Archive for November 2008

Confidential Report – Operation Molotov

4 November, 2008

Article from the New Statesman;

It was Europe’s dark secret. While American banks were lending irresponsibly to homeowners who couldn’t pay, European banks were lending to emerging countries who couldn’t pay. Europe’s sub-prime crisis has now come home as heavily-indebted nations of the eastern bloc – Hungary, Ukraine, Belarus, Bulgaria, the Baltic states – are collapsing one by one into the arms of the IMF. “Icelandisation” is the new spectre stalking Europe.

 

And, as with sub-prime in urban America, this latest crisis was shockingly predictable. I visited Latvia at the height of the credit bubble 18 months ago, and it was clearly an accident waiting to happen. Riga, the capital, was bristling with upmarket shopping malls and classy bars that were all quite empty. Stalin-era flats were being sold for $200,000 in a country where the average wage was less than $400 a month. Latvia has hardly any industry, no energy and few natural resources apart from trees. But such was the irrational exuberance of foreign banks like Swedbank, it was awash with credit.

 

Link to article;

http://www.newstatesman.com/economy/2008/10/european-banks-crisis-imf

 

Comment;

I have long harboured a destructive urge to invade something.  It began when I was an adolescent, and found myself stranded, on a gusty October afternoon in 1995, at the edge of The Pennines, nearly two and a half thousand feet from home with low blood sugar, dizzy spells and a speck of dirt in my left eye.  I collapsed like a highly strung marionette into the middle of the road, which took some doing as I was using the sturdy and well trimmed privet hedge of a Victorian semi-detatched for both guidance and comfort, in the labyrinth of cul-de-sacs I had encountered. After lying there, barely unconscious, for an indeterminate and unanswered amount of camp howls that any indulgent King Lear would have envied, I saw out of the peripheral vision of my one good eye…  a sleeping policeman.

 

As I traversed the coarse lump, using my inner thighs for grip and balance, I endeavoured to crawl towards the nearest kerb commando style…  Reaching the precipice with one final pelvic thrust I grazed my face across the gum enamelled paving, such was the relief I didn’t feel the pain or disgust at the moment I transgressed from potential roadkill to post coital hedgehog.  I’d liken the metamorphoses to being the smartest person in a call centre getting a promotion from frontline customer service to the role of Customer Offence Champion (COC).  There’s no actual elation, just pity from all observers, combined with the shame that they felt compelled to watch instead of turning away.  The COC feels a sense of hollow joy and disorientation, not sure how they ended up in this mess, when all they wanted to do was buy a cottage and write a book even more boring than Madame Flaubert.

 

So, I’m lying on the pavement, half starved, Hubba Bubba everywhere, but not a chud to chink, wondering if there’s a search party, and if they’ll have cheesey Wotsits, when I realise that in my bag is the one thing that can alleviate my swiftly faltering grip on everything.  A strawberry flavoured Petit Filous.  I grab at the zipper on my backpack, but my fingers are cramped into pale lego claws, good for only appropriately sized accessories.  I push the bag towards my mouth and attempt to unfasten the Kappa’s dignity with my teeth.  After several unsuccessful attempts I finally clasp steel and lift with new found reserves of strength.  I fumble inside the bag but it’s useless, my cup holding extremities are now only good for one thing, leverage.  I position them at the base of the rucksack and lift it towards me, and am immediately engulfed by the dark, well stitched insides of an Italian made schoolbag.  Like a spaniel headfirst in a capsized fliplid bin I frantically nuzzle for a tasty morsel.  I scratch my nose on the corner of the yoghurt pot and gnash at where I think it is.  I connect and lower my arms slowly to keep the prize safe in my incisors.  Collapsing on the pavement once more, I’m overwhelmed by the simultaneous taste of plastic and metal in my mouth.  Convinced I’m having an internal nosebleed of Mississippi proportions, I pass out and dream of delicately perfumed creme fraiche.

 

I come to.  The sky is slightly darker, with a lilac hue and dark blue, tumble dryer, filter fluff clouds, the streetlights are now woozily fuzzing into life. They resemble a hot piece of metal recently removed from a smelters furnace, a hard boiled fuschia which in turn makes me think of strawberry milkshake and subsequently my hard won bounty.  I look round and see the carton of hope next to my left elbow.  Realising I can’t lift the pot, as my hands are now completely frozen in a pincer too large for the miniature pot, I strain to devise another plan of action.  Using the bountiful reserves of optimism and sheer bloody mindedness that characterises intrepid British explorers such as Scott of the Antarctic, Sir Edmund Hillary and Jeremy Clarkson, I design an ingenious way of turning neverending disadvantages to my favour.  Placing my left claw face up on the pavement I use the fingertips of the right to chip away at the join of my middle and ring fingers. (Queue Strauss’ ‘Thus Spoke Zarathustra’ in the background

 

After several minutes, and many stylish cuts, they come loose and I am relieved to have fashioned my own v-shaped utensil.  The elation seems to tear down the veil of alienation and disillusionment that I only now realised had suffocated me for years.  I was now a man.  Connecting with my means of production, a new found potential, a damn had been burst and primeval emotions overflowed into my consciousness.  The Neanderthal murdered on the rocks of Gibraltar had awakened again in me, back to kick some homo(-sapien) arse.  I must enter this afternoon delight that the fates had brought me, as a sign of gratitude.  Nudging the carton towards the semi-circular shelter of my right hand, I carefully remove the foil lid to reveal the umblemished strawberry field surface.  (Apologies that the cultural references are now becoming more hamfisted than a one armed butcher, but in recounting this story I am struggling to deal with the overwhelming emotions that are returning with hindsight.)  Using my recently evolved forkarm, I gouge at the rich, sweet dessert, again and again, filling my mouth with the normally inadequate portion. 

 

That experience had a great influence on the man I am today.  My wish to enter things by any means possible grew year on year, but my eagerness only led to disappointment.  Rejection after rejection, but this did not deter me, it merely starved my hunger into pathological rage.  Unable to find satisfaction in animal, vegetable or mineral, I set my sights higher, and this is where I get to the point of the story.  I propose to invade Latvia.  I have harboured this ambition for over a year now and feel the current economic climate provides an opportunity not to be missed.  I have a private store of fibre glass javelins and a herd of well educated Polar bears based in Estonia readying for such a mission.

 

Latvia has a small army and no airforce, therefore Baltic Air Policing of the area is undertaken by Nato and based in Lithuania.  It’s currently the turn of the USA to patrol the region for 4 months, starting 30th September 2008 (see image below).  I’m led to believe that the entrance requirements for the US Air Force are pretty low, and any cross-eyed, redneck with glaucoma can probably enlist successfully, if they so wish.  This leads to misunderstandings, fatal friendly fire and hilarious blooper reels for the folks back home.  It is my belief that for the period of December to January, with sufficient administrative planning, and with the premise of promoting tourism and international relations, it would be possible to hold a ‘Northern Baltic States Winter Athletics Tournament 2008/9’ ceremony in the Latvian capital.  Thus allowing us to march serenly on Riga in our tracksuits, astride Polar bears, armed to the teeth with javelins, under the guise of EPO fuelled lunatics.  We could request a flyby from the Americans, they could even accidentally bomb a few hospitals for us.  Granted this plan has not been fully thought out, but when has that ever stopped anyone?  Actions not words are what’s needed, so I’m going to stop talking and start forking.  In a pincer movement towards Latvia (via Estonia for supplies), who’s with me?!  An idea of numbers in advance would be great as we may need to order more javelins/tracksuits, bears might be shared 1 between 2 (reserve donkeys may be deployed), also if you have any dietary requirements please let us know in advance.

 

 

 

 operation-molotov

 

 

 

FREE PETIT FILOUS OF YOUR CHOICE ON ENTRY*!!!

(*Entry in this instance means crossing the border of Latvia from Estonia in Polar bear/donkey cavalcade.  Participant must be wearing appropriate attire in order to receive free gift.  We reserve all right to refuse or reclaim aforementioned dairy product at any time from mouth to ass.)

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Monkey Business

1 November, 2008

Rescued banks to pay millions in bonuses

Completely bananas

Completely bananas

In the UK;

RBS ‘making monkeys’ out of the government

 

Royal Bank of Scotland, which is being bailed out with £20bn of taxpayers’

money, has signalled it is preparing to pay bonuses to thousands of staff despite government pledges to crack down on City pay.

 

The bank has set aside £1.79bn to cover “staff costs” – including discretionary bonuses – at its investment banking division for the first six months of the year alone. The same division caused a £5.9bn writedown that wiped out the bank’s profits for the same period.

 

The government had demanded that boardroom directors at RBS should not receive bonuses this year and the chief executive, Sir Fred Goodwin, is walking away without a pay-off. But below boardroom level, RBS and other groups are preparing to pay bonuses to investment bankers who continue to generate profits.

 

The disclosure drew fierce criticism from Vince Cable, the Liberal Democrat Treasury spokesman.

“The government said they would attach strict conditions on bonuses and it is very clear they are doing nothing of the kind.

 

“The banks are just making complete monkeys of them.”

 

He suggested the government would not have agreed to bail out any standalone investment bank. RBS and others had become “entangled with casino-style investment banking operations”, he said.

 

Despite the continuing financial turmoil and widespread criticism of the bonus culture in the City, the bank is understood to believe the payments are defensible.

 

 

In the USA

 

The banking system

Screw Marx, from top to bottom, Investment bankers, the banks, the government and Joe the Plumber

 

When the Bush administration announced it would be injecting $250bn into US banks in exchange for equity, the plan was widely referred to as “partial nationalisation” – a radical measure required to get banks lending again. Henry Paulson, the treasury secretary, had seen the light, we were told, and was following the lead of Gordon Brown.

In fact, there has been no nationalisation, partial or otherwise. American taxpayers have gained no meaningful control over the banks, which is why the banks are free to spend the new money as they wish. At Morgan Stanley, it looks as if much of the windfall will cover this year’s bonuses. Citigroup has been hinting it will use its $25bn buying other banks, while John Thain, the chief executive of Merrill Lynch, told analysts: “At least for the next quarter, it’s just going to be a cushion.” The US government, meanwhile, is reduced to pleading with the banks that they at least spend a portion of the taxpayer windfall for loans – officially, the reason for the entire programme.

What, then, is the real purpose of the bail-out? My fear is this rush of dealmaking is something much more ambitious than a one-off gift to big business: that the Bush version of “partial nationalisation” is rigged to turn the US treasury into a bottomless cash machine for the banks for years to come. Remember, the main concern among the big market players, particularly banks, is not the lack of credit but their battered share prices. Investors have lost confidence in the honesty of the big financial players, and with good reason.

This is where the treasury’s equity pays off big time. By purchasing stakes in these financial institutions, the treasury is sending a signal to the market that they are a safe bet. Why safe? Not because their level of risk has been accurately assessed at last. Not because they have renounced the kind of exotic instruments and outrageous leverage rates that created the crisis. But because the market will now be banking on the fact that the US government won’t let these particular companies fail. If they get themselves into trouble, investors will now assume that the government will keep finding more cash to bail them out, since allowing them to go down would mean losing the initial equity investments, many of them in the billions. (Just look at the insurance giant AIG, which has already gone back to taxpayers for a top-up, and seems likely to ask for a third.)

Links

 

UK story;

 

http://www.guardian.co.uk/business/2008/nov/01/royal-bank-scotland-vincent-cable

 

 

USA story;

 

http://www.guardian.co.uk/commentisfree/2008/oct/31/useconomy-banking