October 15

This is a hilarious global warming article. Conservatives claim the oceans will rise by 4 feet by 2100, resulting in waterfront losses including L.A., Savannah, all of Florida, etc. It continues to say that the bright side of this news is that travel to new areas warmer areas, like the arctic, will be the next tourist boomtowns! http://www.msnbc.msn.com/id/27090554/

NY Times: Paulson Handed Bank CEO's One Page Document, Told Them in "blunt terms" that they had best "sign it before leaving the room"

Editor's Note: Sounds like it took three-and-a-half -hours for Paulson to read to the less enthusiastic CEOs what's in their "control file". Emphasis mine:
The chief executives of the nine largest banks in the United States trooped
into a gilded conference room at the Treasury Department at 3 p.m.
Monday. To their astonishment, they were each handed a one-page
document that said they agreed to sell shares to the government, then
Treasury Secretary Henry M. Paulson Jr. said they must sign it before they
left. The chairman of JPMorgan Chase, Jamie Dimon, was receptive, saying
he thought the deal looked pretty good once he ran the numbers through
his head. The chairman of Wells Fargo, Richard M. Kovacevich, protested
strongly that, unlike his New York rivals, his bank was not in trouble
because of investments in exotic mortgages, and did not need a bailout,
according to people briefed on the meeting. But by 6:30, all nine had signed
— setting in motion the largest government intervention in the American
banking system since the Great Depression . . . Mr. Paulson, according to
his own account, presented his case in blunt terms . . . "In a relatively
short period of time, people came on board.", he said . .

Yahoo News: Like a Real Life Don Corleone, Godfather Paulson Made CEOs an "Offer they can't refuse" . . . "This smacks of straight gangsterism"
The day after the news about a watershed change in American capitalism,
the story behind the story of how Hank Paulson forced the nations top 9
banks to take capital is coming to light. After a discussion of the state of
the banking system and economy, the bankers were then unceremoniously
handed a one-page term sheet outlining Paulson's plan. The bank CEOs
"weren't allowed to negotiate," The WSJ reports. "Paulson requested that
each of them sign. It was for their own good and the good of the country,
he said, according to a person in the room." In sum, Hank Paulson made
the bank CEOs an offer they couldn't refuse -- like a real Don Corleone.

William Engdahl: Behind the Panic, There is a Massive Financial War Being Fought Over Control of the Big Banks
. . . in every major U.S. financial panic since at least the Panic of 1835, the
titans of Wall Street - most especially until 1929, the House of JP Morgan -
have deliberately triggered bank panics behind the scenes in order to
consolidate their grip on US banking. The private banks used the panics to
control Washington policy including the exact definition of the private
ownership of the new Federal Reserve in 1913, and to consolidate their
control over industry such as US Steel, Caterpillar, Westinghouse and the
like. They are, in short, old hands at such financial warfare . . . Now they
must do something similar on a global scale to be able to continue to
dominate global finance, the heart of the power of the American Century.

Mike Ruppert: The Financial Elite are Planning an Intentional Shutdown of the Economy so They Can Start Seizing Everything in Sight
This move, announced today, is absolute confirmation for me that this is
an intentioned shut down of the economy. Each bank or financial institution
that the Treasury buys into will give it (and Goldman Sachs) the power to
shut each bank down and to decide when it shuts down. It couldn't be
more transparent. They're going to turn out the lights in an orderly fashion
and it's obviously an attempt at a controlled fast crash. They've only got
three months left in office. That would essentially make Barack Obama an
economic janitor employed by the same firm. I can just hear Bush and
Cheney cracking a joke about it . . . Bear in mind that everything that
happened today happened in absolute silence about Citigroup. The latest
there is that there is supposed to be a court hearing next week about a
suit Citi may bring against Wells and Wachovia. Meantime, Citigroup has waived all claims to acquiring any of Wachovia's assets (cash deposits). Mysuspicion is that out of fear Citi is hanging back for any kind of discussionabout its stability. Then again, they just might be waiting for the rightmoment to break the bad news to achieve the worst effect: capitulation.

Vanity Fair: James Howard Kunstler Has Been Right All Along, "The machinery of U.S. capital is now a smoking wreckage"
It was James Howard Kunstler, the author of The End of Suburbia and TheLong Emergency, who warned with scourging wit and rococo imagery in hisweekly online column that high gas prices, suburban sprawl, decayinginfrastructure, the machinations of hedge-fund greedheads, and Wall Streetnecromancy were converging into a Hurricane Katrina–size "cluster****”that would deform the social and political landscape. In his August 25column, Kunstler wrote, “I’m rather convinced that the carnage on themoney scene will be so extreme this fall that the nation will seem to havebeen transformed from a superpower to a basketcase before November4th, and that the blame for this state of affairs will be blindingly obvious:the people in charge the past eight years looted the treasury, destroyedthe currency, and left the machinery of capital a smoking wreckage.”Within a month, the carnage Kunstler envisioned not only got worse butgained velocity as mortgage giants Freddie Mac and Fannie Mae requiredan emergency federal bailout, fabled Merrill Lynch disappeared into themaw of Bank of America, Lehman Brothers went belly-up, A.I.G. wasrescued, and the Dow lost 500 points in one day, the worst loss since 2001.Billions of dollars of bad loans devoured by boll weevils, thousands of well-paying jobs liquidated in a single stroke, stock portfolios turning into scarecrows before one’s eyes, and who knew what awaits the next hill?

321 Gold: Why the Price of Gold is Dropping Even Though Gold Dealers are Experiencing Shortages and Runs on Bullion
Meanwhile, real investors in real gold are enjoying their shopping spree -except that the spree turned into a treasure hunt as the shelves and display cases of gold dealers look more and more like the supermarketshelves in the old Soviet Union - bare. This is the only 'bare-market' in realgold the world will see for a long, long time to come. With this split, thisdisconnect, between Comex illusion and gold reality, one thing or the otherwill have to give, and it won't be physical gold that gives. The system builtup around Comex-gold as being a price-setting mechanism for real goldplays right into the hands of the financial establishment. The establishmentdepends for its (now increasingly meager) existence on the illusion thatgold "isn't living up to its promise" as a real inflation and disaster hedge.The implication, of course, is that investors might as well stay in thecomputer blip and paper world. As the Comex gold price illusion drops,many retail investors are still persuaded to keep their money circulating inthe paper world, and that ultimately feeds the system. Of course, by nowthat 'feeding' mechanism looks more like life-support, but try and unhooksomeone on life-support. The results are dramatic, immediate - and final.

Business Week: Iceland's Stunning Collapse Sending Massive Shockwaves Through Worlds of International Finance, Geopolitics
To avert financial disaster, the country — which is a founding member ofNATO — may turn to Russia for help. The Russian government has said itwould consider lending Iceland $5.5 billion. "We have not received the kindof support that we were requesting from our friends," Haarde said. "So in asituation like that one has to look for new friends." . . . the ramifications ofIceland's meltdown extend far beyond the tiny Nordic country. Over thepast decade, Icelanders have taken advantage of low interest rates offeredby the country's banks to finance rapid expansion beyond the island nationin numerous industries . . . Offering higher interest rates than counterpartsin Britain, Icelandic banks have attracted huge inflows from UK investors inrecent years. Since its launch in October 2006, Icelandic internet bankIcesave, owned by Landsbanki, attracted $7 billion in deposits from 300,000British retail investors. When the bank went bust, British Chancellor of theExchequer Alistair Darling was forced to step in. On Oct. 8 he pledged toguarantee the deposits of all British retail investors in Landsbanki and itssubsidiaries. The British government says it plans to sue Iceland to recoupat least some part of the savings of British customers in Icesave . .

Time Magazine: Arms Trade Doing Brisk Business as Economy Crashes
Need to start a war? No problem. While stock markets gyrate and financialinstitutions (and even whole countries, like Iceland) teeter on bankruptcy,one global industry is still drawing plenty of high-end trades and profits:weapons. Researchers say arms trading has boomed in the decade sincethe Angolagate scandal was uncovered. That's partly due to heightenedsupply. As ex-Soviet republics emerged as economic actors in their ownright, several countries developed national arms industries, refitting weapons from their stocks and manufacturing new weapons of their own.Those industries have taken off in recent years. Ukraine has about 6 millionlight weapons from Soviet stockpiles, and has modernized tanks, missilesand other weaponry, says Hugh Griffiths, an expert on illicit weapons at theStockholm International Peace Research Institute. A dramatic example ofUkraine's reach is playing out off the Horn of Africa, where a majorshipment of Ukrainian weapons, including 33 T-72 tanks, was hijacked bySomali pirates and remains a vexing military and diplomatic problem . .

Fortune Magazine: Crisis Pushes Jefferson County to Brink of Bankruptcy
For months now, Riley and other leaders in Alabama have been battling toavert what appears almost certain - that Jefferson County will file forChapter 9 protection, in what would be the largest municipal bankruptcy inour nation's history. The county has fallen hopelessly behind on paymentsto service the $3.2 billion it borrowed - on reckless terms - over the pastdecade to build a new sewer system . . . Every decade or so, somethingbig and scary does happen in the normally staid world of public finance:
There was a near miss in the '70s when New York City almost went broke;
in the '80s the Washington Public Power Supply System defaulted on $2.25
billion in loans when it stopped construction of two nuclear power plants;
and California's Orange County went into Chapter 9 in the '90s, after the
county treasurer made bad bets on interest rates and lost $1.6 billion. But
the saga of Jefferson County stands apart. Unlike previous municipal
meltdowns, it is a financial disaster that was to a large degree invented,
packaged, and sold by Wall Street. And there are striking parallels to the
wider credit crisis that has enveloped the financial world - with overeager
borrowers, willing enablers, and dangerously complex financial instruments.

Economist: California Rapidly Running Out of Money to Pay the Bills
The world’s eighth biggest economy has two problems, both stemming
from the economic downturn. First, it is finding it hard to raise enough
money to pay the bills. Under normal circumstances the state would sell $7
billion in bonds to tide it through until April, when income taxes flood in.
Thanks in part to the delayed budget, the state has been forced to go to
the bond markets at a time when investors are wary of everything but
Treasury notes. If the credit markets gum up even more, the state may
seek relief from the Federal Reserve or from its public pension funds . . .

Christian Science Monitor: States Begin Lining up for Emergency Bailouts
How California fares with a $4 billion short-term bond sale this week will
help answer a key question looming over the current US financial crisis: are
traditional credit markets so frozen that states won't be able to raise
revenues to tide them over their cash crunch? The practice of selling
short-term bonds is used regularly by at least a dozen US states, and
occasionally by several more, to keep state programs and services running
smoothly year round. Because tax income is not steady throughout the
year – far more revenue comes in from September through December
than January through March – California and others borrow short-term to
pay their bills when revenues are temporarily insufficient. Now, with states
facing the same problem faced by millions of businesses – tightening credit
markets – at the same time revenues are sinking, many budget officials
are worried that they may not be able to borrow when they need to . . .

UK Guardian: Victorville, California Goes From Desert Boom Town to Bust
Victorville was a desert boomtown. Up until a year ago, it was the second-
fastest growing city in the United States. There are still signs of the boom
everywhere. Driving into town, there are signs pointing to developments,
and as you get closer, people stand on the street corners waving signs to
try to entice buyers to model homes. But now, 11% of the homes in the
city are in foreclosure, and the city recently was part of a $13 million grant
to help buy some of the homes before they are abandoned. New building
has come to a standstill. They can't build homes because the foreclosed
homes are selling for less than the cost to build a new home, he said.
That's hit the construction industry. High food and petrol costs have also
hit the economy. The spike in petrol prices made it prohibitively expensive
for people who commute 50 plus miles to work in Los Angeles, and that
might make it difficult for people to move there unless they work locally.

Yahoo News: As Crisis Bites, More Americans Turning to Food Stamps

Living on food stamps is a devastating reality for millions of Americans --
and the numbers are growing to alarming levels. The number of food
stamps being distributed in the U.S approached a new record this summer
and promises to reach a new peak with repercussions of the financial crisis
starting to bite. More than 29 million Americans received food stamps in
July, an increase of close to one million over just three months earlier. The
latest figures do not count the new requests for assistance in September,
when several financial institutions collapsed, stock values plunged, housing
foreclosures soared, and job losses spiked to the highest level of the year.

Business Week: Now Wall Street Wants to Get Its hands on Your Pension
Editor's Note: Relinked at reader request. When the pension funds collapse the way housing prices have and workers start dropping dead because they can't afford necessities, the good news for the companies is they will still manage to make money. "How can that be?" you ask. Well most of these compannies have taken out what's known as "Dead Peasents Insurance" (DPI) on their workers. DPI happens to makes up 20% of all life insurance policies sold each year:

The folks who brought you the mortgage mess and the ensuing hedge fund
blowups, busted buyouts, and credit market gridlock have another bold
idea: buying up and running troubled corporate pension plans. And despite
the subprime fiasco, some regulators may soon embrace Wall Street's
latest scheme. The Treasury Dept. on August 6th offered a blueprint for
lawmakers to allow "financially strong entities in well-regulated sectors" to
acquire pension plans , after the IRS ruled that the concept needed
legislative approval. "The Administration's proposal says these deals should
only be permitted when the acquiring entity has a higher credit-rating than
the seller," says Charles Millard, director of the Pension Benefit Guaranty
Corp. (PBGC), the federal insurer of last resort of corporate pension plans.