Tuesday, 14 October 2008

It's almost a 6 trillion problem so far!

I have attached a table of the 'bailout' so far.  It is by no means accurate, and I am sure has a measure of some double counting.  The table has been a sort of score card as the problem unfolded.  Roubini's video below acts as a double check- I would like someone to check the numbers and provide a input.


Sunday, 12 October 2008

Blue Lights Flashing - New round of scam starting as we expected!

US climate fix could help solve financial crisis

  • 11:36 10 October 2008
  • NewScientist.com news service
  • New Scientist staff and Reuters


If the US focused on curbing climate change as soon as a new president took office – or sooner – it could help pull the world from the financial brink, according to environmental policy experts.

"Skyrocketing energy prices and the financial crisis have been a wake-up call that something's got to change," says Cathy Zoi, chief executive officer of the Alliance for Climate Protection, which is chaired by former US vice president Al Gore.

"My very strong belief is that we need to reorient our investments toward this transition to a clean energy economy, and it will be the engine of growth for getting us out of the doldrums that we've gotten in right now," says Zoi.

The reorientation must include limits on emissions of climate-warming carbon in the US, she said: "Unless we take action at home, we're not going to be able to have much influence in the international arena about what gets done."

The Bush administration accepts that human-spurred climate change is a reality, but rejects mandatory across-the-board caps on carbon as a disadvantage when competing with fast-growing, big-emitting countries like China and India.

The US is alone among the major developed countries in staying out of the carbon-capping Kyoto protocol, but is part of international discussions on new targets to fight climate change, due to befinalised in Copenhagen at the end of 2009.

Both major US presidential candidates– Democrat Barack Obama and Republican John McCain – favour requiring reductions in greenhouse emissions, and environmental activists says whoever wins the White House in the 4 November elections will be an improvement over president George W Bush.

"There is an urgent need for whichever party wins the US election to give an early signal [of an intent to do more to combat global warming], or there cannot be a credible reason for 190 nations to come together in Copenhagen," says Achim Steiner, head of the UN Development Programme.

Rajendra Pachauri, who shared the 2007 Nobel Peace Price with Gore and who chairs the UNIntergovernmental Panel on Climate Change, says an Obama presidency would probably be morefavourable to the fight against climate change.

But he adds: "Even if McCain wins, he has been very committed."

There is little chance of passing a US law to mandate a programme to cap and trade carbon emissions before Bush leaves office in January.

However, the first draft of a cap-and-trade bill was released this week by US Democratic representatives John Dingell of Michigan – home of the Big Three auto manufacturers – and Rick Boucher of Virginia – coal-mining country – that is likely to frame debate next year.

The draft legislation drew measured applause from environmental activists, who noted it contains options that could substantially weaken controls on greenhouse emissions from some sectors.

But the fact that these two law makers are crafting legislation aimed at curbing climate change indicates a possible change in tone in Washington.

Who said Zuma was born to be the president of the ANC?

ON WEDNESDAY, former defence minister and ANC national chairperson Mosiuoa Lekota convened a media conference at which he told the nation that the ruling party was on the verge of breaking up.

“It seems we are serving divorce papers,” he told reporters.

Half an hour later, ANC treasurer Mathews Phosa said the ANC would not “throw stones” at Lekota. Instead, Phosa said, the ANC would meet Lekota the following day to discuss Lekota’s complaints about the organisation.

Phosa said their marriage had not “irretrievably broken down”. At the same conference, ANC president Jacob Zuma seemed to be singing a different tune, warning Lekota and company not to use ANC structures to organise any rebellion against the party.

Earlier, ANC secretary-general Gwede Mantashe said Lekota’s move had been in the pipeline even before Polokwane. Also on Thursday, the day of the meeting, ANC Youth League president Julius Malema said “we”, presumably the ANC, would “sign Lekota’s divorce papers”.

While it is unclear why the ANC is communicating different messages to the public on this issue, Lekota has moved to set the record straight.

During a visit to City Press offices on Friday, Lekota said that the ANC, true to its current bullying nature, chose not to deal with his grievances about the organisation’s purported deviation from the values enshrined in the Freedom Charter, but sought to bully him.

Below are some of the comments from the former defence minister, who resigned from cabinet after the ANC sacked President Thabo Mbeki from his position as head of state.

Lekota said he would finally meet ANC treasurer Mathews Phosa tomorrow but was unsure what the agenda for the meeting was.

He said Phosa had been trying to meet him from as far back as June, about a different matter.

That was long before this week’s dramatic events.

On “100% Zulu boy” T-shirts

“You have a (former) deputy president of the ANC who allowed people to produce t-shirts in his name, and put his face there. He didn’t give them money to produce them as far as I am aware, but to allow members of the organisation to wear a t-shirt that proclaims tribalism, this is wrong.”

On Zuma’s “uMshini Wam”

“You will not find in our history that the activists of the movement will sing songs like they are just Millie Jackson’s pop songs. They must sing songs that advocate the policy, that announce policy, that popularise policy of the ANC. They motivate people to do what the policy is. Now you teach people to sing songs whose time has passed, songs which are essentially advocating that we should defeat the democracy and the peace that we have now. You must look at the Freedom Charter.”

On ANC Youth League president Julius Malema’s comments that he would kill for Zuma

“What happens to the security of the people? Where is the call for peace (as proclaimed in the Freedom Charter)? When you say to people: ‘We will kill for Zuma’, you are saying therefore that if you don’t elect this guy, ‘you are going to have it and we’ve got our machine-guns here already.’ What happens to ‘the people shall govern?’ When you say ‘the people shall govern’, they should be able to vote and choose who they want to lead them.”

On the ANC call to find a political solution to Zuma’s legal woes

“What has happened to the clause in the Freedom Charter ‘all shall be equal before the law’? If you have a political solution for one criminal case, are you going to have political solutions for each and every case of all citizens that are arrested?”

On Zuma’s theory that there is a political conspiracy to prevent him from becoming the country’s president

“Who was born to be president of the ANC? How can I say people have plans against me as if to be president of the ANC is hereditary; as if I was born for that?”

On his meeting with ANC treasurer Mathews Phosa

“That meeting, by the way, was not called because of this development. Mathews Phosa asked me for this meeting in about June or July. It would be arranged, it wouldn’t happen, it would be arranged and it wouldn’t happen. On one occasion, I came from Pretoria, I woke up at 4.30am to do my exercises and then rushed here because I was supposed to have breakfast with him. When I got there, he was not there.

I had the breakfast alone. After that, I got back into my car and drove to Pretoria. This had nothing to do with these issues. It was a matter of him wanting to see me about some other matter which I don’t want to discuss. How this meeting has to be linked up with this, I don’t know.”

And his meeting with ANC deputy president Kgalema Motlanthe?

“I was called by comrade Kgalema, who was supposed to see me with Max Sisulu. I went to Luthuli House. They were in a meeting. I waited a bit and then Kgalema came out and said I should wait a bit because Max had just gone out.

“He says he thinks Max must be in the building. He sends somebody to look for him. That guy comes back and says: ‘Max has left’. So I look at him, he looks at me. I also sit back and look at him. He then tells me he has spoken to the SG (Gwede Mantashe); that the SG must personally address the issue of my concern in the letter. I said: ‘Thank you very much, deputy president, and wished him well.’

“Now, while I’m gone, the following day I hear Mantashe in the media saying he does not know what meeting I’m talking about. I don’t know whether he says the deputy president (Motlanthe) lied to me or who lied to who. Now, there is the Mathews thing. How it got to the media, I don’t know.

On Malema’s remarks that the ANC will sign Lekota’s divorce papers.

“I don’t talk to Malema. Malema is a baby. I talk to the leadership of the ANC, the mother body. The Youth League cannot represent the ANC. They can send him to go and say those things, I won’t respond. I want to hear what these big heads have to say.”

On statements that the ANC will ask former president Thabo Mbeki to campaign for them before next year’s elections

“I found it very strange the other day that Malema was saying they want Thabo Mbeki to campaign for them.

“How do you go to the nation and say this guy is discredited and we have lost confidence in him, recall him immediately, we can’t even wait for the elections to come. Get rid of him because he is a major burden on us, and then a week or so later you come out and say no we want him to go and tell the people to vote for us. But you have told the people the guy is a piece of junk.”

On Zuma’s warning to Lekota not to use ANC structures to hold meetings

“The ANC has never been a prison. It’s not a prison. You go in there if you like. If you don’t like it, you don’t go in there. Those people, if they want to go to a meeting, they will go.”

On how debate is muzzled in the ANC

“Sooner or later, if you give political power to characters like that, they will suppress everybody in this country. Nobody will be allowed to say something against them, as in the case of Libya. You cannot say anything in Libya against (Colonel Muammar) Gaddafi. As soon as you do that, you will find yourself arrested. There is a cult of the person developing in the ANC.”

On the crisis in the ANC

“We may have been friends and comrades for a long time, but it’s like what Jesus Christ says in the bible: ‘I have not brought peace but trouble. I am going to say things which are going to separate man from wife.’

“We are at this point. Now we must implement equality before the law. When you implement equality before the law, you may have to arrest your brother. The commitment is that nobody must steal. You can’t protect thieves, whether they are of the Lekota family or not. This is very painful and unpleasant but that’s the hard lesson of life. It’s the only way in which we can sustain our democracy.

“We cannot wait for disaster to happen.”

CITY PRESS -11/10/2008 17:34  - (SA) 

Saturday, 11 October 2008

Why coloureds can't be terrorists: by MARK LOTTERING

  1. Ons is altyd laat. We would have missed all 4 flights.
  2. We talk loud and would bring attention to ourselves.
  3. Met free kos en cooldrink oppie plane, we'll sommer forget why we're there.
  4. We praat with our hands, so we'll continually be putting the weapons down.
  5. We would ALL want to fly the freaking plane,ending in a moerse fight with each other.
  6. We'll sommer argue and start a fight in the terminal before we even get on the plane & one of us is bound to say out loud: "Gaan kak man! Dan hijack jy die fokken plane alleen!!"
  7. Ons kannie 'n secret hou nie. We would have told everyone a week before doing it, telling them: "Moet vir niemand se nie, ho!"
  8. We would have insisted that the plane fly past Strandfontein Pavillion.
  9. We would have all lined up to get our photograph taken by one of the hostages. When we enter the cockpit, we would have used the intercom system for a karaoke session, with one doos trying to sing 'I did it my way'.
  10. We would first rob everyone of their Ray-Bans, cellphones and gold teeth, just before we crash the plane.
  11. Our whole freaking family plus neighbors would have been at the airport to see us off, crying their bleddie eyes out, and your mother saying to the white ou next to her: "I'm so proud of him. It's the first time he's hijacking a plane!"
  12. We would have dressed like terrorists for our airport go-way clothes: balaclavas, jumpsuits, karate skoentjies, dark glasses, en 'n moerse attitude.
  13. Two of us would have forgotten our passports at home.
  14. Three of us would have overweight luggage.
  15. All of us would have luggage.
  16.  We would have all wanted to watch the in-flight movie first.
  17.  Before we went into action, we would have all queued up at the toilet to first gel our hair.
  18. We would have taken the plane for a joyride first, played the music at full blast and try to park the plane somewhere where the chicks could see us... 

Interesting article on Bonus culture - well written

A pause for repentance, or the end of big bonuses?

By John Gapper

Published: October 10 2008 18:17 | Last updated: October 10 2008 18:17

Gordon Brown, the UK prime minister, says that he is upset at the bankers whom his government has been forced to bail out. “I am angry – I am angry at irresponsible behaviour,” he said this week. “The days of big bonuses are over.”

Mr Brown is not the only politician to demand restraint from bankers in return for taxpayers’ cash. The uproar that has followed announcements of bail-outs in the US, UK and elsewhere has led to politicians telling bankers off like schoolchildren.

To which, the whispered reply from those at the back of the class on Wall Street and in the City of London is: “Yeah, right.”

Investment bankers have endured years of criticism about “fat cats” and the “trader’s option” – that they take millions when things are going well and leave the losses to shareholders. It has never dissuaded them from carrying on as before.

This time, investment bankers know that they will have to make short-term sacrifices. The chairmen and chief executives of banks that have relied on public money to remain in business will not be taking bonuses for 2008, unless they have taken leave of their senses.

Those below them know they may also have to demonstrate some public spirit. The market is already dictating that. This is usually the time of the year when bankers gain guaranteed pay offers to move to other investment banks, but there is little largesse on offer now.

“I think banks may be very strict on bonuses this year, particularly if the chief executive has stepped up and said he will not take one. It is a matter of accountability. They must take some hits, like the rest of the world,” says Jeanne Branthover, head of financial services for Boyden, a New York headhunting firm.

After a decent period of mourning – a year or two – most expect things to return to normal. Half of a bank’s revenues will again be placed in the annual bonus pool and shared out according to how much each banker or trader has brought in. The top revenue generators will once more earn $10m to $50m a year.

I am not so sure. We are in the biggest financial crisis since 1929 and the implications of that have not yet dawned on this generation of investment bankers.

It comes down to this: using your wits to trade with others’ capital has been very profitable over the past decade. Capital was so cheap that anyone at an investment bank who knew how to make money with it could take half the proceeds.

This crisis has shown that bankers were taking excessive risks with their shareholders’ capital and that a lot of the revenue was illusory – it has been followed by multi-billion dollar write-downs. It has also shown that capital and liquidity are more precious than banks came to think.

So the real risk-adjusted return on capital of a lot of investment banks has been zero at best. Bankers have been walking out of the building with all the industry’s profits.

Capital will now be more expensive for banks to obtain and they will be unable to afford the extraordinary tithe that their employees have taken out of revenues each year. Sooner or later, that brutal financial fact will be inescapable.

Bankers know there is less cash to go around and that public assistance comes at a price. The US government, for example, has attached conditions to its $700bn bail-out package that would heavily increase the tax bill for participating banks that pay tens of millions to senior executives.

Many expect the compensation bill to go down for a time because fewer people will have jobs and the market for average performers will slacken. “I don’t think we’ll see what we saw in the last five years – outrageously large bonuses for people who are not superstars,” says Ms Branthover.

Deep down, however, bankers do not expect the crash fundamentally to alter the way that Wall Street works. Barclays, which bought the US investment banking arm of Lehman Brothers when the latter collapsed, has been negotiating bonus packages to retain top employees.

The banks say they have no choice because the best bankers and traders could, despite all the turmoil in markets, leave to get a new job with a hedge fund or private equity fund instead. Even amid a crisis, good performers have the upper hand in bonus negotiations.

Perhaps bankers should pause to think about this. There is no question that hedge funds have offered some refugees from investment banks the chance to make tens – or, in a few cases, hundreds – of millions of dollars. But we do not yet know how many of these funds will be left when the markets calm down.

Furthermore, it has become obvious to every investment banker that there is a considerable value in working for a big, well-capitalised institution. Not only is it less likely to collapse but it has a greater chance of being bailed out if it gets into trouble. A big share in a hedge fund is worth nothing if the fund founders.

The logic of the way in which the world is evolving is that there will now be two kinds of Wall Street employer: safe and decently paid or risky and highly paid. Banks will be more regulated and less profitable places to work, where bonuses are lower. Those who have both the talent and the risk appetite will take their chances elsewhere.

It will take time for this to sink in, given that the good times went on so long. But those who expect a pause for repentance followed by a return to business – and bonuses – as usual may have a shock coming.

john.gapper@ft.com

Scams - dump (I wrote this more than 6 months back - Jan to Mar 2008)

Scams we faced/facing
- AGW: This is to start a world wide carbon trading model. Yet more money flowing to the financial sector. Where is the creation of real wealth? What happens to underdeveloped economies that sell their credits?

- Housing scam: Popular programs on TV to say how houses can be sen as investments. Buy to let, buy to turn a quick profit etc. This fed the bubble. The wealth and inflows of money came from illusion of house price increase. People feel richer, borrow to throw at stock market (because it is a stairway to heaven), or spend more. Ridiculous values placed on services. Costs more to higher a cleaner for 3 hours than to buy a DVD player (£20) from the store at the local service station.

- Agency theory: We need to do some more work here. It is classic agency theory where management in companies do what is in their interest rather than the shareholders. Managers pay themselves 30-40% of the profits without any risk capital at stake.

- Y2K: I heard somewhere that Italy was one of the few countries that chose not to implement Y2K action and....nothing happened. Who benefited? Large accounting firms.

- Dotcom: Why were the financial analysts never taken to task for their gross over valuations of companies. Complete distortion of reality. Barriers to entry low. Why is Google so highly valued. Compare this to large companies with tangible assets and try to make sense of this? Lastminute.com at its height was just a booking agency and valued at £800m.

- Enron and financial engineering fiasco: Again the analysts did little to no fundamental analysis. They just pedalled the same garbage - then it was SIVs that hid exposure off balance sheet. They also booked the entire future cash flow of acquisitions as income for a year to maximise bonuses. Where were the auditors?

- Credit crunch: Now its the rating agencies. But also the analysts who continued to talk up the financial community....ongoing....

- Commodities: The role of the hedge funds/investment banks in hyping up the oil frenzy of 2006 to 2008. Making fuel from food. When did we lose our sense so badly http://www.time.com/time/magazine/article/0,9171,1725975,00.html

It's an avalanche

Sunday, 05 October 2008

More on the size of the bail out



Thought that the following graphic from BBC was very interesting for perspective effect.