As more and more of my mother’s house is being taken apart by my sister’s actions to sort, to sell, to ask about or to keep the things here in order to satisfy my Dad’s estate and mine that are wrapped up here together, the more the memories of these things awaken that remind me of why my had them, when she bought them,
and why she had me come over to her house to clean it, organize it for her, to re-order all these things around her and put my time into caring for them whether it was crystal, or antiques, or porcelain collectible dolls, or doll patterns, or books, collectibles or doll making supplies, porcelain doll making molds and cast pieces she had made for baby dolls, or her vast collection of cookbooks and recipes, many of them hand-written or clipped from magazines and newspapers – among other things. She loved buying things and knew the story of how she and Daddy had bought each one, where they went out to eat that time and a story about how she came to find each one even though there are very likely over 200,000 individual items in this house, most of them hers and Dad’s but also a vast number of mine because she took nine households of my things over the years and hoarded it as she called me to get it and then wouldn’t allow me to have it or remove it in the thousands of times across thirty something years, (we’ve lived here 42 years in total with me in and out of this house living here on a number of occasions as well) that I’ve really felt this was my home no matter where else I lived or stayed and coming here staying for weeks at a time over the years to help them fix something, clean something, organize something, do some plumbing, change flooring or whatever needed to be done.
Now, as my sister dismantles it, I feel disdain when she tells me hand-cut leaded crystal is to be sold for 50 cents to a dealer with a lot that is 250 pieces of antique, crystal, collectible and modern pieces of glass mixed together that Mom had collected over the years and had me come over to dust, wash, handle so carefully, occasionally pack up for her impeccably with great care on numerous times she wanted them out of her sight for awhile. Now, the $65 or $120 each value that many of them had and even though still in perfect or nearly perfect condition without a chip on them because of my stewardship of them over the years, they aren’t worth anything in the market according to my sister and when she clinks them together in packing the pieces in a bunch of paper into a plastic tub or as she photos them to sell, I come running at the sound and she thinks that is funny because to her they are not worth anything but a waste of her time and effort as is everything here even as she claims she is trying to get some value for them.
About two dozen Precious Moments dolls in miniature still in their unopened boxes and in the display box from my Mom’s art, antiques and collectibles store she had in the 80’s and 90’s were sitting near the glassware and writing this, I’m wondering where my sister has put those now and whether she will be toting all of them off to a thrift store or listing them for 50 cents each as a lot on Ebay despite their obvious value and still being collectibles today that would easily bring $10 or more apiece.
A large lawn and leaf bag full of Cabbage Patch Kids doll heads for making those dolls is in that room too. Are they worth something or is it something my sister will simply toss since it has no value to her? If an elegant working gramophone in its beautiful wood cabinet is only worth $600 based on her listing it on craigslist with two needles for it and albums and since she expects to not get even that from it and knock down the price, is anything here going to bring any of its real price or value to the estate of my Dad or to be given any time in the marketplace to get that value? My mind reels with the prices I’ve had to pay to get things even on craiglist or Ebay and she seems determined to bring as little as possible from the items believing that will move them faster or from any of it perhaps to prove herself right about none of it being worth anything in the marketplace today and how we need to get rid of it all as quickly as she can while doing it by herself and without our help to do it better and faster.
And, my estate along with all of my property and belongings are here too. As one of two executors of Dad’s estate, my sister says it is illegal for her to pay us (me and my daughter who my Dad asked to live here while this all goes on and until the house is sold and divided properly and equally among the twelve heirs and beneficiaries) – to help her and illegal for her to allow us to list any of it, find buyers for specific items or groups of things or to sell them for the estate and us get a 20% commission or small fee for doing that. I know that isn’t accurate, it can’t be right. We could be administrators for the estate on behalf of the executors – that’s what the law says and Daddy talked about with us, but no – and if an outside company is allowed to make a commission of 50% plus their costs, why couldn’t we be given a commission for selling the things and participate in getting the most money from the specialized things?
So, as my sister selects things to buy from the estate at whatever discounted price she is giving for it – which I’m hoping she is writing down and being above board about – and that she has placed to take home with her and put on her own Ebay and Etsy stores or in her antiques booth at a store where she lives, even though she is an executor of Dad’s estate, we’re not allowed to make sure the estate realizes as much of the market value of these collectibles, antiques and specialized items and collections of things as we could for the estate even though Daddy specifically asked us to do that while living here to keep it secured and to maintain everything until the house is sold. I wouldn’t even be here if he had not personally insisted upon that from me and he asked me that on the phone at least twice a phone call across several months of phone calls before I came and then demanded I say yes to him in person on three different occasions in the last month before he died after I came here – (I was here for his last month alive, and have been here since then because he had me move here and my other family members insisted on me doing that as the right thing to do.) He asked it of my daughter and asked that of me more than once in a way that was obviously very important to him and where saying, “no” wasn’t an acceptable answer from either of us. We both agreed to do that. We have been doing that. We are doing that. Dad thought that the estate would make it possible for us to work with getting the most value from everything here that Mom had bought and invested his money in and had me take care of and had hoarded over the years – collections of things with large numbers of items in them, some of which have real value to collectors and come of which obviously would not. And, now the two executors named among our family members, are not going to do that, nor allow us to effectively participate in making that happen.
And, every part of me is saying, there are over 150,000 items here in anyone’s estimation and the family members agree that is the case. There are likely more like 200K items with a basement and attic filled with antiques from Mom’s shop and other things she collected after that until her death in 2013. Even if the average of $1 is gained from the sale of each item – averaging across the whole total, that is $150,000 – $200,000 that should be available to the estate. And, hundreds if not, thousands of items should get far in excess of $1 since they are antiques like curio cabinets and chairs and collectibles and collections of desirable items collectors seek to have like hundreds of Matchbox and the other brand of little cars which as a group would probably be worth something to people who want to add them to their own collections.
There are also tens of thousands of photos from this particular time in America from the 40’s to the present that Dad took across life in the South and in Florida during the CUban Missile crisis days when we lived there and as the first rockets to the moon were being designed and tested at Cape Canaveral and then called Cape Kennedy – to photos and 8mm films of driving across America several times to go live in California from Georgia and then back again to live in Georgia and back to live in California along with our yearly trek to the Carolinas where our family is from during those years as well.
There are photos specific to the space race that Dad and us were so much a part of because of his work at Lockheed and photos and memorabilia from California in the late 60’s and 70’s when we lived there including a program from the first showing of Hello Dolly at Graumann’s Chinese Theater in Los Angeles where we got to see it because someone had not picked up their tickets at the window during the last few minutes before the show started and Daddy had just come up to ask if there were any as we were having a touristy moment in Hollywood when we lived in the San Fernando Valley. It would seem that would be worth something in the right memorabilia auction or by emailing it somewhere that has a museum of those kinds of things – my sister and my son that is acting as executors are not going to do that because it “takes too much time” in their estimation, but they won’t let me and my daughter do it either.
Not talking about the pictures from calendars of planes that are seen on this wall – There were times Daddy was on the flight line running tests because of his engineering job with Lockheed, loaned out to Boeing and Graumann and back in his days at Martin and McDonnell-Douglas aeronautics that he has photos and film of planes from sitting here.
There are also photos that Mom and Dad got from other family members that show life in the South in original photographs and their negatives of the South from the 30’s to the 50’s with peach farming long before the 50’s in the Piedmont areas of South Carolina and photos from North Carolina where both Mom’s and Dad’s family had lived before that.
This estate of Dad’s also has test reels of new planes flying over the desert sitting back in the room where I had collected up all the family photos and vast numbers of assorted documents from his work along with all these collectibles Mom sought in crystal and dolls, antiques and china, Pfaltzgraff pieces including lots of serving pieces that to replace even one piece of the set would cost well over $35 even if there was a sale at the replacement site online to a large plastic bin tub full of slotcar tracks that my sons had when they lived here and I found up in the attic to rare memorabilia from events including ones in California, a collection of souvenir postcards and old postcards from the 50’s and 60’s from California and Florida as well as across the country where we traveled by car, vast numbers of stamps from different times that were never catalogued but saved such that they weren’t damaged by Dad especially and memorabilia from the LA Museum of Art and other museums and attractions from the 50’s, 60’s and 70’s. Those all should be handled with an intention of getting value from them in the money they should be bringing to the estate but no, it won’t be in the way it is being done now. The photos won’t be digitized as Daddy asked. And as I said, if the estate even received an average of $1 each across all 200K items, that is $200,000 – but not if they’re being given away or drastically discounted.
About CricketDiane –
I’ve been creating nearly every day since I was a kid and that is over 50 years. I’ve created in numerous ways in a range that moves from art to problem-solving to inventing, creating music, sculpting and painting to writing and doing various computer / online based projects.
“It is better to make the effort to move forward and release the flow of ideas to work with them and do things creatively, create things and invent and write and make – I definitely know that by experience.” – cricketdiane, 2018
The March for Science is going to be on April 14 this year. It is important this year more than ever to stand up for Science and for STEM in the United States as it is all under attack daily throughout our government in its current iteration.
At a time when America needs science and technology to make significant leaps forward to catch up with the rest of the world who has been supporting education, higher education, science, math, technology and engineering with massive efforts, our nation’s leaders have chosen to make war on science at every opportunity and in every agency, every policy, every possible way.
We need education to support STEM now more than ever and to support education for our children and adults to be competitive in a global playing field where we have fallen behind. Now, rather than supporting our nation to be in a leadership role in science, technology, innovation and education, it is being de-funded, demeaned, derided, discredited, dismantled and destroyed.
These actions will set our nation behind by years upon years against other nations’ efforts supporting STEM, higher education and science, in particular. Please join the March for Science – whether you are a scientist or not to show America’s business leaders and political decision-makers that we stand together supporting fact-based and evidence-based decision making, scientific reason and educated thinking.
The March for Science is being organized for April 22, 2017 and a Climate March is set for April 29, 2017.
Divide and conquer are being used on us to keep our voices and our knowledge out of being joined together for many of these organizing marches.
Many people have asked me why scientists would march at all and for what reason. There is an outright war on science right now and on scientific facts as facts that require a real response from the majority of people who believe evidence based facts and science are critically important.
For too long, scientists, engineers, academics, architects and researchers have simply focused on funding and the science or engineering they were doing. But underlying those efforts was the assumption that we had all agreed on the basic integrity of facts and accurate data as a premise.
Now, we are challenged as a community of scholars and those in the practice of science and its applications, to fight for the substance and importance of that very premise – that evidence based facts are facts and that it is not acceptable to politically alter those facts to suit a given purpose of the moment.
Don’t tell me that, “I’m not a scientist, so it doesn’t matter to me.” It does and will affect everything for scientific fact to no longer be accepted as facts.
Don’t tell me that, “if this effort fails to support some other aspect about diversity or inclusion that you can’t support it.” Stand up and let this opportunity do both.
This is far more basic than that although welcoming to include diversity and inclusion within this effort to stand up for science and evidence based facts, scientific method and respect for its rigorous path to accuracy, peer review and repetition of results before acceptance.
What stops this full on assault against the facts as facts – if not ALL of us standing up who have a vested interest in science, scientific integrity and the importance of facts as accurate and not distorted or altered to suit politics or business or ideologies of the moment.
I said to someone recently that never in our lifetimes have we had to fight for the basic premise of facts as facts. But, that was wrong. Scientists had their work denigrated, funding removed, careers and reputations destroyed by political administrations seeking to undermine facts about climate changes, global warming, ecological harms being done to communities and regions, sea level rise and ocean changes. That fight went unmatched by science activism during many years of previous administrations in America and globally when the data could have been used to make a difference.
Today, in federal agencies and funding sources from the federal government under the Trump administration and GOP held Congress and Senate, permanent changes are being made to science, science funding, scientific data, scientific research, how scientific research and data are gathered, what can be discovered from that data officially (or not), scientific committees and departments, and what scientific data will be kept, made public, published and archived by the federal government.
Where scientific fact disproves or fails to support some political or business agenda or purpose, the agency heads and White House liaison teams from the Trump administration are intent on destroying the science and altering scientific data rather than developing helpful and appropriate policies that would be derived from those facts.
Not collecting the data through NOAA satellite programs and cutting those programs will not alter climate change, rising CO2 levels, rising sea levels, arctic ice destruction, warming ocean currents, changing atmospheric conditions from pollutants. But, that is the answer of the administration in control now – simply don’t collect the data, don’t let scientists work with that data and don’t allow publication of that information and its scientific study – then climate change will go away. It doesn’t work that way, but that is the choice the current administration and Congressional and Senate decision makers are using.
Engineers, architects and applied sciences will have as much, if not more problems with data and scientific facts being made over in the image of political and business ideologies as it is happening now. These disciplines rely on the underlying sciences, scientific principles, accurate data and facts as known quantities to use in their work. Without accuracy, anything engineered, built, created by applied science disciplines is in jeopardy. No one wants loosy-goosy data building a structure that is intended to house people and their lives, contain businesses and their activities that is intended to be safe.
Right now, the Trump and GOP in federal administration and legislature positions of unfettered power, are changing not only scientific access and resources, they are changing the way data is collected at the Bureau of Economic Analysis, included what data will no longer be collected. The forensic science arm of the Department of Justice is being changed, de-funded and in some ways disbanded. Research at the EPA and NOAA, NIH and other federal agencies are being de-funded of grant allotments, in fact entire programs of study and research are disappearing. Part of this is being done through budget cuts, Trump appointed agency heads and liaison teams within the agencies, through the OMB and by Congress and Senate rolling back programs from the previous administration plus cutting programs through the upcoming budget legislation.
For some years, it has been the case, that a portion of propaganda and lobbying has been aimed at falsifying facts, dismissing facts, undermining facts and data, discrediting scientific facts for the purpose of politics and business. In some ways, this right wing thinking is desperate for science and scientific facts to accomplish business purposes and political projects, but desires control over what facts, how those facts are interpreted, and now – having come full circle, are exerting control over supporting only what agrees with what they believe to be the case whether any facts support that or not. Then those facts that do not support what they believe are discarded and discredited as a lie becomes the only allowable truth. That’s where we are now.
Scientists and engineers, architects and the general public, academics and scholars, educated and non-educated citizens alike, need to stand with us to support science for the March for Science, April 22 and for the Climate March on April 29, because science is important and evidenced-based facts are critical to good decision making.
Yes, we need more diversity in science. Yes we need more inclusion in engineering and the fields of architect, developer, builder. Yes, we need more science education across our entire population including our adult population. Yes we need more support for science, engineering, technology, mathematics – and the arts. Yes we need an education system that pulls all of us into a higher level of direct education that we don’t have now.
And, yes we need decision-makers to accept scientific facts as facts, that evidence-based factual information are the facts we accept and work with and agree upon as facts, that we do not accept lies as facts to suit the politics or business needs of the moment, and that decision-makers grounded in reality are critical to good policies, good administration, good thinking and sound judgment.
And, yes – we need to stand together and say that science is important and scientific facts are not constructs of politics, nor will we allow them to be.
The stakes are enormous. The Trump administration takes power amid the first days of meaningful international action against climate change, an issue on which political polarization still runs deep. And for the first time in years, Republicans have control of the White House and both houses of Congress—giving them an opportunity to remake the nation’s environmental laws in their image.
[ . . . ]
It’s a lot to keep track of, so National Geographic will be maintaining an abbreviated timeline of the Trump administration’s environmental actions and policy changes, as well as reactions to them. We will update this article periodically as news develops.
The big news this week: President Trump signed a long-anticipated executive order rolling back many Obama-era climate policies. While it doesn’t pull the United States out of the Paris agreement, it will make it a lot harder for the country to meet emissions reduction goals. Vox’s Brad Plumer has the best summary of what the order does — and cannot do. He explains the executive order’s eight big changes:
Analysis of how the changes in science and scientific fact in Trump’s executive order will impact science and science funding with a bit more detail. Also from the last week of March / first week of April 2017. Worth reading.
GOP-backed measures seek to rein in science used at EPA (Update)
February 8, 2017 by Michael Biesecker
Pondering new restrictions on how the Environmental Protection Agency can use scientific data, congressional Republicans are seeking advice from the chemical and fossil fuel industries.
House Science, Space and Technology committee chairman Lamar Smith this week accused the Obama administration of relying on faulty and falsified data to justify new regulations, such as limiting carbon emissions from coal-fired power plants. The Texas Republican has been a frequent critic of climate science showing the world is warming and that man-made carbon emissions are to blame.
(etc.) – GOP war on science and scientific facts – worth reading.
In light of the overwhelming body of available information there can hardly be doubt that there are grounds that were to trigger Switzerland’s obligation to submit cases for investigations into the crime of torture against anybody present on its soil who has authorized, participated or was complicit in the above practices.
This would have to include also former President G Bush who had the overall control as commander in chief and as all information suggests authorized, knew and acquiesced into the practices that constitute the crime of torture. Switzerland would also have to take measures against any offender present on its territory to secure his presence for such criminal investigations and proceedings.
In this regard, the OMCT considers that neither officials nor former Heads of States can enjoy immunity for the crime of torture under the UN Convention Against Torture, nor can superior orders or the memos drafted by government lawyers and that sought to immunize officials from prospective prosecution under US domestic law, shield them from responsibility under international law.
Excerpt from the article / letter on the above linked page about the visit that ex-President George Bush was expecting to make on Feb. 12, 2011.
It is about damn time. He and his Republican conservative cronies had no right to use the United States the way they did and to use the resources put at their command to abuse people, to torture, to kill people during torture, and to do any other of a number of horrible things they did. It is unfortunate that they made those decisions but they were not done in our name as citizens and most of us, including me – do not agree with any of it having been done in America’s name. I’m glad they have taken a stand on it.
My email response back to family members (to line of thought below it that was sent to me) and the information I had sent to them originally –
No, ___ – that is wrong. Using the technology described in the article would not mean what you said. And, the profits from producing it wouldn’t go where you said, either.
Just as with anything, from those high-tech hydrofoil boats to nanoparticle finishes on sunglasses, the technology from Cella Energy in the UK could be “purchased” as rights to use it by leasing the rights, or licensing. That would give the right to produce fuel with what they discovered. The plant to produce it could be in the US with US workers, paying US taxes, distributing it through US owned businesses and distributors, and selling it around the world from the US companies where it is being produced. The business revenues and profits would be in the US. The people working in all those companies involved with it would be people in the US and the owners of the companies that license the fuel technology to produce it would be US owners / US business people. The corporate taxes and fuel taxes paid on it would go to the US.
Now, at what point, do you not realize that the best way to make a real dent in the deficit is by rebuilding our economy, rather than by cutting everything keeping it stable to shreds. That is partly how we got here in the first place. New businesses were not built or they were pushed out of business, they decided to go elsewhere or they couldn’t compete in the US marketplace if they were based here. A wealthy country can simply pay off that debt. In oil rich Kuwait, the citizens are all provided for by the revenues from the oil resources being harvested there. None of them have to work at anything, unless they just want to and the government provides absolutely everything. Many societies get more from their natural and national resources for their federal budgets than our nation does. We have been robbed. And, as much as that is the truth of it – what we do now as Americans matters even more.
We can pay a fee to license any technology, any new technology, any new discovery from anywhere in the world, from any university in the US or around the world, any existing patent and newly discovered whatever and use it by license to create new businesses that provide fuels in a different way, that provide light for our homes in other ways, that neutralize the chemical pollution of our cities, that provide a better concrete, that makes a better way to build sidewalks to allow water to seep through rather than to flood streets, and vast other things. Those businesses built on these things, pay a small fee to the licensing but otherwise, produce for America all the revenues and profits and employment and support of other businesses around them that they create.
And, don’t let that number fool you or your friends about the amount of money owed – it just means that we each need to create one good piece of software to sell around the world and it can be paid off. Or, vote to use Yucca Mountain as a massive server farm leasing space to servers from governments around the world instead of using it for radioactive waste to be stockpiled there. In India, there are physicists that have created a process to more completely use the radioactive materials with a process of fission combined with fusion which they are going to be licensing and Russia is using reprocessing radioactive materials as a revenue generating industry for their own economy. We could be doing that too. We could be doing a lot of things as Americans, including building new businesses that are based on the solutions to real problems we face as a nation.
Yes, both London and Wall Street financed and insured both sides of most wars, most military assets, many paramilitaries, most governments, many businesses and many more corporations. That is how they have been making their money. Apparently, they’ve already figured out how to do that well and make money going in both directions at the same time. In their estimation, it has nothing to do with conscience – it has to do with being “fair” by supporting all sides with financing at the same time, they are satisfying their corporate goals of being profitable. It has yielded and supported some pretty horrific things but they are playing by the rules they set – so either we get in the game by those rules and outdo them or simply stay indebted to them and other powers in the world, give them all our money and resources, or watch our money and resources be devalued to nearly nothing and still have to pay them for borrowing their money.
Personally, I think it would be better to rise up in our efforts rather than to muck about fussing with who is right about what a mess it is now. I noticed that a lot of those sites you visit are not inclined to have told you that when nations and people from around the world can buy something they need or want, only from America – then they spend money here which becomes ours to use for our nation’s needs, our states’ needs, our local communities’ needs, our education systems, our community businesses, our employment opportunities, our futures, our individual needs, and all those other things we think are important.
And, after seeing that the US gave Egypt $150 Billion Dollars since 1950 for military needs – as in “gave them $150 Billion Dollars” plus countless sweet contracts on equipment and several billion for education and other civil society things, even over the past few years – And, seeing that there are entire programs to give huge grant funds to people in the Middle East, set up by President Bush administration – for starting businesses, creating innovation, expanding businesses, etc. – And, other things of a similar nature – it occurs to me that if all expenditures being given to every other nation on the planet from the US taxpayers’ money were to completely stop – we wouldn’t have a deficit at all . . .
—– Original Message —–
From: family members
Sent: Sunday, January 30, 2011 2:26:38 AM
Subject: Re: New fuel that can be used in existing cars – trucks – engines – at $1.50 a gallon – from Oxford
That is good news, but the moneys for the fuel still would go to England.
We need moneys being made here to keep the moneys here so we can pay the debt that the government has assigned to us as taxpayers. That is unless you can figure how everyone in the population can come up with $200,000 average per person to pay off this horrible tax debt they have set up.
Right now if the tax rate were raised to 100%, we still could not pay the interest on the present debt loan, and the African born, so called, president (completely illegal under our constitution), wants to increase the National Debt Limit. It is kind of like killing a person by shooting them with $200,000 and wanting to shoot them with another $200,000.
I would say “what is wrong with these people”, but I think I know. He wants to set up a communist New World Order. There is a war going on “to destroy your freedom”.
PS: He calls it “World Order”. And the big bankers that are directing the actions here and around the world are centered in England.
Subject: New fuel that can be used in existing cars – trucks – engines – at $1.50 a gallon – from Oxford
UK-based Cella Energy has developed a synthetic fuel that could lead to US$1.50 per gallon gasoline. Apart from promising a future transportation fuel with a stable price regardless of oil prices, the fuel is hydrogen based and produces no carbon emissions when burned. The technology is based on complex hydrides, and has been developed over a four year top secret program at the prestigious Rutherford Appleton Laboratory near Oxford.
Early indications are that the fuel can be used in existing internal combustion engined vehicles without engine modification.
According to Stephen Voller CEO at Cella Energy, the technology was developed using advanced materials science, taking high energy materials and encapsulating them using a nanostructuring technique called coaxial electrospraying.
No virus found in this message.
Checked by AVG – www.avg.com
Version: 10.0.1204 / Virus Database: 1435/3411 – Release Date: 01/29/11
My Note –
So, what I want to say is this –
The one who was calling for a “New World Order” wasn’t our current President – it was President H.W. Bush (Sr.) – there are taped clips from a number of events and speeches where he used the term. However, he probably didn’t come up with it himself and no telling where it originated, but I’m sure someone knows. I think at one point there was a speech at the League of Nations which also contained it, but I think I read the transcript of that speech somewhere online, (a site with historical references and official documents from government sources and official sources from organizations that served the basis for current organizations.)
To see that the thing I sent to my family members, didn’t inspire them or yield even a thought about what could be done with it – is rather horrifying. It is as if any simple thing serves to simply add to the argument they’ve already bought made by those who have none of our best interests at heart. When I found so many of the right wing websites and even radio broadcasting, are owned by gold and silver traders, hosting revenue generating ads from a multitude of arms dealers and militia-oriented equipment and training along with using themes to intentionally incite fear, instigate violence, and make their sales based upon fear, hate and intolerance – I didn’t like it. There is no point to it but to sell those things by virtue of instilling fear and intolerance in their participants, listeners, readers and audience members.
Most of our loss of freedoms and quasi-legal denials of our guaranteed rights under the Constitution have happened over the last thirty years under the conservative run Republican administrations that have been in power across the Federal level and in almost every state. They gave sovereign immunity to states. They divided our nation into fifty sovereign nation states rather than us being one great nation indivisible. They did those things. And, they have fit us into the “New World Order” which was done in the manner they conceived of it that now makes us look like a nation in decline who owes fealty to literally every other nation on the earth. Our tax money has been spent to freely give around the world by hundreds of billions and even in the trillions of dollars, while any of us in America couldn’t even have the support of our own agencies to build a business, start a business, grow a business or market a business or support our own education systems and communities. That is what they have left to us.
They didn’t want efficient rapid transit, because their personal incomes and organizational incomes were deriving benefit from petroleum industries – so electric trolley systems were devolved, train systems were decimated, underground subway systems weren’t built (such as in Los Angeles early on), gas guzzling automobile and truck engines weren’t made competitive with the rest of the world, electric and alternative fueled vehicles were busted rather than being manufactured and promoted, and now our cities, towns and rural areas across America look like industrial cesspools in air quality, in the soil readings, in available water sources and in every other thing it has touched.
(Yes, that is quite a sentence – just don’t even get me started.)
The budget deficits we are paying for today, came from the failed economic policies of thirty years under the rule of conservative Republicans who failed to see what the real world around them was becoming at their hands. And, the interest payments we are required to pay today, were made on terms they created, with dollar values they devalued, after leaving our nation desolate from every natural resource being raped, pillaged and plundered by the outside corporate interests who gave us nearly nothing for them compared to the profits they received from them. Not even Saudi Arabia would allow that, but our nation’s leaders did – long before President Obama and his current team ever had the chance to be in the office.
When I wrote the America the Beautiful Show idea on paper in my home, and then posted it on my blog once I realized that I personally was not in a position to have the freedom to do it, and then last August as I posted the idea on a website of its own (an my daughter put a flash website together for it) – I had really genuinely believed that it was a good idea that others could pick up and do across the United States. I believed that people would want to do things to help rebuild our economic freedoms and help one another to do that. And, then I saw the right wing websites filling the internet, the airwaves, and my family’s older members own emails and posts they were, and are shipping all over the country to people they know. And, I realized how much money is in it – and how much they are willing to give to it, and how much all their friends are giving into it while they sit at home and say they don’t want to be bothered with the news, or the news in the world, or to “think” about anything.
But, they “think” about those things they hear on the right wing broadcasts and read on those right wing websites and emails sent from them enough to repeat those things without regard for thinking to see if it makes sense, or to find out if parts of it have twisted interpretations of facts or if it has out and out falsehoods in it. They just repeat them and send money to support what they believe are efforts to return our nation to “I don’t even know what” – but it isn’t good. I think they believe the conservatives and the conservative right wing politicians in general will return the nation to a time of their youth when all was right with the world. But, after having watched the situation in Egypt over the past few days, and finding out how much of our money has put sophisticated military hardware in the hands of a bunch of sadistic lunatics running Egypt’s government – I would have to say that it wasn’t safe, protected, stable and right in the world (nor in the US) even when they were young.
Looking at how much money we’ve spent to subsidize electric cars and the existing car industries being able to re-tool to produce them, having paid for most, if not all of the research on them and the battery technologies for them, and having noted the literally hundreds of billions upon billions given to the various industries over the years in grants, incentives, tax breaks, property, expansion grants, subsidies, research done for them, analysis done for them, distribution infrastructures built for them and paid for by us – I keep thinking that just about any American citizen could’ve been able to do the same thing had we been allowed in the action. Or am I to believe that if I had been given $3.2 billion dollars and all the research on it, a factory building and property for a dollar as many states have done and no taxes on the money made – that I couldn’t have produced a few thousand electric cars for a retail price of $42,000 each? Oh yes I could.
Anyone could do better than that with those kinds of resources given to them, (among massive other things that were made available to these businesses, corporations and industries from America’s taxpayers’ coffers.)
Federal Lanham Act Remedies for False Advertising –
1. Historical Background –
Section 43(a) of the Lanham Act prohibits any false description or representation of goods. Although this section was originally construed narrowly, to reach only “passing off” and other behavior resembling trademark infringement, modern cases regard the statute as providing a federal remedy against false advertising.
2. Standing: Who May Invoke Section 43 –
A plaintiff seeking injunctive relief under § 43(a) must show a likelihood of economic injury due to the defendant’s conduct in order to be entitled to relief. If the plaintiff seeks damages, it must demonstrate an actual loss of sales (and / or loss of revenue, my note – actual money, but can include lost opportunity costs.)
3. What Constitutes a False Description or Representation –
Any falsehood with a tendency to mislead or deceive is actionable under section 43(a), provided it is material. The plaintiff need not prove that the defendant acted intentionally.
(from – “Capsule Summary”)
pp. 20 – 21, also pp. 148 – 150
Unfair Trade Practices & Intellectual Property,
author – Roger E. Schechter,
Black Letter Series, West Publishing Co., St. Paul, Minn.; 1986
Hmmmm . . . . – wonder if those laws still exist? After watching the Goldman Sachs hearings in the Senate committee yesterday, when investors are told that a thing is good investment securities, when they know it is not – isn’t that applied to laws like this? Or rather, aren’t laws like this applied to situations like that?
I found another section of this book which had this sentence – “Nonetheless, some courts will impose a duty to pay if the equities of the situation require it to prevent unjust enrichment.” – What constitutes “unjust enrichment”?
English unjust enrichment law is a developing area of law in unjust enrichment. Traditionally, work on unjust enrichment has been dealt with under the title …
en.wikipedia.org/wiki/English_unjust_enrichment_law – Cached – Similar
English unjust enrichment law is a developing area of law in unjust enrichment. Traditionally, work on unjust enrichment has been dealt with under the title of “restitution“. Restitution is a gain-based remedy, the opposite of compensation, as a loss-based remedy. But the event it responds to is the “unjust enrichment” of one person at the expense of another.
Hazell v. Hammersmith and Fulham LBC  2 AC 1. Banks paid councils a lump sum (for Islington, £2.5m). The councils then paid the banks back at the prevailing interest rate. Banks paid councils back a fixed interest rate (this is the swap part). The point was that councils were gambling on what interest rates would do. So if interest rates fell, the councils would win. As it happened, interest rates were going up and the banks were winning. Islington was due to pay £1,354,474, but after Hazell, it refused, and waited to see what the courts said. At first instance Hobhouse J said that because the contract for the swap scheme was void, the council had been unjustly enriched with the lump sum (£2.5m) and it should have to pay compound interest (lots) rather than simple interest (lots, but not so much). But luckily for local government, three law Lords held that Islington only needed to repay with simple interest. There was no jurisdiction for compound interest. They said this was because there was no ‘resulting trust’.
Westdeutsche Landesbank Girozentrale v Islington LBC  AC 669, the council had no authority to enter into a complex swap transaction with the German bank. So the House of Lords held that the council should repay the money they had been lent and a hitherto unknown ‘unjust’ factor was added to the list. Birks argued that the better explanation in all cases is an ‘absence of basis’ for the transfer of property. Searching through or adding to a list of open ended unjust factors simply concludes on grounds of what one wishes to prove, grounds that ‘would have to be constantly massaged to ensure that they dictated an answer as stable as is reached by the shorter ‘non basis’ route.’ (Birks (2005) 113)
The following eleven categories are examples of “unjust factor” (or what Peter Birks argued could be unified under one principle of a basis of a right being absent) which may ground a claim of restitution for unjust enrichment.
Unjust enrichment is a developed and coherent field in continental civil law systems. Continental lawyers say someone is unjustly enriched when there is no basis for their possession or title to some right or property. A more correct way of saying it is that someone has been “unjustifiedly enriched”. In German, the term is Ungerechtfertigte Bereicherung (§812 BGB) and in France the term is Enrichissement sans cause. English lawyers, however, have been accustomed to identify an “unjust factor”. The difference between “unjust factors” and “absence of basis” as a unifying principle has generated a lot of debate, particularly since Peter Birks changed his mind in his second edition of Unjust Enrichment (2005) in the Clarendon Law Series, and argued that the continentals had got it right.
The two leading theorists that have revived unjust enrichment were Lord Goff, who produced Goff and Jones on Restitution and Professor Peter Birks.
Black Letter Series, West Publishing Co., St. Paul, Minn.; 1986
(excerpt – )
To constitute “unfair” conduct, an advertisement or commercial practice must pose a risk of substantial, unmitigated, unavoidable consumer injury.
(further – )
These advertisements may be deceptive, however, if analyzed under the historic definition of that term. Under the classic test, an advertising claim is deceptive if it has any tendency to deceive a significant number of consumers.
(also found on pp. 225 – )
2. True. The original version of the statute [VIII. Federal Trade Commission Regulation of Unfair and Deceptive Practices] only dealt with “unfair methods of competittion.” The 1938 Wheeler-La Amendment added the “unfair and deceptive acts and practices” language.
(and on pp. 228)
4. True. Such statutes have been applied against defendants who were making casual sales of used goods.
(and therefore, why shouldn’t it be applied to investment firms, banks, hedge funds and others in the investment community who engaged in deceptive and misleading practices that would’ve been illegal in any other context, including as the laws and statutes are applied to regular Americans being involved in casual sales of goods that were unlikely to have created the huge ramifications that the Wall Street players caused, my note.)
Unjust enrichment is a legal term denoting a particular type of causative event in which one party is unjustly enriched at the expense of another, and an obligation to make restitution arises, regardless of liability for wrongdoing.
Liability under the principle of unjust enrichment is wholly independent of liability for wrongdoing. Claims in unjust enrichment do not depend upon proof of any wrong. However, it is possible that on a single set of facts a claim based on unjust enrichment and a claim based on a wrong may both be available. A claim based on unjust enrichment always results in an obligation to make restitution. A claim based on a wrong always results in an obligation to make compensation, but may additionally result in an obligation to make restitution and on the other hand it will result in an obligation to make reimbursement which will allow the normal citizen to the courts for its wrongdoing which it never intended to do so. For discussion of restitution for wrongs, see the page on restitution.
At common law, a claim based on unjust enrichment can be submitted to five stages of analysis. These can be summarized in the form of the following questions:
Was the defendant enriched?
Was the enrichment at the expense of the claimant?
There are two established approaches to this issue. Traditionally, common law systems such as those of England and the US have proceeded on the basis of what may be termed the ‘unjust factor’ approach. Traditionally, civil law systems such as those of France and Germany have proceeded on the basis of what may be termed the ‘absence of basis’ approach. More recently, many common law systems have showed signs of a possible move towards the ‘absence of basis’ approach (see for example the law of North Dakota in the section on the United States below). Both approaches will be discussed.
The ‘unjust factors’ approach requires the claimant to point to one of a number of factors recognized by the law as rendering the defendant’s enrichment unjust. English law clearly recognises at least the following unjust factors:
‘Absence of consideration’ is particularly controversial because the cases that support its existence as an unjust factor can also be used to support the view that English law has begun to favour the ‘absence of basis’ approach (see next paragraph).
The ‘absence of basis’ approach does not deal in individual unjust factors. Instead it seeks to identify enrichments with no legitimate explanatory basis. Imagine that A contracts with B that A will pay $150 up front for B to clean his house. A pays the money. B’s enrichment has a legitimate explanatory basis – he was paid under a valid contract. However, let us now change the example and assume that the contract was in fact void. This is discovered after A has paid the money but before B cleans the house. B’s enrichment no longer has a legitimate explanatory basis so B must repay the $150 to A.
Notice that in the example just given, exactly the same conclusion would be reached using the ‘unjust factors’ approach. Under that approach, A would not be able to point to an unjust factor provided that the contract was valid, but could point to the unjust factor of total failure of consideration once we assume that it was void. In the vast majority of cases, a properly developed ‘unjust factors’ approach and a properly developed ‘absence of basis’ approach will reach the same result.
 What remedies are available to the claimant?
It is necessary to distinguish personal remedies from proprietary remedies. A personal remedy asserts that the defendant must pay the claimant a sum of money. By contrast, a proprietary remedy asserts that some property in the defendant’s possession belongs to the claimant, either at common law or in equity. There are several arguable examples in the English case law of the courts giving a proprietary remedy in an unjust enrichment claim. However, some commentators maintain that, in English law, unjust enrichment only ever triggers a personal remedy.
There are several reasons why it may be important for the claimant to seek a proprietary rather than a personal remedy. The most obvious is that showing that one is entitled to a proprietary interest in some property means that one need not compete with the defendant’s unsecured creditors in the event of his insolvency. It is also generally accepted, although with little justification, that a claimant who is entitled to a personal remedy only will be restricted to simple interest, while a claimant who is entitled to a proprietary remedy can get compound interest. The availability or non-availability of a proprietary remedy may also have consequences for limitation periods and for the conflict of laws.
English law gives effect to restitutionary proprietary interests (assuming that it does at all) through a number of devices. One of these devices will be discussed and another two will be mentioned briefly.
It doesn’t matter if you are a “market maker” or not, such as Goldman Sachs and about 2000 others are – they still can’t store explosives under their desks because they must abide by the laws which apply to that just as we all do, and they still can’t engage in failing to meet OSHA standards for a work place, nor can they be exempted from the regulations, statutes and laws governing the rest of us and the business laws that generally apply to everything.
I know yesterday during the hearings, the term “market maker” was used as a declaration of why “we get to get away with doing it this way, by law – because we qualify as a market maker.” That doesn’t mean everything else in the law and in international law doesn’t apply to them. It does not exclude their businesses, their business participation, their business practices and decisions, their business processes and their marketing practices from the laws governing everything else.
An Icelandic 1000-krónur note. The value of the Icelandic króna declined significantly during 2008.
Economic growth in Iceland, Denmark, Norway and Sweden from 2000 to 2007. Iceland is in red.
The 2008–2010 Icelandic financial crisis is a major ongoing economic crisis in Iceland that involves the collapse of all three of the country’s major banks following their difficulties in refinancing their short-term debt and a run on deposits in the United Kingdom. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history.
In late September 2008, it was announced that the Glitnir bank would be nationalised. The following week, control of Landsbanki and Glitnir was handed over to receivers appointed by the Financial Supervisory Authority (FME). Soon after that, the same organisation placed Iceland’s largest bank, Kaupthing, into receivership as well. Commenting on the need for emergency measures, Prime MinisterGeir Haarde said on 6 October, “There [was] a very real danger … that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could have been national bankruptcy.” He also stated that the actions taken by the government had ensured that the Icelandic state would not actually go bankrupt. At the end of the second quarter 2008, Iceland’s external debt was 9.553 trillion Icelandic krónur (€50 billion), more than 80% of which was held by the banking sector. This value compares with Iceland’s 2007 gross domestic product of 1.293 trillion krónur (€8.5 billion). The assets of the three banks taken under the control of the FME totaled 14.437 trillion krónur at the end of the second quarter 2008.
The financial crisis has had serious consequences for the Icelandic economy. The national currency has fallen sharply in value, foreign currency transactions were virtually suspended for weeks, and the market capitalisation of the Icelandic stock exchange has dropped by more than 90%. As a result of the crisis, Iceland is currently undergoing a severe economic recession; the nation’s gross domestic product decreased by 5.5% in real terms in the first six months of 2009. The full cost of the crisis cannot yet be determined, but already it exceeds 75% of the country’s 2007 GDP. Outside Iceland, more than half a million depositors (far more than the entire population of Iceland) found their bank accounts frozen amid a diplomatic argument over deposit insurance. German bank BayernLB faces losses of up to €1.5 billion, and has had to seek help from the German federal government. The government of the Isle of Man will pay out half of its reserves, equivalent to 7.5% of the island’s GDP, in deposit insurance.
( . . . )
On 24 October, it emerged that Norway’s semi-public export credit agencyEksportfinans had made a complaint to Norwegian police concerning the alleged embezzlement of 415 million Norwegian kroner (€47 million) by Glitnir since 2006. The Icelandic bank had acted as an agent for Eksportfinans, administering loans to several companies: however Eksportfinans alleges that, when the loans were paid off early by borrowers, Glitnir kept the cash and merely continued with the regular payments to Eksportfinans, effectively taking an unauthorized loan itself.
OMX Iceland 15 closing prices during the five trading weeks from September 29, 2008 to October 31, 2008
Trading in shares of six financial companies on the OMXNordic Iceland Exchange was suspended on 6 October by order of the FME. On Thursday 9 October, all trading on the exchange was frozen for two days by the government “in an attempt to prevent further panic spreading throughout the country’s financial markets”. The decision was made to do so due to “unusual market conditions”, with share prices having fallen 30% since the start of the month. The closure was extended through Monday 13 October due to continuing “unusual market conditions”.
The market reopened on 14 October with the main index, the OMX Iceland 15, at 678.4, which corresponds to a plunge of about 77% compared with 3,004.6 before the closure. This reflects the fact that the value of the three big banks, which form 73.2% of the value of the OMX Iceland 15, had been set to zero. The values of other equities varied from +8% to –15%. Trading in shares of Exista, SPRON and Straumur-Burðarás (13.66% of the OMX Iceland 15) remains suspended. After a week of very thin trading, the OMX Iceland 15 closed on 17 October at 643.1, down 93% in króna terms and 96% in euro terms from its historic high of 9016 (18 July 2007).
Trading in the shares of two financial services companies, Straumur–Burðarás and Exista, resumed on 9 December: together the companies account for 12.04% of the OMX Iceland 15. The values of the shares in both companies dropped sharply, and the index closed at 394.88, down by 40.17% on the day. Trading in shares in SPRON and Kaupthing remains suspended, at prices of ISK 1.90 and ISK 694.00 respectively.
Ratings of Icelandic sovereign debt
(long-term foreign currency)
The four credit rating agencies which monitor Iceland’s sovereign debt all lowered their ratings during the crisis, and their outlook for future ratings changes is negative. The Icelandic government had a relatively healthy balance, with sovereign debt of 28.3% of GDP and a budget surplus of 5.5% of GDP (2007). Debt is now 90 percent of GDP with a budget deficit.
In addition, the value of foreign currency bonds which mature in the remainder of 2008 is only $600 million, and foreign currency debt service in 2009 is only $215 million, well within the government’s ability to pay. However the agencies believe that the government will have to issue more foreign currency bonds, both to cover losses as the banks’ overseas operations are liquidated and also to stimulate demand in the domestic economy as Iceland goes into recession.
On 24 October, the IMF tentatively agreed to loan €1.58 billion. However the loan had still not been approved by the Executive Board of the IMF on 13 November. Apparently, UK and the Netherlands had halted IMF’s aid to Iceland as the Icesave dispute had not been resolved. Due to the delay Iceland found itself caught in a classic catch-22 situation, loans from other countries could not be formally secured until the IMF program had been approved. The Icelandic government spoke of a $500M (€376M) gap in the funding plans. Dutch finance ministerWouter Bos stated that the Netherlands would oppose the loan unless agreement was reached over deposit insurance for Landsbanki customers in the Netherlands.
The IMF-led package of $4.6bn was finally agreed on 19 November, with the IMF loaning $2.1bn and another $2.5bn of loans and currency swaps from Norway, Sweden, Finland and Denmark. In addition, Poland has offered to lend $200M and the Faroe Islands have offered 300M Danish kroner ($50M, about 3% of Faroese GDP). The Icelandic government also reported that Russia has offered $300M. The next day, Germany, the Netherlands and the United Kingdom announced a joint loan of $6.3bn (€5bn), related to the deposit insurance dispute.
In 2001, banks were deregulated in Iceland. This set the stage for banks to upload debts when foreign companies were accumulated. The crisis unfolded when banks became unable to refinance their debts. It is estimated that the three major banks hold foreign debt in excess of €50 billion, or about €160,000 per Icelandic resident, compared with Iceland’s gross domestic product of €8.5 billion. As early as March 2008, the cost of private deposit insurance for deposits in Landsbanki and Kaupthing was already far higher (6–8½% of the sum deposited) than for other European banks. The króna, which was ranked by The Economist in early 2007 as the most overvalued currency in the world (based on the Big Mac Index), has further suffered from the effects of carry trading.
Coming from a small domestic market, Iceland’s banks have financed their expansion with loans on the interbank lending market and, more recently, by deposits from outside Iceland (which are also a form of external debt). Households also took on a large amount of debt, equivalent to 213% of disposable income, which led to inflation. This inflation was exacerbated by the practice of the Central Bank of Iceland issuing liquidity loans to banks on the basis of newly-issued, uncovered bonds — effectively, printing money on demand.
In response to the rise in prices — 14% in the twelve months to September 2008, compared with a target of 2.5% — the Central Bank of Iceland has held interest rates high (15.5%). Such high interest rates, compared with 5.5% in the United Kingdom or 4% in the eurozone for example, have encouraged overseas investors to hold deposits in Icelandic krónur, leading to monetary inflation: the Icelandic money supply (M3) grew 56.5% in the twelve months to September 2008, compared with 5.0% GDP growth. The situation was effectively an economic bubble, with investors overestimating the true value of the króna.
As with many banks around the world, the Icelandic banks found it increasingly difficult or impossible to roll over their loans in the interbank market, their creditors insisting on repayment while no other banks were willing to make fresh loans. In such a situation, a bank would normally have to ask for a loan from the central bank as the lender of last resort. However, in Iceland the banks were so much larger than the national economy that the Central Bank of Iceland and the Icelandic government could not guarantee the repayment of the banks’ debts, leading to the collapse of the banks. The official reserves of the Central Bank of Iceland stood at 374.8 billion krónur at the end of September 2008, compared with 350.3 billion krónur of short-term international debt in the Icelandic banking sector, and at least £6.5 billion (1,250 billion krónur) of retail deposits in the UK.
The Icesave logo, advertising it as “part of Landsbanki, Reykjavik, Iceland”
The situation was made worse by the fact that Icesave was operating as a branch of Landsbanki, rather than as a legally independent subsidiary. As such, it was completely dependent on the Central Bank of Iceland for emergency loans of liquidity, and could not turn to the Bank of England for help. The UK Financial Services Authority (FSA) was aware of the risk, and was considering imposing special liquidity requirements on Icelandic deposit-taking banks in the weeks before the crisis. However the plan—which was never implemented—would have forced the Icelandic banks to cut interest rates or stop taking new deposits, and might even have sparked the sort of bank run it was designed to prevent. The Guernsey authorities were also planning on bringing in restrictions on foreign banks operating as branches and on transfers of funds between Guernsey subsidiaries and parent banks (“parental upstreaming”). Landsbanki operated in Guernsey through a legally independent subsidiary.
The existence of a bank run on Landsbanki accounts in the UK in the period up to 7 October seems confirmed by a statement from the bank on 10 October, which said “Landsbanki Íslands hf. transferred substantial funds to its UK branch during this time to fulfil its Icesave commitments.” The transfer of funds from Landsbanki Guernsey to Heritable Bank, a Landsbanki subsidiary in the UK, also suggests a bank run in the UK. A transfer of “substantial funds” from Iceland to the UK would have been a significant downward push on the value of the króna, even before the effects of any speculation.
The current economic climate in the country has affected many Icelandic businesses and citizens. With the creation of Nýi Landsbanki, the new organisation which replaces the old Landsbanki, around 300 employees will lose their jobs due to a radical restructuring of the organisation which is intended to minimise the bank’s international operations. Similar job losses are expected at Glitnir and Kaupthing The job losses can be compared with the 2,136 registered unemployed and 495 advertised vacancies in Iceland at the end of August 2008.
Other companies have also been affected. For example, the private Sterling Airlines declared bankruptcy on 29 October 2008. The national airline Icelandair has noticed a significant slump in domestic demand for flights. However, the airline states that year-on-year international demand is up from last year. Guðjón Arngrímsson, a spokesman for the airline, said “we’re getting decent traffic from other markets… we are trying to let the weak [króna] help us.” He has also stated that it is impossible to predict whether the company will be profitable this year.Morgunblaðið, an Icelandic newspaper, is cutting some jobs and merging parts of its operations with the media corporation 365. The newspaper 24 stundir has ceased publication due to the crisis, resulting in the loss of 20 jobs.
Importers are particularly hard hit, with the government restricting foreign currency to essential products such as food, medicines and oil. The €400 million loan from the central banks of Denmark and Norway is sufficient to pay for a month’s imports, although on 15 October there was still a “temporary delay” which affected “all payments to and from the country”.
The assets of Icelandic pension funds are, according to one expert, expected to shrink by 15–25%. The Icelandic Pension Funds Association has announced that benefits will in all likelihood have to be cut in 2009. Iceland’s GDP is expected by economists to shrink by as much as 10% as a result of the crisis, putting Iceland by some measures in an economic depression.Inflation may climb as high as 75% by the end of the year.
Unemployment had more than tripled by late November 2008, with over 7000 registered jobseekers (about 4% of the workforce) compared to just 2136 at the end of August 2008. As 80% of household debt is indexed and another 13% denominated in foreign currencies, debt repayment is going to be more costly. Since October 2008, 14% of the workforce have experienced reductions in pay, and around 7% have had their working hours reduced. According to the president of the Icelandic Federation of Labour (ASÍ), Gylfi Arnbjörnsson, these figures are lower than expected. 85% of those currently registered as unemployed in Iceland stated that they lost their job in October, after the economic collapse.
Over £840 million in cash from more than 100 UK local authorities was invested in Icelandic banks. Representatives from each council are meeting to try to persuade the Treasury to secure the money in the same way that customers’ money in Icesave was fully guaranteed. Of all the local authorities, Kent County Council has the most money invested in Icelandic banks, currently £50 million.Transport for London, the organisation that operates and coordinates transport services within London, also has a large investment at £40 million. Local authorities were working under government advice to invest their money across many national and international banks as a way of spreading risk. Other UK organisations said to have invested heavily include police services and fire authorities, and even the Audit Commission. It is hoped that about one-third of the deposited money will be available fairly rapidly, corresponding to the liquid assets of the UK subsidiaries: liquidation of other assets, such as loans and offices, will take longer.
In an emergency sitting of Tynwald on 9 October, the Isle of Man government raised compensation from 75% of the first £15,000 per depositor to 100% of £50,000 per depositor. The Chief Minister of the Isle of Man, Tony Brown, confirmed that Kaupthing had guaranteed the operations and liabilities of its Manx subsidiary in September 2007, and that the Manx government was pressing Iceland to honour this guarantee. Depositors with Landsbanki on Guernsey found themselves without any depositor protection.
On 11 October, an agreement was reached between the Icelandic and Dutch governments on the savings of about 120,000 Dutch citizens. The Icelandic government will cover the first €20,887 on savings accounts of Dutch citizens held by Landsbanki subsidiary Icesave, using money lent by the Dutch government. The total value of Icesave deposits in the Netherlands is €1.7 billion. At the same time, Iceland and Britain reached an agreement on the general contours of a solution: Icesave deposits in the UK total £4 billion (€5 billion) in 300,000 accounts. The figure of €20,887 is the amount covered by the Icelandic Depositors’ and Investors’ Guarantee Fund (DIGF; Tryggingarsjóður in Icelandic): however, the DIGF had equity of only 8.3 billion krónur at the end of 2007, €90 million at the exchange rates of the time and far from sufficient to cover the Dutch and British claims.
The cost of deposit insurance in the UK is not completely clear as of November 2008. The Financial Services Compensation Scheme (FSCS) paid around £3 billion to transfer deposits from Heritable Bank and Kaupthing Singer & Friedlander to ING Direct, while the UK Treasury paid an additional £600 million to guarantee retail deposits that were higher than the FSCS limit. The Treasury also paid out £800 million to guarantee Icesave deposits that were higher than the limit. A loan of £2.2 billion to the Icelandic government is expected to cover the claims against the Icelandic DIGF relating to Icesave, while the exposure of the UK FSCS is expected to be £1–2 billion.
The crisis also prompted the Ministry of Foreign Affairs to reduce its foreign aid to developing nations, from 0.31% to 0.27% of GNP. The effect of the aid cut was greatly amplified by the falling value of the krona, leading the Icelandic International Development Agency (ICEIDA) to see its budget fall from $22 million to $13 million. Since Iceland’s foreign aid is targeted in sectors for which the country has particular expertise (e.g. fisheries, geothermal power), the cutbacks will have a substantial impact in countries which receive Icelandic aid – most noticeably in Sri Lanka, where ICEIDA is pulling out altogether.
On February 27, 2009, the Wall Street Journal reported that Iceland’s new government is trying to raise $25 million by selling its ambassadorial residences in Washington, New York, London and Oslo.
On August 28, 2009, Iceland’s parliament voted 34-15 (with 14 abstentions) to approve a bill (commonly referred to as the Icesave bill) to repay the United Kingdom and the Netherlands more than $5 billion lost in Icelandic deposit accounts. Initially opposed in June, the bill was passed after amendments were added which set a ceiling on the repayment based on the country’s Gross Domestic Product. Opponents of the bill argued that Icelanders, already reeling from the crisis, should not have to pay for mistakes made by private banks under the watch of other governments. However, the government argued that if the bill failed to pass, the UK and the Netherlands might retaliate by blocking a planned aid package for Iceland from the International Monetary Fund (IMF). Under the deal, up to 4% of Iceland’s Gross Domestic Product (GDP) will be paid to the UK, in sterling terms, from 2017-2023 while the Netherlands will receive up to 2% of Iceland’s GDP, in euro terms, for the same period. Talks between Icelandic, Dutch and UK ministers in January of 2010 dubbed as “Icesave” did not result in any specific actions being agreed upon. 
In April 2009, Iceland’s state prosecutor hired Eva Joly, the Norwegian-French investigator who led Europe’s biggest ever fraud investigations into bribery and corruption at oil group Elf Aquitaine, as special consultant to a 20-member ”economic crime team” to “investigate suspicions of criminal actions in the period preceding the collapse of the Icelandic banks” which may involve several Iceland’s business and banking leaders. Joly stated that the investigation will require a minimum of 2–3 years to build up enough evidence to secure prosecutions.
In an interview Joly stated that:
“Finding proof will start at home in Iceland, but my instinct is that it will spread. If there are things relevant to the UK we will get in touch with the Serious Fraud Office. If there are things relevant to Germany we will get in touch with their authorities. In Iceland, there is more than enough for a starting point for the investigation, given all the talk about market manipulation and unusual loans. If these are proved they are embezzlement and fraud. The priority is tracing any flow of assets from the banks and getting them back.”
The investigation is expected to focus on a number of questionable financial practices engaged in by Icelandic banks:
Almost half of all the loans made by Icelandic banks were to holdings companies, many of which are connected to those same Icelandic banks.
Money was allegedly lent by the banks to their employees and associates so they could buy shares in those same banks while simply using those same shares as collateral for the loans. Borrowers were then allowed to defer paying interest on the loan until the end of the period, when the whole amount plus interest accrued was due. These same loans were then allegedly written off days before the banks collapsed.
Kaupthing allowed a Qatari investor to purchase 5% of its shares. It was later revealled that the Qatari investor “bought” the stake using a loan from Kaupthing itself and a holding company associated with one of its employees (i.e. the bank was, in effect, buying its own shares).
Scrutiny of Icelandic business leaders
Since the crisis began, many of Iceland’s business leaders, who had previously been considered financial gurus who greatly developed Iceland’s economy, are now under intense public scrutiny for their roles in causing the financial crisis:
Reportedly, all of those under scrutiny are now rarely seen in public and some have apparently left the country. They are also reportedly the subjects of an ongoing investigation to determine if any of their business practices warrant criminal prosecution.
Statements from former politicians
Former Prime Minister Davíð Oddsson has claimed that Iceland needs to investigate “unusual and unconventional loans” given by the banks to senior politicians during the years before the crisis.
Björn Bjarnson, the former Minister for Justice and Ecclesiastical Affairs, has started a blog detailing the problems with the business sector and the efforts to cover them up. This was cited as an example of how politicians and businessmen, who traditionally held a tight grip over the Icelandic media, have lost this control and that dozens of similar blogs have been created. Björn stated that:
“I have written a lot about problems in the business sector over the last 14 years, and I can only compare some parts of it to Enron. Here companies have been playing a game, using the media and publishing to make themselves look good. We only hope that the foreign media will soon begin to understand what has been going on.”
Some of the 6000 protesters in front of the Alþingishús, seat of the Icelandic parliament, on 15 November 2008.
Parts of the Icelandic public have arranged protests against the Central Bank, the Parliament and the government’s alleged lack of responsibility before and after the crisis, attracting between 3000 and 6000 people (1–2% of Iceland’s population) on Saturdays.
And a little about the Freedom of Information Act and financial firms –
§ 38:249 (US Code)
K. Eighth Exemption: Reports by Financial Institutions
1. In General
§ 38:249 (US Code) Introduction
5 USCS § 552(b) (8) provides an exemption from FOIA disclosure for matters that are contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.
Accordingly, a number of federal offices and agencies, including the Treasury Department, the Comptroller of the Currency, the Federal Reserve System, and the Pension Benefit Guaranty Corporation have promulgated regulations affirmatively applying Exemption 8 to relevant information in their possession.
Some regulations, however, such as those of the Federal Deposit Insurance Corporation, may contain provisions for the discretionary release of reports that are otherwise exempt.
As stated in the legislative history of the FOIA, Exemption 8 is designed to insure the security and integrity of financial institutions, since the sensitive details collected by government agencies which regulate financial institutions could cause great harm if they were to be indiscriminately disclosed. A major concern is that the disclosure of such reports containing frank evaluations of investigated banks might undermine public confidence in the soundness of such institutions and cause unwarranted runs on banks.
A secondary purpose behind the enactment of Exemption 8 is to safeguard the relationship between the banks and the supervising agencies. There was concern that if bank examinations are freely made available to the public and to the banks’ competitors, the banks will be less likely to give the agencies their full co-operation – (which they don’t do now, my note).
The courts have indicated that Exemption 8, like the other FOIA exemptions, must be narrowly construed, but this does not mean that the plain meaning of the language of the exemption can be overlooked.
Practice pointer: Although reports prepared by bank regulatory bodies are beyond the scope of FOIA disclosure, such reports might nevertheless be subject to discovery in the course of litigation.
Exemption 8 does not create independently any evidentiary privilege, its effect being only to permit the withholding of such information from the public generally.
If, however, the federal banking agency forbids the bank to disclose a report of an examination without agency approval, discovery of examination reports must be sought from the agency and not from the bank as part of pretrial discovery in litigation involving the bank. (or financial investment, financial brokerage, stock market records, or investment “auction” facility, my note).
(from pp. 256 – 257, 15 Fed Proc, L Ed; )
§ 38:250. What “financial institutions” are governed by
The term “financial institution” has been interpreted to include banks and other related institutions.
Thus, two sets of federal regulations, those of the Comptroller of the Currency and the Federal Reserve System, indicate that the exemption is applicable to reports relating to the affairs of any bank or affiliate thereof, bank holding company or subsidiary, broker, finance company, or any person engaged, or proposing to engage, in the business of banking, extending credit, or managing or controlling banks.
It has been held that examination reports of federal savings institutions are also exempt from disclosure. Although some fears have been expressed that if Exemption 8 is construed literally, the records relating to a closed bank will be perpetually sealed, it has been held that such records come within the scope of Exemption 8, at least where the bank has only recently been closed and where the records have not yet been turned over to GSA.
One question is whether national securities exchanges are considered to be “financial institutions” within the meaning of Exemption 8.
In one case, a Securities and Exchange Commission staff study on an off-board trading problem raised by a rule of the New York Stock Exchange, as well as of the transcripts made and documents received by the SEC in the course of its investigation, were held not? to be exempted from FOIA disclosure by reason of Exemption 8.
But it has been held that an SEC report regarding an inspection of one of the lesser stock exchanges is exempt as pertaining to a financial institution.
(and from pp. 259, 15 Fed Proc, L Ed)
§ 38:252 Other exempt information
Other types of information that have been held to be exempted from disclosure under 5 USCS § 38:252 (b) (8) include reports of the Comptroller of the Currency concerning the policies of a national bank, reports of FDIC examiners, and reports of the Federal Home Loan Bank Board concerning the financial conditions of savings associations.
Information concerning disciplinary proceedings involving specific stock exchange members, since it is of value to SEC supervision of the stock exchange, is protected by Exemption 8.
Freedom of Information
Federal Procedure, Lawyers Edition; 1990
§ 38:249 (US Code)
§ 38:250 (US Code)
§ 38:252 (US Code)
Volume 15, § 38:1 – 38:600
So much for the concept of transparency. It seems that is simply a term to be used in public displays of political arena working and not an application used in fact, in process, nor in financial services processes.
Conflict of Laws –
Entry, pp. 1085, Vol. 4, Encyclopedia Britannica, 1978
The law of conflict of laws has to do with the resolution of problems that result from the fact that there exists in the world a multiplicity of different sets of courts and different systems of private laws; that is, law dealing with relations between persons. As the earth is presently organized, its surface is divided among nations that are independent of each other and that have no world government above them. Each of these nations maintains its own set of courts in complete independence of every other nation, and each nation has its own set of laws, written or unwritten.
The Law of Conflict of Laws: Function and Sources –
While in such countries as France, Sweden, Peru, or Japan, one single system of law obtains for the whole country, diversity exists in many others, especially nations organized upon a federal pattern, such as the United States, Canada, and, to a minor degree, West Germany, Switzerland, Mexico, or Soviet Union [today, Eastern European nations and Russia]. ( . . . )
Even in countries whose political structure is of the unitary rather than the federal pattern, differences can be found. In the United Kingdom, for example, considerable difference exist between the laws of England, Scotland, the Isle of Man, the Channel Islands, and Northern Ireland. (I’m not sure the extent to which that is true today, my note).
Diversity of laws exists frequently between a country and its colonies. (etc.)
Diversity of laws develops where a country is divided. (etc.)
Diversities of law within one country may also exist on an ethnic or religious basis. (etc.)
Because of the spread of Western civilization over the entire planet, the laws of modern nations, at least insofar as they are concerned with relations between private individuals, present a considerable measure of uniformity. (to some extent, my note).
They are sufficiently different, however, to make it important to know to what situations one ought to apply the law of one country, state, region, or group rather than that of another, especially when dealings are carried on between persons of different law units.
This question of determining which of the world’s numerous laws is the proper one to apply in a particular situation is in itself a legal question.
Those rules of law by which such questions of choice of law are determined constitute a major part of that field of the law that is known as private international law or the law of conflict of laws.
Other parts of this field of the law are concerned with the problem of jurisdiction — that is, the problem of determining in what cases the courts of a particular country or state are, or are not, to go into action — and, furthermore, with the problem of stating what weight, if any, is to be given in one country or province to the judgments and other decisions of the courts or other agencies of other countries or provinces.
In countries adhering to the French legal tradition it is customary to regard as parts of private international law also those rules that deal with nationality and with the legal position of aliens and nonresidents.
In accordance with usage in countries of the English legal tradition, however, the present article will be limited to jurisdiction, foreign judgments, and choice of law.
The name private international law, which is generally used in countries of European-continental tradition, and occasionally also in England, seems to indicate that it is a part of international law — that is, that system of law that is superior to all sovereign states and that, at least in theory, is uniform throughout the world.
This view was commonly held for many centuries, and when the name private international law was coined in the 19th century it was meant to signify that the supranational body of international law consisted of two parts, public and private international law.
While the former would determine the proper conduct of sovereign nations toward each other in both peace and war, the latter would, in a uniform way, tell all nations in what cases their courts ought or ought not to take jurisdiction, under what conditions foreign judgments were to be enforced or otherwise recognized, and in what cases the laws of one nation were to be applied rather than those of another.
pp. 1087, Vol. 4 (same entry – Conflict of Laws)
In the United States, the Constitution provides that “full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state.”
Under this clause, the states, and by statute, the territories, are obliged mutually to enforce their money judgments and to recognize the res judicata and law-changing effects of their judicial acts, provided the state by which the judgment was rendered was acting within the scope of its jurisdiction as defined by the Supreme Court of the United States.
The only other defenses that might be raised are grave irregularity of the proceedings in which the judgment was obtained and, in certain cases, lack of finality.
In countries that follow the general principles of the common law, a foreign judgment usually is willingly enforced and otherwise recognized unless (1) the country by which it was rendered lacked jurisdiction according to the notions prevailing in the place where recognition is sought, or (2) the proceedings in which the judgment was obtained were tainted with fraud or were otherwise grossly unfair, or (3) the recognition or enforcement of the foreign judgment would seriously interfere with an important public policy of the country or state where recognition or enforcement is sought.
In addition to these requirements, most civil-law countries (except, of course, those few in which foreign judgments as such are not enforced at all) also demand that reciprocity with the country whose judgment is sought be recognized. (. . . )
Nowhere will a foreign judgment be enforced or recognized unless the country by which it was rendered had jurisdiction to do so under the notions obtaining where recognition is sought. These limits are sometimes wider, however, than those that a country will concede to others for the exercise of their jurisdictions.
pp. 1088, Vol 4
The greatest difficulties have arisen in the field of contract. Many courts and writ have held that problems of the law of contract are generally to be decided under the law of the place where the contract was made.
Under a refinement of this theory (1978, my note), problems concerning performance are to be decided under the law of the place where the contract was to be performed.
But where is a contract made when it was concluded by the exchange of letters between Tokyo and Paris, or San Francisco and Chicago? Where is the contract of sale to be performed when the seller has to obtain the goods in New Orleans and ship them from New York to Amsterdam, and the buyer, a business firm in Oslo, has to pay the price at a bank in London?
furthermore, what intrinsic connection with the parties’ relationship does the place of contracting have at all, if, as frequently happens, the contract was made at a place at which quite accidentally the parties’ minds met. Should German law really be applied to a contract concluded by a Dane and an Italian while they were flying over Germany in an airplane?
The view most widely followed by the courts of both civil-law and common-law countries is that problems concerning an alleged contract are to be decided in accordance with that law which the parties expressly agreed to be applicable, or which is recognizably that law upon the basis of which the parties negotiated and made their contract.
Theoretical objections to this practical view still carry some weight, especially in the United States. Where no particular law can be discovered as the one upon the basis of which the parties transacted their business, detailed differentiations must be made depending on the kind of contract in question (sale, insurance, transportation, contract for services, suretyship, etc.) and on the particular problem to be decided.
Although the field of contract is the most important for international and interstate trade, it is the one beset with the most uncertainties as to choice of law. Fortunately, the substantive laws do not widely differ from one another, and business has learned to avoid many of the difficulties through resorting to arbitration and appropriate drafting. Through skillful draftsmanship the experienced international lawyer can prevent many of the difficulties that can so easily arise under private international law.
(out of the order offered in the text – but important here)
The notion that the courts of a country should ever have to decide problems under foreign law rather than invariably deciding all problems coming before them under the law of their own country is by no means self-evident.
It has its rationale mainly in the thought that it would be unjust to teh parties concerned if a problem were decided under a law that they did not know might cover their situation when they began the transaction that led to the subsequent litigation. (but does not apply to false advertising, misrepresentation, fraud and other illusory, illegal, fraudulent, corrupt, unfair, unscrupulous or criminal business practices, my note, because even at a very basic level, those engaging in it know by its nature to be wrong and likely to fail the merits of any legal test of acceptable practices. – cricketdiane)
(further, on pp. 1088, Vol 4 – Conflict of Laws)
The necessity to apply the law of a foreign country or province, however, constitutes an inconvenience to the court and the parties. Although judges are familiar with the law of their own country, they cannot be expected to be familiar with the laws of the whole world. (but they can read at least as good as I can, my note.) Foreign law must therefore be especially pleaded and proved, often at considerable inconvenience and expense.
European and American scholars of the late 19th centuries attempted to reduce the whole field of choice of law to a few principles that could be expressed in a small number of highly generalized maxims.
Their results, however, proved impractical. Since the problems of choice of law are almost as manifold as those of substantive private law, these efforts turned out to constitute oversimplifications.
Mid-20th-century writers and courts regard it as their task to elaborate patiently those detailed rules of narrow application that are necessary to do justice to the infinite variety of actual life.
Some U.S. scholars also stress the interests of states to implement their policies over divergent policies of other states. The results of the manifold efforts can be found in the works listed in the bibliography. Here no more can be done that state some overall approaches, which must not be regarded as rules of immediate applicability. (their note, not mine.)
(also out of order from the text – )
In their general approach to the problem of jurisdiction, the common-law countries still proceed from the long-obsolete notion that no civil suit could be commenced in any way other than by the defendant’s arrest by the sheriff. Consequently, an action can still be brought in any place in which the defendant is personally served with process, (or in which they own property or have conducted business, my note), even though he may be there only for a few minutes to change airplanes.
In modern times it has come to be widely held, however, that personal service upon the defendant is no longer an indispensable requirement of jurisdiction and that an individual may be sued in the country or state of his residence, even if the summons is not personally pressed upon him. a corporation can always be sued in the country or state in which it has been incorporated.
(and, also out of order – but very interesting – )
As another example, the courts of New York regard themselves as an “inconvenient forum” for suits between nonresidents concerning a tort committed outside New York.
With few exceptions, Anglo-U.S. courts will not try controversies concerning title to, or trespass upon, land situation outside the state. (my note, but this changes when it involves money, securities, exchange of securities, fraud, fraudulent business practices, currency manipulation or currency forms as the property in question.)
(etc. – lots more good information here, but I need to lookup something else.)
Encyclopedia Britannica, 1978
pp. 1085 – 1088; Vol. 4, “Conflict of Laws”
Essentials of Business Law, Second Edition –
1984, 1986, West Publishing Company, St. Paul, Minn.
authors – Smith, Mann, Roberts
pp. 700 – 701, 702 – Part Nine, Regulation of Business
Figure 39 – 3 Restraints of Trade
Restraint – Standard
Price fixing … Per se illegal
Market allocations … Horizontal: per se illegal
Vertical: rule of reason
Group boycotts … per se illegal
Tying arrangements … per se illegal (* if seller has power in tying product or a not insubstantial amount of interstate commerce is affected in the tied product.)
However, in the text –
Economic analysis indicates that a monopolist will use its power to limit production and increase prices. Therefore, a monopolistic market will produce fewer goods at a higher price than a competitive market. Addressing the problem of monopolization, Section 2 of the Sherman Act prohibits monopolies, attempts to monopolize, and conspiracies to monopolize.
Thus Section 2 prohibits both agreements among businesses and, unlike Section 1, unilateral conduct by one firm.
Although the language of Section 2 appears to prohibit all monopolies, the courts have not interpreted it in that manner. Rather, they have required that in addition to the mere possession of market power there also must be either the unfair attainment of the monopoly power or the abusive use of that power once attained.
It is extremely rare to find an unregulated industry with only one firm, so the issue of monopoly power involves defining what degree of market dominance constitutes monopoly power. Monopoly power is the ability to control prices or to exclude competitors from the marketplace. The courts have grappled with this question of monopoly power and have developed a number of approaches, but the most common test is market share.
A market share greater than 75 percent generally indicates monopoly power, while a share less than 50 percent does not. (but what constitutes the actual market base is subjectively determined, my note). A 50 to 75 percent share is inconclusive (1986).
Market share is the fractional share possessed by a firm of the total relevant product and geographic markets, but defining the relevant markets is often a difficult and subjective project for the courts.
The relevant product market, as demonstrated in the case which follows (at the bottom of pages 701 – 702), includes products that are substitutable for the firm’s product on the basis of price, quality, and adaptability for other purposes. For example, although brick and wood siding are both used in buildings as exteriors it is not likely that they would be considered as part of the same product market. On the other hand, Coca Cola and Seven-Up are both soft drinks and would be considered part of the same product market.
The relevant geographic market is the territory in which the firm sells its products or services. This may be at the local, regional, or national level. (or in the cases we have today – in the international arenas, my note.)
For instance, the relevant geographic market for the manufacture and sale of aluminum might be national, whereas that of a taxi company would be local. The scope of the relevant geographic market will depend on such factors as transportation costs, the type of product or services, and the location of competitors and customers.
If sufficient monopoly power has been proved, it must then be shown that the firm has engaged in unfair conduct. The courts have not yet agreed on what constitutes unfair conduct (that is not true even when it was written and certainly not now – my note).
One judicial approach is that a firm possessing monopoly power has the burden of proving that it acquired such power passively or that it had the power “thrust” upon it. An alternative view is that monopoly power, when combined with conduct designed to exclude competitors, violates Section 1. a third approach requires monopoly power plus some type of predatory practice, such as pricing below marginal costs (among others, my note.)
(from – )
Essentials of Business Law, Second Edition –
1984, 1986, West Publishing Company, St. Paul, Minn.
authors – Smith, Mann, Roberts
pp. 700 – 701, 702 – Part Nine, Regulation of Business
excerpt from “Operations Management, Strategy and Analysis” by Krajewski, Ritzman: 1993, Addison-Wesley Publishing Co.
(pp. 296 – 299: also pp. 300 about diseconomies of scale, found below first reference passages and Managerial Practice 8. 1 “The Agony of Too Much – And Too Little – Capacity”)
Capacity is the maximum rate of output for a facility. The facility can be a work station or an entire organization. The operations manager must provide the capacity to meet current and future demand or suffer the consequences of missed opportunities.
Capacity plans are made at two levels. Long-term capacity plans, which we describe in this chapter, deal with investments in new facilities and equipment. These plans look at least two years into the future, but construction lead times alone can force much longer time horizons.
Currently, U.S. investment in new plant and equipment is $550 billion annually (1986). Service industries account for more than 64 percent of the total. Such sizable investments require top-management participation and approval because they are not easily reversed.
Short-term capacity plans, which we discuss in later chapters, are constrained by long-term plans. Short-term plans focus on work-force size, overtime budgets, inventories, (short-term capital plays, etc., my note), and the like, rather than on capital investment decision.
Capacity planning is central to the long-term success of an organization. Too much capacity can be as agonizing as too little, as Managerial Practice 8. 1 demonstrates. When choosing a capacity strategy, managers have to consider questions such as, should we have one large facility or several small ones? Should we expand capacity before the demand is there or wait until demand is more certain? A systematic approach is needed to answer these and similar question and to develop a capacity strategy appropriate for each situation.
Capacity planning requires a knowledge of current capacity and its utilization. A statistic often used to indicate the degree to which equipment, space, or labor (or throughput of product, my note) is currently being utilized is the average utilization rate, calculated as follows:
Average Utilization Rate = Average Output Rate divided by Capacity
and expressed as a percentage. The average output rate and the capacity must be measured in the same terms, that is, time, customers, units, or even dollars.
Output Measures – are the usual choice of product-focused firms. Nissan Motor Company confidently states its capacity to be 450,000 vehicles per year at its Tennessee plant. Capacity is well understood as an output rate because customization is low.
For multiple products, however, the capacity measure must recognize the product mix. For example, ( . . . )
Input Measures – are the usual choice of process-focused firms. For example, managers of a job shop think of capacity as machine hours or number of machines. Just as product mix can complicate output capacity measures, so also can demand complicate input measures.
Demand, which invariably is expressed as an output rate, must be converted to an input measure. Only after making the conversion can a manager compare demand requirements and capacity on an equivalent basis.
(pp. 297 – Managerial Practice 8. 1)
The Agony of Too Much and Too Little Capacity
Too Much Capacity –
The commercial real estate market in most major U.S. cities is sick, (1993) caused in part by the recession in the early 1990s. At the same time many tenants, especially those in the financial industry, are undergoing restructurings expected to cut demand for office space for years to come.
The vacancy rate of office space is 26 percent in Miami, Oklahoma City, Phoenix, and Dallas alike; it is 20 percent nationwide. Values have declined as much as 30 percent in some markets, and the capacity glut hurts everyone. For example, the CenTrust Tower in Miami, a 47-tower building built by a failed thrift for $165 million, was recently sold for only $38 million.
To make matters worse, the real estate industry is suffering from a virus becoming known as the “rollover risk.” Tenants from well-planned and pricey buildings are being lured to cheaper, empty buildings.
With the exception of the credit squeeze, rollover risk may be the single greatest obstacle to the recovery of the real estate market.
“There isn’t a tenant in Washington who pays the rent who isn’t getting two calls a week from brokers asking the tenant to break the lease and move into cheap space elsewhere,” says a banking consultant in Washington, D.C. “The entire market is being cannibalized.”
Too Little Capacity –
In the late 1980s the world’s airlines re-equipped their fleets and vied to buy a record number of commercial passenger jets. Orders for Boeing, Airbus, and McDonnell Douglas surged to more than 2600 planes.
Douglas alone had a backlog of some $18 billion in firm orders for its MD-80 and new MD-11 widebody. That’s enough to keep its plant fully utilized for more than three years.
Despite the number of orders, Douglas’ commercial aircraft division announced a startling loss, Airbus had yet to make money, and even the mighty Boeing fought to improve subpar margins.
The large number of orders caused many problems. For one, Douglas’ suppliers in the metal forging industry were unable to keep pace with sales. Another problem was with its own work force: In two years, Douglas’ work force doubled, but training periods were abbreviated and the new hires were much less productive than seasoned employees.
Plant managers tried to keep on schedule by pushing planes along the assembly process, even if all the work at one particular station had not been completed.
Work was also subcontracted to other plants, including a sister plant that makes combat planes and a leased plant owned by the U.S. Air Force.
Because of the capacity shortage, costs skyrocketed and profits plummeted. By the start of the 1990s, the capacity pressure was relieved because American had cut back on the hypergrowth strategy that had set the pace for the entire airline industry in the 1980s.
Sources: “Office Buildings, Under Pressure Already, Face Threat to Their Leases,” Wall Street Journal, September 27, 1991; and “Planemakers Have It So Good, It’s Bad,” Business Week, May 8, 1989.
(from pp. 297, Operations Management, Strategy and Analysis, 1993)
Diseconomies of Scale –
New Rules Breed Wasteful Mergers – Law in the News pp. 705, Part Nine – Regulation of Business, Essentials of Business Law, Second Ed., 1986
New Rules Breed Wasteful Mergers by Herman Schwartz
Public policy is always fertile ground for irony. Today, for example, the economic landscape is strewn with merger fiascos, but current antitrust policy toward these combinations is increasingly lenient. “economic efficiency” is now the “only goal” of merger policy, according to a former Justice Department official.
As a result, the merger wave of the 1980s surges ahead, reachinng a new peak last week with the Allied Corporation’s $5 billion plaanned union with the Signal Companies, the largest industrial merger ever (outside the oil industry).
This preoccupation with economic efficiency ignores Congressional intent and judicial precedent. The legislative history of the antitrust laws contains almost no mention of efficiency, production or price. Rather, there is an insistent Jeffersonian concern for the small entrepreneur – for social, not economic reasons.
Thus, the Supreme Court has always ruled that efficiencies cannot save an otherwise illegal merger.
Steel mergers were supposed to “rationalize” a sick industry. But LTV, for example, is having so much trouble digesting Republic that, even though LTV’s own steel sales rose substantially in the first quarter of 1985, it lost $156 million and operated less efficiently than the other top steelmakers; before the merger LTV had been among the most efficient.
Elsewhere, the once-voracious ITT will spin off 12 industrial technology acquisitions in its third major asset sale in eight months, with more to follow. G.E. has shed Utah International, after a loss of perhaps $3 billion.
Du Pont’s acquisition of Conoco was described by one market analyst as “dead weight pulling Du Pont down all the time.” And the history of railroad mergers like that of Penn Central (permitted in the name of “efficiency”) is dismal: in 1979, Forbes magazine concluded that 14 out of 17 rail mergers were unsuccessful.
At least some of these deals would have been blocked by an antitrust policy more consistent with Congressional intent and established law. ( . . . )
One merger consultant estimated that 70 percent fail.
(out of order in the content of the article – )
Nevertheless, when the Administration (1985 article, my note), took office, William F. Baxter, then the Assistant Attorney General in charge of anti-trust, promptly redrew Federal guidelines to ease restrictions on mergers between competitors. The guidelines further legitimized virtually any “vertical” merger — between customer and suppliers — or between companies in neither a directly competitive nor supply relationship.
Soon, deals — such as the proposed Allied-Signal merger — were proposed “that never would have been . . . before the Reagan Administration took office,” as one businessman put it. (etc. Last June, the Antitrust Division further softened the guidelines.
Experience shows that the supposed benefits of a merger are often illusory.
( . . . ) Today, Mobil is trying to spin off Montgomery Ward, after pouring over $600 million into it, and is taking a $500 million charge against earnings. Exxon has written off a $1.3 billion investment in Reliance Electric. . . . And Arco’s divestiture of its refining and retailing operations shows that vertical integration may yield not efficiencies, but trouble.
pp. 705, Essentials of Business Law, 2nd Ed.
inset article from New York Times Company, 1985
Managerial Considerations in Job Design and Work Measurement pp. 279 – 281, Operations Management, Strategy and Analysis
Compensation Plans –
Compensation plans based on work measurement typically involve incentive schemes. Those used most often are piece rate and individual incentive plans.
Piece Rate Plans – piece rate is a compensation plan based on the number of units processed during a day or week. (my note – that is whether it is stocks, bonds, investment “deals”, seams in a pair of blue jeans or what management must specify as a “fair day’s work.” – that last part came from the text.)
Individual Incentive Plants – sometimes, incentive plans are used to motivate workers. Such plans reward output that exceeds a predetermined base level. (etc.)
Quality and Compensation Plans – the purpose of incentive pay is to encourage high levels of output from employees. However, a high rate of output may be achieved at the expense of quality. What is the advantage to a company if a worker produces at 115 percent of standard but has a 20 percent defective rate?
In Chapter 3, when we discussed total quality control, we argued that quality at the source is critical for achieving world-class quality performance. Incentive plans that do not recognize and reward quality may not motivate the worker to produce high-quality goods.\
Two basic approaches are used to recognize quality in incentive pans. The first is the autocratic approach, which docks the worker’s pay for defective production or requires the worker to repair all defects at a lower rate of pay.
The second is the motivational approach, which is based on the concept of extra pay for extra effort. (etc.)
Many variants (including game theory popular in the last twenty-five years whereby the extreme levels of compensation, rewards, perks and bonuses of the executives are used as a motivating carrot for all mid-level performs who would be enticed to think they could have that eventually too, my note) of the motivational approach of including quality in work measurement are used in practice. the important point is that quality should be clearly recognized when compensation plans are being developed.
(Apparently, there also needs to be a standard set for what represents “quality” especially in the financial investment industries – because not every deal qualifies as “the deal” nor should it be, as exemplified by yesterday’s Senate hearings with the mid-level management / decision makers of the Wall Street investment firm, Goldman Sachs, – 04-27-10, Senate investigations committee.)
It has resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies.
It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity.
Many causes have been proposed, with varying weight assigned by experts. Both market-based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy over the 2010–2011 periods.
And on pages 300 – 301 of the same book – Operations Management, Strategy and Analysis, 1993 -in the section titled “Economies of Scale”
there is also – Diseconomies of Scale
. . . Historically, many organizations have subscribed to the concept of economies of scale. The concept seems simple: Increasing a facility’s size (or scale) decreases the average unit cost.
But in reality, it’s not at all simple. At some point a facility (or business, corporation, bank or conglomerate, my note) becomes so large that diseconomies of scale set in. Excessive size can bring complexity, loss of focus, and inefficiencies, which raise the average unity cost. (etc.)
muckety map - good example of diseconomies of scale - AIG / Goldman Sachs / Wall Street bailouts
(Figure 8.1 found on page 300 of the book below – not really applicable)
Figure 8.1 also shows a second dimension to the concept. Not only is there an optimal size for a facility but also an optimal operating level for a facility of a given size. Economies and diseconomies of scale are represented not just between cost curves but also within each one.
As the output rate approaches a facility’s best operating level, economies of scale are realized. Beyond that level, diseconomies set in.
pp. 300 – 301, Operations Management, Strategy and Analysis
My Note – I had another chart or two about these general concepts and some online information that I found awhile back, however – by the time I find it in my computer – it could be awhile. Therefore, I’m going to take a break, start a new blog entry and check online for the ones I was trying to find, which would have to be easier.
Share in GDP of U.S. financial sector since 1860 - must not include derivatives - Leonard N. Stern School of Business at New York University - Thomas Philippon, The future of the financial industry
Derivatives were suggested to be over $600 Trillion dollars – I don’t think that is included in the GDP . . .
(of anywhere, now that I think about it, my note) – cricketdiane
The lead underwriter for Gazprom was Goldman, Sachs, …
also – just remembered from the hearings today about the credit ratings agencies –
1. noted by someone testifying at the end of the second hour –
The ratings agencies set the standards for what is AAA or BBB, etc. – as he suggested, it is like allowing a private enterprise to determine what is a “tall” building and then they define tall as 5 stories one time, ten stories another time and whatever else at some other time, etc.
2. how did they increase the cushion – the credit cushion in the derivatives – as the executives were saying?
3. the $376 million – in 4 tranches by Citigroup that was described by the Senator – expected to have 77% losses – which ended up being more than that but were rated as AAA
4. by not back reviewing the credit derivatives while claiming to be subjecting them to a new more conservative credit model (and publishing and publicizing that epprudent model was in us) – that is why the AAA ratings on old sets of credit products / derivatives were thought to have the rating based on the new standard when they didn’t – it means the company, its executives, managers and departments intentionally misled clients because their CEO & sales info says they were using the new models and updating the old securities’ ratings using it – when they weren’t
– they also depleted resources and refused to acquire the necessary personnel resources in the departments responsible for placing the old securities packages through the new models and re-rating them appropriately, they effectively hindered them from accomplishing that process and did so knowing the result would be to not have the new ratings model applied to the existing derivatives and previous products put in place by them in the marketplace and still being resold with the new model being touted as if it was used.
– cricketdiane, 04-24-10
About the Goldman Sachs / Abacus case SEC announced this week –
(from NY Times article)
[ . . . ]
The ABN Amro executives who were involved in the Abacus deal were, like Abacus itself, largely unknown. Many focused on “exotics,” that is, complex instruments that are virtually unheard of outside of financial circles.
These executives included Mitchell Janowski, the head of credit trading exotics at ABN; Richard Whittle, global head of credit and alternatives trading; and Stephen Potter on the trading desk, whose job it was to present the trade to ABN’s credit and risk committee.
At the furthest remove from the trade was Robert McWilliam, who was in charge of assessing the credit quality of ABN’s trading counterparties.
According to people involved in the transaction, Goldman and ACA Capital, a bond insurance company that also played a central part in Abacus, contacted ABN Amro because they needed a big bank to offset ACA’s risk in the deal.
( . .
Former ABN executives were divided on the merits of the case against Goldman. One person involved in the deal said that if ABN Amro executives had known of Mr. Paulson’s role in Abacus they might have had second thoughts about the deal.
But another former executive insisted that ACA, as an expert in this area, had a chance to reject the securities that Mr. Paulson had chosen for the deal.
“These guys were experts,” this person said. “If they were so good and thought the market was going to go to hell, they should not have put their name to it.”
A version of this article appeared in print on April 23, 2010, on page A1 of the New York edition.
When the Abacus investment soured, Royal Bank of Scotland, under the terms of the deal, was obligated to cover the $840.1 million in losses. The British bank paid that sum to Goldman Sachs, which, in turn, paid John A. Paulson, the hedge fund manager who had bet against the deal. According to the Securities and Exchange Commission, Goldman had devised the investment to fail from the start so that Mr. Paulson could wager against it. Goldman has vowed to fight the claims, which it has called baseless.
(from above NY Times article, 04-23-10)
A Routine Deal Became an $840 Million Mistake
By LANDON THOMAS Jr.
Published: April 22, 2010
Perhaps 60% Of Today’s Oil Price Is Pure Speculation
Jun 27, 2006 – The price of crude oil today is not made according to any traditional … of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who …. US gasoline and heating oil futures on the ICE Futures exchange in London. … where we have both high supplies of crude oil and high crude oil prices. … www.rense.com/general81/pure.htm
(also from the 2006 – 2007 oil prices debacle – )
“We’re facing a new threshold and that’s $4 a gallon,” said Mr. Reed of Edmunds.com. “It’s going to be interesting to see at what point will people start making substantial changes.”
For an 800-mile round trip, the average during the summer, the extra cost of paying a dollar more a gallon at the pump adds up to $40 for a vehicle that gets 20 miles a gallon.
A third of all leisure travel takes place in the summer. This season, Americans will take 326 million trips, according to the Travel Industry Association, essentially the same as last year. The trade group expects Americans to spend $1,000 on each trip, but travelers are expected to save money on hotels, food and dining to make up for the higher gasoline expense.
Gasoline prices rose to record highs this spring on the back of a big increase in oil prices. After reaching a high of $75.17 a barrel in April, crude oil remains around $70 a barrel because of concerns over the security of supplies around the world.
Gas prices are directly affected by oil’s movements. A general rule is that a $10 increase in the price of a barrel of oil adds nearly 25 cents to the price of gas at the pump.
Higher energy prices have eaten into incomes, wiping out almost a third of last year’s total wage increases, according to a new report by the United States Conference of Mayors and Global Insights. In 2005, energy expenditures accounted for 5.9 percent of consumer spending — up 20 percent from 2004, the report said. Households spent $287 billion for gasoline and $225 billion on other energy expenses, or 9 percent of all wages and salaries.
The Energy Information Administration of the Energy Department, in a recent report, said a lasting increase of 10 percent in the price of crude oil would lead to a 0.4 percent drop in domestic petroleum consumption over two years. While that may not seem like much for a nation that consumes more than 20.5 million barrels of oil a day, it can add up.
“So far, $3 a gallon is old hat,” said Jan Stuart, an energy economist at UBS in New York. “The question is, What kind of price levels do you need for people to stay at home?”
This is not to say that Americans are immune to changes in energy prices, whose effects are slowly spreading through the economy. Lower-income households, which devote a higher share of domestic spending to energy, are feeling the pain, certainly, much more than higher-income families.
(from the same article above – 2006)
By Labor Day, drivers will have logged more than 800 billion miles, or 8.6 billion miles a day, and will have consumed 36 billion gallons of fuel crisscrossing the United States, according to the Energy Department.
Gas Prices Aren’t Deterring Summer Travelers – New York Times
May 27, 2006 – After reaching a high of $75.17 a barrel in April, crude oil remains around $70 a barrel because of concerns over the security of supplies around the world. … http://www.nytimes.com/2006/05/27/business/27gasoline.html
Gas Prices Aren’t Deterring Summer Travelers
By JAD MOUAWAD
Published: May 27, 2006
My Note – and considering the following – why were speculators in energy and oil futures allowed to drive up the prices of crude to over $100 per barrel?
CFTC Market Surveillance Program
The CFTC’s market surveillance program is intended to preserve the economic functions of futures and option markets. The market surveillance program’s primary mission is to identify situations that could pose a threat of manipulation and to initiate preventive actions.
Large Trader Reporting Program
The CFTC operates a comprehensive system of collecting information on market participants as part of its market surveillance program. The Commission collects market data and position information from exchanges, clearing members, futures commission merchants (FCMs), foreign brokers, and traders. The Commission and U.S. futures exchanges employ a comprehensive large-trader reporting system (LTRS), where clearing members, FCMs, and foreign brokers (collectively called reporting firms) file daily reports with the Commission.
Speculative Limits To protect futures markets from excessive speculation that can cause unreasonable or unwarranted price fluctuations, the Commodity Exchange Act authorizes the Commission to impose limits on the size of speculative positions in futures markets.
US Commodity Futures Trading Commission, Department of the US Treasury
Index Investment DataSwap dealers and index traders that receive a “special call” (under CFTC Rule 18.05) must file monthly reports with the CFTC’s Division of Market Oversight within 5 business days after the end of the month. Selected quarterly data from those reports is published below. Those data show the national values and the equivalent number of futures contracts for all U.S. markets with more than $0.5 billion of reported net notional value of index investment at the end of any one quarter.
The most recent quarter-end information generally is added about 4 to 5 weeks after the “as of” date. Once posted, the CFTC does not generally revise this information to reflect any amended information subsequently received, but may do so if the changes are extraordinary.
Does this mean that only a selection / a slice of the swap dealers and index traders are given oversight and overview by the US Commodity Futures Trading Commission? Don’t they have just about the best computers and software in the world available to them? Or is that only one part of some bigger process that isn’t evident?
Treasury Financial Manual
Volume IV: Treasury Tax and Loan Depositaries
Treasury’s operating cash balance is maintained in a portfolio of four separate investment vehicles under investment authority codified at Title 31 U.S.C. Section 323. Currently, only financial institutions that are designated as Treasury Tax and Loan (TT&L) depositaries are eligible to participate in Treasury’s investment program.
Treasury’s Federal Reserve Account:
Represents Treasury’s checking account. The vast majority of payments and collections are paid out of and received into this account maintained at the Federal Reserve Bank of New York. Treasury does not earn explicit interest earnings on the account although it does receive implicit interest on the balances in the form of Federal Reserve earnings. Treasury generally targets a $5 billion end-of-day balance in its Federal Reserve Account.
Represents funds invested with commercial depositaries that agree to pay Treasury interest at the rate determined by the Secretary of the Treasury. Treasury has the ability to call TT&L funds on a same-day basis and place funds on a same-day or one-day basis depending upon each depositary’s designation (almost 90% of Treasury’s TT&L capacity is available on a same-day basis). TT&L investments may be placed as direct investments, dynamic investments, or special direct investments.
Term Investment Option (TIO) Investments:
The TIO is an investment opportunity offered to TT&L depositaries. Treasury will frequently auction excess operating funds to participants for a fixed term and rate determined through a competitive bidding process. Term Investments are normally placed toward mid-month and mature toward end-of-month. Acceptable collateral is typically TT&L collateral and commercial loans held in a Borrower-in-Custody (BIC) arrangement. However, Treasury reserves the right to restrict acceptable collateral to TT&L collateral only.
Repurchase Agreement (Repo) Program:
The Repo Program is Treasury’s newest investment opportunity offered to TT&L depositaries. Treasury will invest excess operating funds through Reverse Repo transactions for an overnight term. Repo investments will typically occur daily at approximately 9:15 a.m. ET. Settlement is Fedwire delivery-versus-payment. Underlying securities for a Repo investment must be U.S. Treasury Bills, Notes, or Bonds. The Repo Program began as a pilot program in March 2006 and was designated a permanent program in the fall of 2007.
The Troubled Asset Relief Program, commonly referred to as TARP, is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector. It is the largest component of the government’s measures in 2008 to address the subprime mortgage crisis.
Of the $245 billion invested in U.S. banks, over $169 billion has been paid back, including $13.7 billion in dividends, interest and other income, along with $4 billion in warrant proceeds as of April 2010. AIG is considered “on track” to pay back $51 billion from divestitures of two units and another $32 billion in securities. In March 2010, GM repaid more than $2 billion to the U.S. and Canadian governments and on April 21 GM announced the entire loan portion of the U.S. and Canadian governments’ investments had been paid back in full, with interest, for a total of $8.1 billion.
Anti-cartel enforcement is a key focus of competition law enforcement policy. In the US the Antitrust Criminal Penalty Enhancement and Reform Act 2004 raised the maximum imprisonment term for price fixing from three to ten years, and the maximum fine from $10 to $100 million.
These actions complement the private enforcement which has always been an important feature of United States antitrust law. The United States Supreme Court summarised why Congress allows punitive damages in Hawaii v. Standard Oil Co. of Cal.:
“ Every violation of the antitrust laws is a blow to the free-enterprise system envisaged by Congress. This system depends on strong competition for its health and vigor, and strong competition depends, in turn, on compliance with antitrust legislation. In enacting these laws, Congress had many means at its disposal to penalize violators. It could have, for example, required violators to compensate federal, state, and local governments for the estimated damage to their respective economies caused by the violations. But, this remedy was not selected. Instead, Congress chose to permit all persons to sue to recover three times their actual damages every time they were injured in their business or property by an antitrust violation. ”
In the mean time, Art. 81 EC makes clear who the targets of competition law are in two stages with the term agreement “undertaking”. This is used to describe almost anyone “engaged in an economic activity”, but excludes both employees, who are by their “very nature the opposite of the independent exercise of an economic or commercial activity”, and public services based on “solidarity” for a “social purpose”. Undertakings must then have formed an agreement, developed a “concerted practice”, or, within an association, taken a decision. Like US antitrust, this just means all the same thing; any kind of dealing or contact, or a “meeting of the minds” between parties.
and the corresponding provision under US antitrust states similarly,
“No person shall acquire, directly or indirectly, the whole or any part of the stock or other share capital… of the assets of one or more persons engaged in commerce or in any activity affecting commerce, where… the effect of such acquisition, of such stocks or assets, or of the use of such stock by the voting or granting of proxies or otherwise, may be substantially to lessen competition, or to tend to create a monopoly.
What amounts to a substantial lessening of, or significant impediment to competition is usually answered through empirical study.
Then although the lists are seldom closed, certain categories of abusive conduct are usually prohibited under the country’s legislation. For instance, limiting production at a shipping port by refusing to raise expenditure and update technology could be abusive. Tying one product into the sale of another can be considered abuse too, being restrictive of consumer choice and depriving competitors of outlets. This was the alleged case in Microsoft v. Commission leading to an eventual fine of €497 million for including its Windows Media Player with the Microsoft Windows platform. A refusal to supply a facility which is essential for all businesses attempting to compete to use can constitute an abuse.
Jan 23, 2010 …Bankers scarce as Davos probes post-crisis dangers … CEO Lloyd Blankfein, a Davos regular before 2009, doesn’t plan to attend. Goldman President Gary Cohn, however, will be making the trip, a spokeswoman said. … http://www.marketwatch.com/…/bankers-lose-their-luster-at-davos-2010-01-23 – Cached
Bankers Return to Davos. January 24, 2010 12:01 a.m. … March 30, 2009 12:01 a.m.. Gary Cohn, president of Goldman Sachs Group, talked to The Journal’s …
topics.wsj.com/person/c/gary-d-cohn/656 – Cached – Similar
Jan 26, 2010 … Ackermann and Sands will be the most visible bankers in Davos, …Cohn, Goldman Sachs’s president and the most senior executive attending … http://www.businessweek.com/…/davos-too-big-to-fail-as-bankers-recoil-in-political-backlash.html – Cached
However, I was trying to find the part where at Davos, the bankers and investment firms / bank holding companies / Wall Street investors and brokers / investment bankers all got together in a room to decide amongst themselves to provide a united front against legislation of financial reforms, etc. – which was on the news at the time. I don’t remember if it was at Davos 2009 – or 2010, but it was on just about every news show when they did it.
I’ll find it . . .
I do remember one of the panels that Cohn or somebody from the US financial system was on speaking before a packed audience at Davos in 2009 among other financial experts and leaders addressing questions – it was a complete embarrassment for the US and the Wall Street view of the financial crisis and what to do about it. I’ll see if I can find that video too. It has to be seen to be fully comprehended in light of reality.
(from BBC News – about Davos 2010 -)
Josef Ackermann, the boss of Deutsche Bank, proposed the creation of a B20 group of business leaders, to ensure the voice of business was heard when the G20 group of leading countries met again to co-ordinate economic policies and financial regulation.
(my note, if that isn’t a cartel – I don’t know what is)
Some of the world’s top bankers – including those at Deutsche Bank and Barclays – indicated that they might be prepared to pay a global financial insurance levy, so that the next bank bail-out would be financed by the industry, not by taxpayers.
Both Mr Sands and Mr Ackermann warned that there would have to be a trade-off between making the financial system safer and raising the cost of, or even limiting, the availability of credit.
(and on cable news and business shows there were a parade of interviews with a couple of financial / CEO people who continuously flitted around Davos and the media with those and other threats – insisting that everyone needed to treat the bankers much nicer and not assign blame to them for the mess, etc., my note))
Jan. 26 (Bloomberg) — For a sign of how the mood has changed at the World Economic Forum in Davos this week, consider the speakers at an invitation-only client lunch hosted by Paul Calello, who runs Credit Suisse Group AG’s investment bank.
Last year’s panel on “Financial Market Dynamics” featured senior executives from financial companies JPMorgan Chase & Co., Blackstone Group LP, hedge fund Eton Park Capital Management and NYSE Euronext. This year clients will learn about “Leadership, Responsibility and the Recovery of the Financial System” from U.K. and Swiss regulators and Laura D’Andrea Tyson, an economics professor who has served in the U.S. government.
While those attending may represent banks that are too big to fail, they are not too big to keep a low profile. Citigroup Inc. CEO Vikram Pandit, Morgan Stanley Chairman John Mack and the chief executives of Credit Suisse and UBS AG won’t be speaking at any sessions listed in the official program. Bank of America Corp. CEO Brian Moynihan and Goldman Sachs President Gary Cohn are each participating on one panel.
None of them will be speaking at a session on “Redesigning Financial Regulation” on Saturday afternoon moderated by Barry Eichengreen, a professor of economics and political science at the University of California at Berkeley. That panel will include European Central Bank President Jean-Claude Trichet, the governor of the central bank of Mexico, the South African finance minister and the CEO of U.K. insurer Prudential Plc.
Financial companies continue to play a key role in the World Economic Forum, with more than 25 banks, insurers, exchanges and investment companies serving as sponsors of the annual meeting. They include Bank of America, Citigroup, JPMorgan, Goldman Sachs and Morgan Stanley, as well as the two biggest Swiss banks and HSBC Holdings Plc, Barclays Plc and Standard Chartered Plc from the U.K.
Two of the seven co-chairs of this year’s meeting run banks: Deutsche Bank AG CEO Josef Ackermann and Peter Sands, CEO of London-based Standard Chartered. Ackermann, who chairs the Institute of International Finance trade group, has positioned himself as a spokesman for the industry. He said at a conference in London last week that proposals to split up or limit the size of banks are “misguided.”
Ackermann and Sands will be the most visible bankers in Davos, with each participating in three sessions. On Jan. 30, Ackermann will take the stage as the sole private-sector executive alongside Summers, the finance minister of France, the deputy governor of the People’s Bank of China and Dominique Strauss-Kahn, managing director of the Washington, D.C.-based International Monetary Fund.
Offstage — in private sessions and dinners — bankers may wield more clout. Ackermann is one of a group of bank CEOs scheduled to take part in an “informal” Saturday morning gathering on global financial regulatory reform with central bankers and ministers, said Ackermann’s spokesman Stefan Baron.
“We have transformed the banking crisis into kind of a sovereign solvency crisis by buying up a lot of private securities and auto companies and so forth,” he said. “We’ve dealt with the consequences of vaporizing $3 trillion of private demand in the U.S. by providing a lot of public demand.”
( . . . )
Looking for Goldman
Banks typically reserve hotel suites and conference rooms throughout the Alpine town to hold private meetings with clients and to host cocktail parties and invitation-only dinners. Citigroup, the bank that is 27 percent owned by the U.S. Treasury Department, will be having a cocktail party on Friday. Jon Diat, a spokesman for the bank, declined to provide details.
In a sign of how little of the action at Davos takes place at public events, only two of the seven Goldman Sachs executives attending the forum are participating in discussions on the official schedule.
“This is a client-driven event for us,” said Samuel Robinson, a company spokesman. Goldman Sachs will host “a couple of small, private dinners” that will include “a range of clients.” He declined to comment further.
The bank’s delegation includes four executives from New York, two from London and J. Michael Evans, chairman of the firm’s Asian business, who is based in Hong Kong.
Cohn, Goldman Sachs’s president and the most senior executive attending from the firm, is scheduled to participate in a panel on “Rethinking Risk in the Boardroom” that will be closed to the media. The other Goldman Sachs executive making an appearance is Dina Powell, head of corporate engagement, who will be one of 12 panelists in a discussion on Wednesday.
Her subject: how business can address rural poverty.
For the previous few days, bankers and regulators had been shouting past one another over the Volcker Rule — President Obama’s surprising proposal to prevent commercial banks from engaging in proprietary trading and limiting their overall size — and what it would mean to the global banking system.
The bankers had gone on the offensive, with Bob Diamond, chief executive of Barclays Capital, taking the lead.
“You have to step back from the rhetoric,” he said. “I have seen no evidence to suggest that shrinking banks and making banks smaller and more narrow is the answer.” (Not all the chief executives were in agreement on that point, however. Several privately told me, as one said, that “size, by default, increases risk.” That seems a sensible assessment, but none of them contested Mr. Diamond’s point out loud.)
The more contentious discussions were around Mr. Obama’s plan to restrict proprietary trading. One hedge fund manager described the proposed rule by using more four-letter words in one sentence — as nouns and verbs — than I thought possible.
The biggest debate surrounded exactly how proprietary trading was going to be defined.
Mr. Obama had said, “Banks will no longer be allowed to own, invest or sponsor hedge funds, private equity funds or proprietary trading operations for their own profit, unrelated to serving their customers.”
( . . . )
A senior banker put it to me more bluntly: “I can find a way to say that virtually any trade we make is somehow related to serving one of our clients. They can go ahead and impose the rule on Friday, and I can assure you that by Monday, we’ll find a way around it. Nothing will change unless the definition is ironclad.”
Indeed, in the past week and half, banks have tried to estimate their proprietary trading, with most banks suggesting that it is a minuscule part of their business. JPMorgan Chase, Morgan Stanley and others estimated it at less than 2 percent of their business; Goldman Sachs said it was under 10 percent.
But as the chief executive of a global bank said to me, knocking back a shot of vodka, “The numbers you’ve heard about don’t include all the investments we make that are related to our clients. Nobody’s talking about that. That’s a much bigger number.”
The politicians and regulators in attendance, on the other hand, started the week off with their own fiery bursts, including this from Representative Barney Frank, who didn’t win over many bankers in the audience: “I think almost every American here pays much less in taxes than you ought to,” he said. “I’m going to go back and try to raise the taxes of most of the people who attended here.”
And so perhaps it was surprising that by Saturday, after many of the biggest names had already flown back in their private jets (yes, many took private jets, though it is worth noting that Mr. Diamond did not, nor did George Soros nor Eric Schmidt of Google, for those of you keeping score), the beginning of an agreement started coming together.
Government regulators from the United States and Europe laid out their financial reform plans Saturday before a skeptical banking industry, asking financiers for input but adamant that change was coming with or without their support.
Emerging from the two-hour meeting as its unofficial spokesman, U.S. Representative Barney Frank made it clear that governments were now calling the shots after spending billions to bail out the industry.
The meeting comes after days of tension at this Swiss Alpine resort over government plans for stricter controls on the financial industry to limit speculation and avoid a repeat of the 2008 meltdown that plunged the world into recession. Bankers have protested, saying the U.S. and other countries risk choking off a gradual economic recovery with regulation they see as heavy-handed.
The event was not on the forum’s official agenda, but quickly became the most significant development of the day.
“We are determined to do strong, sensible regulation,” Frank said, rejecting any notion that President Barack Obama’s administration could sink the economy again with too many new controls on the banking industry.
“That’s nonsense,” Frank told reporters. “What we’re trying globally to recover from is a total lack of regulation.”
On the government side, those at the meeting included Lawrence H. Summers, Mr. Obama’s top economic adviser, British treasury chief Alistair Darling, French Finance Minister Christine Lagarde and Jean-Claude Trichet, president of the European Central Bank, which oversees the 16-nation euro zone.
Bankers attending the private talks included Josef Ackermann, chief executive of Deutsche Bank AG, Bank of America Corp. CEO Brian Moynihan and JPMorgan Chase & Co. Chairman Jacob Frenkel.
The banks were asked for their input, Frank said, adding that he believed they got the message that tighter controls were coming.
“Frankly it doesn’t matter if they did or didn’t,” Frank said. “They aren’t in charge of this.”
I wish I could find that – it seems like it was on Wednesday or Thursday at Davos when the bankers in the afternoon were shown going into a room together for a private meeting and they all looked pissed as hell. I’ll keep looking but they intended to unite against and plan a strategy against whatever reforms and regulations, bonus diminishment, proprietary trading regulations, and higher funding against leverage requirements, etc. – I’ll keep looking –
(This one has some video – including three at the bottom of the page, one of which is titled – Bankers at Davos criticise Obama’s State of the Union speech)
A bust-up over US plans to curb risk-taking by banks again took centre stage on the last day of the World Economic Forum, with central bank chiefs huddling with finance ministers and officials, and top private bankers.
The banking issue has clouded the four-day Davos meeting, starting with French President Nicolas Sarkozy’s opening address in which he backed US President Barack Obama’s tough clampdown plans.
Chinese and Indian delegates have trumpeted their country’s healthy growth rates of nearly nine and seven percent respectively, and the United States hailed Friday’s unexpectedly-rosy 5.7 percent GDP growth figure.
But unemployment remains a worrying problem in the United States and Europe, which both have a jobless rate of around 10 percent, despite a return to overall growth.
“What we’re seeing in the United States is a statistical recovery and a human recession,” said Larry Summers, Obama’s chief economic advisor, commenting on the jobless recovery phenomenon.
Warnings of a double-dip recession — where nascent recovery fades back into a new slowdown — have abounded in Davos as leaders mull exit strategies from huge stimulus packages agreed to prevent a full-blown Depression last year.
Jan 29, 2010 …Davos bankers to lobby against Obama reforms | Business | guardian . … If so, wouldn’t this meeting be illegal under the anti-trust laws if it happened in the US? …. Comments are closed for this entry … http://www.huffingtonpost.com/…/davos-bank-ceos-hold-priv_n_441624.html
Jan 28, 2010 … British and American banks at a secret meeting in Davos… between London-based bankers before presenting the UK’s position … tomorrow to
January 28, 2010
Davos: Top bankers to hold secret talks with Darling in bid to avert tough sanctions
Alistair Darling is to meet the chiefs of top British and American banks at a secret meeting in Davos tomorrow to hear their concerns about the introduction of tough new sanctions against the banking sector.
The Times has learnt that the bosses of HSBC, Barclays and Standard Chartered, and top executives from key American banks, including JP Morgan and Morgan Stanley, will try to persuade the Chancellor that any moves to curtail the banks will have unforeseen repercussions for the global economy.
The talks will be hosted by Peter Sands, the group chief executive of Standard Chartered, one of the architects of last year’s banking bailout.
The bankers will also press the point that any perception that there could be an extension of this year’s tax on bonuses could damage London’s status as a financial capital.
Mr Soros defended Mr Obama’s plans to stop banks growing too big and to prevent them undertaking riskier activities such as proprietary trading and said that he had been unimpressed by the bankers’ response to it. “I think the banking community . . . is tone deaf. I think it is a very unfortunate reaction.”
Mr Soros’s broadside came minutes after three of the world’s most senior bankers had questioned the wisdom and practicalities of clamping down too fiercely on banks.
Bob Diamond, president of Barclays, argued in favour of large universal banks because they were liked and needed by big business, by governments and by large institutional investors, such as pension funds. “I’ve seen no evidence … that suggests that shrinking banks to make them smaller and narrower is effective,” he said.
Josef Ackermann, chairman of Deutsche Bank, hit out at politicians and regulators for failing to take their share of responsibility for the global financial collapse, a direct criticism of politicians that leading bankers have long held off from making.
However, even if the ratings agencies were duped, their participation in these complex deals gives the appearance of complicity. At minimum, Goldman and its competitors had a symbiotic relationship with the ratings agencies.
When Goldman Sachs Chief Executive Lloyd Blankfein recently testified before the congressionally mandated Financial Crisis Inquiry Commission, which is looking into the causes of the financial crisis, he suggested that Wall Street banks were at the mercy of the ratings agencies.
However, in a McClatchy investigation late last year, former Moody’s officials recounted how Wall Street investment powers like Goldman played the three major ratings agencies off each other to get the ratings they needed to attract investors.
The carrot for the ratings agencies was a big reward, $1 million or more, for providing an investment grade to a complex deal.
Moody’s dominated the rating of “structured-finance products,” the general term for complex financial instruments concocted by Wall Street. Chief among these were collateralized debt obligations and mortgage-backed securities.
Both involve pools of loans, most often mortgages, which were packaged into bonds that were sold to investors. Institutional investors such as pension funds and endowments are often restricted to purchasing only investment-grade securities, so Wall Street worked feverishly to win investment grades from Moody’s or its competitors, Standard & Poor’s and Fitch.
McClatchy’s investigation documented how McDaniel promoted officials from the highflying structured finance division, and how he installed its architect Brian Clarkson as president and chief operating officer of Moody’s.
Officials who oversaw the process of giving top ratings to some of the worst deals were given top executive suites and jobs heading regulatory affairs and compliance.
During this era, former Moody’s executives said, ratings quality eroded as analysts were under intense pressure from Clarkson and McDaniel to maintain market share and a “business-friendly” environment.
During the Senate hearings on the credit ratings agencies, there was a place during the middle set (second of the series) when the adversarial and abusive tactics used by the investment firms was described by one of the three managers of the credit ratings agencies that were testifying. That is a form of extortion by intimidation, considering that they were literally yelling on the phone at the ratings committee members, threatening, intimidating, abusive and apparently it was a common practice over the course of the hundreds of thousands of credit derivatives that were rated by the agencies for them.
That shows a pattern of behavior. Just as the bankers, ratings agencies, Wall Street investment firms and speculative futures traders in every case, engaged in those kinds of pattern of behavior. They met together in secret. They knew all the details of the deals, because their organizations were the same ones making the mergers happen for companies. They were the same ones with the inside information about what institutional investors were doing because their firms were handling or advising on those portfolios and trades, then turning around and making the same speculative position purchases for themselves in both hedging plays and short sells and large trades to benefit their own profits. Hmmm . . .
They met regularly with their competitors, even going to Davos and other similar events to meet behind closed doors intending to create and support a united front to benefit their own profits and purposes. To what end is their good in this when such a massive population, including those populations’ joint resources have been not only jeopardized by this behavior but also depleted, lost or destroyed?
TARP allows the United States Department of the Treasury to purchase or insure up to $700 Billion of “troubled assets”, defined as “(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.”
In short, this allows the Treasury to purchase illiquid, difficult-to-value assets from banks and other financial institutions. The targeted assets can be collateralized debt obligations, which were sold in a booming market until 2007 when they were hit by widespread foreclosures on the underlying loans. TARP is intended to improve the liquidity of these assets by purchasing them using secondary market mechanisms, thus allowing participating institutions to stabilize their balance sheets and avoid further losses.
Yet, if the Capital Purchase Program warrants of Goldman Sachs are representative, then the Capital Purchase Program warrants were worth between $5-to-$24 billion dollars as of May 1, 2009. Thus canceling the CPP warrants amounts to a $5-to-$24 billion dollar subsidy to the banking industry at taxpayers expense.
The Federal Reserve Board on Wednesday announced the termination of the enforcement action listed below. Terminations of enforcement actions are listed on the Federal Reserve’s website, www.federalreserve.gov/boarddocs/enforcement, as they occur.
Heritage Bank, Topeka, Kansas
Prompt Corrective Action Directive dated March 26, 2009
Terminated April 13, 2010
(which is included in part of the document for Ameri-National Corporation below, my note)
Release Date: April 20, 2010
For immediate release
The Federal Reserve Board on Tuesday announced the execution of a Written Agreement by and between Ameri-National Corporation, Overland Park, Kansas, a registered bank holding company, and the Federal Reserve Bank of Kansas City.
The board of directors of Ameri shall take appropriate steps to fully utilize Ameri’s financial and managerial resources, pursuant to section 225.4(a) of Regulation Y of the Board of Governors of the Federal Reserve System (the “Board of Governors”)
(12 C.F.R. § 225.4(a)), to ensure that National Bank of Kansas City complies with the Formal Agreement entered into with the Office of the Comptroller of the Currency (the “OCC”) on May 20, 2008, and that Heritage Bank, National Association complies with the Formal Agreement entered into with the OCC on September 29, 2008, and any other supervisory action taken by the Banks’ federal regulators.
Dividends and Distributions
2. (a) Ameri shall not declare or pay any dividends without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision and Regulation (the “Director”) of the Board of Governors.
(b) Ameri shall not directly or indirectly take dividends or any other form of payment representing a reduction in capital from the Banks without the prior written approval of the Reserve Bank.
(c) Ameri and its nonbank subsidiary shall not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director.
(d) All requests for prior approval shall be received by the Reserve Bank at least 30 days prior to the proposed dividend declaration date, proposed distribution on subordinated debentures, and required notice of deferral on trust preferred securities. All requests shall contain, at a minimum, current and projected information on Ameri’s capital, earnings, and cash flow; the Banks’ capital, asset quality, earnings, and allowance for loan and lease losses (the “ALLL”); and identification of the sources of funds for the proposed payment or distribution. For requests to declare or pay dividends, Ameri must also demonstrate that the requested declaration or payment of dividends is consistent with the Board of Governors’ Policy Statement on the Payment of Cash Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve Regulatory Service,
4-877 at page 4-323).
Debt and Stock Redemption
3. (a) Ameri and any nonbank subsidiary shall not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the Reserve Bank. All requests for prior written approval shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and the planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.
(b) Ameri shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank.
NEW YORK (Reuters)—An analyst
at Goldman Sachs, a banker at
Merrill Lynch and a printing plant
worker were arrested, charged with
participating in an international insider
trading ring that netted $6.7
million and involved more than a
Authorities said the schemes involved
stealing pre-publication copies
of BusinessWeek magazine to gain advance
knowledge of share tips and persuading
an investment banker to pass
on details about upcoming mergers.
The U.S. Attorney said those under
arrest were Eugene Plotkin, a bond
analyst at Goldman Sachs Group
Inc., and Stanislav Shpigelman, a junior-
level investment banker at Merrill
Lynch & Co. Inc.
A third man, Juan Renteria, an
employee at a plant that printed BusinessWeek
magazine, was arrested
in Milwaukee. All three face insider
trading and securities fraud charges.
“These defendants developed their
sources of information in the hopes of
running that insider trading business
as a money-making machine, and for
a little while it worked, netting millions
of dollars,” said Michael Garcia,
the U.S. Attorney for the Southern
District of New York.
The case showed “there are still
some people out there even at the biggest
and best of Wall Street firms who
are motivated by greed, are willing to
put their careers and their liberties in
jeopardy,” Garcia added.
The case is linked to the arrest last
year of David Pajcin, a former Goldman
employee who allegedly made
stock trades from stolen pre-publication
copies of BusinessWeek. Pajcin
is cooperating with authorities, officials
The U.S. Securities and Exchanges
Commission said the schemes were
orchestrated by Plotkin and Pajcin,
who persuaded Shpigelman to provide
tips on upcoming mergers in return
for a share of trading profits.
In a second scheme, Plotkin and
Pajcin recruited two individuals, including
Renteria, to obtain jobs at a
printing plant, steal advance copies
of BusinessWeek and tip them about
the names of companies discussed. The arrests were the result of an
eight-month investigation that began
in early August 2005.
Plotkin, aged 26, faces a maximum
penalty of 70 years in prison; Shpigelman,
aged 23, could get up to 55
years; and Renteria, aged 20, could
be jailed for 15 years.
All three will be arraigned later on
Separately, the SEC filed civil insider
trading charges against Shpigelman,
Plotkin, Renteria and a number
of people who allegedly received inside
tips. These included Pajcin’s aunt
Sonya Anticevic, a former underwear
factory worker living in Croatia.
Plotkin and Pajcin allegedly recruited
Merrill Lynch’s Shpigelman
to pass along inside information about
various deals at the investment bank,
in exchange for cash payments.
Plotkin and Pajcin traded stocks
based on those tips, making at least
$6.4 million in illicit gains, according
to the complaint.
The deals included Proctor & Gamble
Co.’s acquisition of Gillette Co. in
January 2005 and Adidas’ acquisition
of Reebok in August. The Adidas
deal allegedly netted them more
than $2 million in profit.
In the other scheme, Plotkin and
Pajcin allegedly bribed Renteria
and Nickolaus Shuster, employed
at a Wisconsin printing plant where
McGraw-Hill Cos. Inc.’s Business-
Week was produced, to pass along
the names of stocks favorably mentioned
in the magazine’s “Inside Wall
Street” column, on the trading day
before it hit the newsstands.
The pair traded in approximately
20 different stocks on this basis,
earning $340,000 in illicit gains, the
complaint said. These stocks included
TheStreet.com Inc., PriceSmart Inc.
and Symbol Technologies Inc.
In order to boost their combined
profits, the pair allegedly tipped off
other individuals, including two people
A spokesman at Merrill said:
“These allegations, if true, represent
a serious breach of trust and violation
of Merrill Lynch’s fundamental principles.
We do not tolerate or condone
insider trading. This conduct victimizes
the company and the clients
alike. It is outrageous, if true. We are
cooperating with the regulators.”
The arrests were the result of an
eight-month investigation that began
in early August 2005.
Plotkin, aged 26, faces a maximum
penalty of 70 years in prison; Shpigelman,
aged 23, could get up to 55
years; and Renteria, aged 20, could
be jailed for 15 years.
My Note –
That seems way out of scale considering the billions of dollars involved in the scandals rocking bank’s shareholders, investors, pension funds and depositors, taxpayers, state revenues and budgets, endowments, trusts and other financial pools – which have sustained incredible losses –
The Reserve Bank will make up to $200 billion of loans under the TALF.
TALF loans will have a one-year term (with interest payable monthly), will be folly secured by the market value of high-quality ABS (subject to a collateral haircut), and will be non-recourse to the borrower. The term of TALF loans may be lengthened later if appropriate.
Substitution of collateral during the term of the loan will not be allowed. TALF loans will not be subject to ongoing mark-to-market or re-margining requirements. The U.S. Treasury Department – under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008 – will provide $20 billion of credit protection to the Reserve Bank in connection with the TALF, as described below,
Eligible Collateral. Eligible collateral will include U.S. dollar-denominated ABS that have a long-term credit rating in the highest investment-grade rating category (for example, AAA) from two or more major nationally recognized statistical rating organizations (NRSROs) and do not have a long-term credit rating of below the highest investment-grade rating category from a major NRSRO.
My Note – But aren’t they still making up those AAA ratings – is there any objective standard for what that !!!AAA!!! represents? Aren’t they still being rated by the same two corrupt companies that were making them all through the damages they helped to cause in the financial markets and economies around the world? Aren’t we still paying for their mistakes in every business, school system, state, family, community, employer and non-profit in the US and elsewhere?
AFX News Limited Chicago Fed’s Evans mirrors Bernanke no-recession forecast
02.14.08, 2:02 PM ET
NEW YORK (Thomson Financial) – The Chicago Federal Reserve Bank has an economic index that is now signaling a greater than 50% chance of a recession, but the bank’s new President Charles Evans would not, in a speech Thursday, go beyond the same slow growth/late 2008 recovery outlook that Fed Chairman Ben Bernanke delivered earlier in the morning.
‘Our outlook at the Chicago Fed is for real GDP to increase in the first half of the year, but at a very sluggish rate,’ Evans said in remarks prepared for financial analysts in Chicago. ‘However, we expect growth will pick up to near potential by late in the year and continue at or a bit above this pace in 2009.’
That is essentially the same forecast Chairman Bernanke gave in congressional testimony Thursday morning, and it is relatively optimistic compared to some, though not all, private forecasters who now expect a recession.
Even the Chicago Fed’s own National Activity Index three month moving average fell to -0.67 in December, and Evans said based on research he did as a staff economist there, ‘readings like this indicate a greater than 50% probability that the economy is in a recession.’
There are reasons to discount this probability, Evans pointed out. Retail sales posted a modest increase in January, and the forward-looking data on orders for capital goods ended last year on a positive note.
Still, ‘it is clear that the U.S. economy currently faces substantial headwinds.’
And there are forces pushing growth against those headwinds, the Fed itself not least of them.
‘At 3%,’ Evans said, ‘the current federal funds rate is relatively accommodative and should support stronger growth. Indeed, because monetary policy works with a lag, the effects of last fall’s rate cuts are probably just being felt, while the cumulative declines should do more to promote growth as we move through the year.’
Then, too, the fiscal stimulus checks should be boosting consumer spending in the second half of the year.
The Chicago Fed’s forecast is for inflation to moderate over the next two years. ‘Slower growth in 2008 will limit price increases somewhat. Furthermore, futures markets point to a peaking of energy and commodity prices,’ according to Evans. And inflation expectations are still mostly contained.
For financial markets, despite the improvement in liquidity, overall credit conditions are still strained, and the lending environment is much less receptive to risk-taking than it was prior to last August.
‘So we are in the midst of a period of soft economic activity. We also are in a period of heightened uncertainty about the economic outlook,’ he concluded.
WASHINGTON — In the nation’s first-ever $3 trillion budget, President Bush seeks to seal his legacy of promoting a strong defense to fight terrorism and tax cuts to spur the economy. Democrats, who control Congress, are pledging fierce opposition to Bush’s final spending plan _ perhaps even until the next president takes office.
The 2009 spending plan sent to Congress on Monday will project huge budget deficits, around $400 billion for this year and next and more than double the 2007 deficit of $163 billion. But even those estimates could prove too low given the rapidly weakening economy and the total costs of the wars in Iraq and Afghanistan, which Bush does not include in his request for the budget year beginning Oct. 1.
Last year, when Democrats were newly in the majority, there were drawn-out veto struggles. This year’s fights could be worse because it is an election year.
As in past years, Bush’s biggest proposed increases are in national security. Defense spending is projected to rise by about 7 percent to $515 billion and homeland security money by almost 11 percent, with a big gain for border security. Details on the budget were obtained through interviews with administration officials, who spoke on condition of anonymity until the budget’s release.
The bulk of government programs for which Congress sets annual spending levels would remain essentially frozen at current levels. The president does shower extra money on some favored programs in education and to bolster inspections of imported food.
/* Bush’s spending proposal would achieve sizable savings by slowing the growth in the major health programs _ Medicare for retirees and Medicaid for the poor. There the president will be asking for almost $200 billion in cuts over five years, about three times the savings he proposed last year.
There is no indication Congress is more inclined to go along with this year’s bigger cuts; savings would come by freezing payment rates for most health-care providers for three years.
In advance, Democrats attacked the plan as a continuation of failed policies that have seen the national debt explode under Bush; projected surpluses of $5.6 trillion wiped out; and huge deficits take their place, reflecting weaker revenues from the 2001 recession, the terrorism fight, and, Democrats contend, Bush’s costly $1.3 trillion first-term tax cuts.
“This administration is going to hand the next president a fiscal meltdown,” Senate Budget Committee Chairman Kent Conrad D-N.D., said Sunday in an interview with The Associated Press. “This is a budget that sticks it to the middle class, comforts the wealthy and has a set of priorities that are not the priorities of the American people.”
Bush’s budget reflects the outlines of a $145 billion stimulus plan that the president is urging Congress to pass quickly to combat the growing threat of a recession.
While the House passed a stimulus bill close to the president’s outline, Senate Democrats are trying to expand the measure to include cash relief for older people and extended unemployment benefits.
Bush’s five-year blueprint makes his first-term tax cuts permanent while still claiming to get the budget into balance by 2012, three years after he leaves office.
Republicans are pledging to protect those first-term tax cuts. But Democrats, including the party’s presidential candidates, want to retain the tax cuts that benefit lower and middle-income taxpayers while rolling back the tax cuts for the wealthy.
Democrats say Bush’s budget is built on flawed math. Beyond 2009, the budget plan does not include any money to keep the alternative minimum tax, which was aimed at the wealthy, from ensnaring millions of middle-income people. It also includes only $70 billion to fight the wars in Iraq and Afghanistan in 2009, just a fraction of the $200 billion they are expected to cost this year.
Reflecting strong lobbying by Secretary of State Condoleezza Rice, Bush’s budget includes a request to hire nearly 1,100 new diplomats to address severe staffing shortages and put the State Department on track to meet an ambitious call to double its size over the next decade.
In a change from last year, the administration is also seeking to increase spending on the State Children’s Health Insurance Program by $19.7 billion over the next five years. That request is midway between the $5 billion increase requested by Bush last year and the $35 billion increase in bills passed by Congress but vetoed by Bush in October and December.
Bush also proposes boosting spending in some areas of education such as Title I grants, the main source of federal support for poor students. But at the same time, Bush seeks to eliminate 47 other education programs that are seen as unnecessary including programs to encourage art in the schools, bring low-income students on trips to Washington and provide mental health services.
Deficits in the range of $400 billion would be very close to the all-time high imbalance, in dollar terms, of $413 billion set in 2004 during Bush’s first term. Many private economists are forecasting that the deficits this year and next will surpass the 2004 record in large part because they believe the country is heading into a recession.
Stanley Collender, a budget expert with Qorvis Communications, a Washington consulting firm, said it is very likely that the next budget year will begin with the government operating on a short-term spending measure. In that scenario, Democrats, unable to enact their spending priorities over Bush’s vetoes, would mark their time hoping the country will elect a Democrat to succeed Bush.
The $3 trillion Bush’s proposes spending in 2009 would be the first time that milestone has been reached. Bush also presided over the first budget to hit $2 trillion, in 2002. It took the government nearly 200 years to reach the first $1 trillion budget, which occurred in 1987 during the Reagan administration.
Pay-Per-View – Evening Standard – London – HighBeam Research – Feb 29, 2008 … the real world in 2009 when a slowdown and it will only be a slowdown and not a recession … Evening Standard – London; September 16, 2009 ; 358 words …
$2.95 – St. Paul Pioneer Press – NewsBank – Feb 29, 2008 The $935 million deficit in the budget through mid-2009 means state leaders … A brief, mild recession that will ease as Minnesotans begin spending money …
ORLANDO (MarketWatch) — The housing market will not stabilize until late in 2008 at best, with sales, starts and prices continuing their slide through most of the year, economists attending the International Builders Show here said Wednesday.
Housing starts, which fell 30% in 2007, could drop nearly that much again in 2008, said David Seiders, chief economist for the National Association of Home Builders. His forecast calls for new-home sales to fall to a 25-year low of 632,000 units in 2008, down more than 20%. Existing-home sales will drop as well, to a 20-year low, of 4.33 million units.
And while home-price trends will vary across the country, the national median price is projected to drop again in 2008. When housing does finally stabilize, probably in mid-2009, prices will have fallen about 15% from their peak in mid-2006, said David Berson, chief economist for the PMI Group Inc.
“The housing market, continuing the dramatic contraction that has been developing over the last two years, is putting a big hit on overall economic activity,” Seiders said. “The economy is in rather weak condition at the moment. We think the economy will avoid an actual recession, but we had a weak fourth quarter, we’re going to have a weak first quarter and the second quarter is not going to be so hot either.”
Seiders sees a pickup in housing activity for 2009, with sales and starts rebounding, although still clocking in below 2007 levels. But he said there are plenty of downside risks to that forecast.
“This easily could spiral downward the way things feel now,” he said.
Frank Nothaft, chief economist for Freddie Mac, thinks parts of the country are already in recession and that there is “clearly a risk of recession” nationwide. Even with the economic stimulus package passed by Congress that will put tax-rebate checks into the hands of millions of Americans, Nothaft said there will be little impact until late in the year.
“Even if we get an economy that is at best flat, it will be another negative for the housing market,” Berson told reporters. “You have to remember that all the problems we’ve had in housing finance have come in an expanding economy.”
A large number of homes remain for sale across the country, with vacant homes for sale at a record high, Berson noted. That will continue to place a major drag on home prices, which are likely to fall nationally in 2009 as well as 2008, he predicted, although more markets around the country should be seeing home-price increases in 2009.
“Home prices have fallen significantly in some parts of the country and will fall more,” Berson said. That has created a situation where foreclosures and mortgage delinquencies could jump substantially.
“You’ve heard about homeowner defaults on loans for which they can make their payment but where the value of their home has fallen below what they owe on the mortgage. We don’t have figures on that … but if there has been a behavioral change on the part of homeowners, and we don’t know if that is happening, it is possible credit losses could go up a lot.”
Credit crunch continues
Seiders said in addition to housing, one of the biggest drags on the economy is the credit crunch in financial markets that was spurred by massive problems in subprime lending. That has crimped the options not just for homeowners and buyers in the subprime market, but for those who use any kind of loan that is not “conforming,” meaning it fits the guidelines to be purchased by government sponsored mortgage enterprises Fannie Mae and Freddie Mac.
“The best news I can share is that if you are a prime borrower looking for a conforming loan, able to provide full documentation and make a down payment, things are looking pretty good,” Nothaft said, noting that the 30-year fixed-rate conforming mortgage is expected to average 5.5% this year.
“The problem is, a lot of people can’t make those requirements,” he said.
Seiders believes there will have to be a second round of economic stimulus this year, and he said the home builders would be pushing for some kind of temporary tax credit directed at buyers who purchase houses out of the existing vacant inventory.
“What we really need is something to get housing sales going again so this thing doesn’t degenerate into an absolute debacle,” he said. “The home-buying side has to be improved first before any of the other measures will rebound.”
Apparently with an eye on another round of stimulus, on Tuesday the National Association of Home Builders Political Action Committee, Build-PAC, said it was halting all approvals and disbursements of contributions to federal congressional candidates and their PACs until further notice.
“The NAHB Build-PAC board of trustees felt that over the past six months Congress and the administration have not adequately addressed the underlying economic issues that would help stabilize the housing sector and keep the economy moving forward,” said Brian Catalde, NAHB president. “More needs to be done to jump-start housing and ensure the economy does not fall into recession.”
Builders were not in a particularly optimistic mood in the days leading up to their annual convention here. The most recent NAHB/Wells Fargo Housing Market Index reading, a measure of builder confidence, rose only slightly in January after hitting a record low in December. According to the January reading, about one in five builders believe that the market is healthy.
Although figures aren’t finalized until after the show, planners said that the number of attendees who registered in advance is down about 12% compared with last year, reflecting the hard times in the industry. Still, more than 1,900 exhibitors are here hawking their wares; for many the show accounts for the majority of their sales for the year.
Steve Kerch is assistant managing editor and personal finance editor of MarketWatch in Chicago.
Pay-Per-View – International Herald Tribune – HighBeam Research – Feb 13, 2008 No recession, just slowing, White House economist predicts … find … International Herald Tribune 08-12-2009 White House counteroffensive in works on …
The local economic engines are shifting into low gear, but they will stay out of reverse, predicted Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.
Georgia and Atlanta will grow at a tepid pace through the year, while still outperforming the national economy, he said during the center’s quarterly conference Wednesday.
“It is going to be at least 2009 before we come close to normalcy,” Dhawan said. “And 2010 is going to be a normal year.”
Among the drags on growth: a near-freeze in credit markets, high energy prices and a battered housing market that has undermined consumer finances.
Yet Georgia will avoid the worst of the damage, he predicted.
Metro Atlanta will add 19,100 jobs this year, accelerating to 45,400 next year and 66,100 in 2010, Dhawan said.
Atlanta will account for the lion’s share of additions to Georgia payrolls. The state will add about 27,900 jobs this year and 71,000 in 2009. With nearly 4.2 million jobs in the state, the impact of that new hiring will be modest, he said. “If your kid is going to graduate in 2009, there is a high probability that he will be living in your basement.”
All the state’s metro areas except Dalton will add jobs during the next two years, he said. Less encouraging is the mix of jobs: Just 6 percent of the jobs added in Georgia this year will pay more than $45,000 a year, he said.
Nationally, the economy will edge perilously close to recession, Dhawan said.
Gross domestic product will not grow this quarter. Next quarter, GDP will drop at a 0.2 percent pace. For the year, the economy will eke out an anemic 1.1 percent growth rate, he said.
Dhawan’s view has grown decidedly more bearish since his November conference. At that session, he acknowledged the headwinds hitting the economy but predicted a pickup in growth by mid-2008. During the center’s August conference, Dhawan projected expansion of Georgia payrolls by 79,700 jobs in 2008, with Atlanta’s economy accounting for 59,100 positions. That was roughly three times the growth prediction made Wednesday.
Among forecasters, Dhawan now sits close to the middle of the pack: Slightly more than half the nation’s forecasters say the economy will avoid recession. About 45 percent say recession is either here or imminent, while pessimists warn it will be painful and prolonged.
For instance, New York University’s Nouriel Roubini says recession will last about a year and a half.
While popularly defined as two successive quarters of shrinking GDP, recession’s definition is actually more nuanced. In fact, the 2001 recession did not include two consecutive down quarters. The labeling of a recession falls to the National Bureau of Economic Research. That designation usually comes months after the downturn begins.
While the NBER has issued no proclamations, some signals are flashing red: Purchases of big-ticket goods have dropped, consumer confidence has plunged, manufacturing reports have turned down and household spending has been weak. Last month, the economy lost jobs for the first time in four years.
The broadest economic measure, GDP, last quarter slid to growth of less than 1 percent.
Even if GDP can stay positive, economists say that anything close to zero growth can feel like tough times in the labor market. Regardless of the official label, jobs are harder to come by, pay boosts are anemic and layoffs rise.
“Does it make any difference whether it’s a recession or not technically?” Dhawan said.
Dhawan said the key problem for growth remains credit. Loans are the lubricant of a growing economy.
The Federal Reserve has poured money into the system. Yet that has not persuaded banks to take chances, Dhawan said.
Many lenders have been spooked by fears that billions of dollars in bad loans have percolated into various investments. Many institutions have been forced to take huge write-downs, while a dread of worse losses has permeated decisions about making more loans.
The result is a chill in borrowing for business as well as for home purchases, Dhawan said. “It’s not a problem of ‘Can I afford it or not?’ It’s a problem of ‘Can I even get the loan?’ ”
Still, the most recent data show a tentative recovery in the markets for those investments, he said. “That is why I am not predicting a deeper recession or a prolonged slowdown.”
Minneapolis Star-Tribune – Minneapolis Star Tribune – Feb 14, 2008 … turnaround that will gain steam in 2009, an economic forecast says. … Manufacturers will flirt with recession during the first six months of 2008 …
Los Angeles County should escape a recession in 2008 and 2009, according to a forecast to be released this morning from the Los Angeles County Economic Development Corp.
Although more slow growth lies ahead as the housing slump continues, enough sectors of the local economy are showing modest growth that the area should sidestep a downturn.
The LAEDC report forecasts that L.A. County should add about 30,000 jobs in 2008 for a sluggish growth rate of 0.7 percent. That’s the same pace as 2007, when 30,600 jobs were created.
“We’re on a two-track economy right now,” said Jack Kyser, chief economist with the LAEDC. “Housing, related activity and financial services are all struggling, while other sectors, chiefly tourism, international trade and health services, are doing modestly better.”
But Kyser said several wild cards are on the horizon that could slow job growth even further or even tip the county into job losses, the definition of a localized recession. Chief among these is the possibility of labor strife in several key industries, including entertainment and trade. Both the Screen Actors Guild and International Longshore and Warehouse Union are negotiating contracts.
Another wild card is the possibility of more shocks to the already beleaguered financial sector that could worsen the credit crunch.
If these setbacks don’t materialize, Kyser said growth should pick up later this year as the Federal Reserve’s interest rate cuts and the national economic stimulus package signed last week kick in. The forecast projects 50,000 jobs being added to the L.A. County market in 2009, for a growth rate of 1.2 percent.
If the projections for 2008 and 2009 hold, then later this year, the county should finally surpass its record employment level of 4,135,700 non-farm payroll jobs reached in 1990. “That’s a sorry record of 18 or 19 years without hitting a new employment high, given the economic base that we have,” Kyser said.
NEW YORK (CNNMoney.com) — The Bush administration’s top economists see annual unemployment remaining just below 5% through 2013, meaning an extended period when the jobless rate would top the full-year average in six of the last 10 years.
The annual outlook of the president’s Council of Economic Advisors, released Monday, also projects that the economy will keep growing this year and avoid a recession. In fact, real gross domestic product is forecast to rise by a healthy 2.7% when comparing the fourth quarter of this year to a year earlier.
But the report projects the full-year unemployment rate will rise to 4.9% in 2007, up from 4.6% each of the last two years. And it expects the unemployment rate will stay at the 4.9% rate in 2009 before starting to retreating slightly to 4.8% in each of the following four years.
Edward Lazear, chairman of the council, said at a news conference that the downturn in some economic readings since the forecasts were made in November could result in a lowering at its mid-year update. But he said he’s also hopeful that interest rate cuts by the Federal Reserve and the recently passed economic stimulus package could keep the economy growing at close to this forecast.
While the administration is always concerned about unemployment, the current level is low by historic standards, Lazear said.
“Even if we go with the most aggressive notion of what is a high unemployment rate – 5.7% – we’re still quite a ways from that right now,” he said. “I think by anybody’s measure 4.9% is still low unemployment.
“I would argue that the 4.9% unemployment that we have now still reflects a relatively tight labor market,” he added. “Obviously last month’s numbers were not as strong. That’s something we’re going to keep watching. I think that the concerns that people looking at the economy have are concerns we share as well.”
The seasonally-adjusted monthly unemployment rate, which had been as low as 4.4% in March, jumped to 5% in December before retreating slightly to a 4.9% reading in January. But that month also saw employers shave 17,000 jobs from U.S. payrolls.
The CEA forecast also sees soft job growth in the next six years. Average monthly job growth is expected to be 109,000 a month on a fourth-quarter-to-fourth quarter basis. That growth pace would be down 15.5% from 2007 levels and down 43% from the growth reported in 2006.
And while the CEA forecast sees 2009 job growth returning to 2007 levels, it then sees it falling off again in 2010 and for the following three years, falling to only an average gain of 92,000 a month by 2013. Rising retirements by baby boomers is one of the reason for the slower job growth going forward, according to the report.
Unemployment was between 4% and 4.7% in the period from 1997 though 2001, the final year being the period that included the last recession. It then spiked above 5% the next four years, reaching to 6% by 2003 before starting the decline that brought it down to 4.6% the last two years.
Bush received the report from his economic advisers in a White House ceremony at which he said he approved of the $170 billion economic stimulus package passed by Congress last week. He said that he looked forward to signing the legislation to give most taxpayers hundreds in tax rebates, although he repeated his earlier contention that the economy is sound.
“This report indicates that our economy is structurally sound for the long term, and that we’re dealing with uncertainties in the short term,” Bush said. He said that in addition to the economic stimulus plan, he believes it is important for Congress to make permanent tax cuts passed in 2001 and 2003 that are due to expire beginning next year.
AFX News Limited White House sticks with economic optimism in annual report to Congress UPDATE
02.11.08, 5:25 PM ET
(updates with White House briefing)
WASHINGTON (Thomson Financial) – The White House stuck with the same, by now relatively optimistic, economic forecast it made last November when it released the annual Economic Report of the President to Congress on Monday.
‘I don’t think we’re in a recession,’ and the administration is not forecasting one, declared Edward Lazear, Chairman of the Council of Economic Advisers (CEA) and President George W. Bush’s chief economist.
The official forecast prepared by the CEA is still for 2.7 pct gross domestic product growth in 2008, while both the Congressional Budget Office and the Blue Chip Economic survey have now cut back their predictions to 1.7 pct growth.
Lazear barely defended the higher growth number in his briefing for reporters, describing it more like a simple ‘plug-in’ for the prediction model.
‘We do only two formal forecasts a year,’ he said, and the 2.7 pct growth number comes from the November forecast. ‘Obviously there have been new data since then that might alter our forecast next time,’ he said. ‘Next time’ in the administration’s forecasting schedule will be June.
Private economists are predicting an actual recession in growing numbers. Among Blue Chip economists, 20 pct think there will be at least one quarter of GDP contraction, and private forecasters are approaching a consensus view of a 50-50 recession chance.
The White House has seen the same data as the other forecasters, Lazear said, and that was the motivation behind the stimulus package. ‘We were worried about lower growth and as a result of the we decided it was time to act.’
Later this week the president is expected is expected to sign the stimulus package, which includes rebates of 600 usd to 1,200 usd to most taxpayers and 300 usd checks to disabled veterans, the elderly and other low-income people.
‘The economy is structurally sound and we are dealing with the uncertainties,’ Bush said in a brief appearance before cameras today.
The 2008 Economic Report says ‘the period of somewhat slower-than-normal growth that began in 2007 is likely to continue into 2008,’ with slow growth in the first half of the year and recovery in the second half.
For 2008, on a Q4 to Q4 basis, the White House forecast includes the 2.7 pct GDP growth rate and a 2.1 pct increase in the Consumer Price Index (CPI). It projects an average 4.9 pct unemployment rate and average payroll growth of 109,000 jobs per month.
For 2009, the forecast is 3.0 pct economic growth with 2.1 pct CPI inflation. Payroll growth would increase to an average of 129,000 jobs per month but the unemployment rate would remain at 4.9 pct.
There are parts of the Economic Report publication that are hard to reconcile with the the faster-growth scenario. One is the projected decline in average monthly growth of payroll jobs from 129,000 in 2007 to 109,000 this year.
Also, for the economy to achieve a 2.7 pct Q4 to Q4 growth rate for the year as a whole, a one percent-plus first half rate would have to be followed by a three-per cent plus rate in the second half. That puts a lot of reliance on the Fed’s rate cuts and the stimulus package.
Lazear today declined to discuss whether an additional stimulus package might be needed, saying only that the current one was ‘the right thing to do.’
In its January forecast, the Congressional Budget Office predicted both slower growth and higher inflation and unemployment for 2008. It sees 1.7 pct GDP growth, 2.9 pct CPI inflation and 5.1 pct unemployment.
For 2009, the CBO growth outlook is slightly slower at 2.8 pct, with 2.2 pct for CPI and higher unemployment at 5.4 pct.
In Congressional testimony last week, Treasury Secretary Henry Paulson said the 2.7 pct growth assumption probably makes the administration’s 2008 federal deficit forecast of $410 billion about $15 billion to $20 billion smaller than it would be if the economy grew at the slower 1.7 pct rate.
More broadly, the Economic Report of the President says the US economy has been and still is in a period of ‘rebalancing,’ in which ‘higher growth of non-residential investment and exports offset the lower rates of housing investment.’
Looking longer term, the CEA sees a long-lasting economic slowdown for the US. The report says ‘potential GDP growth is expected to slow in the medium term as productivity growth reverts toward its long-run trend (about 2.5 pct per year), and to slow further during the period from 2008 to 2011 as labor force growth declines due to the retirement of the baby-boom generation.’
Nixon’s New Worries About Recession Time Magazine – Time – Mar 30, 1970 Nixon’s New Worries About Recession. One trouble with the economic strategy practiced by Richard Nixon is that it makes awkward politics for his party. ..
Says indices show India healthier than America currently
New York-based Economic Cycle Research Institute has had an extended record of correctly predicting cyclical turning points in growth and inflation of economies.
The institute, started by Geoffrey Moore, once Alan Greenspan’s statistics professor, doesn’t proffer point forecasts such as 8.3% GDP growth expected in the first quarter, etc.
Instead, it tells when a cyclical turn will occur in an economy using what it calls are “reliable sequences of events”..
Lakshman Achuthan, managing director of the institute, told Raj Nambisan and Vivek Kaul in an email interview why, at the current stage of US economic cycle, major stock market corrections tend to be rare, and do not send important economic signals.
Are business and stock market cycles intertwined at all points in time? Is there a case for one leading the other? How does the relationship work?
Generally, yes. This is because stock prices are related to profits growth (which depends on the pace of economic activity) and interest rates (also dependent on economic growth). Stock prices usually have a short lead of a quarter or two over the economy, but they can give false signals so it is better to use a well constructed leading index instead for forecasting the cycle.
You have said in a recent report that sizeable stock price declines are probably not imminent, but even if they do occur, are unlikely to have important economic implications. Is this true even in the context of emerging markets like India?
No. The study we have done is for the US market specifically, but the general theory does hold for India too. Our Indian Leading Index is actually much healthier than the US. So that is in fact supportive of corporate profits, and therefore stock prices.
Stock markets have always been an indicator of where the economy is heading. What makes you say, that there is no longer a connect between stock markets and economic cycles. Would that be true in the case of India as well?
There is a connection between stock prices and economic cycles. Stocks are a “short-leader” of the economy. Our leading indexes look at other, unrelated leading indicators of the economy, some of them with longer leads than stock prices.
It is on the basis of these leading indexes that we gauge the “risk” associated with stocks, and this does hold for India.
Is the current Sensex correction of 1900 points in a week in India a harbinger of things to come?
This seems to be something more technical and having to do with a regulation as opposed to a harbinger of slower economic growth ahead. As indicated, Indian economic growth looks to improve over coming quarters.
You’ve said that corrections tend to be nastier when the ECRI leading indices point to slowing growth. You haven’t flagged a US recession yet. Still, do you see growth slowing with the subprime issue yet to fully pan out
Yes, US growth is slated to have a broadbased slowdown affecting all major sectors of the economy (services, manufacturing and construction).
However, growth is slowing from 3.8% growth in Q2, and roughly 3% growth in Q3 (we get the data on October 31) so there is room to slow without recession. The credit crisis is part of the reason for the slowing.
In the last two months, Alan Greenspan, former Federal Reserve chief, has reduced the odds of a US recession from one-third chance to one-half now.
ECRI hasn’t given its verdict yet. Is there a perceptible decrease in your estimates of a US recession in the last 2-3 months?
Over the past year, the consensus recession probability estimate has hovered around 25%, but it jumped this summer to somewhere between a third and a half.
In truth, a 50-50 probability of recession implies that a forecaster is clueless about whether or not a recession is likely, and a coin flip would be just as accurate. Edging the recession probability down closer to one-third is not much better.
While the recession probability is never zero, ECRI’s indicators suggest that the recession risk today is much lower than the consensus believes.
ECRI’s recession forecasts have always been based on objective leading indexes, rather than on plausible parallels with the past bolstered by gut feel and selective statistics.
Based on that time-tested approach, we do not see a recession at hand. When recession risks actually rise, that should show up first in our leading indexes.
Will the ARM mortgage resets that intensify from November aggravate the subprime crisis, and therefore increase the chances of a US recession?
Perhaps, but if so our leading indexes will pick that up. It is notable that Libor rates have declined since the Fed rate cut so the resets are not as bad as they were in late August.
Is there a timeline where, based on the ECRI leading indices, you can presage the weakest or most volatile period in the short-term for the Dow?
Yes, if and when our leading indexes signal a recession (they do not say that today).
Most major bear markets are associated with recessions.
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WASHINGTON (MarketWatch) — Here is the prepared testimony of Federal Reserve Chairman Ben Bernanke at the Senate Banking Committee on Tuesday.
“Chairman Dodd, Senator Shelby, and members of the Committee, I am pleased to present the Federal Reserve’s Monetary Policy Report to the Congress.
“The U.S. economy and financial system have confronted some significant challenges thus far in 2008. The contraction in housing activity that began in 2006 and the associated deterioration in mortgage markets that became evident last year have led to sizable losses at financial institutions and a sharp tightening in overall credit conditions. The effects of the housing contraction and of the financial headwinds on spending and economic activity have been compounded by rapid increases in the prices of energy and other commodities, which have sapped household purchasing power even as they have boosted inflation. Against this backdrop, economic activity has advanced at a sluggish pace during the first half of this year, while inflation has remained elevated.
‘The possibility of higher energy prices, tighter credit conditions, and a still-deeper contraction in housing markets all represent significant downside risks to the outlook for growth.’
Ben Bernanke, Federal Reserve chairman
“Following a significant reduction in its policy rate over the second half of 2007, the Federal Open Market Committee (FOMC) eased policy considerably further through the spring to counter actual and expected weakness in economic growth and to mitigate downside risks to economic activity. In addition, the Federal Reserve expanded some of the special liquidity programs that were established last year and implemented additional facilities to support the functioning of financial markets and foster financial stability. Although these policy actions have had positive effects, the economy continues to face numerous difficulties, including ongoing strains in financial markets, declining house prices, a softening labor market, and rising prices of oil, food, and some other commodities. Let me now turn to a more detailed discussion of some of these key issues.
“Developments in financial markets and their implications for the macroeconomic outlook have been a focus of monetary policy makers over the past year. In the second half of 2007, the deteriorating performance of subprime mortgages in the United States triggered turbulence in domestic and international financial markets as investors became markedly less willing to bear credit risks of any type. In the first quarter of 2008, reports of further losses and write-downs at financial institutions intensified investor concerns and resulted in further sharp reductions in market liquidity. By March, many dealers and other institutions, even those that had relied heavily on short-term secured financing, were facing much more stringent borrowing conditions.
“In mid-March, a major investment bank, the Bear Stearns Cos., was pushed to the brink of failure after suddenly losing access to short-term financing markets. The Federal Reserve judged that a disorderly failure of Bear Stearns would pose a serious threat to overall financial stability and would most likely have significant adverse implications for the U.S. economy. After discussions with the Securities and Exchange Commission and in consultation with the Treasury, we invoked emergency authorities to provide special financing to facilitate the acquisition of Bear Stearns by J.P. Morgan Chase & Co. In addition, the Federal Reserve used emergency authorities to establish two new facilities to provide backstop liquidity to primary dealers, with the goals of stabilizing financial conditions and increasing the availability of credit to the broader economy.1 We have also taken additional steps to address liquidity pressures in the banking system, including a further easing of the terms for bank borrowing at the discount window and increases in the amount of credit made available to banks through the Term Auction Facility. The FOMC also authorized expansions of its currency swap arrangements with the European Central Bank and the Swiss National Bank to facilitate increased dollar lending by those institutions to banks in their jurisdictions.
“These steps to address liquidity pressures coupled with monetary easing seem to have been helpful in mitigating some market strains. During the second quarter, credit spreads generally narrowed, liquidity pressures ebbed, and a number of financial institutions raised new capital. However, as events in recent weeks have demonstrated, many financial markets and institutions remain under considerable stress, in part because the outlook for the economy, and thus for credit quality, remains uncertain. In recent days, investors became particularly concerned about the financial condition of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. In view of this development, and given the importance of these firms to the mortgage market, the Treasury announced a legislative proposal to bolster their capital, access to liquidity, and regulatory oversight. As a supplement to the Treasury’s existing authority to lend to the GSEs and as a bridge to the time when the Congress decides how to proceed on these matters, the Board of Governors authorized the Federal Reserve Bank of New York to lend to Fannie Mae and Freddie Mac, should that become necessary. Any lending would be collateralized by U.S. government and federal agency securities. In general, healthy economic growth depends on well-functioning financial markets. Consequently, helping the financial markets to return to more normal functioning will continue to be a top priority of the Federal Reserve.
‘The economy has continued to expand, but at a subdued pace’
“I turn now to current economic developments and prospects. The economy has continued to expand, but at a subdued pace. In the labor market, private payroll employment has declined this year, falling at an average pace of 94,000 jobs per month through June. Employment in the construction and manufacturing sectors has been particularly hard hit, although employment declines in a number of other sectors are evident as well. The unemployment rate has risen and now stands at 5.5.%.
“In the housing sector, activity continues to weaken. Although sales of existing homes have been about unchanged this year, sales of new homes have continued to fall, and inventories of unsold new homes remain high. In response, homebuilders continue to scale back the pace of housing starts. Home prices are falling, particularly in regions that experienced the largest price increases earlier this decade. The declines in home prices have contributed to the rising tide of foreclosures; by adding to the stock of vacant homes for sale, these foreclosures have, in turn, intensified the downward pressure on home prices in some areas.
“Personal consumption expenditures have advanced at a modest pace so far this year, generally holding up somewhat better than might have been expected given the array of forces weighing on household finances and attitudes. In particular, with the labor market softening and consumer price inflation elevated, real earnings have been stagnant so far this year; declining values of equities and houses have taken their toll on household balance sheets; credit conditions have tightened; and indicators of consumer sentiment have fallen sharply. More positively, the fiscal stimulus package is providing some timely support to household incomes. Overall, consumption spending seems likely to be restrained over coming quarters.
“In the business sector, real outlays for equipment and software were about flat in the first quarter of the year, and construction of nonresidential structures slowed appreciably. In the second quarter, the available data suggest that business fixed investment appears to have expanded moderately. Nevertheless, surveys of capital spending plans indicate that firms remain concerned about the economic and financial environment, including sharply rising costs of inputs and indications of tightening credit, and they are likely to be cautious with spending in the second half of the year. However, strong export growth continues to be a significant boon to many U.S. companies.
‘Inflation seems likely to move temporarily higher in the near term’
“In conjunction with the June FOMC meeting, Board members and Reserve Bank presidents prepared economic projections covering the years 2008 through 2010. On balance, most FOMC participants expected that, over the remainder of this year, output would expand at a pace appreciably below its trend rate, primarily because of continued weakness in housing markets, elevated energy prices, and tight credit conditions. Growth is projected to pick up gradually over the next two years as residential construction bottoms out and begins a slow recovery and as credit conditions gradually improve. However, FOMC participants indicated that considerable uncertainty surrounded their outlook for economic growth and viewed the risks to their forecasts as skewed to the downside.
“Inflation has remained high, running at nearly a 3.5% annual rate over the first five months of this year as measured by the price index for personal consumption expenditures. And, with gasoline and other consumer energy prices rising in recent weeks, inflation seems likely to move temporarily higher in the near term.
“The elevated level of overall consumer inflation largely reflects a continued sharp run-up in the prices of many commodities, especially oil but also certain crops and metals.2 The spot price of West Texas intermediate crude oil soared about 60 percent in 2007 and, thus far this year, has climbed an additional 50 percent or so. The price of oil currently stands at about five times its level toward the beginning of this decade. Our best judgment is that this surge in prices has been driven predominantly by strong growth in underlying demand and tight supply conditions in global oil markets. Over the past several years, the world economy has expanded at its fastest pace in decades, leading to substantial increases in the demand for oil. Moreover, growth has been concentrated in developing and emerging market economies, where energy consumption has been further stimulated by rapid industrialization and by government subsidies that hold down the price of energy faced by ultimate users.
“On the supply side, despite sharp increases in prices, the production of oil has risen only slightly in the past few years. Much of the subdued supply response reflects inadequate investment and production shortfalls in politically volatile regions where large portions of the world’s oil reserves are located. Additionally, many governments have been tightening their control over oil resources, impeding foreign investment and hindering efforts to boost capacity and production. Finally, sustainable rates of production in some of the more secure and accessible oil fields, such as those in the North Sea, have been declining. In view of these factors, estimates of long-term oil supplies have been marked down in recent months. Long-dated oil futures prices have risen along with spot prices, suggesting that market participants also see oil supply conditions remaining tight for years to come.
“The decline in the foreign-exchange value of the dollar has also contributed somewhat to the increase in oil prices. The precise size of this effect is difficult to ascertain, as the causal relationships between oil prices and the dollar are complex and run in both directions. However, the price of oil has risen significantly in terms of all major currencies, suggesting that factors other than the dollar, notably shifts in the underlying global demand for and supply of oil, have been the principal drivers of the increase in prices.
“Another concern that has been raised is that financial speculation has added markedly to upward pressures on oil prices. Certainly, investor interest in oil and other commodities has increased substantially of late. However, if financial speculation were pushing oil prices above the levels consistent with the fundamentals of supply and demand, we would expect inventories of crude oil and petroleum products to increase as supply rose and demand fell. But in fact, available data on oil inventories show notable declines over the past year. This is not to say that useful steps could not be taken to improve the transparency and functioning of futures markets, only that such steps are unlikely to substantially affect the prices of oil or other commodities in the longer term.
“Although the inflationary effect of rising oil and agricultural commodity prices is evident in the retail prices of energy and food, the extent to which the high prices of oil and other raw materials have been passed through to the prices of non-energy, non-food finished goods and services seems thus far to have been limited. But with businesses facing persistently higher input prices, they may attempt to pass through such costs into prices of final goods and services more aggressively than they have so far. Moreover, as the foreign exchange value of the dollar has declined, rises in import prices have put greater upward pressure on business costs and consumer prices. In their economic projections for the June FOMC meeting, monetary policy makers marked up their forecasts for inflation during 2008 as a whole. FOMC participants continue to expect inflation to moderate in 2009 and 2010, as slower global growth leads to a cooling of commodity markets, as pressures on resource utilization decline, and as longer-term inflation expectations remain reasonably well anchored. However, in light of the persistent escalation of commodity prices in recent quarters, FOMC participants viewed the inflation outlook as unusually uncertain and cited the possibility that commodity prices will continue to rise as an important risk to the inflation forecast. Moreover, the currently high level of inflation, if sustained, might lead the public to revise up its expectations for longer-term inflation. If that were to occur, and those revised expectations were to become embedded in the domestic wage- and price-setting process, we could see an unwelcome rise in actual inflation over the longer term. A critical responsibility of monetary policy makers is to prevent that process from taking hold.
“At present, accurately assessing and appropriately balancing the risks to the outlook for growth and inflation is a significant challenge for monetary policy makers. The possibility of higher energy prices, tighter credit conditions, and a still-deeper contraction in housing markets all represent significant downside risks to the outlook for growth. At the same time, upside risks to the inflation outlook have intensified lately, as the rising prices of energy and some other commodities have led to a sharp pickup in inflation and some measures of inflation expectations have moved higher. Given the high degree of uncertainty, monetary-policy makers will need to carefully assess incoming information bearing on the outlook for both inflation and growth. In light of the increase in upside inflation risk, we must be particularly alert to any indications, such as an erosion of longer-term inflation expectations, that the inflationary impulses from commodity prices are becoming embedded in the domestic wage- and price-setting process.
‘The new rules will help to restore confidence in the mortgage market’
“I would like to conclude my remarks by providing a brief update on some of the Federal Reserve’s actions in the area of consumer protection. At the time of our report last February, I described the Board’s proposal to adopt comprehensive new regulations to prohibit unfair or deceptive practices in the mortgage market, using our authority under the Home Ownership and Equity Protection Act of 1994. After reviewing the more-than 4,500 comment letters we received on the proposed rules, the Board approved the final rules yesterday.
“The new rules apply to all types of mortgage lenders and will establish lending standards aimed at curbing abuses while preserving responsible subprime lending and sustainable homeownership. The final rules prohibit lenders from making higher-priced loans without due regard for consumers’ ability to make the scheduled payments and require lenders to verify the income and assets on which they rely when making the credit decision. Also, for higher-priced loans, lenders now will be required to establish escrow accounts so that property taxes and insurance costs will be included in consumers’ regular monthly payments. The final rules also prohibit prepayment penalties for higher-priced loans in cases in which the consumer’s payment can increase during the first few years and restrict prepayment penalties on other higher-priced loans. Other measures address the coercion of appraisers, servicer practices, and other issues. We believe the new rules will help to restore confidence in the mortgage market.
“In May, working jointly with the Office of Thrift Supervision and the National Credit Union Administration, the Board issued proposed rules under the Federal Trade Commission Act to address unfair or deceptive practices for credit card accounts and overdraft protection plans. Credit cards provide a convenient source of credit for many consumers, but the terms of credit-card loans have become more complex, which has reduced transparency. Our consumer testing has persuaded us that disclosures alone cannot solve this problem. Thus, the Board’s proposed rules would require card issuers to alter their practices in ways that will allow consumers to better understand how their own decisions and actions will affect their costs. Card issuers would be prohibited from increasing interest rates retroactively to cover prior purchases except under very limited circumstances. For accounts having multiple interest rates, when consumers seek to pay down their balance by paying more than the minimum, card issuers would be prohibited from maximizing interest charges by applying excess payments to the lowest rate balance first. The proposed rules dealing with bank overdraft services seek to give consumers greater control by ensuring that they have ample opportunity to opt out of automatic payments of overdrafts. The Board has already received more than 20,000 comment letters in response to the proposed rules.
“Thank you. I would be pleased to take your questions.”
1. Primary dealers are financial institutions that trade in U.S. government securities with the Federal Reserve Bank of New York. On behalf of the Federal Reserve System, the New York Fed’s Open Market Desk engages in the trades to implement monetary policy.
2. The dominant role of commodity prices in driving the recent increase in inflation can be seen by contrasting the overall inflation rate with the so-called core measure of inflation, which excludes food and energy prices. Core inflation has been fairly steady this year at an annual rate of about 2%.
But none of the US budget figures include the Iraq war, the war in Afghanistan and countless other military and financial bailout funds that were used at the time? What were the real numbers? And, how could economic forecasters, experts, economists and financial /investment firm advisors have been so completely wrong on such a large scale? How is it that they could not see what was going to happen, especially those in the Treasury and Federal Reserve from 2007 to 2009? Why was it considered a matter of opinion or “rhetoric” in defining whether it was a recession, would be a recession or even whether there was really a problem in the economy or not? How is that possible?
A $500 Trillion dollar risky asset portfolio was held by Lehman? Currently there are over $600 Trillion dollars in credit default swaps and financial derivatives globally? Off-balance sheet accounting is still acceptable? Lack of transparency is still tolerated? There have been no financial regulations of corrections to the system, nor reform of financial regulations? Nothing has changed except that our futures are still at risk? I don’t get it.
The FDIC is often appointed as receiver for failed banks. This page contains useful information for the customers and vendors of these banks. This includes information on the acquiring bank (if applicable), how your accounts and loans are affected, and how vendors can file claims against the receivership. Failed Financial Institution Contact Search displays point of contact information related to failed banks.
This list includes banks which have failed since October 1, 2000.
AIG Decides to Keep Unprofitable Mortgage Insurer (Update1)
February 12, 2010, 04:20 PM EST
AIG, which was rescued in September 2008 after losses from bad bets tied to housing markets, posted a $1.43 billion operating loss from mortgage insurance in the first nine months of 2009 as U.S. foreclosure filings climbed to a record. The company said in November that it tapped the Treasury Department line within its $182.3 billion rescue package for about $4.2 billion, in part to restructure United Guaranty.
Feb. 12 (Bloomberg) — American International Group Inc., the insurer divesting assets to repay a government bailout, opted to keep its money-losing U.S. mortgage guarantor after selling Canadian and Israeli subsidiaries of the unit.
AIG made a “recent decision” to hold onto Greensboro, North Carolina-based United Guaranty, Arlene Isaacs-Lowe, a Moody’s Investors Service analyst, wrote yesterday in a research note. AIG executives told her of the move within the past few months, Isaacs-Lowe said today in an interview.
United Guaranty was founded in 1963 and sold to AIG in 1981. The business generated $2.8 billion in operating income and $600 million in dividends for AIG in the eight years prior to the housing slump, the company has said.
United Guaranty was ranked the fourth-largest U.S. mortgage insurer in the first six months of 2009, behind No. 1 MGIC Investment Corp., Radian Group Inc. and PMI Group Inc., according to Inside Mortgage Finance, a trade journal. All the firms were unprofitable in the first nine months of 2009.
Essent Guaranty Inc., backed by investors including Goldman Sachs Group Inc. and JPMorgan Chase & Co., became the first newcomer to the U.S. mortgage-guaranty business since the housing collapse, leaving it unburdened by policies sold in 2005 and 2006 when underwriting standards were lower.
Until 2007, private mortgage policies had been among the most profitable types of coverage sold by insurers. From 2004 to 2006, members of the Mortgage Insurance Companies of America reported a profit margin of at least 35 cents for every dollar they collected in premiums. Auto insurers made less than 5 cents on every dollar in 2006, according to A.M. Best Co.
Last week offered some sobering news on the housing market: Even with broad government support for housing, data from the National Association of Realtors showed that the median price of single-family homes continued to decline in 2009. RealtyTrac, an online marketer of foreclosed properties, said foreclosure filings rose by 15 percent in January compared with a year ago.
Foreclosure is generally a long process, with multiple filings as delinquent borrowers fall ever further behind. What is most ominous about the latest RealtyTrac numbers is that nearly 88,000 people had their homes repossessed in January, a 31 percent increase from a year ago. The big jump indicates that many foreclosures that were in process in 2009 are now beginning to move to repossession and, eventually, auction. With more than four million homes in that pipeline, the foreclosure crisis shows no sign of abating.
[ . . . ]
There is an emerging consensus among financial experts and policy makers that the key to successful modifications is to reduce the amount of the borrower’s loan balance, rather than merely reducing the monthly payment. The goal is to lower the payment while restoring equity, thus giving borrowers both the means and the incentive to keep up with their payments.
Administration officials have resisted that approach, in part because they believe it would be too expensive. Another obstacle is the lenders themselves. In general, a lender is unwilling to take losses by reducing principal unless the owners of the second mortgage on a home also take a hit. For banks that own the second mortgages, such losses would be huge — something they clearly would prefer not to face up to.
Banks’ unwillingness to take losses on second mortgages may also be holding up so-called short sales, in which a lender agrees to retire a first-mortgage debt by taking the proceeds from the sale of the home, even when the amount is less than the mortgage balance.
The number of Americans who owed more than their homes were worth was virtually nil when the real estate collapse began in mid-2006, but by the third quarter of 2009, an estimated 4.5 million homeowners had reached the critical threshold, with their home’s value dropping below 75 percent of the mortgage balance.
They are stretched, aggrieved and restless. With figures released last week showing that the real estate market was stalling again, their numbers are now projected to climb to a peak of 5.1 million by June — about 10 percent of all Americans with mortgages.
“We’re now at the point of maximum vulnerability,” said Sam Khater, a senior economist with First American CoreLogic, the firm that conducted the recent research. “People’s emotional attachment to their property is melting into the air.”
Suggestions that people would be wise to renege on their home loans are at least a couple of years old, but they are turning into a full-throated barrage. Bloggers were quick to note recently that landlords of an 11,000-unit residential complex in Manhattan showed no hesitation, or shame, in walking away from their deeply underwater investment.
[ . . . ]
It would cost about $745 billion, slightly more than the size of the original 2008 bank bailout, to restore all underwater borrowers to the point where they were breaking even, according to First American.
Using government money to do that would be seen as unfair by many taxpayers, Mr. Barr said. On the other hand, doing nothing about underwater mortgages could encourage more walk-aways, dealing another blow to a fragile economy.
With prices now down by about 30 percent, underwater borrowers fall into two groups. Some have owned their homes for many years and got in trouble because they used the house as a cash machine. Others, like Mr. Koellmann in Miami Beach, made only one mistake: they bought as the boom was cresting.
Guy D. Cecala, publisher of Inside Mortgage Finance magazine, says he does not hear much sympathy from lenders for their underwater customers.
“The banks tell me that a lot of people who are complaining were the ones who refinanced and took all the equity out any time there was any appreciation,” he said. “The banks are damned if they will help.”
David Rosenberg, the chief economist of the investment firm Gluskin Sheff, wrote recently that borrowers were not victims. They “signed contracts, and as adults should also be held accountable,” he wrote.
Of course, this is not necessarily how Wall Street itself behaves, as demonstrated by the case of Stuyvesant Town and Peter Cooper Village. An investment group led by the real estate giant Tishman Speyer recently defaulted on $4.4 billion in debt that it had used to buy the two apartment developments in Manhattan, handing the properties back to the lenders.
Moreover, during the boom, it was the banks that helped drive prices to unrealistic levels by lowering credit standards and unleashing a wave of speculative housing demand.
[ . . . ]
Mr. Koellmann applied last fall to Bank of America for a modification, noting that his income had slipped. But the lender came back a few weeks ago with a plan that added more restrictive terms while keeping the payments about the same.
“That may have been the last straw,” Mr. Koellmann said.
For the truth is that lack of fiscal discipline isn’t the whole, or even the main, source of Europe’s troubles — not even in Greece, whose government was indeed irresponsible (and hid its irresponsibility with creative accounting).
No, the real story behind the euromess lies not in the profligacy of politicians but in the arrogance of elites — specifically, the policy elites who pushed Europe into adopting a single currency well before the continent was ready for such an experiment.
Consider the case of Spain, which on the eve of the crisis appeared to be a model fiscal citizen. Its debts were low — 43 percent of G.D.P. in 2007, compared with 66 percent in Germany. It was running budget surpluses. And it had exemplary bank regulation.
But with its warm weather and beaches, Spain was also the Florida of Europe — and like Florida, it experienced a huge housing boom. The financing for this boom came largely from outside the country: there were giant inflows of capital from the rest of Europe, Germany in particular.
The result was rapid growth combined with significant inflation: between 2000 and 2008, the prices of goods and services produced in Spain rose by 35 percent, compared with a rise of only 10 percent in Germany. Thanks to rising costs, Spanish exports became increasingly uncompetitive, but job growth stayed strong thanks to the housing boom.
Then the bubble burst. Spanish unemployment soared, and the budget went into deep deficit. But the flood of red ink — which was caused partly by the way the slump depressed revenues and partly by emergency spending to limit the slump’s human costs — was a result, not a cause, of Spain’s problems.
(etc. – he claims that the single currency Euro has created the problem – – I don’t agree, but it does mean that some options for currency adjustments are not available to use for fixing the situation as a result of the single currency – my note)
My Notes – Who decided that the value and costs of property, including basic shelter / housing would be at a price far beyond the reach of any real wages made in a year or in five years of a citizen’s efforts?
When was that created and was it by the natural laws of supply and demand at the time or was it constructed with intention?
And, what has it become now / as a natural outgrowth of housing values having exceeded the real income of the majority of our population, along with the uses of mortgages as an asset class to be bought and sold and leveraged against – what do we have now as a result of this huge disparity between income and housing costs?
What happens when banks are allowed to borrow at 0% interest from our Treasury using our money, although they are a bad credit risk in every respect at the time they are allowed to borrow many millions at 72 to 1 (or more) against every dollar of assets they pretend to have? (and at asset valuations they pretend are at a level that was taken before the economic downturn)?
Not only are people walking away from their upside down mortgages, they are also not being employed in any reasonable period of time after being dumped by companies whose only interest was to pad the bottom line for a short period of time to inspire conditional confidence in their stock shares?
What happens when people realize that they are not going to be employed anytime in the next five years, are not going to be able to own another house in their lifetimes, watch their children not have access to a higher education because the money intended for it was returned to them depleted of over 75% of its initial value, and begin to understand the disparity of return on their time and efforts if and when companies do choose to hire them back?
Who was it that decided the next natural progression in the economic foundation of our country would drop manufacturing and replace it with money making money industries? Who decided that it would be a strong, healthy foundation for our economic future? What bunch of ninnies came up with that?
So, now that companies do not have to profit or to be profitable in the primary business model under which their business operates, but simply have to manipulate investment portfolios to their advantage, what real value do those companies (and state budgets and Wall Street firms) have to the employment base, in interactive services and products available to the benefits of our population, and in our longterm financial growth as a nation?
When large corporate and institutional players are the only ones basically manipulating the markets, the stock markets, the commodities markets, the futures and speculative plays marketplaces, and international economies and markets, what actual real values exist for any of the things being traded?
Just as when in 2008, the speculative increase in the oil futures drove prices up to record profits for those speculators and their firms, entire industries across the United States suffered massive losses as they covered the extra costs of those oil prices at the consumer level. But, the entire play was no more than a manipulated construct. It wasn’t the real value of the commodity in any sense but it was passed along to the consumers, including throughout the increased business costs passed along secondarily to consumers.
And, what value do those speculators have and the profits they skimmed off that play when their time, effort, talents, resources, and availability of cash isn’t used for anything productive that enhances the overall economic foundation and future of the United States? It isn’t being used to underwrite alternative energy options, it isn’t the speculators that are inventing something which solves real problems in our communities nor that solves climate change causes nor do those resources make our companies more solvent and more competitive. What good do they do?
When housing mortgages are packaged and sold, then resold and a number of financial products are made based on them, including the credit default swaps, the mortgage insurance products, leverages are made against them in huge loan packages based on their value, then what real value do they have going forward? Are they real? Are they a pretense with no more value than what someone in Wall Street or the backrooms of a banking firm somewhere says that they have? Are they real capital formation, or are they in fact, not worth the paperwork they are printed on? What trade actually exists on them in any solvent form once people across the world in every aspect of our society and financial systems are aware that the values are unfairly being manipulated and don’t exist in the real world?
Trickle down economics is a failed economic policy from the Reagan years and beyond Greenspan’s idea of an unregulated economy – at what point do the Wall Street firms and gigantic banking conglomerates realize the basis of their comparative valuation structures have re-valued real assets somewhere below zero? Why don’t they know that now? Losses that required a loan over $180 Billion dollars for AIG seem to be a clear indication of what that means. As they have tried to sell off assets, which have borne little of their estimated and accounting values – it would indicate the disparity that exists between the real economy, the real values and their perceptions of values? Why does it not tell them anything that makes sense to them in a broader understanding of what they are doing?
To me, it indicates that using a “money making money” basis for our overall economic foundation is not a sound choice, among other things. It also shows me that the integral factors of trading values are manufactured and not real.
Over the course of all these elements put together, it tells me that our economy and our economic growth, our economic foundation, our economic future, it set out over air with no real foundation whatsoever. The basic relationships that should exist to maintain a stable structure of values for the purposes of comparison and realistic values being set to actual assets, values, housing, properties, corporations, loans, loan products or whatever financial instruments does not exist in any actual sense.
It also shows me that the rules do not exist for either the values nor for the plays that can be made with them which makes the system more like a polished poker game of bluffing than a real market or any other monetary concept of actual values.
What happens when those banks, financial firms, investment banks, investment houses, stock brokerages, financial investment funds, insurance companies acting as hedge funds, and other exaggerated examples of financial imprudence get to play by a set of rules which offers large grants, loans and offsets when they are insolvent, defaulting on loans, exemplify a bad credit score and a bad credit risk, whose past behavior indicates bad choices and even tremendous bad judgments and bad plays, insider trades, conflicts of interest and abuse of their fiduciary trust?
What basis of economic growth and what new understanding of fiduciary trust does that become when those same people and institutions are refusing credit to anyone whose credit score resembles what they had when they used and continue to use the American taxpayer’s money and our National Treasury to cover their losses?
(An implicit obligation of the United States means what now?)
– cricketdiane, 02-15-10
I watched as the economic forecasters and analysts continued to say it is all better now, the same way they said in 2008 that we weren’t in a Recession (while not being willing to even use the word in many cases). Either they don’t know what the hell they are doing or they are lying about what they do know. I’m not sure which it is, but to continue paying analysts and advisors whose sole intent is to propagate lies in the name of instilling a falsely founded confidence in a system whose values are distorted, at best – is beyond me to understand.
The economic models that I understand are dimensional and well-founded in larger pictures of integrated values. When the Reagan administration cronies and Republican administration policy makers decided to fudge the numbers throughout statistical data sets that they had to collect and make public by law, it did not change the facts. The unemployment numbers inclusively are not the numbers published by the US Labor Department as a result of the changes made by Republican administrators, however – it didn’t change the facts on the ground in this country. And, since everyone making analyses knows that those employment and unemployment numbers have been divided into unnatural categories of data and statistically manipulated by that division, they should know better than to assume the rate of unemployment is anywhere close to 10% in the United States. Even adding the admitted unemployment figures across every state, yields a figure much higher on any given date and even those do not include those citizens who are in our prisons at the moment, put in mental hospitals for some reason, having to work part-time when they can’t afford to live at that rate, retired by having to go back to work because their pensions have been stolen by Wall Street, and those who have not continued to collect unemployment benefits but are still unemployed. The real loss in consumer buying power can be significant enough that even China knew to put its focus on other markets that don’t include the United States.
Don’t tell me that everything is all okay now – that isn’t even close to the truth.
If nobody can afford to buy a house except those people who “flip houses” – then what is a house really worth?
If 90% of the bread produced goes unsold and into the trash bin, then what is a loaf of bread worth? Is it really worth the $4.29 that is being charged for that loaf of bread?
(everything from my notes on down are my thoughts about it – understandably I still have more questions that are unanswered – I will study it some more.)
On Tuesday, January 12, 2010, a major earthquake struck southern Haiti. Many U.S. residents and organizations are generously donating food, water, medicines, and other supplies to aid in the relief efforts. In order to facilitate the movements of these goods, we offer the following guidance that applies to any goods not requiring a license, such as food, clothing, and medicines.
Schedule B Numbers
There are four Schedule B numbers that can be used when exporting humanitarian goods. Those numbers are found in Chapter 98 of the Schedule B book, under subheading 9802.
9802.10.0000 Food products
9802.20.0000 Medicinal and pharmaceutical products
9802.30.0000 Wearing apparel (including footwear and headwear)
9802.40.0000 Donated articles, not elsewhere specified
Any shipment valued over $2,500 per Schedule B number or that requires a license must be filed in the AES. However, if the shipment is valued less than $2,500 per Schedule B number and does not require a license, then the low value exemption (NOEEI FTR 30.37(a)) can be used. In this case, food, clothing, and medicines do not require a license; however, medical equipment and tools may require an export license.
The Export Information Code to be reported is “CH” for shipments of goods donated for relief or charity.
The value to be reported is the market value. If that value is not known, estimate how much you would receive if you sold the goods. The value should be consistent with the goods being exported, to avoid confusion and possible delays with U.S. Customs & Border Protection officers at the port of export.
There are different ways to file your export information. The most common is to report through the Census Bureau’s free Internet based filing system calledAESDirect. We have provided training videosto help you get started with AESDirect. Another option is to file with a forwarder or agent who may be more familiar with export licensing and regulations.
U.S. Exports to China
November Trade Data Released
Posted by Global Reach on January 12, 2010 06:02:16 AM 0
The Nation’s international trade deficit in goods and services increased to $36.4 billion in November from $33.2 billion (revised) in October. The increase in the deficit occurred as exports rose less than imports. The rise in exports was the seventh consecutive monthly increase.
U.S. exports to China in November ($7.3 billion) were a record high, beating the record set last month ($6.9 billion) by $469 million. While the last two months have been record highs the year-to-date exports to China ($61.2 billion) are still down from last year ($64.6 billion). Check back next month to see if December exports manage to climb high enough to make the 2009 figures beat 2008 Below are a few commodities driving the export figures:
* Soybeans have more than accounted for the increase in exports to China for the last two months. Soybean exports to China totaled $2.0 billion this month, 27% of U.S. total exports to China. This increase is being caused in part by a shortage of soybeans in Argentina due to a drought.
* Semiconductor exports to China are down by $1.5 billion so far this year, accounting for almost half of the year-to-date decrease in exports to China. Semiconductor exports to China are still considerable totaling $4.6 billion through November; they are the second largest commodity export to China, behind soybeans with $7.5 billion. Aircraft is the third largest export to China at $4.5 billion.
* You can find more commodity by country detail our website.
U.S. Exports to China
Read more: November Trade Data Released
Welcome to Electronic Export Filing
Welcome to Export Regulations
Posted by Global Reach on January 6, 2010 05:12:54 AM 9
In the world of exporting, it’s important to be proactive, instead of reactive. Not knowing is not an excuse Whether you are a small business, first time exporter, or a large multinational corporation, you are in control of your company’s compliance as it pertains to exporting laws and requirements.
As the Trade Ombudsman for the U.S. Census Bureau, I travel the nation and work with all types of companies involved in the exporting process. I offer advice and clarifications on the Foreign Trade Regulations (FTR), solutions to problems regarding the Automated Export System (AES) and assist with a wide range of other topics. However, one of the most important messages I convey is that the Foreign Trade Division (FTD) of the U.S. Census Bureau is available to assist you with your exporting questions and concerns. Our goal is to provide you with tools and resources to maintain export compliance. We reach out to the trade community through various methods to provide a better understanding of your roles and responsibilities in the export transaction. Our outreach efforts include, but are not limited to:
Read more: Welcome to Export Regulations
« Global Reach Main Page
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Commodity Analysis Branch
(Menu Option 2)
Classification Systems, Schedule B changes; Data analysis and review; Obtaining Harmonized Commodity Code for Imports and Exports: Non-Durable Goods (Food, animals, wood, chemicals,plastic articles, textiles and wearing apparel, linens and minerals) or Durable Goods: (Metals, machinery, vehicles, measuring and testing equipment, furniture and miscellaneous manufactured articles)
** PLEASE include your full telephone number (area code, country code, etc.) with your message ***
Special Projects Branch
State data; Profile of U.S. exporters
Methodology Research & Quality AssuranceBranch
Process Coordination Staff
All staff members not listed:
Any staff member not specifically listed above can be located using the U.S. Census Bureau’s staff search.
E-mailing contacts: The link on each of the contact names is set up to open your browser’s e-mail program, open a new message and address that message. If you click on that link and nothing happens (i.e. no blank message opens), manually open your e-mail program and use the e-mail address listed under NOTES.
(from – )
The goods data are compiled from the documents collected by the U.S. Customs and Border Protection and reflect the movement of goods between foreign countries and the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and U.S. Foreign Trade Zones. They include government and non-government shipments of goods, and exclude shipments between the United States and its territories and possessions, transactions with U.S. military, diplomatic and consular installations abroad, U.S. goods returned to the United States by its Armed Forces, personal and household effects of travelers, and in-transit shipments. The General Imports value reflects the total arrival of merchandise from foreign countries that immediately enters consumption channels, warehouses, or Foreign Trade Zones. Imports for Consumption measure the total of merchandise that has physically cleared through Customs either entering consumption channels immediately or entering after withdrawal for consumption from bonded warehouses under Customs custody or from Foreign Trade Zones.
For imports, the value reported is the U.S. Customs and Border Protection appraised value of merchandise; generally, the price paid for merchandise for export to the United States. Import duties, freight, insurance, and other charges incurred in bringing merchandise to the United States are excluded.
Exports are valued at the free alongside ship (f.a.s) value of merchandise at the U.S. port of export, based on the transaction price including inland freight, insurance and other charges incurred in placing the merchandise alongside the carrier at the U.S. port of exportation.
Monthly data include actual month’s transactions as well as a small number of transactions for previous months. SITC and country detail data are not revised monthly. These data are revised annually to eliminate carry-over (that portion of the monthly statistics that arrives too late for inclusion in the transaction month) and to include errata (corrections to the published monthly data).
Methods of Classification
The export statistics are initially collected and compiled in terms of commodity classifications in the Schedule B, Statistical Classification of Domestic and Foreign Commodities Exported from the United States. Schedule B is a U.S. Bureau of the Census publication and is based on the Harmonized Commodity Description and Coding System (Harmonized System).
Harmonized Tariff Schedule of the United States Annotated for Statistical Reporting Purposes (HTSUSA)
The import statistics are initially collected and compiled in terms of commodity classifications in the Harmonized Tariff Schedule of the United States Annotated for Statistical Reporting Purposes (HTSUSA) [Not a Census web site], an official publication of the U.S. International Trade Commission. The HTSUSA is the U.S. import version of the Harmonized System.
Standard International Trade Classification (SITC)
The SITC is a statistical classification of commodities designed by the United Nations. It is designed to provide the commodity aggregations needed for purposes of economic analysis and to facilitate the international comparison of trade by commodity. The Harmonized System and SITC Revision 3 are interrelated. For more details, see What is the SITC classification system? at: http://www.census.gov/foreign-trade/www/sec2.html#sitc.
The HTSUSA and Schedule B classifications are summarized into six principal end-use categories and further subdivided into about 140 broad commodity groupings. These categories are used in developing seasonally adjusted and constant dollar totals. The concept of end-use demand was developed for balance of payments purposes by the Bureau of Economic Analysis.
Steel 201 Remedy in Effect
To facilitate positive adjustment to competition from imports of certain steel products, in March 2002 the President signed into law a relief program for the domestic steel industry. This program has come to be known as Steel 201 named after Section 201 of the Trade Act of 1974. For more information on Section 201 Steel Products, see the United States Trade Representative (USTR) steel section at: http://www.ustr.gov/sectors/industry/steel201/background.htm [Not a Census web site].
U.S./Canada Data Exchange and Substitution
The data for U.S. exports to Canada are derived from import data compiled by Canada. The use of Canada’s import data to produce U.S. export data requires several alignments in order to compare the two series.
* Coverage — Canadian imports are based on country of origin. U.S. goods shipped from a third country are included. U.S. exports exclude these foreign shipments and excludes certain Canadian postal shipments.
* Valuation — Canadian imports are valued at point of origin in the United States. However, U.S. exports are valued at the port of exit in the United States and include inland freight charges, making the U.S. export value slightly larger. Canada requires inland freight to be reported.
* Reexports — U.S. exports include reexports of foreign goods. Again, the aggregate U. S. export figure is slightly larger.
* Exchange Rate — Average monthly exchange rates are applied to convert the published data to U.S. currency.
* Other — There are other minor differences which are statistically insignificant, such as rounding error.
Effective with January 2001 statistics, the current month data for exports to Canada contain an estimate for late arrivals and corrections. The following month, this estimate will be replaced, in the press release tables only, with the actual value of late receipts and corrections. This estimate will improve the current month data for exports to Canada and treat late receipts for exports to Canada in a manner more consistent with the treatment of late receipts for exports to other countries.
SOURCE: U.S. Census Bureau, Foreign Trade Division, Data Dissemination Branch, Washington, D.C. 20233
MY Note –
See all of these tables for each year through 2009 from 1985 on the link below the charts. There is no real trade imbalance until the H.O.P.E. tariff incentives and a variety of economic development funds poured into Haiti from the United States and International communities.
Trade with Haiti : 1994
NOTE: All figures are in millions of U.S. dollars, and not seasonally adjusted unless otherwise specified.
‘TOTAL’ may not add due to rounding.
Table reflects only those months for which there was trade.
MORE DATA: Data for all countries are available online in a zipped Excel file. [Excel] or the letters [xls] indicate a document is in the Microsoft® Excel® Spreadsheet Format (XLS). To view the file, you will need the Microsoft® Excel® Viewer available for free from Microsoft®. This symbol indicates a link to a non-government web site. Our linking to these sites does not constitute an endorsement of any products, services or the information found on them. Once you link to another site you are subject to the policies of the new site.
Source: FTDWebMaster, Foreign Trade Division, U.S. Census Bureau, Washington, D.C. 20233 Location: MAIN: STATISTICS:COUNTRY DATA: TRADE BALANCE Created: 12 January 2010 Last modified: 12 January 2010 at 08:32:14 AM
My Note – there are some obvious disparities in the numbers between raw materials shipped in and completed metric tons shipped out of Haiti. (That disparity is irreconcilable in its numbers among other things including the amount of money sent by the United States Departments of Commerce and Foreign Trade offices through economic development programs and funding grants along with those from the UN and international community for the same purpose. Obviously, the final target of improving the infrastructure, education, adult education, hospitals, roads, schools and general quality of and safety of life for Haitians was abrogated, diverted for private interests or something . . . I’m not sure what, but I do know there is precedent for clawbacks on that money through US treaties and International law. This includes going to the Grand Cayman and Swiss banks, the hedge funds and investment brokerage groups to relieve them of manipulating the previous windfalls of economic and charitable money for Haiti and to insure that it isn’t diverted or hijacked for profiteering and embezzlement this time.
– cricketdiane, 01-23-10
But there’s more –
eHam.net – Amateur Radio (Ham Radio) Community
Earthquake Net Frequencies — 7045, 3720 kHz:
from CQ / WorldRadio Online Newsroom on January 12, 2010
View comments about this article
Earthquake Net Frequencies — 7045, 3720 kHz:
All radio amateurs are requested to keep 7045 kHz and 3720 kHz clear for possible emergency traffic related to today’s major earthquake in Haiti.
International Amateur Radio Union (IARU) Region II Area C Emergency Coordinator Arnie Coro, CO2KK, reports that as of 0245 UTC on January 13, nothing had been heard from radio amateurs in Haiti, but that the above frequencies were being kept active in case any Haitian hams manage to get on the air, and in case of other related events in surrounding areas, including aftershocks and a possible tsunami.
The following is from an e-mail from CO2KK:
A few minutes after the earthquake was felt in eastern Cuba’s cities, the Cuban Federation of Radio Amateurs Emergency Net was activated, with net control stations CO8WM and CO8RP located in the city of Santiago de Cuba, and in permanent contact with the National Seismology Center of Cuba located in that city.
Stations in the city of Baracoa, in Guantanamo province, were also activated immediately as the earth movements were felt even stronger there, due to its proximity to Haiti. CO8AZ and CO8AW went on the air immediately , with CM8WAL following. At the early phase of the emergency, the population of the city of Baracoa was evacuated far away from the coast, as there was a primary alert of a possible tsunami event or of a heavy wave trains sequence impacting the coast line at the city’s sea wall …
Baracoa could not contact Santiago de Cuba stations on 40 meters due to long skip after 5 PM local time, so several stations in western Cuba and one in the US State of Florida provided relays. CO2KK, as IARU Region II Area C Emergency Coordinator, helped to organize the nets , on 7045 kHz and also on 3720 kHz, while local nets in Santiago de Cuba and Baracoa operated on 2 meters.
As late as 9,45 PM local time 0245 UTC we have not been able to contact any amateur or emergency services stations in Haiti.
Amateurs from the Dominican Republic, Puerto Rico, Venezuela were monitoring the 40 meter band frequency, that I notified to the IARU Region II executive Ramon Santoyo XE1KK as in use for the emergency, requesting that 7045 kHz be kept as clear as possible …
We are still keeping watch on 7045 kHz hoping that someone in Haiti may have access to a transceiver and at least a car battery to run it.
All information that has so far come from the Cuban seismologists tell us of a very intense earthquake, and also of the possibility of other events following.
Following the advice of the geophysicists, we are keeping the 7045 and 3720 kiloHertz frequencies active until further notice.
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Earthquake Net Frequencies — 7045, 3720 kHz:
by N2KI on January 13, 2010 Mail this to a friend
Does anyone in the affected area know to be transmitting on the target frequencies?
Earthquake Net Frequencies — 7045, 3720 kHz:
by W8VZM on January 13, 2010 Mail this to a friend
Any stateside organizations handling health and welfare inquiries into Hati? I have a friend who is unable to get through on phone of course. I have recently relocated and do not have HF up at this time.
Earthquake Net Frequencies — 7045, 3720 kHz:
by WA2FDU on January 13, 2010 Mail this to a friend
SALVATION ARMY TEAM EMERGENCY RADIO NETWORK
North American Command
Full Alert Level DELTA III for Haiti Earthquake Emergency. All nets active. 14.265 MHz Primary Daytime. 7265 and 3977.7 KHz evening and night
RE: Earthquake Net Frequencies — 7045, 3720 kHz:
by KB3HOG on January 13, 2010 Mail this to a friend
LETS GET OFF OUR CHAIRS, OPEN OUR POCKETS AND OUR HEARTS AND HELP THESE POOR PEOPLE IN HATI.
* Security Council
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The UN and . . .
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* Please note:
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The Charter established six principal organs of the United Nations: the General Assembly, the Security Council, the Economic and Social Council, the Trusteeship Council, the International Court of Justice, and the Secretariat. The United Nations family, however, is much larger, encompassing 15 agencies and several programmes and bodies.
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The following Bodies report directly to the General Assembly.
(1) The United Nations Peacebuilding Commission has a direct reporting relationship with the Security Council and the General Assembly, and non-subsidiary relationship with the Economic and Social Council and the Office of the Secretary-General.
(2) The UN Drug Control Programme is part of the UN Office on Drugs and Crime.
(3) The IAEA reports to the Security Council and the General Assembly (GA).
(4) The CTBTO Preparatory Commission and OPCW report to the GA.
(5) UNDEF’s Advisory Board recommends funding proposals for approval by the Secretary-General.
(6) UNFIP is an autonomous trust fund operating under the leadership of the United Nations Deputy Secretary-General.
UNIDO focuses its resources and expertise to support developing countries and economies in transition in their efforts to achieve sustainable industrial development.
As a technical cooperation agency, we design and implement programmes focused on three thematic priorities, which directly respond to global development priorities. These priorities are:
Poverty reduction through productive activities
UNIDO seeks to enable the poor to earn a living through productive activities, thus to find a path out of poverty. The Organization provides a comprehensive range of services customized for developing countries and transition economies, ranging from industrial policy advice to entrepreneurship and SME development, and from technology diffusion to sustainable production and the provision of rural energy for productive uses. Through this thematic priority, UNIDO mainly addresses MDG1, MDG3 and MDG8. More…
Developing countries are benefiting from increasingly participating in the global trading system. Thus, strengthening their capacity to participate in global trade is critical for their future economic growth. Especially after their accession to the WTO, their technical ability to enter into global production and value chains is key for their successful participation in international trade.
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Energy is a prerequisite for poverty reduction. Still, fundamental changes in the way societies produce and consume are indispensable for achieving global sustainable development. UNIDO therefore promotes sustainable patterns of industrial consumption and production.
As a leading provider of services for improved industrial energy efficiency and sustainability, UNIDO assists developing countries and transition economies in implementing multilateral environmental agreements and in simultaneously reaching their economic and environmental goals. Through this thematic priority, UNIDO mainly addresses MDG1, MDG7 and MDG8. More…