of last resort for record amounts of cash in the latest week, under extreme pressure from the worst global financial crisis in a generation, Federal Reserve data showed on Thursday.
Banks and dealers’ overall direct borrowings from the Fed averaged a record $437.53 billion per day in the week ended October 15, topping the previous week’s $420.16 billion per day.
Some analysts are concerned that banks’ dependence on Fed lending might become long term and difficult to change.
“The banking system is going to become addicted to this very cheap money. Unwinding it will be very difficult,” said Howard Simons, strategist with Bianco Research in Chicago.
Australia: No Opt-Out of Filtered Internet
October 17th, 2008Would you like filtered, or filtered?
Via: Computerworld:
Australians will be unable to opt-out of the government’s pending Internet content filtering scheme, and will instead be placed on a watered-down blacklist, experts say.
Under the government’s $125.8 million Plan for Cyber-Safety, users can switch between two blacklists which block content inappropriate for children, and a separate list which blocks illegal material.
Pundits say consumers have been lulled into believing the opt-out proviso would remove content filtering altogether.
Gold Gap Down
October 16th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Just FYI.
Via: MarketWatch:
Gold futures tumbled Thursday, at one point down more than 5% to below $800 an ounce for the first time in one month, as nervous investors seeking cash sold futures contracts.
Some hedge funds were forced to liquidate their positions to cover losses in stocks and other markets, according to economists at research firm Action Economics. Global stock markets saw another day of heavy selling Thursday.
Gold for December delivery fell more than 5% to $793.50 an ounce, dropping below the $800 mark for the first time since Sept. 17. Futures were last down $35.50, or 4.2%, at $803.50 an ounce on the Comex division of the New York Mercantile Exchange.
The contract has surrendered more than $100 an ounce since Oct. 8.
Also pushing gold prices lower were news reports that central banks were selling gold. The latest weekly data from the European Central Bank showed 7.6 tons of gold was sold during the week ended Oct. 10, according to Bloomberg, citing Barclays Capital.
Central banks sell gold to earn more cash, but their selling is helping push the gold prices lower, analysts said.
UK: Defendants Can’t Deny Police an Encryption Key Because of Fears the Data it Unlocks Will Incriminate Them
October 16th, 2008Via: Linux World:
Defendants can’t deny police an encryption key because of fears the data it unlocks will incriminate them, a British appeals court has ruled.
The case marked an interesting challenge to the UK’s Regulation of Investigatory Powers Act (RIPA), which in part compels someone served under the act to divulge an encryption key used to scramble data on a PC’s hard drive.
Failure to do so could mean a two-year prison sentence or up to five years if the case involves national security.
The appeals court heard a case in which two suspects refused to give up encryption keys, arguing that disclosure was incompatible with the privilege against self incrimination.
Nikkei Down 11.4 Percent, Worst Fall Since ’87 Crash
October 16th, 2008Down 10%. Up 14%. Down 11%.
Via: Reuters:
The Nikkei average tumbled more than 11 percent on Thursday in its biggest one-day fall since the 1987 stock market crash, after weak U.S. data fuelled fears that bank rescue measures would not stave off a global recession.
SEC Agrees to Accounting Shift Sought by U.S. Banks Which Will Allow Them to Keep Pretending that They Haven’t Been Wiped Out
October 16th, 2008Via: Bloomberg:
The U.S. Securities and Exchange Commission agreed to back an effort by banks that may let them delay writedowns on a type of security that has declined in value during the collapse of the credit markets.
Banks in limited cases may account for so-called perpetual preferred securities as debt, letting them wait to write down their value, SEC Chief Accountant Conrad Hewitt wrote yesterday to Financial Accounting Standards Board Chairman Robert Herz. Hewitt’s interpretation can be used immediately in valuing the securities, which are issued without maturity dates.
The Potential Cost of the Latest Bailout Package Comes to $2.25 Trillion, Triple the Size of the Original $700 Billion Rescue Package
October 16th, 2008Via: IHT:
What happened during those three and a half hours is a story of high drama and brief conflict, followed by acquiescence by the bankers, who felt they had little choice but to go along with the Treasury plan to inject $250 billion of capital into thousands of banks — starting with theirs.
Paulson announced the plan Tuesday, saying “we regret having to take these actions.” Pouring billions in public money into the banks, he said, was “objectionable,” but unavoidable to restore confidence in the markets and persuade the banks to start lending again.
In addition to the capital infusions, which will be made this week, the government said it would temporarily guarantee $1.5 trillion in new senior debt issued by banks, as well as insure $500 billion in deposits in noninterest-bearing accounts, mainly used by businesses.
All told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package, which centered on buying distressed assets from banks. The latest show of government firepower is an abrupt about-face for Paulson, who just days earlier was discouraging the idea of capital injections for banks.
One Million Britons On The Dole By Christmas
October 15th, 2008Via: Guardian:
More than a million Britons will be out of work and on the dole by next month as the toxic fallout from Black October filters down to ordinary families, economists are warning.
A bleak Christmas lies ahead for many as the City turmoil spreads into the so-called real economy. Companies are now being squeezed on two vital fronts, with shoppers abandoning the high street and bank lending drying up, making it almost impossible for smaller businesses to get credit to stay afloat.
Geoff Hoon, the new Transport Secretary, yesterday warned that there were ‘potentially serious consequences for small business, for employment’ from the current crisis, reflecting private warnings to the Prime Minister’s new economic ‘war cabinet’ that job losses and business collapses later this year are now virtually inevitable.
Official unemployment figures for September, due on Wednesday, are expected to show another increase in job losses – although this will not yet be the sharp upward spike which is expected as the full consequences of last week’s stock-market crash filter through. Some forecasts suggest that unemployment will hit two million by Christmas.
Research Credit: Idleworm
The Godfather: Paulson Makes Offer Banks Can’t Refuse
October 15th, 2008The backstories for what follows are:
Unloading Toxic Waste Mortgage Backed Securities: “We Americans Were Very Clever”
Here’s part of an email that I sent to someone a couple of days ago:
I’ve never been as close to honest to god mobsters as I was when I was
contracted out to [Wall Street firm]. No shit, pinky ring wearing,
Hey-Tony, fuggetaboutit mobsters.
When that stuff went down, the night before the paper dump… And no law
enforcement was involved in the investigation. Man, that was it. You
just knew that this was going to be handled off the books.
So, if I hadn’t seen that stuff at [Wall Street firm], I might think, “Maybe, maybe
not,” about that Jim Willie story. But I believe it. Oh yeah.
Why aren’t more people saying what they saw inside [Wall Street firm]??? The IT
contracting team that I was involved with was literally one step above
janitorial level in that thing and I COULDN’T BELIEVE what we wound up
seeing. Where are the stories???
I’m not the only one who’s afraid to talk.
Well, I’ve told what I know, but I haven’t linked the name to it.
The feds/anyone looking to get even won’t have to look far to find A LOT
of people who knew what happened. The front-line managers in that chop
shop were up to their eyeballs in it.
…
A big component of this thing is 100% criminal activity. [Wall Street firm] knew
the loans were going to bogus applicants…
…
And now Unkle $cam comes along to make it all better with the confetti
paper. HAHAHA
Via: Yahoo Tech Ticker:
The day after the news about a watershed change in American capitalism, the story behind the story of how Hank Paulson forced the nations top 9 banks to take capital is coming to light.
After a discussion of the state of the banking system and U.S. economy, the bankers were then unceremoniously handed a one-page term sheet outlining Paulson’s plan. The bank CEOs “weren’t allowed to negotiate,” The WSJ reports. “Paulson requested that each of them sign. It was for their own good and the good of the country, he said, according to a person in the room.”
In sum, Hank Paulson made the bank CEOs an offer they couldn’t refuse — like a present-day (and real) Don Corleone.
Icelandic Shoppers Clean Out Supermarkets in Wake of Currency Collapse
October 15th, 2008Via: Bloomberg:
After a four-year spending spree, Icelanders are flooding the supermarkets one last time, stocking up on food as the collapse of the banking system threatens to cut the island off from imports.
“We have had crazy days for a week now,” said Johannes Smari Oluffsson, manager of the Bonus discount grocery store in Reykjavik’s main shopping center. “Sales have doubled.”
Bonus, a nationwide chain, has stock at its warehouse for about two weeks. After that, the shelves will start emptying unless it can get access to foreign currency, the 22-year-old manager said, standing in a walk-in fridge filled with meat products, among the few goods on sale produced locally.
Iceland’s foreign currency market has seized up after the three largest banks collapsed and the government abandoned an attempt to peg the exchange rate. Many banks won’t trade the krona and suppliers from abroad are demanding payment in advance. The government has asked banks to prioritize foreign currency transactions for essentials such as food, drugs and oil.
