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People in Iceland tell their stories
A few rather dramatic stories from people living in Iceland, gathered by the BBC.
Examples: Stockpiling of food, mass layoffs, foreigners having too little money to visit their homeland, and house prices falling so much they're worth less than the credit taken in the bank... A few rather dramatic stories from people living in Iceland, gathered by the BBC. ... more -
The United States is now, in some very general sense, bankrupt
First take a deep breath, and recall President Franklin Roosevelt’s wise advice that there is nothing to fear but fear itself.
Then let’s admit something painful: The United States is bankrupt, in the sense that it’s assets (housing stock, corporations and cash flow, plant and machinery) are now worth much less than its liabilities (in the form of mortgage-backed securities, other debt and loan instruments). In particular, large parts of the housing stock are now worth much less than the owners paid for them, and less than the outstanding value of the mortgages, or the collateralised bonds that have been issued against them. First take a deep breath, and recall President Franklin Roosevelt’s wise advice that there is nothing to fear but fear itself. ... more -
Icelandic billionaire, his glamorous wife and friends drown their sorrows
This was Icelandic billionaire Jon Asgeir Johannesson, dressed casually in black, legs outstretched, and his merry court at 1am yesterday, holed up in a chic hotel in the capital Reykjavik.
His failed bank Glitnir, of which he is the majority shareholder, owes millions of pounds to British investors, including companies, town halls, police authorities and charities.
But while Reykjavik burns and its assets freeze, The Mail on Sunday found Mr Johannesson still doing nicely – evidenced by the £85 bottles of white wine on his table.
The 41-year-old, who was found guilty of false accounting last year, drives a Bentley and lives in a three-storey Reykjavik mansion that boasts a bullet-proof room in case of attack. Some people half joke that he may yet need it.
He is one half of Iceland’s most glamorous couple: his 47-year-old wife is Ingibjorg Palmadottir, who owns a yacht which she moors in the Caribbean and drives a customized white Mercedes known in Reykjavik as the White Pearl.
They hosted an impromptu get-together for friends at Hotel 101 on Friday night as their island nation effectively went bankrupt, owing Britain £20billion and others £15billion.
That is £116,000 for every one of its 320,000 inhabitants.
‘It is like being in Hell and watching all the little devils enjoying the last days of normal life in Iceland,’ said an elderly diner.
Earlier on Friday, British tycoon Sir Philip Green, who owns Topshop, held talks with Mr Johannesson, his friend and former business partner, at the hotel.
Although Mr Johannesson refused to confirm that Sir Philip was buying a stake in his retail empire Baugur, the news channel he owns, TV2, said a deal would go ahead.
Baugur is the last private company standing amid the wreckage of Iceland’s economy but is struggling to stay afloat.
After the talks, floppy-haired Mr Johannesson, who looks more rock star than businessman, said: ‘We are looking at the state of business between Iceland and Britain and trying to calm the atmosphere that has become very hostile, as can be seen on the front covers of British newspapers.’ This was Icelandic billionaire Jon Asgeir Johannesson, dressed casually in black, legs outstretched, and his merry court at 1am yester... more -
Bank Holiday on Sight
The Senate passed the Wall Street bailout bill, by a 3:1 majority. Some sweeteners like tax cuts and raising the limit to $250k on individual accounts for bank depositors helped. Some people might think that finally the banking system can at last receive some meaningful fixes. The Senate passed the Wall Street bailout bill, by a 3:1 majority. Some sweeteners like tax cuts and raising the limit to $250k on ind... more
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Can Obama win in Canton, Ohio?
The Real News Network travels to Ohio and talks to people hit by economic crisis.
Stark County, Ohio is feeling the pressure of a down economy. Rising unemployment rates and financial hardships are leaving a sour taste in mouths of many voters in this crucial electoral battleground. The Real News spoke with residents of Canton, Ohio to assess the impact of the current crisis. The Real News Network travels to Ohio and talks to people hit by economic crisis. ... more -
Will the largest Swiss banks collapse?
Just as is the case with Iceland, Switzerland's economy is dwarfed by the size of it's banks. The balance sheet of the largest bank in the country, UBS, adds up to 4 times the annual GDP. Number two in Switzerland, Credit Suisse, is worth 2.5 times the annual GDP. The combined outstanding loans in these two banks are worth more than the annual GDP.
In this article, the popular German weekly, Der Spiegel, talks about fears in Zurich, of what the world financial crisis can bring to Switzerland. Just as is the case with Iceland, Switzerland's economy is dwarfed by the size of it's banks. The balance sheet of the large... more -
Nobel Laureate Yunus: 'Capitalism has degenerated into a casino'
Interview with Nobel Laureate in Economics Muhammad Yunus. A few excerpts:
"Today's capitalism has degenerated into a casino. The financial markets are propelled by greed. Speculation has reached catastrophic proportions."
"The fundamental difference is that our business is very connected to the real economy. When we provide a loan of $200, that money will go to buy a cow somewhere. If we lend $100, someone will maybe buy some chickens. In other words, the money goes to something with concrete value. Finance and the real economy have to be connected. In the US, the financial system has completely split off from the real economy. Castles were built in the sky, and suddenly people realized that these castles don't exist at all. That was the point at which the financial system collapsed." Interview with Nobel Laureate in Economics Muhammad Yunus. A few excerpts: ... more -
The End of Arrogance: America Loses Its Dominant Economic Role
(Article from popular German weekly "Der Spiegel").
The banking crisis is upending American dominance of the financial markets and world politics. The industrialized countries are sliding into recession, the era of turbo-capitalism is coming to an end and US military might is ebbing. Still, this is no time to gloat.
There are days when all it takes is a single speech to illustrate the decline of a world power. A face can speak volumes, as can the speaker's tone of voice, the speech itself or the audience's reaction. Kings and queens have clung to the past before and humiliated themselves in public, but this time it was merely a United States president.
Or what is left of him.
George W. Bush has grown old, erratic and rosy in the eight years of his presidency. Little remains of his combativeness or his enthusiasm for physical fitness. On this sunny Tuesday morning in New York, even his hair seemed messy and unkempt, his blue suit a little baggy around the shoulders, as Bush stepped onto the stage, for the eighth time, at the United Nations General Assembly.
He talked about terrorism and terrorist regimes, and about governments that allegedly support terror. He failed to notice that the delegates sitting in front of and below him were shaking their heads, smiling and whispering, or if he did notice, he was no longer capable of reacting. The US president gave a speech similar to the ones he gave in 2004 and 2007, mentioning the word "terror" 32 times in 22 minutes. At the 63rd General Assembly of the United Nations, George W. Bush was the only one still talking about terror and not about the topic that currently has the rest of the world's attention.
"Absurd, absurd, absurd," said one German diplomat. A French woman called him "yesterday's man" over coffee on the East River. There is another way to put it, too: Bush was a laughing stock in the gray corridors of the UN.
(continues - see the link) (Article from popular German weekly "Der Spiegel"). ... more -
A UK Bankruptcy Every Five Minutes
After a decade of binging on borrowed money and dining out on debt, consumers are now paying a heavy price.
According to the debt charity Credit Action, one person is declared bankrupt or insolvent every five minutes in the UK.
Every day, 104 properties are repossessed and the average household debt is £9,500 (excluding mortgages).
According to Roger Bootle, the managing director of Capital Economics, the way banks lend money has changed forever.
He said: "The financial landscape will never be the same again. We've passed through a major event which is on a par of much of what occurred in the 1920s and 30s leading up to the Great Depression.
"We've been through a period when the financial markets went bonkers and remarkably central banks and governments allowed them to and many of us were caught up in this."
The number of people seeking debt help from Citizens Advice has increased by more than a third in the last 12 months.
Most people do not realize how much debt they are in. Even those who know they are in trouble, are often reluctant to seek help. Advisers stress that ignoring debt is the worst thing people can do.
Alex MacDermott, policy officer at Citizens Advice, said: "Come and get advice as early as possible. There are lots of ways we can help. We can make sure you're getting all your benefits and tax credits.
"There is something like £9.9 billion of means-tested benefits which went unclaimed last year so there's certainly a lot of money that people are missing out on.
"We would then look at prioritizing your debts, so we'd look at making your mortgage payments, your council tax, your fuel payments a top priority to make sure you don't get cut off or evicted from your property. Then we'd look at rescheduling any other debts out of what's left over." After a decade of binging on borrowed money and dining out on debt, consumers are now paying a heavy price. ... more -
Why did Iceland's banks go bankrupt?
For most of the last century, Iceland was little more than a rest stop for North Atlantic fishing fleets trawling the waters between Greenland and the Faroe Islands.
Reykjavik, where much of the island’s population of 320,000 is based, still feels like a provincial port. Taxi drivers wave to the president and there is a sense that most people are linked by blood, business or politics. But for all its sleepy air, the Icelandic capital has been transformed over the past decade. A headlong expansion into foreign markets brought the country influence out of proportion to its size and made its population one of the richest, per capita, in the world.
Now, after a week in which Iceland’s top three banks collapsed and were nationalised – putting more than €20bn ($27bn, £16bn) of depositors’ money in jeopardy across Europe – fame is turning into notoriety. As Geir Haarde, prime minister, warned this week: “The danger is real that the Icelandic economy would be sucked, along with banks, under the waves and the nation would become bankrupt.”
It is a sorry finale to what Mr Haarde’s predecessors hailed as an economic transformation that turned a poor, isolated community into a powerhouse of banks and entrepreneurs, with global investments ranging from pharmaceuticals to fund management.
The island erupted on to the world’s financial stage in the early years of this decade. Icelanders bought up swaths of eastern Europe’s telecommunications market, some of the best-known names on the UK’s high street, including House of Fraser and Hamleys, and much of the Nordic banking system.
Inevitably, observers questioned where the money had come from. Tales of strange links to Russia abounded. “It is often implied that there is something dubious or shady about the origin of Icelandic financial strength,” Ólafur Ragnar Grímsson, president, said in 2006, commenting on “far-fetched explanations” of Iceland’s sudden wealth.
Much of the mystery centred around the charismatic figure of Thor Björgólfsson, even now barely 40, Iceland’s richest man and founder of Actavis, the world’s fourth largest maker of generic drugs. He began his career by setting up a brewery in St Petersburg, which he sold to Heineken in 2002. The sale earned him $100m.
About the same time, Jón Ásgeir Jóhannesson, the youthful chief executive of Baugur, Iceland’s biggest retailer, suddenly materialised as the unknown acquirer of a big stake in Arcadia, the UK retail chain.
In reality, said Mr Grímsson, Iceland’s success was easily explained. The country had benefited from a fortuitous combination: globalisation and widespread removal of trade and financial controls, together with innovations in information technology that made its geographical isolation irrelevant.
At the foundation of Iceland’s success was aluminium smelting and a well-funded pension system based on the fisheries industry that had the money and a new appetite to invest in equities. This coincided with the deregulation and privatisation of the banking system, which allowed the island’s banks – Kaupthing, Landsbanki and Glitnir (then called Islandsbanki) – to diversify away from their traditional bases in farming and fisheries.
A class of 30-something business school alumni such as Hreidar Mar Sigurdsson, now chief executive of Kaupthing, the bank that until its nationalisation this week was Iceland’s biggest listed company, were quick to take advantage of these changes. As one banker says: “Kaupthing thought of themselves as the Goldman Sachs of the Arctic.”
Bankers and businessmen borrowed heavily abroad, invested in each others’ companies and expanded overseas. When asked where Bakkavor, the Icelandic food company, had got the money to buy Geest – a deal that turned Bakkavor into the UK’s largest ready-made food company – Mr Grímsson said: “The answer was very simple: ‘It comes from Barclays Bank’.” Much of Mr Björgólfsson’s backing came from Deutsche Bank.
(continues at link) For most of the last century, Iceland was little more than a rest stop for North Atlantic fishing fleets trawling the waters between G... more -
‘Seven Days That Shook The World’: Democracy In America Dies | TrippingElSalvador....
“The free market for all intents and purposes is dead in America. The action proposed today by the Treasury Department will take away the free market and institute socialism in America.” “The free market for all intents and purposes is dead in America. The action proposed today by the Treasury Department will take away ... more
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Iceland's largest bank seized and entire stock market halted, doomed be the u...
Well after the third largest and second largest banks were seized.. Iceland is officially totally screwed...
The Iceland stock market has completely and totally collapsed.
Will Russia buy Iceland in time? Well after the third largest and second largest banks were seized.. Iceland is officially totally screwed... ... more -
Time to face facts In Afghanistan
By Eric Margolis
For those who savor historical irony, the Soviet Empire collapsed in the years 1989-1991 because of an implosion of its economy brought on by a ruinous arms race with the United States and the heavy costs of occupying Afghanistan.
Seventeen years later came the turn of the world’s other great imperial power, the United States. Lethally bloated by runaway debt, and burdened by 50% of the world’s military spending, the house of cards known as the US economy finally collapsed.
The doomsday news from New York and Washington has obscured most other world affairs. This is unfortunate because for the first time there is a flicker – and I mean only a flicker – of light at the end of the Afghanistan tunnel. It may only be an oncoming truck bomb.
The US-installed Afghan president, Hamid Karzai, revealed last week he had asked Saudi Arabia to broker peace talks with the alliance of tribal and political groups resisting Western occupation collectively known as Taliban. Saudi Arabia had been one of the few nations to recognize the Taliban government and retains considerable influence in Afghanistan and remains a loyal friend of Pakistan.
Taliban leader Mullah Omar quickly rejected Karzai’s offer, and claimed the US was heading toward the same kind of catastrophic defeat in Afghanistan that the Soviet Union had met. The ongoing financial panic in North America lent substance to his words.
The US economy is in grave peril and its big three automakers may soon face bankruptcy. In a crazy sidebar, as Wall Street and the Us banking system faced meltdown, the insouciant Pentagon just announced it would spend $300 million with American `contractors’ to spread pro-US propaganda in Iraq. This remarkable idiocy notwithstanding, Washington could soon run out of money necessary to keep paying for operations in Iraq, and bribing Pakistan with $250-300 million a month to wage war against its own rebellious Pashtun tribes people along the Afghanistan border.
The able and forthright US commander in Afghanistan, Gen. David McKiernan, urgently called for at least 10,000 more troops. US and NATO forces in Afghanistan are increasingly on the defensive, hard pressed to defend vulnerable supply lines in spite of massive fire power and total control of the air.
Attacks on US and NATO convoys are even beginning at the port of Karachi. The prospect of the US spreading a war it can’t win in Afghanistan into Pakistan is military and political madness.
Startlingly, Gen. McKiernan appeared to break with Bush administration policy by proposing political talks with Taliban and admitting the war had to be ended by diplomacy. The military men know this war cannot be won on the battlefield. McKiernan’s predecessor told Congress that 400,000 US troops would be needed to pacify Afghanistan. There are currently 80,000 western troops in Afghanistan, many of them unwilling to enter combat.
(more below) By Eric Margolis ... more -
The Iraq war hits Wall Street
At almost $1 trillion, and counting, the Wall Street bailout will cost taxpayers as much as the Iraq war.
Barack Obama squandered the chance to lead with an alternative plan to the Wall Street bailout. Instead both Obama and McCain pushed for a plan that's not only deeply unpopular but potentially as costly as a new Iraq war. Too busy slinging mud at each other, both campaigns are ignoring the enormous significance and wide-ranging repercussions of the financial crisis, which British scholar John Gray defines as the US equivalent of the fall of the Soviet Union.
Pepe Escobar, born in Brazil is the roving correspondent for Asia Times and an analyst for The Real News Network. He's been a foreign correspondent since 1985, based in London, Milan, Los Angeles, Paris, Singapore, and Bangkok. Since the late 1990s, he has specialized in covering the arc from the Middle East to Central Asia, including the wars in Afghanistan and Iraq. He has made frequent visits to Iran and is the author of Globalistan and also Red Zone Blues: A Snapshot of Baghdad During the Surge both published by Nimble Books in 2007. At almost $1 trillion, and counting, the Wall Street bailout will cost taxpayers as much as the Iraq war. ... more -
The financial crisis at the local level
Leo Panitch: As property values tank, so do state and municipal budgets. Part 3
In the third segment of Senior Editor Paul Jay's discussion with Leo Panitch, Leo explains how the credit crunch will affect state and municipal governments. Leo points out that the Great Depression had its roots in the bankruptcy of state and municipal governments, offering that in such a situation the national government must intervene to keep the states and municipalities solvent. Leo advocates for a hybrid of increased taxation and deficit spending to finance this, adding finally that a real solution requires more than a change in policy, but a change in deep structures.
Leo Panitch is the Canada Research Chair in Comparative Political Economy and a Distinguished Research Professor of Political Science at York University in Toronto. Panitch is also the author of "Global Capitalism and American Empire" and his most recent release "American Empire and the Political Economy of International Finance".
See Part 1 at: http://current.com/items/89378166_free_markets_depend_o...
See Part 2 at: http://current.com/items/89382669_the_financial_crisis_... Leo Panitch: As property values tank, so do state and municipal budgets. Part 3 ... more -
AIG spends $440,000 on Corporate Retreat Days after $85bn Bailout
The world's largest insurance company, AIG, spent $440,000 on a lavish corporate retreat at one of California's top beachside resorts a few days after accepting an $85bn emergency loan from the US government to stave off bankruptcy.
Details of the week-long getaway enraged legislators at a congressional hearing yesterday where AIG's former bosses were accused of spending taxpayers' money on pedicures, golf games and cocktails.
Crippled by losses on financial insurance companies, AIG was bailed out by US taxpayers on September 17 to avert a collapse which risked causing further failures.
The House oversight committee, which is investigating the company's problems, confronted AIG executives with an invoice from the St Regis resort in Monarch Beach, south of Los Angeles, detailing an eight-day company event which began five days after the rescue.
"Average Americans are suffering economically," said Henry Waxman, chairman of the committee. "They are losing their jobs, their homes and their health insurance. Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."
The bill shows that AIG spent $139,375 on rooms, $147,301 on "banquets", $23,380 on spa treatments and $6,939 on golf at an eight-day company event which began on September 22.
"US taxpayers will be, in effect, paying for this," said Elijah Cummings, another Democrat, who demanded to know who was responsible for the outlay. "I think that person ought to be fired." The world's largest insurance company, AIG, spent $440,000 on a lavish corporate retreat at one of California's top beachsid... more -
Holy crapo! Iceland's doomed to near bankruptcy
You think the U.S. economy and the dollar is screwed, Iceland has it worse...
And they don't have the Clinton-BarneyFrank-FreddieMacFannieMae-Bush-Enron-AIG-Iraq-Lehman mess to blame...
Last week, the country's third largest bank was nationalised. This week, the government dismissed the board of directors of Landsbanki, its second-largest bank, and put it into receivership. On Monday, the Prime Minister, Geir Haarde, warned its citizens the country faces bankruptcy.
On the bright note, with the krona, being devalued so much, vacation plans to beautiful Iceland are much more affordable?
(Hey, an Iceland story here not involving Sigur Ros) You think the U.S. economy and the dollar is screwed, Iceland has it worse... ... more -
Three Canadian election candidates have declared bankruptcy
Three federal candidates in B.C. -- one Liberal, one Green and one Conservative -- have declared personal bankruptcy, The Vancouver Sun has learned. Three federal candidates in B.C. -- one Liberal, one Green and one Conservative -- have declared personal bankruptcy, The Vancouver Su... more
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'Free markets' depend on state intervention
Leo Panitch: US state plays role of defending global financial system, it had to act in this crisis.
After President Bush signed the controversial bailout bill into law, Senior Editor Paul Jay talked with Leo Panitch to get his analysis of the situation. Leo said it is irresponsible to suggest that the government should have let these banks fail, ultimately advocating for the full nationalization of the troubled banks. Leo then explains the significance of the US treasury bill as the base upon which everything else in the global financial system is valued, as well as explaining the US government's role as the guarantor of the t-bill's value. Finally, Leo criticizes the dominant paradigm that states and markets are separate and opposing forces in the modern capitalist system.
Leo Panitch is the Canada Research Chair in Comparative Political Economy and a Distinguished Research Professor of Political Science at York University in Toronto. Panitch is also the author of "Global Capitalism and American Empire" and his most recent release "American Empire and the Political Economy of International Finance".
See Part 2 at: http://current.com/items/89382669_the_financial_crisis_...
See Part 3 at: http://current.com/items/89386959_the_financial_crisis_... Leo Panitch: US state plays role of defending global financial system, it had to act in this crisis. ... more -
Where does money come from?
What? You're telling me it's all imaginary!!!
Well, it turns out our new source of money, since the early 20th century, has no real value... what?
Yup, these days money is really based on YOUR DEBT - ever increasing debt exponentially.
Maybe we should re-think what kind of "change" we really need in this world... What? You're telling me it's all imaginary!!! ... more
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