The latest in the great Eurozone Crisis Saga.
And what is a haircut, you may ask?
"Gary Jenkins, head of fixed income at Evolution securities, outlined what a haircut would mean for Greek bond holders. ‘It involves a "voluntary" bond exchange with a nominal discount of 50% on notional debt held by private sector holders with €30 billion provided by the eurozone member states for credit enhancements, and it aims to reduce Greek debt to 120% by the end of the decade.’" Citywire.
Sounds like more of the usual paper-shuffling and prestidigitation to me.
How about recapitalisation?
"To what extent taxpayers have to plug the gap – and whether state aid rules then kick in – could depend on the timescale banks are given to raise the capital. Huertas told Newsnight that the EFSF would be there as a "last resort". He said: "The plan is for banks to access public markets first," before turning to nation states for support – and then the EFSF." Graun.
Yeah, yeah, yeah ….
Maybe commenter Moggoid sums it up better, over at the Slog: “I stumbled upon this article – tying to find out what “recapitalisation of banks” actually means. And I gather it means that somewhere large amounts of money are found and then just given to the bank – Is that right?”
The banks love the deal, which should make anyone who’s not a banker suspicious. The much-courted and fawned over “Markets”* love the deal - but then they loved the glistening 2000s bubble that preceded the 2008 Crash, didn’t they. So what do they know.
*The "Markets" - basically a bunch of saddoes with nothing better to do than play Crackberry with large numbers and screw the rest of us.
Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Thursday, 27 October 2011
Thursday, 22 September 2011
Hiding from Reality
Three weeks ago over a thousand environmental protesters were arrested outside the White House with barely a squeak from the MSM. Last week some British (so-called) newspapers pulled news of unrest in Rome off their pages, leaving here only the Daily Mirror to report actual news, afaics. This week the corporate media blackout of the Wall Street protests in the USA continues.
Some timely reportage at #occupywallstreet, amongst others.
Paul Harris' Grauniad blog gives some background info on the Wall St protests.
HT: Erich Vieth at Dangerous Intersection.
Some timely reportage at #occupywallstreet, amongst others.
Paul Harris' Grauniad blog gives some background info on the Wall St protests.
HT: Erich Vieth at Dangerous Intersection.
Wednesday, 3 August 2011
Economic Senility
Way back on July 13th economist Zanny Minton Beddoes suggested on Radio 4’s Today programme that although Italy had coped thus far with its large debt, that if (if!) problems occurred then the ECB could step in and start buying their bonds, that in turn being the likely start of federalising the debt.
And sure enough, as Berlusconi froths about the ‘locusts of international speculation’ (shades of the interwar era?) the West’s senile economies are only kept going by increasingly large doses of their chosen narcotics.
Over here Federal Europe may be beckoning. Declan Ganley will be pleased.
And sure enough, as Berlusconi froths about the ‘locusts of international speculation’ (shades of the interwar era?) the West’s senile economies are only kept going by increasingly large doses of their chosen narcotics.
Over here Federal Europe may be beckoning. Declan Ganley will be pleased.
Wednesday, 25 May 2011
Can Banking Be Good?
With the end of the tax on bankers bonuses, government borrowing this April the worst on record and small business still being held to ransom by the financial sector, NEF and Compass are holding a Good Banking Summit today, in a perhaps forlorn attempt to inject some realism into the discourse. There don't seem to be any details online, but Ann Pettifor at Debtonation blog is one of the speakers, doing a bit of last minute publicity.
Loans & Lies: Bankers and Politicians Out of Touch
Back in the day the local bank manager was a key figure. Someone who knew his patch and the people and businesses in it, who would be a good risk and who wouldn't. Nowadays that's all out of the window, as David Boyle explains:
"Neither the politicians nor the bankers will admit it - in fact they collude in this - but the big banks are no longer able to lend effectively to the SME sector. It isn't that they won't, it is that they have consolidated beyond the point where they can. They have no systems, no local managers, which would allow them to. But until the politicians accept this, and the bankers admit it - which they do privately - we can't move on ..."
"A friend of mine who has a small business approached their bank for a loan last week. They were told they had three options, a loan to buy a car, a loan to go on holiday or to put it on their credit card. This is another symptom of the Big Lie. It is time someone in frontline politics had the courage to nail it once and for all."
Loans & Lies: Bankers and Politicians Out of Touch
Back in the day the local bank manager was a key figure. Someone who knew his patch and the people and businesses in it, who would be a good risk and who wouldn't. Nowadays that's all out of the window, as David Boyle explains:
"Neither the politicians nor the bankers will admit it - in fact they collude in this - but the big banks are no longer able to lend effectively to the SME sector. It isn't that they won't, it is that they have consolidated beyond the point where they can. They have no systems, no local managers, which would allow them to. But until the politicians accept this, and the bankers admit it - which they do privately - we can't move on ..."
"A friend of mine who has a small business approached their bank for a loan last week. They were told they had three options, a loan to buy a car, a loan to go on holiday or to put it on their credit card. This is another symptom of the Big Lie. It is time someone in frontline politics had the courage to nail it once and for all."
Wednesday, 12 January 2011
Crisis Committee Coming to Britain
In case we had forgotten, Britain is on the list of STUPID, heavily indebted countries, and later this month we can expect a visit from the EU’s Special Committee on the Financial, Economic and Social Crisis (CRIS) headed up by Wolf Klinz, onetime partner at McKinsey & Co and board member of the East German privatisation agency the Treuhandanstalt, so says Wpedia.
Herr Klinz opines (here pdf) that Europe is at a crossroads needing a "deepening of integration in the economic, budgetary, and social fields, more investments in infrastructure, a functioning labour market as well as a completion of the internal market ... a standstill of reforms in Europe would mean regression."
And on his blog he writes that:
"Reforms of the EU treaties are essential to master the crisis. By failing to address this issue, European leaders are pulling the wool over the eyes of European citizens. The heads of state should be honest to the citizens and they must act rapidly to address their concerns.
The solutions lie in more European integration. What Europe needs is a strengthening of the Community method and less intergovernmentalism."
I wonder if we will hear much about this visit from our media?
Herr Klinz opines (here pdf) that Europe is at a crossroads needing a "deepening of integration in the economic, budgetary, and social fields, more investments in infrastructure, a functioning labour market as well as a completion of the internal market ... a standstill of reforms in Europe would mean regression."
And on his blog he writes that:
"Reforms of the EU treaties are essential to master the crisis. By failing to address this issue, European leaders are pulling the wool over the eyes of European citizens. The heads of state should be honest to the citizens and they must act rapidly to address their concerns.
The solutions lie in more European integration. What Europe needs is a strengthening of the Community method and less intergovernmentalism."
I wonder if we will hear much about this visit from our media?
Tuesday, 4 January 2011
Hungary Leads, But Whither?
Hungary, like Europe as a whole perhaps, is a place with a great heritage, but a distinctly uncertain future. After the Death of Communism, Hungarians fell in with a lot of dodgy loans in foreign currencies like Swiss francs, of all things. With predictable results. Two years ago they were already “on the verge of bankruptcy”, so their EU leadership now is surely beautifully apposite, given that the whole zone teeters there today.
Oh well, time to shoot the messenger of ill tidings!
Blackout4Hungary
Ht: IPwatch
Oh well, time to shoot the messenger of ill tidings!
Blackout4Hungary
Ht: IPwatch
Tuesday, 21 December 2010
Debt Kills
Micro-Finance Becomes Big Business
Debt has been driving farmer suicides in India over many years, but now the southern Dravidian state of Andhra Pradesh - an area already notorious for so-called Naxalite insurgency - is in the spotlight over renewed misery, whose proximate cause this time is that great white hope of development luvvies; microfinance.
Years before Muhammad Yunus and the Grameen Bank received that, now increasingly politicised and jaded accolade of the Nobel Peace Prize, micro-finance, or the lending of small amounts of money to poor, often female recipients, for them to develop small businesses, was heralded as a saviour. It became very fashionable.
As ever though with such panaceas, they have simply provided more plausible and attractive clothing for common human rapacity.
The problem of rural indebtedness was already horrendous. P.Sainath wrote in Counterpunch that the decade to 2007 had seen over 180,000 Indian farmers driven to suicide:
"What do the farm suicides have in common? Those who have taken their lives were deep in debt – peasant households in debt doubled in the first decade of the neoliberal “economic reforms,” from 26 per cent of farm households to 48.6 per cent. We know that from National Sample Survey data. But in the worst states, the percentage of such households is far higher. For instance, 82 per cent of all farm households in Andhra Pradesh were in debt by 2001-02. Those who killed themselves were overwhelmingly cash crop farmers – growers of cotton, coffee, sugarcane, groundnut, pepper, vanilla. (Suicides are fewer among food crop farmers – that is, growers of rice, wheat, maize, pulses.) The brave new world philosophy mandated countless millions of Third World farmers forced to move from food crop cultivation to cash crop (the mantra of “export-led growth”). For millions of subsistence farmers in India, this meant much higher cultivation costs, far greater loans, much higher debt, and being locked into the volatility of global commodity prices. That’s a sector dominated by a handful of multinational corporations."
Small Debt Becomes Big Debt
“Is there a bubble being created? Are most microfinance institutions chasing the same customer? Are we pushing the customer — the poor woman — into a debt trap? Would this lead to suicides?" asked Dr MS Sriram in May this year.
The answer to all four questions is yes.
"As a pioneer in organising women’s SHGs, Andhra Pradesh provided an opportunity to MFIs to provide small loans to lakhs of rural women who are otherwise denied credit by banks. As MFIs expanded operations in the state, they targeted individual borrowers too. In recent years, many MFIs turned into for-profit organisations in a race to make a quick buck begun. MFIs are now under fire for charging exorbitant interest rates and using strong-arm tactics to collect interests." says the Indian Express, with an on the ground report of impoverished rural Indian women being first lured into debt and then terrorised.
What Milford Bateman calls "the distressing and entirely predictable situation in Andhra Pradesh", is that "today, AP is now second only to Bangladesh as the most microfinance ‘saturated’ place on earth, with a full 17% of the population in possession of a microloan account. That this represents a massive over-supply seems clear …"
"And there can be no doubt whatsoever what the real driving force behind the current crisis is: it is clearly, and overwhelmingly, a result of the largely ideologically-driven move to commercialise microfinance."
So can anything be rescued from this terrible situation? Some people keep hoping so ...
TitferTip: NEF and TaxResearch.
Debt has been driving farmer suicides in India over many years, but now the southern Dravidian state of Andhra Pradesh - an area already notorious for so-called Naxalite insurgency - is in the spotlight over renewed misery, whose proximate cause this time is that great white hope of development luvvies; microfinance.
Years before Muhammad Yunus and the Grameen Bank received that, now increasingly politicised and jaded accolade of the Nobel Peace Prize, micro-finance, or the lending of small amounts of money to poor, often female recipients, for them to develop small businesses, was heralded as a saviour. It became very fashionable.
As ever though with such panaceas, they have simply provided more plausible and attractive clothing for common human rapacity.
The problem of rural indebtedness was already horrendous. P.Sainath wrote in Counterpunch that the decade to 2007 had seen over 180,000 Indian farmers driven to suicide:
"What do the farm suicides have in common? Those who have taken their lives were deep in debt – peasant households in debt doubled in the first decade of the neoliberal “economic reforms,” from 26 per cent of farm households to 48.6 per cent. We know that from National Sample Survey data. But in the worst states, the percentage of such households is far higher. For instance, 82 per cent of all farm households in Andhra Pradesh were in debt by 2001-02. Those who killed themselves were overwhelmingly cash crop farmers – growers of cotton, coffee, sugarcane, groundnut, pepper, vanilla. (Suicides are fewer among food crop farmers – that is, growers of rice, wheat, maize, pulses.) The brave new world philosophy mandated countless millions of Third World farmers forced to move from food crop cultivation to cash crop (the mantra of “export-led growth”). For millions of subsistence farmers in India, this meant much higher cultivation costs, far greater loans, much higher debt, and being locked into the volatility of global commodity prices. That’s a sector dominated by a handful of multinational corporations."
Small Debt Becomes Big Debt
“Is there a bubble being created? Are most microfinance institutions chasing the same customer? Are we pushing the customer — the poor woman — into a debt trap? Would this lead to suicides?" asked Dr MS Sriram in May this year.
The answer to all four questions is yes.
"As a pioneer in organising women’s SHGs, Andhra Pradesh provided an opportunity to MFIs to provide small loans to lakhs of rural women who are otherwise denied credit by banks. As MFIs expanded operations in the state, they targeted individual borrowers too. In recent years, many MFIs turned into for-profit organisations in a race to make a quick buck begun. MFIs are now under fire for charging exorbitant interest rates and using strong-arm tactics to collect interests." says the Indian Express, with an on the ground report of impoverished rural Indian women being first lured into debt and then terrorised.
What Milford Bateman calls "the distressing and entirely predictable situation in Andhra Pradesh", is that "today, AP is now second only to Bangladesh as the most microfinance ‘saturated’ place on earth, with a full 17% of the population in possession of a microloan account. That this represents a massive over-supply seems clear …"
"And there can be no doubt whatsoever what the real driving force behind the current crisis is: it is clearly, and overwhelmingly, a result of the largely ideologically-driven move to commercialise microfinance."
So can anything be rescued from this terrible situation? Some people keep hoping so ...
TitferTip: NEF and TaxResearch.
Tuesday, 30 November 2010
The Ever-Elongating Minsky Moment
There’s just no second-guessing the cold hard uncertainty of life is there?
From Wikipedia: “The financial crisis of 2007 to the present was triggered by a liquidity shortfall in the United States banking system … The collapse of the housing bubble, which peaked in the U.S. in 2006, caused the values of securitities tied to real estate pricing to plummet thereafter, damaging financial institutions globally."
I seem to remember that last year it was only “the financial crisis of 2007 - 2009.”
These economists! Just grasping through the mist for any substantial thing, can somebody, anybody, explain to me intelligibly whether Paul McCulley was advocating, mocking or merely predicting when he said “"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism”?
And Paul Krugman, NYT in 2002?
One economist who truly did have the wit to see what to many of us non “masters-of-the-universe” was horrifyingly obvious, namely that what goes up must come down, and that perpetual growth is as impossible as perpetual motion, was Ann Pettifor:
“There were some unkind comments on my column of August 29 2006. In it, I argued that last summer's fall in house sales in Florida and California were canaries in the deep vast coal mine of US credit; that the impact of a credit/debt crisis in the US would have a much greater impact on us all, than the crisis in Lebanon ..."
"The scale of the crisis is beginning to be grasped. However, deniers are still at work, spreading disinformation, delusions and, in some cases, downright lies about the real state of the international financial system. "
But if I may venture to disagree with Pettifor, it seems to me that the full scale of the crisis has NOT been grasped.
There is no going back to business as usual. You can try, but it won't work.
From Wikipedia: “The financial crisis of 2007 to the present was triggered by a liquidity shortfall in the United States banking system … The collapse of the housing bubble, which peaked in the U.S. in 2006, caused the values of securitities tied to real estate pricing to plummet thereafter, damaging financial institutions globally."
I seem to remember that last year it was only “the financial crisis of 2007 - 2009.”
These economists! Just grasping through the mist for any substantial thing, can somebody, anybody, explain to me intelligibly whether Paul McCulley was advocating, mocking or merely predicting when he said “"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism”?
And Paul Krugman, NYT in 2002?
One economist who truly did have the wit to see what to many of us non “masters-of-the-universe” was horrifyingly obvious, namely that what goes up must come down, and that perpetual growth is as impossible as perpetual motion, was Ann Pettifor:
“There were some unkind comments on my column of August 29 2006. In it, I argued that last summer's fall in house sales in Florida and California were canaries in the deep vast coal mine of US credit; that the impact of a credit/debt crisis in the US would have a much greater impact on us all, than the crisis in Lebanon ..."
"The scale of the crisis is beginning to be grasped. However, deniers are still at work, spreading disinformation, delusions and, in some cases, downright lies about the real state of the international financial system. "
But if I may venture to disagree with Pettifor, it seems to me that the full scale of the crisis has NOT been grasped.
There is no going back to business as usual. You can try, but it won't work.
Subscribe to:
Posts (Atom)