Economy House of Card Collapse - Latest Headlines

[and justice for all]

Economic House of Card Collapse - Latest Headlines...

UK unveils details of £200 billion in "toxic debt" bailout
uk.reuters.com

Government finalises second bank bailout plan:

The government will guarantee "toxic debt" worth billions of pounds in a second bank bailout designed to boost lending and fend off a prolonged recession triggered by the worst economic turmoil in 70 years, people familiar with the matter said on Sunday. [...]

Key parts of the bailout will include a huge state insurance scheme to guarantee billions of pounds of banks' bad assets, three people familiar with the discussions said. The Treasury will guarantee at least 100 billion pounds of new lending, the Sunday Times said. [...]

LINK;
http://uk.reuters.com/article/UKNews1/idUKTRE50H1NE20090118


****

British taxpayer assumes £2.5 billion debt of Russian oligarch
mailonsunday.co.uk

Royal Bank of Scotland's £2.5bn loan to Russian oligarch:

Former Royal Bank of Scotland boss Sir Fred Goodwin, branded ‘the world’s worst banker’, was blamed last night for forcing taxpayers to write off a £2.5billion loan to a Russian oligarch.

The money was lent by the bank, which is now controlled by the Government, to Leonid Blavatnik, 51, a London-based billionaire who owns chemical giant LyondellBasell, which is on the verge of collapse.

Treasury officials examining RBS’s books were horrified to learn that they included the sum to Mr Blavatnik, which has now been written off.

‘These bankers doled out ridiculously large sums to foreign investors to finance deals which had nothing to do with Britain,’ said the official.
‘It is only now that we are going through the banks’ accounts that we can see the true scale of their irresponsibility. Some of it is every bit as crazy as the American sub-prime loans scandal.’ [...]

LINK;
http://www.mailonsunday.co.uk/news/article-1120772/Browns-fury-Royal-Bank-Scotlands-2-5bn-loan-Russian-oligarch.html


****

Darling: bank bail-out needed to avoid collapse
guardian.co.uk

Darling warns of economic collapse without latest banking bail-out:

Alistair Darling today insisted he was right to use hundreds of billions of taxpayers' money in a fresh bail-out of the banking sector, saying the recession would be much worse if he did not act.

But shares in the banking sector plunged despite the new support package. Royal Bank of Scotland lost more than 70% after it said it will make a loss of up to £28bn for 2008 - the biggest loss in UK corporate history.

The new measures to support mortgage lending and consumer loans were attacked as a "blank cheque" by critics this morning, but the chancellor warned that the consequences of inaction would be grim. [...]

The Bank of England is also being given new powers, in addition to its control of interest rates. It has been authorised to spend up to £50bn buying a range of assets from the banks, both to increase corporate credit and for monetary policy purposes. [...]

The plan means that the taxpayer is exposed to billions of pounds of potential losses [...]

LINK;
http://www.guardian.co.uk/business/2009/jan/19/bank-bail-out-rbs


****

Bank shares in freefall despite bail-out
guardian.co.uk

Bank shares plummeted today amid concerns that the latest government package to stabilise banks and encourage lending would not solve the deepening economic crisis.

Royal Bank of Scotland was the biggest faller in the FTSE 100 share index, its price collapsing by more than 70%, to 10p, after it warned of the largest loss in British corporate history of up to £28bn and its chief executive Stephen Hester admitted full-scale nationalisation of the bank had been considered.

The taxpayer already owns 58% of RBS but this will soon rise to 68% when £5bn of preference shares owned by the government are converted into ordinary shares. [...]


****

Barclays shares in new collapse as bank crisis enters second phase
guardian.co.uk

Barclays loses 25% of value in one hour of trading:

Shares in Barclays and Royal Bank of ­Scotland plummeted as huge losses at two of America's biggest ­financial institutions sparked fresh fears for the future of Britain's banking industry.

In a frantic hour of trading, Barclays lost almost a quarter of its value - marking the second wave of a banking crisis that has already dragged the industry to the edge of collapse. The dramatic fall, which also shook the newly merged Lloyds TSB and HBOS, forced banking chiefs to cancel a planned summit in the City and ­triggered a flurry of emergency meetings in Whitehall. [...]

LINK;
http://www.guardian.co.uk/business/2009/jan/16/barclays-bank-shares-in-new-collapse


****

More Headlines...


"Too big to fail. too shit to buy," Citigroup insider
A house built on Sandy
http://www.economist.com/finance/displaystory.cfm?story_id=12945673

Anglo Irish bank to restrict access to accounts if balance falls less than debts
http://uk.reuters.com/article/businessNews/idUKTRE50H1I720090118

Sterling falls as government launches latest bank rescue
http://www.ft.com/cms/s/0/d148f288-e613-11dd-8e4f-0000779fd2ac.html?nclick_check=1

USA prepares to immortalize its huge debt
http://english.pravda.ru/business/finance/25-12-2008/106872-usa_debt-0

Russia's Economic And Financial Meltdown Continues Apace
http://english.pravda.ru/business/finance/23-12-2008/106860-Russia_Economic_Financial_Meltd-0

Brown ally: We’re looking like Iceland-on-Thames
http://www.thisislondon.co.uk/standard/article-23622568-details/Brown+ally:+We+re+looking+like+Iceland-on-Thames/article.do

Britain's economy in even worse state than government thinks, says EC report
http://business.timesonline.co.uk/tol/business/economics/article5546863.ece

Pressure on HSBC to let US unit go bankrupt
http://www.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5542969.ece

Increasing numbers of pubs being forced to close down
http://www.timesonline.co.uk/tol/business/industry_sectors/leisure/article5542961.ece

More as it develops...

[and justice for all]

New batch...

Gordon Brown brings Britain to the edge of bankruptcy
telegraph.co.uk

The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic [...]

This catastrophe happened on his watch, no matter how much he now opportunistically beats up on bankers. He turned on the fountain of cheap money and encouraged the country to swim in it. House prices rose, debt went through the roof and the illusion won elections. Throughout, Brown boasted of the beauty of his regulatory structure, when those in charge of it were failing to ask the most basic questions of financial institutions. The same bankers Brown now claims to be angry with, he once wooed, travelling to the City to give speeches praising their "financial innovation" [...]

...the Treasury is pledged to honour those liabilities because it has guaranteed not to let a British bank go down. RBS has liabilities of £1.8 trillion, three times annual UK government spending, against assets of £1.9 trillion. But after the events of the past year, I wager most taxpayers will believe the true picture is worse.

Meanwhile, the assets are falling in value. This matters, because post-nationalisation these liabilities are now yours and
mine. [...]

The PM and the Chancellor , both looking a year older every day, tell us that for their next trick they will buy more bank shares, create a giant insurance scheme for bad debt, pledge to honour liabilities without limit, cross their fingers and hope it all works. The phrase "bottomless pit" springs to mind for a reason: that is what they have designed.

In this gloom, the Prime Minister has but one slender hope: that somehow, by force of personality, the new President Obama engineers a rapid American recovery restoring global confidence, energising the markets and making us all forget this bad dream [...]

LINK;
http://www.telegraph.co.uk/comment/columnists/iainmartin/4295219/Gordon-Brown-brings-Britain-to-the-edge-of-bankruptcy.html

****

STERLING IN FREE FALL
telegraph.co.uk

Sterling slumps as second bank bail-out puts UK woes in spotlight:

Sterling tumbled to its weakest against the dollar in more than five years, hit a record low against the yen and fell versus the euro as the UK Government's second bail-out of the country's banks underlined the dangers facing the economy [...]

LINK;
http://www.telegraph.co.uk/finance/financetopics/recession/4295039/Sterling-slumps-as-second-bank-bail-out-puts-UK-woes-in-spotlight.html

****

Royal Bank of Scotland shares plunge 67%
bbc.co.uk

RBS shares plunge on record loss:

The bank said it expects to report a deficit before write-downs of between £7bn and £8bn for 2008.
It will also write down assets, largely related to its takeover of ABN Amro in 2007, of up to £20bn in 2007.
RBS's final deficit is set to beat Vodafone's 2006 loss of £15bn, the current UK record. The bank also said jobs would go because of the downturn.

The firm's shares ended Monday trading down 23.1 pence to 11.6p.

As part of the government's package to rescue British banks announced on Monday, the Treasury said it would swap £5bn of preference shares for ordinary shares in the bank, taking its stake in RBS to nearly 70%. [...]

LINK;
http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/1/hi/business/7836882.stm?ad=1

****

U.K. Places a Big Bet on Banks
online.wsj.com

With its latest bank bailout plan, the U.K. government has gone headfirst into the credit-default-swap business, a product that helped destabilize the financial system in the first place.

The Treasury will insure banks against a wide range of risks on their balance sheets, from residential mortgages to leveraged loans, regardless of the currency in which it is denominated.

That is a big gamble. If it fails, the consequences for the U.K. economy will be dire.

LINK;
http://online.wsj.com/article/SB123237365496694825.html?mod=mktw


[More on this...]


Once again, Britain leads the world in the macabre speciality of saving banks
telegraph.co.uk

The Treasury's £200bn plan to soak up toxic debt will be followed within days by a US variant from the Obama team [...]

"It is easy to conclude that none of the Government's policies are working," said Professor Peter Spencer from York University. "We must not lose sight of the fact that they have prevented the collapse of the monetary system." :eek:

This is not does mean that recovery is imminent. Nothing can prevent a long purge as years of credit leverage give way to debt deflation [...]

The Fed has cut rates to zero. It is buying mortgage securities on the open market, and eying Treasury debt next. Fellow central banks are exploring their own ways to print money [...]

The latest plans to "ring-fence" bad debts in sceptic tanks puts in place the fourth pillar. The UK Treasury's version involves a state insurance scheme, letting banks shuffle off their crippling loads and escape mark-to-market torture.

The US version is a "bad bank" for mortgage debt. It is more or less the old "TARP" passed by Congress, before the funds were diverted into bank recapitalisations [...]

There is no guarantee that the measures will succeed. The vast scale of government borrowing may exhaust the stock of global capital. Markets are already beginning to question the credit-worthiness of sovereign states. The Fed may find it harder than it thinks to disengage from colossal intervention in the bond markets [...]

LINK;
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4285187/Biblical-debt-jubilee-may-be-the-only-answer.html

****

S&P strips Spain of its AAA credit rating
telegraph.co.uk

Standard & Poor's has stripped Spain of its coveted AAA status in the first such move against a top-rated country since the global crisis began, reflecting the deep damage suffered by Spanish public finances as the debt bubble bursts [...]

LINK;
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4292055/SandP-strips-Spain-of-its-AAA-credit-rating.html

****

Brown's Blank Check Leads Brits Into Slavery
guardian.co.uk

Bonded Labour:
If Gordon Brown's blank cheque for bank bail-outs compromises the security of government gilts, we'll pay dearly for it – for years [...]

The downgrade of Spain and Greece along with potential moves against Ireland and Portugal have raised fears about the UK's credit position. This has been compounded by Gordon Brown's apparent blank cheque to the banking industry and the European Commission's assessment yesterday that the UK economy was one of the worst performing in Europe and would shrink by 2.8% this year [...]

The fears have infected markets for many assets today with sterling tumbling to a seven-and-a-half-year low against the dollar, gilts prices falling – pushing up yields or the cost of raising new debt – and bank shares enduring another torrid day of trading.

There are even rumours in Brussels where Alistair Darling is attending a meeting of EU finance ministers, that Britain is preparing to go to the IMF for help.

...as we see our commitment to the banks rising almost daily, we know we will be paying for this for some time to come – one of the architects of the latest bail-out plan, City minister Paul Myners, has said that he expects these toxic debts to remain on the government balance sheet for "seven to nine years". In the words of one analyst today: "The UK is looking like a huge bank with some legislative functions attached."

LINK;
http://www.guardian.co.uk/commentisfree/2009/jan/20/banking-economics

****

BANK of ENGLAND Paves Way To Start Printing Money
business.timesonline.co.uk

Mervyn King paves way to start Bank print presses:

The Bank of England's Governor paved the way last night to unleash the weapon of “printing money” in a last-ditch drive to combat the rapidly deepening recession [...]

LINK;
http://business.timesonline.co.uk/tol/business/economics/article5556024.ece

*****

More...

'Sell sterling, take cash out of Britain'
http://business.timesonline.co.uk/tol/business/economics/article5555898.ece

Economy fears spark plunge in sterling - Pound falls to 23-year low against dollar
http://www.ft.com/cms/s/0/5b836bbe-e802-11dd-b2a5-0000779fd2ac.html?nclick_check=1

U.K. Pound Serves as Omen for Dollar
http://online.wsj.com/article/SB123258222098404279.html

Calls to nationalise RBS and Lloyds as markets lose faith in bail-outs
http://www.guardian.co.uk/business/2009/jan/20/banks-nationalisation-crisis

UK Unemployment Up To 1.92 Million
http://business.timesonline.co.uk/tol/business/economics/article5558607.ece

Banks ask for crisis funds for E Europe
http://www.ft.com/cms/s/0/9830fa0c-e809-11dd-b2a5-0000779fd2ac.html

Global financial crisis hits ‘Saudi Kingdom’ hard
http://www.middle-east-online.com/english/?id=29893

Ukraine economic concerns grow
http://www.ft.com/cms/s/0/885e265c-e75c-11dd-aef2-0000779fd2ac.html

Japan's Exports Plummet Record 35%, Signaling More Job, Production Cuts
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahnzmInWZn1A&refer=home

Intel to Close Plants, Displacing Thousands
http://online.wsj.com/article/SB123257510891303715.html

IBM Employees Report Job Cuts
http://online.wsj.com/article/SB123257735535404011.html

[killmicrosoft]

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2079rank.html

Debt - external


1
World $ 51,780,000,000,000 2004 est.
2
United States $ 12,250,000,000,000 30 June 2007
3
United Kingdom $ 10,450,000,000,000 30 June 2007

they have been lieing to us for a long time we are well and truly bankrupt

[and justice for all]

Hey, "nice" place where you found those figures... 'cia.gov' :cool:

[tyler]

My business is on the verge of collapse! I need some dosh to buy a new van. I wonder if I can apply for some of this bailout money?

[and justice for all]

More Headlines...

Home repossessed every 10 minutes in UK
http://news.scotsman.com/uk/Home-repossessed-every-10-minutes.4906303.jp

Lights go out across Britain as recession hits home - Electricity demand falls as economy slows
http://www.guardian.co.uk/business/2009/jan/24/recession-britain

Hopes dashed for swift UK recovery - Economy’s sharpest fall in 28 years
http://www.ft.com/cms/s/0/72c2c36e-e92f-11dd-9535-0000779fd2ac.html

It's impossible to get any hard facts and figures from British banks
http://www.telegraph.co.uk/finance/comment/jeffrandall/4316762/Financial-crisis-Its-impossible-to-get-any-hard-facts-and-figures-from-British-banks.html

Northern Rock to get £10 billion to increase mortgage lending
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4317926/Northern-Rock-may-get-10bn-from-government-to-increase-mortgage-lending.html

Hedge fund made millions betting on Barclays crash
http://www.guardian.co.uk/business/2009/jan/23/barclays-short-selling-hedge-fund

UK sterling hits 23 year low - Sterling plunges after data show U.K. recession deepens
http://www.marketwatch.com/news/story/British-pound-plummets-data-show/story.aspx?guid=%7BCA3B3979-F4C5-433E-BC26-A10F8B1155EF%7D

France's AAA rating at risk??
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPIckLrGsg9A&refer=home

Home Delivery Network and Atkins jobs at risk
http://www.guardian.co.uk/business/2009/jan/23/home-delivery-network-job-cuts

General Electric profit drops 46 pct
http://news.yahoo.com/s/ap/20090123/ap_on_bi_ge/earns_general_electric

Samsung reports first-ever quarterly loss
http://www.guardian.co.uk/business/2009/jan/23/samsung-first-quarterly-loss

Microsoft's days as an unstoppable force are over
http://www.telegraph.co.uk/scienceandtechnology/technology/microsoft/4317347/Microsofts-days-as-an-unstoppable-force-are-over.html

Harley-Davidson's wheels get stuck in US recession
http://www.telegraph.co.uk/finance/newsbysector/transport/4325240/Harley-Davidsons-wheels-get-stuck-in-US-recession.html

Eurozone companies slash jobs as recession bites
http://www.ft.com/cms/s/0/d696f75c-e934-11dd-9535-0000779fd2ac.html?nclick_check=1

Australian wine exports collapse
http://www.telegraph.co.uk/news/worldnews/australiaandthepacific/australia/4314928/Australian-wine-exports-collapse.html

5.5% World's Container Ships Now Idle
http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

Shipping rates hit zero as trade sinks
http://www.telegraph.co.uk/finance/4229198/Shipping-rates-hit-zero-as-trade-sinks.html

China prepares for the Year of the Slump
http://www.guardian.co.uk/business/2009/jan/22/china-fears-year-of-slump

Millionaire widow becomes cleaner after losing fortune in Madoff's alleged Ponzi scheme
http://www.telegraph.co.uk/finance/financetopics/bernard-madoff/4323651/Millionaire-widow-becomes-cleaner-after-losing-fortune-in-Madoffs-alleged-Ponzi-scheme.html

------

The last recession in 1990/1991
In Pictures - guardian.co.uk

http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2009/1/22/1232647268090/Gallery-1990s-recession-P-010.jpg

Taxation: The poll tax – widely blamed for Thatcher’s downfall – was abandoned. Michael Heseltine replaced it with the council tax after riots in March 1990 and widespread refusal to pay. This time around, Alistair Darling is cutting taxes to try to avoid recession turning into depression

LINK;
http://www.guardian.co.uk/business/gallery/2009/jan/22/recession-margaretthatcher?picture=342193869

[and justice for all]

My business is on the verge of collapse! I need some dosh to buy a new van. I wonder if I can apply for some of this bailout money?

(I'm sorry to hear that) :(



But hey! It can't hurt to try.... ;)

[and justice for all]

Just how big is Britain's toxic debt?
telegraph.co.uk

An army of accountants is combing through the books, trying to establish just how much the toxic assets of the bailed-out banks are actually worth. At stake, says the Government, is the future of Britain's economy [...]

Confirmation yesterday that the bankers' avarice has officially plunged Britain into recession added to the growing bewilderment as to exactly why we are on the hook for almost £1 trillion in bail-outs and guarantees.

No one even knows exactly how many of these toxic assets British banks are holding, and how much more it might cost the taxpayer to get out of this unholy mess – which is why an army of accountants is about to begin the daunting, if not downright impossible, task of tracking down and putting a value on all the debts of all the banks in which the taxpayer has taken a stake [...]

Experts say the losses reveal the markets' fear of more bad news to come. Despite the Government pledging £954 billion so far – or £31,800 per taxpayer – some analysts believe another £200 billion in insurance may be needed to protect the banks fully against future losses. But no one is willing to predict that it won't be more, just as no one can be sure that our children, or even our grandchildren, won't still be paying off the debts the nation is accruing, as this economic black hole swallows a seemingly limitless amount of our money [...]

Peter Spencer, professor of economics at York University. "As things stand, it is a near-bottomless pit, and no one knows how smelly the stuff at the bottom is." [...]

But how could the banks lose control to such an extent?

"Greed is part of the answer," says Vince Cable, the Liberal Democrat Treasury spokesman. "We have had a bonus culture in which profits were the only motivating factor, and bankers were getting enormous bonuses on the back of very highly leveraged deals. It's also the case that even some of the bosses didn't understand the things they were trading in, because they had become so complicated. The banking regulators knew this and should have put a stop to it, but they didn't." [...]

LINK;
http://www.telegraph.co.uk/finance/4325899/Financial-crisis-just-how-big-is-Britains-toxic-debt.html

****

'Stealth tax' on recession victims
independent.co.uk

Ministers impose huge rise in court fees for those on brink of bankruptcy.

Ministers were accused last night of profiteering from the soaring numbers of people facing bankruptcy after they announced huge increases in fees at debtors' courts.
Charges are to rise by up to 233 per cent for debt proceedings from next May, affecting hundreds of thousands of people who plunge into the red.

The move, which has been branded a stealth tax on those least able to pay, comes as a survey by The Independent reveals the depth of Britain's debt problem with the country now officially in the worst recession for 30 years [...]

LINK;
http://www.independent.co.uk/news/uk/home-news/stealth-tax-on-recession-victims-1514507.html

****

Britain is facing return of three-day week
independent.co.uk

Shorter hours would be preferable to mass unemployment, say government sources.

The prospect of the three-day week returned to haunt Britain yesterday as it emerged that ministers are considering paying firms to cut hours in order to survive the recession [...]

Ministerial sources insisted last night that a scheme to help compensate workers was "not imminent" but said it was an option being discussed. It would match measures introduced by the German government [...]

Yet the move would stir bad memories of the three-day week of the early 1970s, when the Heath government imposed a cut in hours to save electricity as a result of industrial action [...]

Figures from the British Chambers of Commerce, which represent 100,000 firms, show that 39 per cent of businesses are planning to cut hours [...]

LINK;
http://www.independent.co.uk/news/uk/politics/britain-is-facing-return-of-threeday-week-1515307.html

****

Obama's 'Bad Bank' More Bad News
globalresearch.ca

Another miserable failure in the making.

...The proposal? Set up an "aggregator" or " Bad" bank in to which Wall St. can pour it's toxic waste or keep it on their balance sheets while being guaranteed by the taxpayer. Looks like the focus is going to be on the banks after all. The fact that the banks would be unloading more than a trillion dollars in worthless junk, paid for by the taxpayer, does not seem to Summers and Axelrod as a particularly bad idea [...]

Let's examine the results of similiar policies in Europe.

The U.K, Ireland, France and Germany are among the other victims of the same mistakes. Ireland and the U.K., after pumping billions in to the banking sector, have only succeeded in pushing themselves to the verge of bankruptcy and reduced the available capital to do anything actually constructive. Nicolas Sarkozy succeeded in getting Societe Generale to break even by injecting taxpayer cash . What kind of logic is it that says that this is a good thing? Any unprofitable company can break even if it receives taxpayer money to blot out the red ink. The fact remains; it is an unprofitable enterprise and, by any interpretation of market rules, should fail to free up more profitable ones [...]

LINK;
http://www.globalresearch.ca/index.php?context=viewArticle&code=HUG20090122&articleId=11949

****

UK job losses - Britain has shed 77,154 jobs since October
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3542572/Financial-crisis-UK-job-losses.html

Burberry to cut 540 jobs as recession deepens
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/4295112/Burberry-to-cut-540-jobs-as-recession-deepens.html

500 jobs go at Boots headquarters
http://www.telegraph.co.uk/news/1432054/500-jobs-go-at-Boots-headquarters.html

Home Price Declines Compound US Economic Decline
http://www.voanews.com/english/2009-01-24-voa1.cfm

Another Real Estate Crisis Is About To Hit - By Paul Craig Roberts
http://www.rense.com/general84/another.htm

Ford posts biggest loss in 14 years
http://www.telegraph.co.uk/finance/2949437/Ford-posts-biggest-loss-in-14-years.html

[clozaril]

My business is on the verge of collapse! I need some dosh to buy a new van. I wonder if I can apply for some of this bailout money?

i lent someone £20 and they haven't paid me back do i get some of the bailout ?