Manufacturing mired in recession in UK and US ... Boeing hurting after one month of strike

Britain's manufacturing sector shrank in September at the fastest rate since records began.levels of output, new orders and employment registered unprecedented declines.

The figures come a day after the Office of National Statistics confirmed that the UK economy failed to grow in the second quarter.

They reinforce expectations that Britain has entered its first recession since the early 1990s and boost expectations that interest rates could be cut as soon as next week.

Meanwhile in the US,t he ISM's index of factory activity fell to 43.5 in September, compared with 49.9 in August and 50.0 in July. A reading below 50 indicates contracting economic activity; September's is the lowest since Oct. 2001.

The index "indicates a significantly faster rate of decline in manufacturing during September, marking a departure from the 2008 trend toward negligible growth or contraction each month," ISM said. Price inflation also slowed, to just 53.5 vs. 77 in August and 88.5 in July.

Machinists at Boeings's Everett, Washington factory have been on strike for nearly a month, extending seemingly endless delays on the 787--and on the three 777s Virgin Australia ordered for its first flights.

The new carrier, an offshoot of Virgin Blue, will now move its launch date back from December 15 to February 28, 2009 and hope that its planes are ready by then.

October 3rd 1940 - How the French Vichy Government started the work that ened with the Endlosung

Raphael Alibert, the Minister of Justice prepared the First Statut des Juif which President Marshal Petain signd on October 3rd 1940.

Alibert was a staunch Catholic, a long time supporter of Action Francaise . He chose this moment to define a Jew by race not religious belief - 3 Jewish grandparents or just 2 if the spouse was Jewish was sufficient to brand you.

The Statute declared a numerus clausus or quota of Jews who could work in some professions and they were banned from teaching, journalism, film,theatre,radio, the officer corps and the civil service.

On that day a census of Paris was undertaken and the following day a decree was issued by the Vichy Government for the prefets of provincial France to round up all "foreign Jews" and put them into internment camps and use them for forced labour.

Later in the month General Huntziger removed all Jews, whether officers or men from the French Army.

Pastor Marc Boegner was the only voice raised in opposition to these actions. The silence of the Catholic Bishops was unbroken.

Internment Camps and Escape

After the fall of the Popular Front, Daladier's Government had set up internment camps to detain political refugees, foreigners in general and especially communists of whom some 3,500 had been interned by March 1940.

Some 350,000 Spanish Republican refugees were already interned, especially in the South and near the Pyrenees. These camps of quaintly titled "centres d'hebergemont" , (lodging centres) also received suspicious aliens, criminals and what President Sarkozy would today call "racaille" or 'scum'.

Republican France had prepared the ground well - the French population was not ignorant of these camps or they way their inmates were used as forced labour.

The Pyrenees were the worst camps, at Gurs, 30 people a day died in the winter of 1940/41 - it's cemetery is full of Spanish but also some Jews ... Hannah Arendt was in Gurs - but she escaped after 2 weeks, Arthur Koestler was sent to La Vernet - which he was later to describe as worse than Nazi concentration camps.

By the time of Petains First (others followed) Statut Des Juif there were many camps - Recebedou, Noe, St-Cyprien, Rivesaltes, Rivel, Argeles, Bram. Agde, Saliers, Langlade, Aubagne, Les Milles - by the end of 1940 mthere were up to 50,000 prisoners interendd in the Vichy Zone.

Hannah Arendt eventually escaped with her husband and her mother to the United States with the assistance of the American diplomat Hiram Bingham IV who was US Consulate in Marseille, who illegally issued visas to her and around 2500 other Jewish refugees.

Others he helped with the assistance of Varian Fry who hid people at the Villa Air-Bel until they could be smuggled out. More than 2,200 people were taken across the border to the safety of neutral Portugal from where they could sail to the United States.

Others escaped on ships leaving Marseille for the French colony of Martinique and then onwards to the US. Among Fry's closest associates were Americans Miriam Davenport, a former art student at the Sorbonne, and the heiress Mary Jayne Gold, art freak who liked the "good life" who had set up in Paris in the early 1930s - she wrote a memoir of the time "Crossroads Marseilles 1940," published by Doubleday in 1980.

Those helped by this network included sculptor Jacques Lipchitz, artist Marc Chagall, Nobel Prize winner, Otto Meyerhof who with Hill had determined the process glycolysis in muscle cell metabolism. The sculptor Jean Arp was able to flee to Switzerland where he stayed, Marcel Duchamp chose the US.

The writer Lion Fuchtwanger had chosen to live in Sanary sur Mer with his wife , and did not return to germany when Hitler was made Chancellor. His books were proscribed and [publicly burned in the 1933 book burning . On 25th August 1933, an official Nazi paper, Reichsanzeiger , included Feuchtwanger's name in the first list of those whose German citizenship was revoked because of "disloyalty to the German Reich and the German people."

Because Feuchtwanger had addressed and predicted many of their crimes even before they came to power, Hitler considered him a personal enemy and the Nazis designated Feuchtwanger as the "Enemy of the state number one".

At the fall of France he and his wife were captured and imprisoned in Le Milles internment camp and after his escape to the US via Portugal , he published in 1941, a memoir of his internment, The Devil in France (Der Teufel in Frankreich)

Success (Erfolg)

This novel by Feuchtwanger was started on in 1927, and published in 1930 when the Nazis received 18.3 % of the votes. In the eyes of Goebbels, Feuchtwanger became an un-German Jewish evildoer.

Success bears the subtitle "History of a Providence," i.e. Bavaria. The action is set in Munich seemingly cosmopolitan, but essentially a provincial town spawning National Socialism.

Years before Hitler assumed power Feuchtwanger created the fictional person Rupert Kutzner, who founded the party of "The True Germans."Kutzner "orated in a high and sometimes hysterical voice; the words flowed effortlessly from his broad, pale lips... .

The system of capital and interest, the Jews, and the Pope were to blame for the wretchedness of the Germans. The international ring of the Jewish financiers was trying to destroy the German people, as a tubercle bacillus tries to destroy a healthy lung. Once the parasites were eliminated, a healthy society would be created.

When Kutzner stopped speaking, his thin lips with the faint dark mustache and the sleek hair plastered over his head make his face look like a mask, but as soon as he opened his mouth, his face became curiously mobile with a hysterical vivacity...".

Which is why they burned his books....but he loved cats ...see pic

A good day to bury bad news

India built its bombs outside The Nuclear Non-Proliferation Treaty, which allows civil nuclear trade in exchange for a pledge from nations not to pursue nuclear weapons has not been signed by many nations - notably Israel and India. India admits building nuclear bombs which were first tested in 1974. For details of Israeli nuclear bomb testing see - Monday, June 19, 2006 When Israel exploded an atomic weapon - the Vela story

Iran has signed the The Nuclear Non-Proliferation Treaty and accepts visits by UN staff to examine their utilities and resources.

The US Senate today voted by 86 -13 to end a 30 year ban on trdae in nuclear materials and technology between the US and India. This adds legislative action to the deal agreed by Bush when he visited india in 2005. The decision is based purely on the desire for US trade with India.

This vote now allows India access to US civilian nuclear technology and fuel in return for inspections of its civilian, but not military, nuclear facilities.

The US House of Representatives passed the agreement on Saturday, and the Senate's vote now means President Bush can (and will) sign it into law.

India's 14 nuclear reactors supply some 3% of current elctricity supplies which they plan to boost to 25% by 2050.

India has limited coal and uranium reserves but has massive supplies of throium which they plan to use to fuel their systems in future.


India maintains the right to conduct nuclear tests, but that will negate the deal just signed into law.

Earlier this month, the Nuclear Suppliers Group (NSG) lifted a ban that had denied India access to the international nuclear market (NSG waiver enables member states to provide India full civil nuclear cooperation) . The NSG first met in November 1975 (as a direct result of the Indian bomb tests) in London, and is popularly referred to as the “London Club” (“Club de Londres”).

The NSG Guidelines which the 45 member nations must observe are consistent with, and complement, the various international, legally binding instruments in the field of nuclear non-proliferation. These include the NPT, and the Treaty for the Prohibition of Nuclear Weapons in Latin America (Treaty of Tlatelolco), the South Pacific Nuclear Weapons-Free Zone Treaty (Treaty of Rarotonga), the African Nuclear-Weapons-Free Zone Treaty (Treaty of Pelindaba) and the Treaty on the Southeast Asia Nuclear-Weapons-Free Zone (Treaty of Bangkok).

On Tuesday, India and France signed a major co-operation pact which paves the way for the sale of French (Areava) nuclear reactors to Delhi.

On September 5th the External Affairs Minister of India Shri Pranab Mukherjee made Statement on the Civil Nuclear Initiative To reiterate India’s stand on disarmament and nonproliferation (text) ...."We remain committed to a voluntary, unilateral moratorium on nuclear testing. We do not subscribe to any arms race, including a nuclear arms race. We have always tempered the exercise of our strategic autonomy with a sense of global responsibility. We affirm our policy of no-first-use of nuclear weapons. "

The US Government, and both Houses have acknowledged India’s no-first-use pledge and, by default, the reality if not the legitimacy of its possession of nuclear weapons.

It would be nice if someone - Condi Rice maybe, could ask Israel to make such a statement.

Sheila C. Bair buys and sells Wa-Mu and wachovia in a weekend ... busy and very clever lady

Sheila C. Bair is the very savvy, smart lady who has run the Federal Deposit Insurance Corporation (FDIC) since June 26, 2006.

She took the time to call us overnight to tell us that Citigroup will acquire the banking operations of the Wachovia Corporation, and it wold be announced by the FDIC today. Citigroup will pay $1 a share, or about $2.2 billion.

Sheila said the agency would absorb losses from Wachovia above $42 billion and that it would receive $12 billion in preferred stock and warrants from Citigroup in return for assuming that risk.

“Wachovia did not fail,” Sheila explained, “rather it is to be acquired by Citigroup Inc. on an open-bank basis with assistance from the F.D.I.C.”

Citigroup will acquire most of Wachovia’s assets and liabilities, including $400 billion in deposits and will assume senior and subordinated debt of Wachovia.

Wachovia Corporation will continue to own the retail brokerage firm AG Edwards and the money management arm Evergreen.

The move was necessary, Sheila said simply to avoid serious fallout on economic conditions and financial stability.

“This morning’s decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury,” Sheila told us on a crackly lione from Washington. “This action was necessary to maintain confidence in the banking industry given current financial market conditions.”

This leaves us now with three big (VERY BIG) Americans’ bank's taking in deposits :

Bank of America,
JPMorgan Chase
Citigroup

Cui bono indeed.

Together, those three will dominate the industry, with unrivaled power to set prices for their loans and services. Given their size and reach, the institutions should probably come under greater scrutiny from federal regulators.

History shows that Wachovia was badly hurt by its unwise take over in 2006 of Golden West Financial, a California lender specializing in so-called pay-option mortgages.

The bank also faced mounting losses on loans made to home builders and commercial real estate developers, and its acquisition of A. G. Edwards, a retail brokerage firm, turned out to be problematic.

In June, G. Kennedy Thompson, the bank’s longtime chief executive joined the list of unemployed.

Sheila was fresh from explaining on TV the details of how the FDIC also came to help in the "rescue" of the nation’s largest savings and loan, Washington Mutual, which they "seized" the bank and sold on to J P Morgan Chase.

Robert K. Steel, a former top lieutenant of Henry M. Paulson Jr. at both Goldman Sachs and then the Treasury Department, who took over as Wachovia’s chief executive in July, arrived in New York to handle the negotiations in person, along with David M. Carroll, the bank’s chief deal maker. At 8:15 am. on Saturday, Citigroup and Wells got to look at Wachovia’s books.

Regulators pressed the parties to move quickly. Senior officials at the Federal Reserve in Washington, and its branches in New York, Richmond and San Francisco held weekend discussions with all the banks involved. Top officials at the Federal Deposit Insurance Corporation and the Treasury were also in the loop.

Timothy F. Geithner, the president of the Federal Reserve Bank of New York, personally reached out to executives involved in the process to assess the situation and spur it along. Citigroup and Wells pressed regulators to seize Wachovia and let them buy its assets and deposits, as JPMorgan did with WaMu.

A wider world would beneit from learning more about Sheila and her critical role in the re-shaping if the NY financial universe.

It will soon become evident that her fast, direct action - lubricated by the bro ha ha in Washington has had a wider and successful impact than the Hank and Ben End of the World Show now playing to packed houses on the Hill.

Asto the 104 pages of what has now landed on lawmakers desk snd known as a National Stability Bill ,hich has mushroomed from Hank's original 3 page demands we will leave until alter date . If and when it passes into law.

Iceland freeze not over

See - Thursday, March 27, 2008Iceland - funds freezing up.

The Iceland Government in Reykjavik has bought a 75% stake in the Glitnir bank for €600m (£478m) to prevent it from going bust."The government does not plan to hold its share in the bank for an extended period. The purpose of this action is to enhance stability within the financial system," it said in a statement.

Glitnir is the third largest bank in Iceland, behind Kaupthing and Landsbanki.

After the de-regulation of financial markets in 2003, Icelandic companies that previously had only meagre access to funds were able to expand rapidly.

They did...with some alarming conequences.

The banks have moved into foreign markets with their clients, investing alongside them and building investment bank capabilities.

Landsbanki bought stockbrokers Teather & Greenwood and Bridgewell in London .

Kaupthing bought Singer & Friedlander.

At the time of the post we note above the Daily Telegraph was telling us ..."As Iceland goes, so go the Baltics, the Balkans, Hungary, Turkey, and perhaps South Africa.

All are living far beyond their means, plugging the gaping holes in their accounts with fickle flows of foreign finance. All have let credit grow far above the safe "speed limit", some exceeding 50pc a year."

Icelandic Investment groups in the Uk to watch (very carefully) are

Baugur (investment company) - see Wednesday, April 05, 2006 Arctic warms ? Iceland market cools down ? Baugur CEO faces further charges - they own Mosaic Fashions, Coast, Karen Millen, Oasis, Odille, Principles, Shoe Studio Group, Warehouse, Whistles, Jane Norman, MK One, All Saints, House of Fraser, Booker, Iceland, Woodward Foodservice, Julian Graves and Whittard of Chelsea, Hamleys, Aurum, Goldsmiths, Mappin & Webb, Wyevale Garden Centres, Watches of Switzerland, Debenhams, Woolworths, French Connection, Moss Bros

Arev (investment company)Aspinal of London, Blooming Marvellous, Cruise, Duchamp, Hardy Amies, *** GHOST, Jones Bootmaker, Limeys, Linens 'n Things, Mountain Warehouse, Unisport

Hard Amies .... TODAY "The company recently requested further funding from major shareholder (49%) Arev Brands, which has provided significant financial support for the business. " Andrew Manders, the chairman, is also listed as a director of the privately owned Arev Brands

However, a statement from Hardy Amies this morning said that Arev informed the company late yesterday afternoon that it was unable to provide the required finance.

Directors are considering the options for the company which could involved putting the business into administration.

Cui Bono ?

The concentration of economic / financial power on Wall Street / London /Europe just grows daily. It may look like a financial crisis from down on the pavement but from the some 39th floors it looks real good.

If you seek the author of a crime the Ciceronian rhetoric goes, look to see who benefits.

Well the Titans of the Financial World got just that little bigger and often with funds supplied from Spain - Bank Santander now areprobably the biest private hiolder of mortages in the UK ownong Abbey Life and nowAlliance Leicester and having had the £14 Bn of depositors funds thrown at them along with £4 Bn from the Bank of England to cover deposits unsercured by the FSA scheme.

Mitsubishi UFJ (MTU), Japan's biggest bank by market capitalization, is closing in on a deal to buy a 20% stake in Morgan Stanley (MS) for $8-9B 9( now, remember a regulated retail bank) . An announcement is expected shortly.

Sacks of Gold, ( now, remember a regulated retail bank)has US$% Bn from the Sage of Omaha with maybe another £5 Bn in his saddlebags for shares - plus the proceeds of another US$10 Bn share issue.

Fortis whom we mentioned on Tuesday, July 01, 2008 Fortis Bank makes €8 billion provisions and Chairman talks of US "meltdown" ..Citigroup, GM ... when we suggeste dthey were due to explode, finally have - and spite talks of a BNP Paribas take over have had to be part nationalised with money from the Belgina / Dutch and Luxebougois taxpayers.

Belgium's largest financial-services firm, has taken on board a US $16.3B rescue fundin biggest European bailout since the "credit crisis" began. In exchange for the capital, Belgium will receive a 49% stake in Fortis' Belgian banking unit, the Netherlands will receive a similar stake in the Dutch banking unit, and Luxembourg will receive a 49% stake in convertible-shares in Fortis' Luxembourg banking unit. Fortis will also sell its stake in ABN Amro's consumer banking unit, but no buyer has been identified yet.

In the UK Alastair Darling has unveiled Gordon Browns secret plan to becopme the largest owner of UK Housing stock by now adding the massive portfolio of buy to let properties in the UK.

Whilst the Conservative Party unveils a £1 BN plan to cut the Council Tax by £1.40 a week he has pissed away £4 Bn on shifting the massive depositors base to Bank Santander ( who pay a nugatory £400 MN for the privilege - half the Market Cap at closing of 20pon Friday) (Forbes Santander Strikes Gold--Again ) plus a 197-strong branch network of Bradford & Bingley ...whilst Alastair and Gordon, ever the smart money guys have spent a further further eye watering £41 Bn on behalf of the tax payer for their septic loan book .

This makes Mr Darling the UK's biggest landlord. True to socialist priciples as now presented this is to provide housing, not for the needy, the essential workers ... but for those attracted by the tarted up properties Sarah Beeney style and to secure an income for the newborn wannabe rentier classes of middle England..

If there is a bright spot for the UK taxpayer the Guradian offers one - Under the Banking (Special Provisions) Act 2008 – passed in February as part of Northern Wreck nationalisation the government can claw back any losses from the UK's financial services industry.

The Financial Services Compensation Scheme (FSCS) is borrowing £14bn from the Bank of England to finance the deal - under which the government takes control of £41bn of mortgages while Spain's Santander pays just over £400m for B&B's branch operations and savers - and £4bn from the taxpayer.

The first payments on this loan will fall due September 29th 2009 , when the industry will face a levy of around £450m - a massive increase on this year's £5m levy.

The FSCS has confirmed similar interest payments will be levied again in September 2010 and 2011, which means servicing the BOE loan alone will cost ion exces of £1bn to the uK banking industry - stability ... at a price.

Darling admits his fleet of housing stock may no be thes best ..... "It does have more buy-to-let and self-certification mortgages - where, frankly, people just said what they earned and that figure was taken as fact – than we would like."

Bradford & Bingley RIP

So Farewell then B&B but worry not those out there who have failed to heed our advice to remove your deposits that nice Mr Peston at the BBC says you shouldn't "get the willies" (?)

We quote ..."There's too much at stake (including the stability of our banking system) for the government to allow B&B savers to lose a penny ...."

Should you subsequently disciover it takes you longer to get your hard earned from the ever benevolent state that the rapidly closing depositors windows at B&B don't apply to us but to Mr Peston c/o the BBC. London.

It will be interesting to see how much Mr Pym , ex A & L the briefly appointed CEO, at £2.5 Mn a year manages to take away in his wheelbarrow before the door finally shuts...... Monday, August 18, 2008 Richard Pym ex A&L skips to B&B and increases salary/ benefits x 2.5

FCUKED - an emerging problem

The BBC reports that energy trader Inenco says the UK could face power blackouts "within weeks" if a sudden cold snap or unplanned power outage occurs. (Read "The Generation Gap" pdf)

Here at Forthcoming UK Energy Deficit (FCUKED) we have been pursuing this line persistently and consistently since 1999.

Discussed on the Staurday Today programme these fears have been focussed this week since the National Grid published their latest forecast of power supply and demand for the coming winter. Ideally these are based on a "cushion" of capacity but they reveal that cusion will drop to less than 800MW in November.

BBC Online report that David Hunter, of energy consultants McKinnon and Clarke, said there was "real concern" that there could "a lack of enough power available for short periods".

After the National grid report was published the price of electricity rose above £121/MWh, (British Energy sell at approx £45 MWh to the National Grid on fixed contracts) and prices for November delivery rose 7% in a matter of hours.

Removing his head from ahole in the sand a National Grid spokesman (unnamed) said to the BBC "It is nonsense to suggest that the UK is at high risk of blackouts." ... forgetting that faced with the EU directive to pahse out coal fired plant operators have been running plants at maximum output on totally amortised plant - with resultant likelihood of running problems ... we also have nuclear fleet (whover owns them) with persistent problems of sustainability.

We suggest you have a supply of candles, wood, coal, generator depending upon your needs and circumstances.

We mustn't upset the servants or the children

Allan Asher, chief executive of consumer watchdog Energywatch, told the BBC there were several periods this winter when "it's going to be very tight".

He blamed an "appalling lack of future planning and cavalier regulation", but said: "I just don't think it's wise to alarm people about this.

"Both at a regulatory and planning level a huge amount needs to be done, but that shouldn't be done with dire threats which overstate the concern now."

"What's definitely true is that margins are tighter than they've been for a long time and not very much has to go wrong to turn that towards brownouts or blackouts."

Fortunately we are facing such a massive downturn in the UK economy that electricity demand will fall substantially - maybe that was the plan all along.

A Modest proposal Redux

It has been pointed out by the eagle eyed readers that the previous reference to "A Modest proposal" may be a reference too far. Jonathan Swift's pamphlet A Modest Proposal for preventing the children of poor people in Ireland, from being a burden on their parents or country, and for making them beneficial to the publick was published in 1729.

The Modest Proposal was response to the wailing and handwringing of the pious about the degrading poverty of the Irish poor . This is, he declares a direct result of too many children and suggests the "surplus" of children is the direct cause of the problem - cut the suprlus, solve the problem.

He object to selling the children into slavery - not because it would be cruel or simply wrong but no-one would take babies as slaves.

An American back from the Colonies had told him that a child ...

“a most delicious, nourishing and wholesome Food, whether Stewed, Roasted, Baked
or Boyled”

This formed the basis of his idea of breeding children for food.

As a consequence, and considerable discussion we can now suggest that Bill Gates and Gordon Brown spend less time worrying about Malaria which kills only 1 Mn a year worldwide and proceed to lay plans for the imports of live babies - a 380 Airpus could handle a fair load.
Whilst this is somewhat wasteful and importing killed flesh would be better the hygeine standards through the Third (or even 4th) world would probably be unsatisfactory.

1. World population problems if not solved - reduced.
2. Grain production can continue to be diverted to ethanol.
3. Mid west Grain farmers to benefit from subsidies for growing corn for ethanol.
4. Tyson and Pilgim's producers meat packing plants can be kept open - even the Postville plant of Agriprocessors could be kept humming - presumably there is such a thing as a Kosher suckling Kid ?

Archbishop Sentanamu should be forging aheaed with this idea rather than muddled one's about short selling.

Ben and Hank End of the Pier World Show - how does it play in Peoria ?

Whatever results from the deliberations of the US lawmakers this weekend, access to Bloomberg TV has given the viewer (with the time) a ringside seaton one of the centuries major economic tectonic events. Whatver the outcome this is 7+ on the Richter and well over 5 on the Saffir Simpson Hurricane scale.

Flawless sports styler coverage from sharp, savvy commentators, with slick real time graphics , have performed a far better job in explaining what is happeneing than the elected representatives of the people.

...Not that they have been silent.

A major problem is that, apart from the original 700 odd words of the draft Bill the public have no way of determining what is on offer. Ben bernanke and Hank the Bank have been remarkably reticient. For two guys who are supposed to combine both academic savvy of the higherst kind and commercial credentials and expertise that acommanded the highest "compensation" on Wall Street they were totally inartulcate when they came to explain.

1. What the current problem(s) were
2. The extent of these problems
3. The origins of these problems
4. How the very brief plan - handing over 700 VERY VERY BIG ones to Hank to spray around Wall Street - even onto foreign banks (who may, as we have pointed out, by way of trade, helped US citizens defraud the US taxpapyer)

The two relevant Chairmen Senator Chris Dodds head of the House Banking Committee ... and Barney Frank D- Mass, House Financial Services Committee , present the worst of all possible worlds. Whilst wishing to appear sage and reasonable, ratyional even- they haven't a clue. Indeed Dodd now (NOW) says the original plans was unworkable - he might have saved a little heartache and time by saying so from the get go.

He looks used to all nite , or at least late nite sessions, howevre the florid face usggests the only financial concern of those nights was which lobbying firm from wall Street to stiff with the evening's bar bill and entertainment.

Barney Frank looks well past understanding of many financial matters and seems to have mistaken his role as that of the husband faced with his wife'sdemands for the yearly dress allowance.

"US$700 Bn bucks honey that's a lot of money... I mean you ' ve got lotsa dresses in those closets"

"Dresses - you call those dresses?" .... "Even the Charity store stopped taking them months ago"... "Why if my mother knew...."

" But honey you know you got dresses you never wore even ..."

" Wore ... wore ... do you know the price of dry cleaning, the charity store can't afford it ... and they have to clean EVERYTHING now on public health grounds"... "There , there4 have whiskey to calm you down"

" Honey dear haven't you heard of ... AIDS?" ...."Honey these dresses I have ... they are ... no..no... they could be toxic !!!!"

"So honey you see I really need ...NEED those dresses... or else what am I to do?"

This is where Barney pours himself another stiff whiskey and takes out his cheque book. Which his wife just happens to have handy.

However the Ben and Hank End of the Pier World Show is getting booeed and hissed as lawmakers have called in at the golf clubs, Rotary dinners, masonic halls across the land. Wall Street saved but Main street ignored... is how it plays in Peoria and down town Palookaville.

Fed by a savvy TV educated audience from Bloomberg across Fox, BBC, NBC ... and ansty well hocked land is already seeing gas stations that won't take their credit cards, they know how hard it is to reset that home loan. Inflation is steadily working away. Foreclosures are rising and there are no buyers.

All the while the Barney Franks and the Dodds want everyone to hold hands and jump off the bridge together ... but nobody wants to be held responsible when it doesn't work.

As it won't.

It wouldn't work as originally conceived... and after it's been picked over by this bunch of myopic goons nothing is more certain.

The grinding of the economic tectonic plates is well in motion, lubricated by the remains of CDO's, SIV's and a whole alphabet soup of illusory types of money (money = store of value) which has dazzled too many people and politicians for too long.

Economic power is shifting - even yesterday Bloomberg was reporting speculators moving into Singapore dollars - Singapore hosts its First ever Formula One Grand Prix.

Singapore Airlines (SIA), the first to fly the A380, has just taken delivery of their 6th aircraft. In the airline’s latest financial year (ending 31 March 2008) it carried just over 19 million passengers and its average load factor for the year surpassed 80% for the first time. More significantly, it reported record profits of 1.64 billion Singapore Dollars.

VAT fraud - launder £6 Mn get 2 years

Missing Trader Fraud has at it's peak been costing the UK taxpapyer £400Mn a month,for several years. Yesterday the HMRC (who have had up to 1,500 staff on the case at a time) finally succeeded in jailing some of the active UK based participants.

At Worcester Crown Court yesterday as a result of the HMRC Operation "Shoot"

Gerard Michael Forrest (DOB 18.08.1968) of Prince Regent Mews, London, was sentenced to 3 years in prison.

Stephen Hancock (DOB 05.03.1958) currently of HM Prison Service and formerly of Grove Farm, Kingsley Road, Cellarhead, Stoke-on-Trent, Staffordshire, Stoke-On-Trent, Staffordshire, was sentenced to 5.5 years in prison.

Barbara Moran (DOB 03.08.1956)(Hancock's girlfriend) of Laurel Cottage, Scot Hay Road, Alsangers Bank, Stoke-on-Trent, Staffordshire, was sentenced to 3.5 years in prison.

Shane Matthews (DOB 05.08.69) of Ironside Court, Burslem, Stoke-on-Trent and formerly of 6 Partridge Close, Stoke-on-Trent, Staffordshire, was sentenced to 7 years in prison.

In all they stole at least £50 Mn. from the taxpapyer by an elaborate VAT MITC fraud

The related Operation Shepherd, resulted in seven men being sent to prison for a total of 39 years for stealing £68 million.

In related Operation Emersed assets to the value of £6 million have been seized under the Criminal Justice Act 1988 - including 4.5 million in a related investigation (Operation Emersed). Confiscation Orders are being secured to reclaim this money for the public purse. These assets inlclude a helicopter, a yacht, two properties including Meaford Hall, Stoke. Performance vehicles - a Ducati, Aston Martin, Ferrari and two Bentleys, Rolex watches and diamonds.

Craig Johnson was the seventh member of the criminal gang to be jailed in connection with a £68 million VAT fraud. He pleaded guilty to conspiracy to laundering £6.3 million from the proceeds of crime has been given a two year jail sentence at Birmingham Crown Court.

It is noticeable that recovery of cash and assets is negligible in relation to the size of the theft - total losses the the UK taxpapyer since these crimes commenced is not less than £8 Bn. pounds.

The Chancellor of the Exchequer at the time was the current Prime Minister Mr Gordon Brown.

No sense and only nonsense in Sentamu

It is impossible to believe how stupid and ignorant the publicity hungry Archbishop of York John Sentamu is.

"To a bystander like me, those who made 190 million pounds deliberately underselling the shares of HBOS ... are clearly bank robbers and asset strippers," he said in a speech to international bankers in London on Wednesday evening.

If he wants to turn over the moneychangers tables he should wise up on how short selling operates - those short sellers "borrowed" shares held by "long" holders of HBOS shares - probably inlcluding ones that hold the funds that will pay his much required retirement pension.

Those lenders do not, like Christians, do it out of the goodness of their heart - they charge for it, and any profits so made, swell their coffers whether the short sellers makes a profit or not.

Often these short sellers get caught "short" and the share price rises and they have to buy in a rising market and so lose on the bet they placed .

Just talk to Mr Joseph Lewis who spent over US$700 Mn on shares in Bear Stearns in the last 12 months, about losing money betting against the market - see Tuesday, September 11, 2007 Bear Stearns buy in of 8.1 Mn shares = biggest shareholder is Joseph Lewis - East End boy made good

A criminal Act and a New World Order

Hank's original demand handed through the Bankers window was about 700 words - say US$1 Bn a word.

At the last hearing of Barney Frank's assorted hoodlums we were told this was now 45 pages long - and it's a bet that few Congressmen who are asked to pass it have read it and a very few of them will have understood it.

It's certain the President doesn't understand what is going on judging by his address to a confused and anxious nation / world last night.

Financial assets related to home mortgages have lost value during the house decline, and the banks holding these assets have restricted credit. As a result, our entire economy is in danger.

So I propose that the federal government reduce the risk posed by these troubled assets and supply urgently needed money so banks and other financial institutions can avoid collapse and resume lending.

This rescue effort is not aimed at preserving any individual company or industry. It is aimed at preserving America's overall economy.

This Act is aimed at preserving the major tier of bankers (now joined by Sacks of Gold and M & S) and their assets by relieving them of questionable and unsaleable "assets".

It will do nothing to ..

1. Reduce foreclosures
3. Revive the US housing market - there is enough unsold stock / on re sale to meet any possible demand in the enxt 2 years.
3. Improve loan conditions for industry staggering under burdens of debt - see as a simple example the case of Pilgrim's Pride
4. Reduce inflation - it will in fact drive infaltion inexorably as interest rates rise.
5. To cut the National debt - and in fact may triple it this year.

What it will do is destroy the value of those wise and prudent investors who hold annuity funds, not only in the US but in Europe. This will create a new class of indigent and poor old people.

This Act if passed is a blatant assualt by the bankers led by their chief henchman Hank the Bank ( Dontcha you just love the pained look on his face when he talks about the immodest pay packets bankers have been enjoying ?).

This does not presage an elemental shift in the tectonics of global economic forces. As Mitsubishi and Samsung and the sovereign wealth funds sink their teeth into Golden Sacks and M & S , their is ..."flooding in like the main" a rising tide of change as the uS economy slides faster under the encroaching tide.

The UK will also slide along, although their housing market is wholly different as the prices are a reflection not only of cheap credit but real scarcity.

The ensuing depression, whether this criminal Act is passed or not will see an eventual slide punctuated by bouts of chaos and a change ... in fact a New World Order.
Not quite the one the guys in Chicago had planned for.

How foreign based banks who help defraud the US public purse are going to plunder more funds c/o Hank the bank.

We reported that the Senate permanent subcommittee on investigations released a report on July 15th 2008 saying that UBS’s offshore practices helped American citizens hide an estimated $18 billion in 19,000 accounts from the Internal Revenue Service. see Sunday, July 20, 2008
Massive UBS scheme to help US taxpayers to defraud IRS of tax on at least US$18 Bn.

We had also reported Tuesday, July 22, 2008 Deutsche Bank's role in questionable tax shelters - fire destroys bank and records - LMDC and it's interesting people - explaining how Deutsche Bank arranged "taz Shleters" for US citizens...

In August, KPMG reached a $456 million deferred-prosecution agreement with prosecutors and admitted criminal wrongdoing over four types of shelters, some of them ones that Deutsche Bank worked on. A smaller German bank, HVB, has also settled with prosecutors.

The bank has said in the past that the transactions it arranged for tax shelters were regular and ordinary.Prosecutors are examining how Deutsche Bank helped to make and sell a digital option shelter called Cobra (currency options bring reward alternatives Ho.Ho.Ho.),to more than 1,100 wealthy investors around 1999 and 2000, according to the people who have been briefed on the inquiry.

Now this is all grist to the busy bankers day ... but DB and UBS are banks headquartered in a foreign country, and now they can sell off their septic debt to the US taxpayer, via Mr Paulsen's hastily drafted in "experts" on valuing worthless pieces of shit, called SIV's etc.,

Is this a wise/ sensible way to apply the worker's dollar ?

When Butch and Sundance were robbing banks, it was the banks that were robbed ... now we have a socilaised capitalism where the Banks are sanctioned by law to rob the people ... and any act the US Treasury makes is beyond the law.

A "Modest proposal"

It would be fair and reasonable to assume that the Sage of Omaha has more public trust than the "experts" whom Hank the Bank is about to draft in to squander the US taxpayers billions.

We suggets therefore that the money be handed to Warren immediately, without delay.

The urgency is, Warren is an old guy and he might die before the weekend.

It is impossible to predict what he will do with the money but US$5 Bn of his shareholders funds in Sacks of Gold worked wonders so heaven knows how US$700 (and rising) might be applied.

Failing that ..... we start feeding babies to the Hogs in, starting with eirther Alabama or Kentucky.

PS : Or maybe the chicken Farmers could be approached first ....Chicken producer Pilgrim's Pride (PPC) warned it expects a significant Q4 loss, and said it may go into default with its lenders unless they waive or amend its current debt covenant. PPC has been hurt by surging grain and energy costs, weak pricing and demand for chicken, and by its debt load following a 2006 $1B purchase of Gold Kist who had debts of US$144 Mn.

The company announced idling processing facilities in Clinton, Arkansas and another in Bossier City, Louisiana and long term layoffs of 2,300 staff on 11th August.Shares fell 38% Wednesday and slid a further 40% today - now trading at US$3.51. (52 week high US$36)

Clint Rivers, president and chief executive officer in July said Market breast prices averaged about US$1.33 per pound, Rivers said. Market prices should be at least US$2.15 for the industry to break even.

The company also reported in a (now) bitter sweet report at the end of July, that they had sold 7.5 million shares of its common stock for $177 million (US$23 per share - ish) to underwriter Lehman Brothers Inc., to provide the company with more funds. The market price May / June was around US$25.

Maybe, looking at those chickens coming off the PP production line we could cut out the farmer/meat packer and suitably packed distribute processed babies direct - disemblowelled of course, who want's all those mucky intrenal bits?

Why there is a huge push for recruitment in UK Armed Forces

Official MOD figures show that 315 were wounded in action and 1,583 personnel medically evacuated from Iraq between 1 January 2006 and 31 August 2008 and a further 453 wounded in action and 1,302 personnel medically evacuated from Afghanistan between 1 January 2006 and 31 August 2008.

A lot of damaged lives and families.

What do we do if Hank resigns ? ... or even threatens to?

The speed and range of developments in international finance take some keeping up with. e.g Crude futures rose US$25 per barrel,(24.3%)before the NY Mercantile Exchange closed yesterday - US$130 + (it closed out at US$123) and no one expects it to drop today.

Congress and the Senate are clucking about the demands Hank Paulson is making - ie litle short of financial Dictatorship. He want the till stuffed full of US$700 Bn and he wants the keys and he wants protection from the law courts . Forever.

Barney Franks (Chairman of the Financial Services Committee) who looks like an unmade bed and has a grasp of international finance equivalent to Ted Steven's understanding of the internal workings of the Internet.To think this intellectual Titan can decide on what/what not to do gives no comfort in this quarter.

Faced with anxious self important people like Steny Hoyer, Nancy Pelosi, Barney Franks, who want controls on short selling, oversight (with all it's delays) on his actions, Hank Paulson could well decide to tell them go Fuck themselves.

Hank is 63, immensely wealthy, can readily get another job, is no doubt going to be replaced whoever wins the Presidential election.

Why does he want the hassle ?

Hank was very up beat and confident over the weekend - exuding steely charm as he circulated through the TV studios and saying basically ...Hey folks it's Hank's way or NO way.

Just imagine ....what would happen if Hank resigned ... or even threatened to resign ?

He really knows the shit the market is in ...According to page 20 the Goldman Sachs 10-Q regulatory filing for the first quarter of 2006:

During the three months ended February 2006 and February 2005, the firm securitised $19.25bn and $15.24bn, respectively, of financial assets, including $18.15bn and $14.43bn, respectively, of residential mortgage loans and securities.

2 pages later ... exposures to Variable Interest Entities “which primarily issue mortgage-backed and other asset backed securites and collateralised debt obligations” included $22bn of CDOs, $2.9bn of “asset repackagings and credit-linked notes” and $6.5bn of “mortgage-backed and other asset-backed” securities.

Just remember Hank (Wall Street's highest paid Exec) was also hauling dowen big potatoes for this...$18.7 million cash bonus (none of those fancy share options for Hank the Bank)for half a year of work as the Chairman & CEO of the Goldman Sachs Group for 7 years, just before joining George Bush as Treasury Secretary

Perhaps more significantly on the day he left ..."Goldman filed with regulators last Thursday for a sale of Mr. Paulson's 3.23 million common shares, worth $491.6 million based on that day's closing price."

Meanwhile his cronies on the Street have magically got their Get out of Jail card by putting on their magic Cloaks and becoming regulated Banks ! With one bound they are free!

Update on Shoes waiting to drop (UK section)

Already we note that the crazy restrictions placed on short selling have been extended to GM and Ford creating a false market in their shares. This will simply build up expectations of a fall ....they wouldn't demand a stop on s/s unles there really WAS / IS a problem.

Apparently their addition to the list of over 800 financial companies relates to their crdit arms. Ford owns Ford Credit outright, and GM qualified through its 49% stake in GMAC and its mortgage unit ResCap.

This also reflects on Bradford and Bingley Bank (which we have been following here) their Mr Crawshaw (now suffering from stomach Cramps) who very cleverly bought up to a maximum of £12bn worth of mortgages from GMAC-RFC (the US's 11th largest mortgage lender) .

Those home loans (now turning sour big style) were to be bought in quarterly tranches, worth a minimum of £350m per quarter, until the end of 2009.

Five tranches are now left to buy, by the hugely loss making bank - so they are committed to spending a further £1.75bn to fulfil their legally enforceable side of the bargain.

GM shares dropped 11.7% yesterday.

B & B shares are trading at a near lifetime low of 26p on the expectations that the FSA can find someone who will pick up this poisoned chalice.... an increasingly unlikely propsect as the company has been hawked around the City for weeks. The shareholders who are the Banks who supported the recent share issue will be happy to take the loss if they go into administration and be done with it.

Nobody amongst them ,evidently has the heart to pick up this pile of sepsis.

Anybody who has failed to heed the call already, who has funds with B&B Bank are advised to get round there sharpish and withdraw anything they may have. Relying on prompt receipt of their funds via a Government inspired / sponsored guarantee is hopelessly optimistic.

Waiting for the next shoe to drop....

The US Treasury International Capital (TIC) data for July 2008 released last week has gone fairly unremarked today .

Data published yesterday showed total net purchases of U.S. long-term equities dropped to US$6.1Bn. vs. US$53.4Bn the previous month.
The figures for April - July show a deckining interest in overseas buyers in US dollar denominated assets - Net Long-Term Securities Transactions
April US$ 116.1 Bn May US$ 83.2 Mn.Bn. June US$53.4Bn. July US$ 6.1 Bn.The major problem is of course that buyers of uquties are uncertyain about values - The domino effect is in play. EVERY insurance company, brokerage, financial institution, REIT, pension fund, money market fund, bond fund, annuity fund, hedge fund, etc is holding derivatives.

This is the problem.

Know one knows the the market value of the derivatives they hold and second, those that have foreclosures, bankruptcies, etc, are producing less income. The net effect is that assets are less than face value and income is less than planned fior. Together they are a double edged sword affecting both capital and income stream.

It is this bottleneck that Paulson's proposed legislation will allegedly unblock

Paulson's Bill initial text is here.

Treasury officials now propose buying what they term troubled assets, the Bill is rather vague (see below) . In its latest guidance on the bad-debt fund, the Treasury said firms that are headquartered outside the U.S. will now be eligible for assistance.

The troubled assets are described ...

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means 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 September 17, 2008.

Which can be read to mean anything (and probably will) from a strauight domestic mortgage through to a handwritten IOU.

The most remarkable thing about the roposed Bill (which appears to have received no mention so far) are the powers Paulson seeks for himself ...

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency

We need to see the Final Bill , but with these unquestionable powers - limited only by a fund value of US$900Bn. to draw on, it is tantamount to a financial dictatorship. Funny way to describe the workings of the Market.

Will this affect the financial prestidigitators ? The money jugglers, the fund managers, the back room boffins who built , named, re-defined debt as an asset and then sold it ? Many. Many times over ?

No, they will move on to pastures new, they have been through junk loans, S & P, dot,com boom and bust, there are fresher fields and newer pastures , fresher mugs to screw, -nanotech, infotech, biotech and cleantech to name but a few.

The thermodynamic laws of financial affairs have kicked in and the market entropy has kicked in, big style but there are plenty of opportunities waiting. Those out of work bond /CDO /SUV /SIV /SUV salesmen have a smile on the their face, like Bill Loman they have a shine on their shoes.

Just wait for the next wave, the next shoe to drop when GM and Ford come to Washington with the begging bowl .. when Boeing who have a monster strike brewing and can't get the Dreamliner aloft , who have half lost the Air Force tanker deal start knocking on the Treasury door....



Incidentally Boeing's biggest customer , who has US$19 Bn of orders with Boeing is International Lease Finance Corp (ILFC) a wholly owned subsidiary of troubled AIG. Chairman Steven Udvar-Hazy, is looking to buy it out of AIG... but needs the money ..say US$8Bn.

ILFC has orders with Boeing for 102 commercial jets, 74 of which are 787 Dreamliners.

Now how would you like to fund a buy out of a company from an ailing insurance giant who have already run out of money, whose biggest supplier has problems and whose customers are the world's airlines .. who are decreasing in number daily....

MORAL

Wealth creation. Without it, you are fucked as a nation.

Just between ourselves.....

In reviewing the current and ever changing financial markets it is difficult not to bring to mind the remark of John Maynard Keynes when he was askedin 1932 if there were any precedent for what had happened to the world’s economy. He replied , "Yes, it lasted four hundred years and was called the Dark Ages."

Wealth cannot be spread before it is created. The increasingly academic views that previal have confused the notion of the figures attached to the Gross National product with national wealth.

Certainly in the UK, but also in the US a larger and larger share of what is calculated and called the Gross National Product is the product , not of labour, of industry, of endeavour but of actuarial artifice.

We have sat back comfortably transferring wealth making activities either by despatching them overseas, or inviting investment within our shores.

Academics believe that industrious Asia needs the consumer markets of the EU and the US to sustain their burgeoning growth. The fail - or worse still - refuse to see the immense markets building up for them at home.

We neglect the immense sophistciation , combined with prodigious human energy and effort that
now produces the sophisticated tools of modern living. The ubiquitous mobile phones and hand held devices, lap tops, are the product of growing , highly educated, inventive and industrious nations.

They are also a market for good precision engineering - for example China is undertaking amassive upgrade to their railway system.

Tienjin - Peking is a 2 hour drive. The new 35o Km per hour Commuter train undertakes the 115km (72 miles) journey takes 25 minutes and trains run every 3 minutes for 180 services per working day on the 600 seat trains - for which each seat is bookable..

French engineering company Systra provided project management services in combination with the China Academy of Railway Sciences . The US$1.6 Bn rpoject started with the construction of 100 Kms of concrete viaduct using pre-cast concrete sections for speed, and uses techniques supplied in a technology transfer agreement with German engineering company Max Bogel.

Siemens CRH 3 high-speed trains based on technology first used in Deustches Bahn's ICE 3s have been supplied incorporating new technology based on Velaro units which entered service with RENFE in Spain in 2006.

MORAL

Deutches Bahn own what was British Rail Freight see Monday, July 02, 2007 Krauts undertake railway robbery in daylight - CPNI examines it's arsehole , A private Spanish company own British Airports Authority (although this may be dismantled).

It is worth noting that Bank Santander who own Abbey have finally been given approval to buy Alliance and Leicester on the same day that Alastair Darling threw caution and common sense to the winds and allowed Lloyds TSB to takeover HSOB over a weekend without any concern about competition rules.

So a Spanish bank now provides some 30% of UK mortgages.

Just a small reminder that other forces within the EU are doing quite nicely thank you.

Here's a couple they prepared earlier

"Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s......

.......we must conclude that innovation and structural change in the financial services industry have been critical in providing expanded access to credit for the vast majority of consumers, including those of limited means.This fact underscores the importance of our roles as policymakers, researchers, bankers, and consumer advocates in fostering constructive innovation that is both responsive to market demand and beneficial to consumers. "

Alan Greenspan
Federal Reserve System’s Fourth Annual Community Affairs Research Conference, Washington, D.C. April 8, 2005


“Clearly, the U.S. economy is going through a very difficult period. Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year.”

“I remain confident in our economy's long-term prospects,”

Ben Bernanke
Federal Reserve Bank Chairman - Testimony to Congress 3-4-08