By the way

By the way, so far in 2009, 13 banks have been taken over by the FDIC.

Most folks (like how vague that is?) think it's just the beginning.

2009 might well be an "interesting" year.

Where To Invest Now

From Guzzo The Contrarian, the REAL lowdown on where to invest NOW!


"Where’s the best place to invest now to get the best bang for your buck?

Nope, I’m not talking about stocks or bonds, or even real estate. I’m talking buying something now at a 70-80% discount and realizing an immediate return, without having wait for things to turn around in the markets.

No, I’m not yanking your chain. Figure it out yet?

I’m talking about sartorials, baby. What?! Yes, clothes.

Now's The Time To Improve Your WardrobeI went shopping yesterday and just about replaced my entire wardrobe at unbelievable savings.

They’re giving the stuff away!

Consumers aren’t consuming. The retailer sector is experiencing the worst business conditions in decades and they’ll do almost anything to move inventory.

$90.00 dress shirts discounted to $18.00. Dress slacks originally selling at $100.00, now priced at $17.50. $17.50 for a pair of dress slacks! I’m not talking about crap either. High-end merchandise is being priced lower than the everyday stuff.

I’ve always replaced my clothing piecemeal in the past and wouldn’t have given this amount of spending a moment’s thought a couple of years ago. However, I just couldn’t pass on the current discounts.

It’s not only the prices. Service has improved too. Although my wife accompanied me on my shopping trip, the saleswomen still waited on me hand and foot and made the whole experience more enjoyable.

It’s nice to see the retailers returning to the concept of “customer service”.

So, if there’s any bright side to this recession, and if you happen to have some cash stashed away, now may just be a good time to take advantage of the significant discounts and services being offered, and invest in yourself."


Isn't that swell? If you have cash -- go to middle and high end stores -- and steal the stuff (more or less) --- AND, get better service. This while most of us Peons are still shopping at Wal-Mart.

Now, there's a new "destination mall" (or whatever you call it) across the lake from us in Rockwall, Texas -- I think they call it "The Harbor".

It has (or, is supposed to have) some fair to good restaurants. My Suzy and I went to a couple - and found ourselves made to feel UNWELCOME -- esp. at Gloria's - where the barely past teenybooper "greeter" tried to seat us in a closed section, then they totally screwed up the orders, made no apology, and made it clear they did not consider two older women their ideal customers -- esp. since we did not meet the Texas-Gracious-Old-Lady-Stereotype (I tend to wear a ball-cap and jeans -- it is a casual-dining type of place).

Perhaps they thought we were (shudder) LESBIANS.

In any case, though we eat out a bit, we will NEVER set foot in that mall again

(by the way, it's been looking more and more empty every time we pass by -- on our way somewhere else -- isn't that too bad?)

A large, truly global slump

From Brad Setser: Follow The Money


"By bsetser

China’s GDP growth stalled in the fourth quarter, which represents an enormous deceleration from its typical fast growth.

US GDP fell at a close to 4% annualized rate in the fourth quarter. The decline would have been steeper but for a big buildup in inventories. That will subtract from growth in q1.

Japanese GDP growth fell by around 10%. Some estimates are now even putting the q4 fall, annualized, at close to 12%. The fall in smaller Asian economies was often even larger.

And now we know that Europe’s GDP fell by 1.5% q/q, or 6% annualized. Germany, until recently Europe’s strongest economy, contracted at an 8% annual rate."


For the rest please follow the link.

Now, if we begin making Yugos, the circle will begin to close

I just could not resist this. It's from The Economic Populist -- lifted directly. I've resisted doing this before -- but this is too juicy.

Eisenhower's Charlie Wilson (not the Afghanistan guy) once said (supposedly) "What's good for GM is good for America." --- well, here we go.

GM Hummer Division to be Sold to Chinese Defense Contractor?


GM is talks with a Chinese firm to sell off its Humvee division with financing from a private equity firm.

A Chinese company is said to be in advanced talks with General motors over the $100million (£69.4million) takeover of Hummer - the fuel-thirsty, four-wheel-drive vehicle modelled on the US military's Humvee.

News of the unnamed bidder's interest came days after it emerged that another big Western carmaker, Volvo, may be sold to the Chinese.

Ford is in talks to sell Volvo to Chinese tycoon Li Shufu's Geely carmaking business. insiders say a private-equity firm is also involved in the proposed Hummer deal but would not reveal its identity.

The buyer is likely Dongfeng Motor Company, a Chinese defense contractor.

Like car companies globally, Dongefeng is faced with slowing sales, and in the commercial vehicles sector where Dongfeng is concentrated, the story is even worse.

However, its overall vehicle sales fell 19 percent in January to 72,483 units, as sales of commercial vehicles slumped about 60 percent to fewer than 10,000 units, the source added.

Industry analysts blamed Dongfeng's weak commercial vehicle sales, mostly medium to heavy duty trucks, on a slowing economy as well as stricter emission standards imposed in July last year.

Why, then is any Chinese car company in talks to take over Hummer?

Why is DongFeng likely the buyer?

Because of the Dongeng EQ 2050, which looks like this:

That's right, Dongfeng makes Hummer knock offs. And who's buying these knockoffs?

The People's Liberation Army, aka. the Chinese military.

According to Sinodefence.com, the chassis and several parts of the engine come from GM, would the PLA want to rely on foreign companies to supply its potentially main vehicle? Probably not. Im not sure how realiable this information is, seeing as the US and Europe (and most of the capitalist world) has a ban on exporting weapons technology to China for use within weapon systems.

The Dongfeng humvee has a V8 AMG Diesel engine, with 200BHP and a price tag of 250k RMB I’m sure the PLA boys will have a great time playing with this bad boy. The body has only basic protection from small arms fire but looks like it could be upgraded, as could the whole body, to carry missiles, or gun mounts etc. Check out the pictures in the more info section.

Anyway, there are two companies in China that are producing Humvee copies, and both are undergoing road testing with the PLA.

That's right, GM is likely selling its Humvee division complete with the machines needed to produce the engines and chassis to a company that wants to supply the Chinese military with the model. (And it's not just the Chinese military buying them, Dongfeng has been selling military vehicles to the Sudanese government, where they are used in Darfur.)

Did they seriously think that no one would notice?

As easy as it is to scream and yell at GM management about this, the truth is that when a company goes bankrupt they sell assets to people who will buy them. And if that's a Chinese automaker that may or may not be acting as a front for the PLA in order to subvert laws prohibiting the export of military material to China, so be it. That's the way things work when you put making money over the national interest.

And at least in part, blame for this falls on the Congress for keeping Detroit hanging buy a string. And, GM seems to be aware that threatening to go into bankruptcy can compel action.

While filing for bankruptcy may be the best way for GM to cut costs and revitalize, if the company chooses that option it may include politically unpalatable moves to sell off assets and cut more jobs.

Both are unfolding right now.

The UAW just walked out of talks where the company took a hard position on retiree health care. Remember that many, if not most UAW retirees are veterans, so if they lose coverage they're going to be going to the VA to get medical treatment.

And, it's only a matter of time before the buyer of Humvee is revealed. Imagine the public response when we all learn that while Wall Street can't find money to loan to GM to keep the company afloat, they can find funds to ship off dual-use manufacturing assets to China. Where they will likely be used to modernize the Chinese military at a time when stoking nationalism is a powerful way for the CCP to redirect anger generated by the economic collapse unraveling in that country at the United States. Not to mention that ramped up military production puts people to work.

We live in a dangerous world, and in these hard times, our government needs to take steps to ensure that the means to cause us harm do not fall into the hands of nations who bear us ill will.

The easiest means to this end is nationalization, complete with a dedicated fund to take public possession of technology, manufacturing assets, and the firms owning them that may be of military use to hostile states. And in the case of the auto industry, the most feasible means to accomplish this is the outright nationalization of the US auto industry

Wherever You Look

Wherever you look someone is predicting global meltdown. Only ONE has to be right

This is direct from Jesse's Cafe Americain


14 February 2009
European Banks Face Devastating Exposure to Emerging Markets


This view from the City of London is interesting, given the devastation that permeates their own surrounding landscape. The Anglo-Americans seem to be throwing down the gauntlet. What now, Monsieur Trichet?

The European banking system is certainly a mess, and if there was a case to be made for pursuing the 'Swedish option' of nationalizing the banks in a crisis of their own making this is it.

One sentence in this was especially eye-catching.

"We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights."

Problem -> Reaction -> Solution.

There always seem to be some arcane powers at the ready to solve the unexpected crisis.


UK Telegraph
Failure to save East Europe will lead to worldwide meltdown
By Ambrose Evans-Pritchard
11:17PM GMT 14 Feb 2009

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.

Mr Pröll tried to drum up support for his rescue package from EU finance ministers in Brussels last week. The idea was scotched by Germany's Peer Steinbrück. Not our problem, he said. We'll see about that.

Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.

Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble.

"This is the largest run on a currency in history," said Mr Jen.

In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.

Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.

They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data).

Spain is up to its neck in Latin America, which has belatedly joined the slump (Mexico's car output fell 51pc in January, and Brazil lost 650,000 jobs in one month). Britain and Switzerland are up to their necks in Asia.

Whether it takes months, or just weeks, the world is going to discover that Europe's financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus.

Under a "Taylor Rule" analysis, the European Central Bank already needs to cut rates to zero and then purchase bonds and Pfandbriefe on a huge scale. It is constrained by geopolitics – a German-Dutch veto – and the Maastricht Treaty.

But I digress. It is East Europe that is blowing up right now. Erik Berglof, EBRD's chief economist, told me the region may need €400bn in help to cover loans and prop up the credit system.

Europe's governments are making matters worse. Some are pressuring their banks to pull back, undercutting subsidiaries in East Europe. Athens has ordered Greek banks to pull out of the Balkans.

The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan – and Turkey next – and is fast exhausting its own $200bn (€155bn) reserve.

We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights.

Its $16bn rescue of Ukraine has unravelled. The country – facing a 12pc contraction in GDP after the collapse of steel prices – is hurtling towards default, leaving Unicredit, Raffeisen and ING in the lurch. Pakistan wants another $7.6bn. Latvia's central bank governor has declared his economy "clinically dead" after it shrank 10.5pc in the fourth quarter. Protesters have smashed the treasury and stormed parliament.

"This is much worse than the East Asia crisis in the 1990s," said Lars Christensen, at Danske Bank.

"There are accidents waiting to happen across the region, but the EU institutions don't have any framework for dealing with this. The day they decide not to save one of these one countries will be the trigger for a massive crisis with contagion spreading into the EU."

Europe is already in deeper trouble than the ECB or EU leaders ever expected. Germany contracted at an annual rate of 8.4pc in the fourth quarter.

If Deutsche Bank is correct, the economy will have shrunk by nearly 9pc before the end of this year. This is the sort of level that stokes popular revolt.

The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU "union bonds" should the debt markets take fright at the rocketing trajectory of Italy's public debt (hitting 112pc of GDP next year, just revised up from 101pc – big change), or rescue Austria from its Habsburg adventurism.

So we watch and wait as the lethal brush fires move closer.

If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?

See no, Hear no, Speak no - Evil

It is strange that our MSM - the fabled Main Stream Media - is saying very little about the unrest throughout the world. Little is said about the riots, strikes, demonstrations -- why?

Is it to minimize the unspoken run on the bamks in the USA? Is the record fall of the Dow in 2008 also ignored for the same reason?

Could it be an attempt to make the Republicans look rational when everything around us is going down the proverbial tubes? Or, are some of our oligarchs becoming really frightened?

When our folks get REALLY upset, and they get their populist chops going -- will the "Masters of The Universe" run for their lives?

I hope so.

Direct from Krugman's Blog

"February 14, 2009, 4:09 pm
Stressed for success

Aha — the Times’s dealbook blog supplies exactly the numbers I was looking for. It cites a CreditSights report on the potential losses of major banks — which gives us a guide to the amount of capital the federal government needs to put in to make these banks viable.

Focus just on the big four money center banks: Citi, B of A, Wells Fargo, JPMorgan. According to this estimate, they need around $450 billion. Meanwhile, their combined market cap is only about $200 billion — and part if not all of that market cap surely represents the “Geithner put,” the hope that stockholders will in effect get a handout from the feds.

Given these numbers, it’s extremely hard to rescue these banks without either (a) giving a HUGE handout to current stockholders or (b) effectively taking ownership on the part of we, the people. Of these, (a) would be politically unacceptable as well as bad policy — but the Obama administration isn’t ready to go for (b), because it’s not in our “culture”.

Hence the perplexity of policy. Our best hope right now is that the “stress test” will make (b) inevitable — that Treasury will declare itself shocked, shocked to find that the banks are in such bad financial shape, leaving government receivership unavoidable"

Once again, nationalization is the most sensible answer

Big Banks Look Anemic

Beginning to look like nationalization is THE way to go.

Another piece from The New York Times


Under One Stress Test, Big Banks Look Anemic
February 13, 2009, 9:57 am


Treasury Secretary Timothy F. Geithner’s has been criticized in the media and by critics for failing to present a fully fleshed-out plan to tackle the nation’s financial crisis. One of the more vague points in his speech Tuesday was that the government would use “stress tests” to determine the health of banks.

Since then, some specifics surrounding the stress tests have leaked out. Regulators plan to assess the potential losses a bank could face over the next two years, rather than the typical one year, government officials close to the situation told The New York Times.

The government is also expected to look at banks’ exposure to derivatives and other assets normally carried off their balance sheets, and make sure that banks also carry an additional capital cushion. Their assumptions will be guided on a “worst case” basis.

But what constitutes a worst case in such a volatile environment?

CreditSights ran the numbers, and found that according to its “severe” case situation, all the major banks and brokerages — Citigroup, Bank of America, Wells Fargo, JPMorgan Chase, Goldman Sachs and Morgan Stanley — might require further capital injections from the government.

CreditSights’ projections were driven by its own forecast for future credit losses based on how badly the market could perform over the next two years. Under these assumptions, the losses from mortgage-related products would be significantly higher than the amount the banks have set aside already. It also envisions an unemployment rate of 10 percent.

The future losses for some banks are staggering by CreditSights’ estimates: Wells Fargo, $119 billion; BofA, $99 billion; JPMorgan, $124 billion; Citi, $101 billion; Goldman Sachs: $47 billion; Morgan Stanley, $34 billion.

If the government uses similar assumptions, it would probably need to inject all of the firms with billions of dollars in new capital to stabilize them against future losses. The idea would be to give them the money now, as opposed to later, when a huge loss could cause further instability in the banking system.

A further injection of cash by the government would force banks to comply with all the new rules and regulations the government has placed upon future recipients of government cash, including provisions capping executive pay and other executive perks like travel and entertainment stipends.

–Cyrus Sanati

This from The New York Times

Just in case you missed this wonderful news. It looks like we've gone right through recession to the "unthinkable", unspeakable


Laid-Off Foreigners Flee as Dubai Spirals Down

Published: February 11, 2009

DUBAI, United Arab Emirates — Sofia, a 34-year-old Frenchwoman, moved here a year ago to take a job in advertising, so confident about Dubai’s fast-growing economy that she bought an apartment for almost $300,000 with a 15-year mortgage.

Now, like many of the foreign workers who make up 90 percent of the population here, she has been laid off and faces the prospect of being forced to leave this Persian Gulf city — or worse.

“I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld because she is still hunting for a new job. “If I can’t pay it off, I was told I could end up in debtors’ prison.”

With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills). Some are said to have maxed-out credit cards inside and notes of apology taped to the windshield.

The government says the real number is much lower. But the stories contain at least a grain of truth: jobless people here lose their work visas and then must leave the country within a month. That in turn reduces spending, creates housing vacancies and lowers real estate prices, in a downward spiral that has left parts of Dubai — once hailed as the economic superpower of the Middle East — looking like a ghost town.

No one knows how bad things have become, though it is clear that tens of thousands have left, real estate prices have crashed and scores of Dubai’s major construction projects have been suspended or canceled. But with the government unwilling to provide data, rumors are bound to flourish, damaging confidence and further undermining the economy.

Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.

Last month, local newspapers reported that Dubai was canceling 1,500 work visas every day, citing unnamed government officials. Asked about the number, Humaid bin Dimas, a spokesman for Dubai’s Labor Ministry, said he would not confirm or deny it and refused to comment further. Some say the true figure is much higher.

“At the moment there is a readiness to believe the worst,” said Simon Williams, HSBC bank’s chief economist in Dubai. “And the limits on data make it difficult to counter the rumors.”

Some things are clear: real estate prices, which rose dramatically during Dubai’s six-year boom, have dropped 30 percent or more over the past two or three months in some parts of the city. Last week, Moody’s Investor’s Service announced that it might downgrade its ratings on six of Dubai’s most prominent state-owned companies, citing a deterioration in the economic outlook. So many used luxury cars are for sale , they are sometimes sold for 40 percent less than the asking price two months ago, car dealers say. Dubai’s roads, usually thick with traffic at this time of year, are now mostly clear.

Some analysts say the crisis is likely to have long-lasting effects on the seven-member emirates federation, where Dubai has long played rebellious younger brother to oil-rich and more conservative Abu Dhabi. Dubai officials, swallowing their pride, have made clear that they would be open to a bailout, but so far Abu Dhabi has offered assistance only to its own banks.

“Why is Abu Dhabi allowing its neighbor to have its international reputation trashed, when it could bail out Dubai’s banks and restore confidence?” said Christopher M. Davidson, who predicted the current crisis in “Dubai: The Vulnerability of Success,” a book published last year. “Perhaps the plan is to centralize the U.A.E.” under Abu Dhabi’s control, he mused, in a move that would sharply curtail Dubai’s independence and perhaps change its signature freewheeling style

For many foreigners, Dubai had seemed at first to be a refuge, relatively insulated from the panic that began hitting the rest of the world last autumn. The Persian Gulf is cushioned by vast oil and gas wealth, and some who lost jobs in New York and London began applying here.


But Dubai, unlike Abu Dhabi or nearby Qatar and Saudi Arabia, does not have its own oil, and had built its reputation on real estate, finance and tourism. Now, many expatriates here talk about Dubai as though it were a con game all along. Lurid rumors spread quickly: the Palm Jumeira, an artificial island that is one of this city’s trademark developments, is said to be sinking, and when you turn the faucets in the hotels built atop it, only cockroaches come out.

“Is it going to get better? They tell you that, but I don’t know what to believe anymore,” said Sofia, who still hopes to find a job before her time runs out. “People are really panicking quickly.”

Hamza Thiab, a 27-year-old Iraqi who moved here from Baghdad in 2005, lost his job with an engineering firm six weeks ago. He has until the end of February to find a job, or he must leave. “I’ve been looking for a new job for three months, and I’ve only had two interviews,” he said. “Before, you used to open up the papers here and see dozens of jobs. The minimum for a civil engineer with four years’ experience used to be 15,000 dirhams a month. Now, the maximum you’ll get is 8,000,” or about $2,000.

Mr. Thiab was sitting in a Costa Coffee Shop in the Ibn Battuta mall, where most of the customers seemed to be single men sitting alone, dolefully drinking coffee at midday. If he fails to find a job, he will have to go to Jordan, where he has family members — Iraq is still too dangerous, he says — though the situation is no better there. Before that, he will have to borrow money from his father to pay off the more than $12,000 he still owes on a bank loan for his Honda Civic. Iraqi friends bought fancier cars and are now, with no job, struggling to sell them.

“Before, so many of us were living a good life here,” Mr. Thiab said. “Now we cannot pay our loans. We are all just sleeping, smoking, drinking coffee and having headaches because of the situation.”

This from "When Giants Fall"

Time Is On the Wrong Side

Time is often viewed as an ally when it comes to resolving problems. Hence, the expressions "time heals all wounds," "give it time," or "time is the best medicine."

But that is not always the case, especially when the evidence points to much more challenging conditions ahead or where pressures that have long been bottled up are only just starting to be released. Under those circumstances, instead of easing the strains, each day that goes buy seems to compound them.

According to one expert cited by Bloomberg, in a report entitled "Fiscal Crisis Is Urgent Security Concern, Blair Says," that appears to describe the situation we are in now.

The deepening global financial crisis is the most immediate national security concern for the U.S., threatening the stability of governments and making it difficult for allies to meet their military obligations, the top U.S. intelligence official said.

“Time is probably our greatest threat. The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests,” Director of National Intelligence Dennis Blair said today.

Blair, a retired admiral who was confirmed last month for his new job, testified before the Senate Intelligence Committee about security threats to the U.S. Those include al-Qaeda and increasing attacks by the Taliban on U.S. forces in Afghanistan.

Statistical models show that governments are likely to succumb to public unrest if economic crises continue over a one- or two-year period, Blair said.

Countries in sub-Saharan Africa and Latin America as well as those in the former Soviet Union don’t have sufficient cash reserves and credit for a prolonged fiscal slowdown, he said.

Still, the U.S. could use the crisis to overhaul its financial system and exert leadership within organizations such as the G-20, Blair said.

The al-Qaeda terrorist organization, which was the No. 1 security threat, has been weakened by mounting criticism in the Islamic world of its methods as well as by U.S. and allied attacks on its leadership in the Pakistani tribal region, he said.

‘Less Capable’

Also, the continuing decline of al-Qaeda’s branch in Iraq has hurt the group, Blair said. “Al-Qaeda today is less capable and effective than it was two years ago,” he said. Contrary to some media reports, though, al-Qaeda isn’t on the verge of defeat, Blair said.

Blair talked about continued progress in Iraq’s security situation and the potential for a confrontation between Israel and Iran.

He said he doubted that the Iranian presidential election in June would affect Iranian policy on developing nuclear weapons. “I don’t believe that a change of a single individual would change in and of itself fundamental Iranian policy,” Blair said.

Iranian officials have denied U.S. allegations that they are developing a nuclear program for weapons rather than energy. Israeli leaders have said they won’t tolerate a nuclear-armed Iran.

Blair also said that low oil prices have made it harder for Iran and Venezuela to fund groups and efforts counter to U.S. security interests.

Yet if the price decline continues, it could slow an economic recovery by forcing oil companies to end drilling projects that will be necessary when demand increases, he said.

As if happens, below is a recent Reuters report, "FACTBOX-Global Financial Crisis Sparks Unrest in Europe," that reveals the extent to which pressures are already surfacing elsewhere.

Here are some details of protests linked to the global financial crisis:

* BOSNIA:

-- Workers of Bosnia's only alumina producer Birac protested on Monday in Banja Luka, demanding payments and government support to offset falling metal prices. They carried signs reading "The Factory is Our Life" and "Who will Feed our Children?"

* BULGARIA:

-- Bulgarian police vowed on Monday to protest until their demands for better salaries and working conditions were met.

-- Farmers blocked the only Danube bridge link with Romania and rallied across Bulgaria last week demanding the government set a minimum protective price for milk and stop imports of cheap substitutes, such as powdered milk. Prosecutors and authorities said earlier this week they had launched mass checks of milk and meat products safety following the protests.

-- Last month Bulgarians staged rallies to demand economic reforms in the face of the global slowdown, calling on the Socialist-led government to act or step down. One rally in Sofia turned into a riot.

* BRITAIN:

-- Hundreds of workers protested outside British power stations on Wednesday over the use of foreign contractors in recession-hit Britain, where almost 2 million people are unemployed.

-- The protests follow a week-long dispute at the Total-owned Lindsey oil refinery in Lincolnshire earlier this month, which resulted in Total (TOTF.PA: Quote, Profile, Research) agreeing to hire more British workers on the project. Workers voted to end the unofficial strike on Feb. 5.

-- Workers from Britain's high street banks demonstrated outside parliament on Tuesday, saying jobs were put in jeopardy while banking executives reaped massive bonuses.

* FRANCE:

-- France's eight union federations have called for a new day of action on March 19 to protest against President Nicolas Sarkozy's handling of the slowing economy. Sarkozy has called for talks with the unions on Feb. 19.

-- Up to 2.5 million protesters took to the streets of France last month in a first day of strikes and rallies to denounce the economic crisis. Some protesters clashed with police, but no major violence was reported. The strike failed to paralyse the country and support from private sector workers appeared limited. Labour leaders hailed the action, which marked the first time France's eight union federations had joined forces against the government since President Sarkozy took office in 2007.

-- The French government rejected demands earlier this week to raise the minimum wage in the Caribbean island of Guadeloupe, which has been paralysed for three weeks by a general strike over the high cost of living. Protesters in Guadeloupe, a full part of France which sends deputies to the national parliament in Paris, have blocked fuel stations, roads and supermarkets, dealing a severe blow to the tourism industry on which the island depends.

* GERMANY:

-- Thousands of German public sector workers went on strike last week to press for more pay during the worst economic downturn in decades in action that affected transport and schools across the country.

* GREECE:

-- Greek farmers set up roadblocks across the country in January, protesting against low prices. Most were taken down after the government pledged 500 million euros ($652 million) in aid. Blockades continued on and off at the Bulgarian border. On Feb. 3 riot police clashed for a second day with Crete farmers.

-- High youth unemployment was a main driver for rioting in Greece in December, initially sparked by the police shooting of a youth in an Athens neighbourhood. The protests forced a government reshuffle.

* ICELAND:

-- Prime Minister Geir Haarde resigned in January after a series of protests, some violent. The first leader in the world to fall as a direct result of the credit crunch, he was replaced by Johanna Sigurdardottir, who heads a new centre-left coalition. The collapse of the country's banks under a weight of debt last year forced the country to take a $10 billion IMF-led rescue package.

* LATVIA:

-- Latvia's agriculture minister quit on Feb. 3 amid protests by farmers over falling incomes.

-- A 10,000-strong protest in Latvia last month descended into a riot. Government steps to cut wages, as part of an austerity plan to win international aid, have angered people.

* LITHUANIA:

-- Police fired teargas last month to disperse demonstrators who pelted parliament with stones in protest at government cuts in social spending. Police said 80 people were detained and 20 injured. Prime Minister Andrius Kubilius said the violence would not stop an austerity plan launched after a slide in output and revenues.

* MONTENEGRO:

-- In Podgorica on Monday, aluminium workers demanded to be paid their salaries and an immediate restart of suspended production at the Kombinat Aluminijuma Podgorica (KAP), a Russian-owned plant. Metal workers from the central town of Niksic and tobacco workers from Podgorica said they would rally at Montenegro's main government building later on Monday.

* RUSSIA:

-- Thousands of opposition supporters rallied in Moscow and the port of Vladivostok on Jan 31. in a day of protests over hardships caused by the financial crisis. The next day hundreds of Moscow demonstrators called for Russia's leaders to resign.

-- Street rallies were held in almost every major city over those days. The pro-Kremlin United Russia party also drew thousands to rallies in support of government anti-crisis measures.

-- About 100 protesters were arrested in Vladivostok in January at protests against hikes in second-hand car import duties.

(Hat tip to Paul Kedrosky's Infectious Greed)

New Conditions

Sorry for not posting much lately. I've been feeling "off" for a while -- and my concern grew until I went to a Dr.

It seems I'm diabetic -- I don't quite know the extent of it - yet, but Drs. Nurse said "it's bad".

Will find out more Friday -- until then, I've been taking care of other stuff, and cooling it a bit.

Back soon with all new stuff that appeals to me, rants, and good stuff taken from other sites -- with attribution and a link (of course).

A long time ago, I worked for a guy who always said, "Pigs get fat, hogs get slaughtered."

It's always SEEMED true -- now we know it is, sort of. Right now, the biggest hogs are still riding high. Many just below them are having problems -- and still can't understand why.

So many entitled people.

We need actual "real change"

This Dierct From "Financial Armageddon"

It's amazing how close to total meltdown we have come. Now, they still want to reward those who brought us to that brink -- how insane is that?

NATIONALIZE THE BIG BANKS NOW !


The Zero Hour

I have to admit that even I thought there was a great deal of hyperbole involved when Congress was last fall being prodded with scary talk of Armageddon into taking action to "rescue" the financial system.

Now, though, as the Zero Hedge blog reveals in a post entitled "How The World Almost Came To An End At 2PM On September 18," it appears that those giving the warnings were deadly serious.

LiveLeak has caught a scary moment of previously undisclosed insight by Paul Kanjorski where he reveals some facts that have not been captured by the media previously. At 2 minutes and 20 seconds in the video below, Democratic Representative Kanjorski explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two. And it gets worse. Kanjorski paraphrases the following disclosure by Bernanke and Paulson:

On Thursday (Sept 18), at 11am the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn't be further panic out there.

If they had not done that, their estimation is that by 2pm that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it.

We are no better off today than we were 3 months ago because we have a decrease in the equity positions of banks because other assets are going sour by the moment.

Interestingly, Kanjorski, and likely more and more Democrats, are starting to shift to the camp that more time is needed to make a correct decision this time (which may explain Geithner's decision to postpone the "bank-rescue" announcement by one day to Tuesday), instead of rushing into another half-baked plan. Very scary stuff.

"Running Dry in China"

When Giants Fall has some info. about drought in China -- highlighting another major crisis -- WATER, and lack of same. Here's an exerpt.

"Running Dry in China

Insiders and outsiders alike have long acknowledged the negative consequences for China of a major economic slowdown in that country. Without enough growth to keep its people busy and stomachs full, the world's most populous country faced the threat of destabilizing social unrest.

That is not the only thing that has kept Chinese authorities (as well as policymakers elsewhere) awake at night, however. The availability of essential resources, including fresh water, has also been at the forefront of official concerns. Under the circumstances, the following BBC News report,"China Declares Drought Emergency," is a development worth watching.

China has declared an emergency in eight northern and central drought-hit regions, where nearly four million people are suffering water shortages.

Nearly half of China's winter crop - some 10m hectares (24m acres) of wheat and rape seed - are also under threat.

President Hu Jintao and Premier Wen Jiabao ordered all-out efforts to fight the drought, allocating 400m yuan ($58m, £40m) in relief assistance."

Please follow the link for the rest.

Bipartisan THIS!

This is direct from Brad DeLong's blog, "Grasping Reality with Both Hands". It's by John Cole.

The Problem with Bipartisanship

John Cole:

You’ll Never Get This 21 Minutes Of Your Life Back: Instapundit, Malkin, and Joe the Plumber discuss politics for PJTV. There is so much to love about this, I don’t know where to start, but certainly Joe the Plumber bemoaning the lack of spending cuts and general program cuts in the stimulus bill was a highlight. It is almost as if he doesn’t have the first damned clue what he is talking about. A close runner-up would be Instapundit heralding Bush’s MBA as evidence of his awesome managerial skills. There was just so much to love, it is hard to narrow down the “best” parts.

I really don’t understand how bipartisanship is ever going to work when one of the parties is insane. Imagine trying to negotiate an agreement on dinner plans with your date, and you suggest Italian and she states her preference would be a meal of tire rims and anthrax. If you can figure out a way to split the difference there and find a meal you will both enjoy, you can probably figure out how bipartisanship is going to work the next few years.

"The Silver Lining"

This from Discovery News


The Silver Lining
January 28, 2009

If you're like most folks these days, your reality is looking kind of warped. One year ago most informed folks around the world frowned on Americans for consuming too much and not giving a damn about it. Today Americans are smarting from economic troubles and consuming less. Is the world applauding? Nope. The world now wants us to consume more to stimulate their economieAughnaguns. Damned if we consume, damned if we don't. These are strange, twisted times. But before you rattle off all the economic arguments for this, let me say something from a more practical natural resources perspective: It's all nuts.

As much as it hurts, the economic downturn has been good for planet Earth and created a rare and wonderful chance for us to avoid a far bigger, global environmental calamity. Here's the big lesson of our times: When Americans consume less, there is less fossil fuel burning, less trash, less wasted water and less destruction of wildlife habitat worldwide, just to name a few effects. When economists and politicians, then, talk about stimulating the economy to return us to some fabled status quo, they are being foolish or dishonest. The status quo was unsustainable and leading us straight into a global environmental collapse.

So what we have here is not just a crisis but an opportunity. It's not just a dip in the road but also an intersection with another road which goes to a far better destination. I think the general concept our new president has for taking advantage of this opportunity is pretty good. It remains to be seen if we'll all pull together and make it work. This could be our last chance to do the right thing for our planet and those who will inherit it. So we must do it, you know. Now.
-Larry O'Hanlon

Just another day.

It's just another day when I do not want to post anything. Michael Phelps is being punished for being too good -- no one can be that good without having some major flaws -- right? So, he was caught doing what a hell of a lot of kids do -- and now he's being torn down for doing what he does (swim) better than anyone else.

Our economy is going down the tubes -- and the clueless Republicans are playing stupid people tricks, using faux economics to insure Obama's failure -- the fact we all may go down the tubes with the world economy seems to mean nothing, nada, zero, zilch, squat, to these posturing, pompous, assholes. Aren't these the same guys who saw mild criticism as "treason"?

At the very first chance -- VOTE THEM OUT OF OFFICE!

Some "guys" lured a stripper out of her club -- and SET HER ON FIRE! They don't even deserve a trial -- just feed them feet first into a wood chipper.

We've got the usual spate of child abuse cases -- supposed "adults" doing unspeakable things to infants, toddlers, children. Child abuse is institutionalized in American society. We see abusers as "disciplinarians", "strict parents", when most of the time they just want to hurt kids for being kids. Too many people want their kids to be like blow up dolls -- things they can trot out, show off, then fold up and put back into the dresser drawer. We need some real child protection laws. Andrew Vachss has the right attitude toward "baby rapers" - read his Burke series.

The bigots are still making up "facts" about gay folks, and "gay marriage" - what ever happened to "live and let live"? We have become such hypocrites, so unable to clean our own messes that we focus on those of others.

Looks like torture has become the new "American Way" -- and, speaking of the rule of law, people like Carl Rove can just ignore the law. You try it.

People around the world are rioting - our "liberal" media ignores it. We are entering Great Depression II -- and Obama blew his wad being nice to the people who hate traditional America, traditional American Values -- the current Republican Party. He did not realize they are completely divorced from reality. Now he knows -- I hope it isn't too late.

"It's Not Going To Be O.K."

This from "Truthdig" via OpEdNews.

I'm becoming more and more a pessimist. It seems none of our leaders want to confront the real issues. I'm beginnng to believe our Oligarchs don't want to realize the shape we are in. I fear for my America, the nation I loved so much, I made it my course of studies.


It's Not Going to Be OK

by Chris Hedges Page 1 of 1 page(s)

www.opednews.com

The daily bleeding of thousands of jobs will soon turn our economic crisis into a political crisis. The street protests, strikes and riots that have rattled France, Turkey, Greece, Ukraine, Russia, Latvia, Lithuania, Bulgaria and Iceland will descend on us. It is only a matter of time. And not much time. When things start to go sour, when Barack Obama is exposed as a mortal waving a sword at a tidal wave, the United States could plunge into a long period of precarious social instability.

At no period in American history has our democracy been in such peril or has the possibility of totalitarianism been as real. Our way of life is over. Our profligate consumption is finished. Our children will never have the standard of living we had. And poverty and despair will sweep across the landscape like a plague. This is the bleak future. There is nothing President Obama can do to stop it. It has been decades in the making. It cannot be undone with a trillion or two trillion dollars in bailout money. Our empire is dying. Our economy has collapsed.

How will we cope with our decline? Will we cling to the absurd dreams of a superpower and a glorious tomorrow or will we responsibly face our stark new limitations? Will we heed those who are sober and rational, those who speak of a new simplicity and humility, or will we follow the demagogues and charlatans who rise up out of the slime in moments of crisis to offer fantastic visions? Will we radically transform our system to one that protects the ordinary citizen and fosters the common good, that defies the corporate state, or will we employ the brutality and technology of our internal security and surveillance apparatus to crush all dissent? We won't have to wait long to find out.

There are a few isolated individuals who saw it coming. The political philosophers Sheldon S. Wolin, John Ralston Saul and Andrew Bacevich, as well as writers such as Noam Chomsky, Chalmers Johnson, David Korten and Naomi Klein, along with activists such as Bill McKibben and Ralph Nader, rang the alarm bells. They were largely ignored or ridiculed. Our corporate media and corporate universities proved, when we needed them most, intellectually and morally useless.

Wolin, who taught political philosophy at the University of California in Berkeley and at Princeton, in his book "Democracy Incorporated" uses the phrase inverted totalitarianism to describe our system of power. Inverted totalitarianism, unlike classical totalitarianism, does not revolve around a demagogue or charismatic leader. It finds its expression in the anonymity of the corporate state. It purports to cherish democracy, patriotism and the Constitution while cynically manipulating internal levers to subvert and thwart democratic institutions. Political candidates are elected in popular votes by citizens, but they must raise staggering amounts of corporate funds to compete. They are beholden to armies of corporate lobbyists in Washington or state capitals who write the legislation. A corporate media controls nearly everything we read, watch or hear and imposes a bland uniformity of opinion or diverts us with trivia and celebrity gossip. In classical totalitarian regimes, such as Nazi fascism or Soviet communism, economics was subordinate to politics. "Under inverted totalitarianism the reverse is true," Wolin writes. "Economics dominates politics""and with that domination comes different forms of ruthlessness."

I reached Wolin, 86, by phone at his home about 25 miles north of San Francisco. He was a bombardier in the South Pacific during World War II and went to Harvard after the war to get his doctorate. Wolin has written classics such as "Politics and Vision" and "Tocqueville Between Two Worlds." His newest book is one of the most important and prescient critiques to date of the American political system. He is also the author of a series of remarkable essays on Augustine of Hippo, Richard Hooker, David Hume, Martin Luther, John Calvin, Max Weber, Friedrich Nietzsche, Karl Marx and John Dewey. His voice, however, has faded from public awareness because, as he told me, "it is harder and harder for people like me to get a public hearing." He said that publications, such as The New York Review of Books, which often published his work a couple of decades ago, lost interest in his critiques of American capitalism, his warnings about the subversion of democratic institutions and the emergence of the corporate state. He does not hold out much hope for Obama.

"The basic systems are going to stay in place; they are too powerful to be challenged," Wolin told me when I asked him about the new Obama administration. "This is shown by the financial bailout. It does not bother with the structure at all. I don't think Obama can take on the kind of military establishment we have developed. This is not to say that I do not admire him. He is probably the most intelligent president we have had in decades. I think he is well meaning, but he inherits a system of constraints that make it very difficult to take on these major power configurations. I do not think he has the appetite for it in any ideological sense. The corporate structure is not going to be challenged. There has not been a word from him that would suggest an attempt to rethink the American imperium."

Wolin argues that a failure to dismantle our vast and overextended imperial projects, coupled with the economic collapse, is likely to result in inverted totalitarianism. He said that without "radical and drastic remedies" the response to mounting discontent and social unrest will probably lead to greater state control and repression. There will be, he warned, a huge "expansion of government power."

"Our political culture has remained unhelpful in fostering a democratic consciousness,"- he said. "The political system and its operatives will not be constrained by popular discontent or uprisings."

Wolin writes that in inverted totalitarianism consumer goods and a comfortable standard of living, along with a vast entertainment industry that provides spectacles and diversions, keep the citizenry politically passive. I asked if the economic collapse and the steady decline in our standard of living might not, in fact, trigger classical totalitarianism. Could widespread frustration and poverty lead the working and middle classes to place their faith in demagogues, especially those from the Christian right?

"I think that's perfectly possible," he answered. "That was the experience of the 1930s. There wasn't just FDR. There was Huey Long and Father Coughlin. There were even more extreme movements including the Klan. The extent to which those forces can be fed by the downturn and bleakness is a very real danger. It could become classical totalitarianism."

He said the widespread political passivity is dangerous. It is often exploited by demagogues who pose as saviors and offer dreams of glory and salvation. He warned that "the apoliticalness, even anti-politicalness, will be very powerful elements in taking us towards a radically dictatorial direction. It testifies to how thin the commitment to democracy is in the present circumstances. Democracy is not ascendant. It is not dominant. It is beleaguered. The extent to which young people have been drawn away from public concerns and given this extraordinary range of diversions makes it very likely they could then rally to a demagogue."

Wolin lamented that the corporate state has successfully blocked any real debate about alternative forms of power. Corporations determine who gets heard and who does not, he said. And those who critique corporate power are given no place in the national dialogue.

"In the 1930s there were all kinds of alternative understandings, from socialism to more extensive governmental involvement," he said. "There was a range of different approaches. But what I am struck by now is the narrow range within which palliatives are being modeled. We are supposed to work with the financial system. So the people who helped create this system are put in charge of the solution. There has to be some major effort to think outside the box."


"The puzzle to me is the lack of social unrest," Wolin said when I asked why we have not yet seen rioting or protests. He said he worried that popular protests will be dismissed and ignored by the corporate media. This, he said, is what happened when tens of thousands protested the war in Iraq. This will permit the state to ruthlessly suppress local protests, as happened during the Democratic and Republic conventions. Anti-war protests in the 1960s gained momentum from their ability to spread across the country, he noted. This, he said, may not happen this time. "The ways they can isolate protests and prevent it from [becoming] a contagion are formidable," he said.

"My greatest fear is that the Obama administration will achieve relatively little in terms of structural change," he added. "They may at best keep the system going. But there is a growing pessimism. Every day we hear how much longer the recession will continue. They are already talking about beyond next year. The economic difficulties are more profound than we had guessed and because of globalization more difficult to deal with. I wish the political establishment, the parties and leadership, would become more aware of the depths of the problem. They can't keep throwing money at this. They have to begin structural changes that involve a very different approach from a market economy. I don't think this will happen."

"I keep asking why and how and when this country became so conservative,"- he went on. "This country once prided itself on its experimentation and flexibility. It has become rigid. It is probably the most conservative of all the advanced countries."

The American left, he said, has crumbled. It sold out to a bankrupt Democratic Party, abandoned the working class and has no ability to organize. Unions are a spent force. The universities are mills for corporate employees. The press churns out info-entertainment or fatuous pundits. The left, he said, no longer has the capacity to be a counterweight to the corporate state. He said that if an extreme right gains momentum there will probably be very little organized resistance.

"The left is amorphous," he said. "I despair over the left. Left parties may be small in number in Europe but they are a coherent organization that keeps going. Here, except for Nader's efforts, we don't have that. We have a few voices here, a magazine there, and that's about it. It goes nowhere."

Riots have occurred in a number of European countries since the economic crisis began.

My "WTF" echoed by Stiglitz

Yesterday I posted "WTF" where I suggested we might just let them (banks, huge corporations, etc.) go down the tubes and then rebuild a new system.

Today Nobel winner Joseph stiglitz made a "modest proposal"

"..."The government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice."

Methinks he makes sense. Unfortunately, our entrenched oligarchs will not allow that to happen -- even if it actually might end up "saving their bacon" (they are PIGS, after all).

Will this happen here?

When I read the News, I discover the real dystopia we all live in. As the economy gets worse, I suspect we will see more stuff like the following.


Injured man dies after rejection by 14 hospitals

By MARI YAMAGUCHI, Associated Press Writer Mari Yamaguchi, Associated Press Writer – 1 hr 36 mins ago

TOKYO – After getting struck by a motorcycle, an elderly Japanese man with head injuries waited in an ambulance as paramedics phoned 14 hospitals, each refusing to treat him.

He died 90 minutes later at the facility that finally relented — one of thousands of victims repeatedly turned away in recent years by understaffed and overcrowded hospitals in Japan.

Paramedics reached the accident scene within minutes after the man on a bicycle collided with a motorcycle in the western city of Itami. But 14 hospitals refused to admit the 69-year-old citing a lack of specialists, equipment and staff, according to Mitsuhisa Ikemoto, a fire department official.

The Jan. 20 incident was the latest in a string of recent cases in Japan in which patients were denied treatment, underscoring health care woes in a rapidly aging society that faces an acute shortage of doctors and a growing number of elderly patients.

One of the hospitals agreed to provide care when the paramedics called a second time more than an hour after the accident. But the man, who suffered head and back injuries, died soon afterward of shock from loss of blood.

The injured man might have survived if a hospital accepted him more quickly, Ikemoto said. "I wish hospitals are more willing to take patients, but they have their own reasons, too," he said.

The motorcyclist, also hurt in the accident, was denied admission by two hospitals before a third accepted him, Ikemoto said. He was recovering from his injuries.

The death prompted the city to issue a directive ordering paramedics to better coordinate with an emergency call center so patients can find a hospital within 15 minutes. But hospitals cannot be punished for turning away patients if they are full.

Similar problems have occurred frequently in recent years. More than 14,000 emergency patients were rejected at least three times by Japanese hospitals before getting treatment in 2007, the latest government survey showed.

In the worst case, a woman in her 70s with a breathing problem was rejected 49 times in Tokyo.

There was also the high-profile death of a pregnant woman in western Nara city in 2006 that prompted the government to establish a panel to look into the hospitals' practice of refusing care.

In that case, the woman was refused admission by 19 hospitals that said they were full. She died eight days later from a brain hemorrhage after falling unconscious during birth.

Health Minister Yoichi Masuzoe told a parliamentary committee last year that the rising number of elderly patients hospitalized for months was taking up space that could be used to treat emergency cases.

Masuzoe urged the development of a community-wide support system to ease the burden on hospitals. The government also announced plans to increase the number of doctors and improve coordination among ambulances, emergency call centers and hospitals.

This direct from "Jesse's Café Américain "

A Modest Proposal from Joe Stiglitz


"..."The government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice."

Joseph Stiglitz, the Nobel Prize-winning economist


This is the procedure, that is what we do with insolvent banks. That is what the FDIC is for.

We don't prop up the bad banks. The regulators help them become solvent through a resolution and restructuring of their bad debt, and then either sell them, sell their assets independently, or allow them to re-emerge as good banks once they are solvent

This is precisely what Le Café Américain has had on the menu for the banks over the past seven months, with some detail behind it, including systemic reforms.

We do not burden an entire national economy, we do not cripple an entire banking industry including many regional banks who have done no wrong, in propping up a few insolvent institutions who arrived at that state through outrageous bad management.

There is widespread suspicion that this exercise is designed to protect a handful of large money center banks from realizing their losses - JPM, C, Morgan Stanley, B of A, and Goldman Sachs.

Let the system work. Do not continue to privatize the gains and subsidize the losses.

And then let the criminal and civil investigations of the major actors in this modern tragedy begin, if we ever wish to 'restore confidence' in Wall Street in the public and the rest of the world.

"Blacklisting Progressives" - by David Sirota

Blacklisting Progressives: The Untold Story Beneath the Daschle Headlines
by: David Sirota
Tue Feb 03, 2009 at 16:46


Amid the swirling headlines about Tom Daschle withdrawing his nomination for Health and Human Service Secretary is a very dark, very foreboding story that tells us a lot more about what to expect from the Obama administration than a single nomination fight. It is a story that every single voter who supported Barack Obama because of his progressive economic platform should know about - and worry about.

As every newspaper in America has been happy to report, Daschle worked with venture capitalist Leo Hindery after he left the Senate. Hindery was a top economic adviser to John Edwards and later to Barack Obama, and many had floated his name for U.S. Trade Representative or Commerce Secretary. Now, though, that won't be happening, as anyone mentioned near the Daschle flap is being shunned by the Obama administration.

But is that really why someone as accomplished as Hindery was never seriously considered for a top economic post in the administration? The media and the Obama administration would like us to believe yes - but the answer is no. It has far less to do with the Daschle situation and far more to do with Hindery's progressive economic ideology.

Buried in a Politico dispatch, we get the real story:

Hindery did his best to carve out his own public profile, with generous contributions to a range of Democratic-leaning organizations and a 2005 book, "It Takes a CEO," decrying outsourcing, Wal-Mart, and "an ethical and aesthetic 'race to the bottom'" in the media industry.

He also hoped to land a job in the Obama administration, and he had a close Obama adviser - Daschle -- in his corner, the two Democrats said. United Steeelworkers union officials also backed him.

But while Hindery complained that he "waited for the phone to ring," a source said, Obama's aides appear never to have taken his bid seriously. One possible source of friction: Hindery had set himself up in opposition to Obama's top economic advisors, many of whom were associated with The Hamilton Project, an economic think tank that was the inheritor of former Treasury Secretary Rubin's generally pro-trade position.

In the same story, of course, we get hedge fund shark Steve Rattner - a huge Democratic fundraiser on Wall Street - bashing Hindery for backing populist Democratic candidates for local and national office.

And that's the big story here: Leo Hindery, one of the few business leaders to use his wealth to challenge deregulation, corporate trade deals and anti-worker policies was blacklisted by the Obama administration well before the Daschle flap ever happened - and he was blacklisted because he dared to clash with the same Wall Street Democrats whose corporate-backed policies destroyed the economy.
David Sirota :: Blacklisting Progressives: The Untold Story Beneath the Daschle Headlines
You can go ahead and tell yourself that this is just theory - just a single example. But that's willful ignorance, as the Hindrey scalping is only one chapter in what has been one long narrative arc whereby economic progressives have been deliberately shut out of top administration jobs. Just step back and think about it for a minute: Amid a stable of eminently qualified and well-respected progressives like James Galbraith, Joseph Stiglitz, Dean Baker, Robert Reich, Paul Krugman and Larry Mishel, Obama has chosen Rubin sycophants like Larry Summers and Tim Geithner to run the economy - the same Larry Summers who pushed the repeal of the Glass-Steagal Act, the same Geithner who masterminded the kleptocratic bank bailout, the same duo whose claim to fame is their personal connections to Rubin, a disgraced Citigroup executive at the center of the current meltdown. And the list of Rubin sycophants keeps getting longer, from Peter Orszag to Jason Furman.

As the Nation's Chris Hayes shows, its the same in other key regulatory positions, as free market fundamentalists who created the problem take the helm of the regulatory agencies they tried to destroy. Indeed, the only movement progressive in a top economic position is Jared Bernstein, and he was relegated to an amorphous job in the Vice President's office.

And now we see that's not an accident. Though Obama won states like Ohio, Pennsylvania and Indiana on promises to challenge Wall Street and reform our trade policies, there has been a deliberate and calculated effort to stack the administration with the very Wall Street Democrats who created the problems he lamented, and shun those who have been fighting the good fight.

WTF??

I'm going to be 70 in April. I've loved peanut butter all my life. Peanut butter and orange marmalade on white bread was my favorite sandwich for many years. I do not recall EVER seeing, or hearing about a peanut recall. It just did not happen. Our food was safe -- and, that's all she wrote.

Now, with the coyotes in charge of the henhouse, none of our food is safe anymore. Spinach, beef, peanut butter, and damn near everything else is questionable. Even our dogs and cats are at risk.

I guess the all powerful "marketplace" will solve all these problems -- but, how many people will have to die first? How many criminal CEO's will we have to string up? How many execs. will be sent to our version of Hunan for "re-education"?

If the Gov't does not do its job, what will We The People have to do to set things right?

I support Pres. Obama. I support an even larger stimulus program. I want to see our infrastructure renewed, rebuilt.

BUT ---- I'm getting closer to that point where I say, LET THEM ALL FAIL. Let those "too big to fail" banks and evil Corps. go down the tubes. Explain to the Supreme Court that Corporations are NOT "persons" -- they are just god-damn companies, trying to extort every last ounce of work and blood out of their workers before tossing them away.

Rebuild the system -- one brick at a time. This time: GREAT SCHOOLS for ALL. Great public spaces. Make ALL of Montana and Wyoming public land. Local banks. A halt to most "mergers and acquisitions". Allow no firm to be "too big to fail".

Return to Government those functions that belong to Government.

Teach most "pundits" a trade (like fixing shoes) -- and close down the Chicago School of Economics, and all its acolytes

"We're Number ONE!!"

Worker: I Saw Rat Roasting In Peanut Plant
Tells Jeff Glor He Also Saw Rat Droppings, Roaches, Huge Holes In Roof Of Ga. Facility Being Probed In Salmonella Outbreak



Jonathan Prather says he saw a rat, rat droppings, and roaches in the Georgia peanut plant being probed in a nationwide salmonella outbreak. (CBS)


(CBS) A former employee of the Georgia peanut plant at the center of a criminal investigation in a nationwide salmonella outbreak says he saw a rat dry-roasting in a peanut area.

Jonathan Prather was one of 50 people who lost their jobs last month when the Peanut Corporation of America shut down its plant in Blakely.

The outbreak is blamed in as many as eight deaths and has sickened some 500 people, authorities say. Many products made with peanut paste from the plant have been recalled.

In addition, a peanut processing plant in Texas run by the Virginia company blamed for the outbreak operated for years un-inspected and unlicensed by government health officials, The Associated Press has learned.

Prather, 29, told Early Show national correspondent Jeff Glor the facility is dirty.

Prather describes a building in which roaches were a constant problem, saying, "Roaches get up there in the dry roast. Some of them blend in with the peanuts. You'd never know they're there."

Health inspectors also noticed roaches as they searched for the source of the salmonella, saying, "A live roach and several dead roaches were observed in the firm's wash room."

But, three or four months ago, Prather says, he saw the rat "dry roasting in the peanuts."

He says he also frequently saw rat droppings in the area where peanut products were made, where Prather worked.

Health inspectors say they found "gaping" holes in walls, but didn't report evidence of rodents or droppings. They did find holes elsewhere, saying, "There were open gaps observed as large as ... two-and-a-half feet at the air conditioner intakes located in the roof of the firm."

Prather says there were "plenty of holes in the roof, throughout the roof. And when it rained, water just came through the whole plant."

Mold was also spotted by investigators, as were mops washed in the same sink as peanut product production equipment, Glor points out.

"Any of these alleged violations," Glor says, "could be the source of salmonella, which the company's own documents say was discovered at least a dozen times. Peanut Corporation of America is accused of retesting the samples, "lab shopping," until it got favorable results."

Prather says it saddens him that many people have been impacted by the salmonella, adding he's speaking out now because his mother always raised him to tell the truth.

Other employees, Glor notes, have been quoted as saying they did not see problems like the ones depicted by Prather.

On The Early Show Tuesday, former Food and Drug Administration Commissioner David Kessler told co-anchor , "If there were ever an example that our food safety system is broken, this (the situation at the Georgia plant) is it.

Kessler says, "The nation's food safety laws were written 100 years ago. And they don't give the FDA even the basic tools of record inspection or recall. It is absolutely essential that those laws be rewritten."

He added, "Regrettably, (the FDA) lacks the authority (to properly oversee the safety of the nation's food). But there are several key bills in the Senate and the House, and they're excellent bills.

"... The problem is we don't have a system of preventive controls. We're always reacting in this country. It's always chasing the horse after it's out of the barn."

Kessler says he "was very heartened to hear the new president talk about food safety as a priority, getting a new commissioner in, and quickly, who has food safety as a top, No. 1 priority and getting FDA the authority; getting Congress to pass new food safety legislation is a must."

Still, Kessler observes, "We have the safest food system in the world, but that doesn't mean it can't be safer. And each of us has responsibilities. Making sure that our food is well-cooked, good hygiene, those things are still important.

Bottom line?

"(Our food is) certainly safe, but our system is broken. And it needs to be improved, and it needs to be improved quickly."

This direct from Krugman

Bipartisan bromides

Josh Marshall gives us David Broder talking about stimulus — which he says failed to achieve the predicted results the first time. It’s not clear whether he was referring to the TARP or the early 2008 stimulus package, but either way it’s a poor comparison. The TARP isn’t stimulus; the early 2008 package was 1/5 the size of the Obama proposal, and contained nothing but tax cuts.

But the part that really got me was Broder saying that we need “the best ideas from both parties.”

You see, this isn’t a brainstorming session — it’s a collision of fundamentally incompatible world views. If one thing is clear from the stimulus debate, it’s that the two parties have utterly different economic doctrines. Democrats believe in something more or less like standard textbook macroeconomics; Republicans believe in a doctrine under which tax cuts are the universal elixir, and government spending is almost always bad.

Obama may be able to get a few Republican Senators to go along with his plan; or he can get a lot of Republican votes by, in effect, becoming a Republican. There is no middle ground.

The Party's Over

The Following from : Jesse's Café Américain



"The easy times, the extended bull market in equities and corporate profits, with a disinflation and an easy money policy, created a lot of very wealthy people who managed other people's money by riding the incoming tide of the Greenspan era and a willingness to use the world's reserve currency to run up incredible levels of debt.

The disparity of wealth in the US from the wealthiest few to the less fortunate many has never been greater since the start of the Great Depression. And if history repeats there will be a tremendous effort to make the public pay for most of it.

Privatize the gains, but socialize the losses. Having the public bad bank buy the bad assets of the big money center banks and financial ponzi schemes and take all the losses is a thinly disguised act of theft and injustice on an almost incomprehensible scale.

There will be no lending until we drive the bad assets out of the insolvent banks. And the way to do this is to restructure the banks and write off their bad debts, and apportion the losses to the shareholders and credit holders, while backing the individual depositors and guaranteed pension funds one hundred percent.

We cannot continue to subsidize a few big money center banks from their losses, and call anything in our government a republican democracy of the people, by the people, and for the people.

"Nationalization" does not mean that the government will run the banks. Nationalization means that a body like the FDIC will take an insolvent bank, liquidate its assets, arrange for the payment of creditors, and either sell the assets to other banks, or allow a solvent bank to emerge from the process. This is what the FDIC does with any bank that fails, that is not a a powerful manipulator of the political process.

A 'bad bank' or a guarantee of private banking assets by the government is the subsidy of private losses by public money. It is a continuance of a fraud.

We either have a free market, with both gain or loss, or we have a managed economy where the Federal Reserve Bankers and ex-bankers decide who succeeds and who fails, who gains and who loses, who commands and who serves.

No matter who pays for it, the party is over."

Please go to the original for more.

Hodge and Podge

Daschle fucked up. Banks fail to revive lending - this in spite of bailout money. Media doesn't understand what a "stimulus is - want useless tax cuts.

Two women arrested for KISSING in a Mall -- they could have been sisters, no? "Secret report" urges new Afganistan plan. EEOC struggles with huge workload, diminished staff. Drugmaker paid rivals to withhold generic, agency says..

Obama faults FDA on food safety. Motorola loses 3.6 BILLION, suspends dividend, CFO exits. Macy's cuts 7000 jobs - and dividend. Zimbabwe Cholera crisis "worsening". Gunmen attack Athens police station.

"Privatize the gains, but socialize the losses. Having the public bad bank buy the bad assets of the big money center banks and financial ponzi schemes and take all the losses is a thinly disguised act of theft and injustice on an almost incomprehensible scale."

That's just a sample of what's out there today. Washington fiddles while Main Street burns. Republicans do not give a damn about Main Street -- they have lost touch with their roots.

We are all going to be in really, really, big trouble.

"Systemic Corruption"

Corruption And The Global Financial Crisis
Daniel Kaufmann, 01.27.09, 02:58 PM EST
The financial debacle has many causes and implications, but it would be wrong to underestimate systemic corruption.
Daniel Kaufman

It would be very convenient to start this article by stating that corruption is a challenge mainly for public officials in developing countries and that it is unrelated to the current global crisis.

I also wish I could claim that corruption has declined worldwide as a result of the global anti-corruption and awareness-raising campaign, the many effective anti-corruption commissions, and the recognition that poverty and culture are the reasons why corruption prevails.

But none of it is true. For starters, corruption is not unique to developing countries, nor has it declined on average. Some developing countries, such as Chile and Botswana, exhibit lower levels of corruption than some fully industrialized nations. And countries like Colombia and Liberia have made gains in recent years, while others, such as Zimbabwe, have deteriorated. Bribery remains rife in many countries, totaling about $1 trillion globally every year.

In truth, anti corruption commissions, revised laws and awareness-raising campaigns have had limited success. Focus on petty or administrative bribery has been misplaced at the expense of high-level political corruption.

One neglected dimension of political corruption is "state capture," or just "capture." In this scenario, powerful companies (or individuals) bend the regulatory, policy and legal institutions of the nation for their private benefit. This is typically done through high-level bribery, lobbying or influence peddling.

The cost to society of bribing a bureaucrat to obtain a permit to operate a small firm pales in comparison with, say, a telecommunications conglomerate that corrupts a politician to shape the rules of the game granting it monopolistic rights, or an investment bank influencing the regulatory and oversight regime governing them.

As a country becomes industrialized, its governance and corruption challenges do not disappear. They simply morph and become more sophisticated: Transfer of a briefcase stashed with cash is less frequent.
Comment On This Story

Instead, subtler forms of capture and "legal corruption" exist: an expectation of a future job for a regulator in a lobbying firm, or a campaign contribution with strings attached. In many countries this may be legal, even if unethical. In industrialized nations undue influence is often legally exercised by powerful private interests, which in turn influence the nation's regulations, policies and laws.


This has dire consequences: Witness the various forms of corruption underlying the current global financial crisis that started in the U.S.

There are multiple causes of the financial crisis. But we can not ignore the element of "capture" in the systemic failures of oversight, regulation and disclosure in the financial sector. Concrete examples abound.

First, the way Freddie Mac (nyse: FRE - news - people ) and Fannie Mae (nyse: FNM - news - people ) spent millions of dollars lobbying some influential members of Congress in exchange for, among other things, lax capital reserve requirements for these mortgage giants.

Second, how AIG's (nyse: AIG - news - people ) "small" derivatives unit located in London managed to obscure its accounts, be governed by lax regulatory oversight, and take inordinate risks that effectively brought down AIG's empire of 100,000 employees in 130 countries, accelerating the global financial crisis.

Third, how giant mortgage lenders such as Countrywide Financial switched regulators so to fall under the lax oversight of the Office of Thrift Supervision, which was funded by fees paid by the regulated banks (and which also supervised AIG's derivative unit).

Fourth, how in April 2004, during a 55-minute-long meeting at the Securities and Exchange Commission, the largest investment banks persuaded the SEC to relax its regulatory stance and allow them to take on much larger amounts of debt.

Finally, Madoff's giant Ponzi scheme, some of which appears to be plain fraud, though system-wide irregularities also point to subtler forms of corruption and capture. Years ago the SEC knew that Madoff, who had served on the commission's own advisory committee, had multiple violations and was misleading it in how he managed the funds of his customers. Yet the SEC failed in unmasking the Ponzi scheme.

Consequently, the study of corruption ought to include acts that may be legal in a strict narrow sense but where the rules of the game have been bent. Would this broader view of corruption result in different corruption ratings? Absolutely.

Let's look at the U.S. Over the past few years, traditional measures of corruption, such as the Corruption Perceptions Index by Transparency International, have placed the U.S. among the least corrupt nations in the world, currently ranking No. 18 among 180 rated countries.

In stark contrast, when in 2004 I calculated an index of "legally corrupt" manifestations (measured through the extent of undue influence through political finance and powerful firms influencing politicians and policy making), the U.S. rated in the bottom half among the 104 countries surveyed. Countries like the Netherlands, Norway, Denmark and Finland exhibited low levels of "legal corruption" (ranking Nos. 1 through 4, respectively). Yet the U.S. was rated 53rd, a few ranks below Italy. Chile rated 18th. Also rating better than the U.S. were countries like Botswana, Colombia and South Africa.

Corruption and capture are important causes of the crisis. But it is also urgent to face up to the consequences of "new world order." There is a rapid--unprecedented in peacetime--expansion in the role and scope of government in "market economies."This new overarching role of government, taking place in the U.S. and other large economies, is occurring at five levels.

First, the public sector is reshaping regulation; second, the government is becoming an owner of financial institutions; third, it is bailing out selected private concerns through a quick and massive infusion of funds; fourth, it is to provide almost a huge fiscal stimulus into infrastructure; and fifth, it intends to extend the social (and housing) safety net for millions of vulnerable citizens.

There are governance and corruption risks in each of these areas. Lobbyists are already at the door. These new risks are not exclusive to the U.S., but apply to other G-7 countries: Russia and China, among others. With the U.S. leading, current global estimates of disbursed and planned bailout funds approach $3 trillion, while cumulative global plans for fiscal stimulus near $2 trillion.

The new U.S. administration has stated its intention to address the challenges of transparency and accountability in its stimulus plan. The devil will be in the details. Merely creating an oversight institution will not do; system-wide reforms in incentives are required. Deep-seated transparency reforms need to be a cornerstone in the government's plan, and should apply to U.S. public agencies as well as domestic and international financial institutions. Regulations supporting effective disclosure, as well as improved audit, accounting and risk-rating standards, should be preferred to restrictive regulatory controls that block innovation and growth.

Humbly learning from other nations will also go a long way. The situation in the U.S. warrants studying other countries--for instance, Sweden and Chile, which successfully addressed their financial crises long ago. Chile also offers guidance on how to structure less corrupt and effective concessions in infrastructure, where the U.S. is a novice.

In order to restore confidence, citizens, entrepreneurs and bankers need to have renewed trust in the financial system. That way they can be persuaded that it is no longer a giant Ponzi scheme. Transparency is the key.

Daniel Kaufmann, a Chilean citizen, is senior fellow at the Brookings Institution, formerly director of governance at the World Bank. Read his blog at www.thekaufmannpost.net.

From Calculated Risk

Posted by CalculatedRisk on 1/31/2009 11:48:00 PM Comments (330)

NYC: Rents "Falling Fast"

by CalculatedRisk on 1/31/2009 07:06:00 PM

From the NY Times: A Month Free? Rents Are Falling Fast (hat tip Brian)

IN this painful economic climate of layoffs and shrinking investments, there is a sliver of positive news: it’s a good time to be a renter in New York City. Prices are falling, primarily in Manhattan, and concessions like a month of free rent are widespread..................

For the rest, please follow link to the original.

More "fun news" from Europe

Governments across Europe tremble as angry people take to the streets

* Ian Traynor, Europe editor
* The Guardian, Saturday 31 January 2009

France's trade-unions call on workers to strike all over the country


France paralysed by a wave of strike action, the boulevards of Paris resembling a debris-strewn battlefield. The Hungarian currency sinks to its lowest level ever against the euro, as the unemployment figure rises. Greek farmers block the road into Bulgaria in protest at low prices for their produce. New figures from the biggest bank in the Baltic show that the three post-Soviet states there face the biggest recessions in Europe.

It's a snapshot of a single day – yesterday – in a Europe sinking into the bleakest of times. But while the outlook may be dark in the big wealthy democracies of western Europe, it is in the young, poor, vulnerable states of central and eastern Europe that the trauma of crash, slump and meltdown looks graver.

Exactly 20 years ago, in serial revolutionary rejoicing, they ditched communism to put their faith in a capitalism now in crisis and by which they feel betrayed. The result has been the biggest protests across the former communist bloc since the days of people power.

Europe's time of troubles is gathering depth and scale. Governments are trembling. Revolt is in the air.
Athens

Alexandros Grigoropoulos, a 15-year-old middle-class boy going to a party in a rough neighbourhood on a December Saturday, was the first fatality of Europe's season of strife. Shot dead by a policeman, the boy's killing lit a bonfire of unrest in the city unmatched since the 1970s.

There are many wellsprings of the serial protests rolling across Europe. In Athens, it was students and young people who suddenly mobilised to turn parts of the city into no-go areas. They were sick of the lack of jobs and prospects, the failings of the education system and seized with pessimism over their future.

This week it was the farmers' turn, rolling their tractors out to block the motorways, main road and border crossings across the Balkans to try to obtain better procurement prices for their produce.
Riga

The old Baltic trading city had seen nothing like it since the happy days of kicking out the Russians and overthrowing communism two decades ago. More than 10,000 people converged on the 13th-century cathedral to show the Latvian government what they thought of its efforts at containing the economic crisis. The peaceful protest morphed into a late-night rampage as a minority headed for the parliament, battled with riot police and trashed parts of the old city. The following day there were similar scenes in Vilnius, the Lithuanian capital next door.

After Iceland, Latvia looks like the most vulnerable country to be hammered by the financial and economic crisis. The EU and IMF have already mounted a €7.5bn (£6.6bn) rescue plan but the outlook is the worst in Europe.

The biggest bank in the Baltic, Swedbank of Sweden, yesterday predicted a slump this year in Latvia of a whopping 10%, more than double the previous projections. It added that the economy of Estonia would shrink by 7% and of Lithuania by 4.5%.

The Latvian central bank's governor went on national television this week to pronounce the economy "clinically dead. We have only three or four minutes to resuscitate it".
Paris

Burned-out cars, masked youths, smashed shop windows, and more than a million striking workers. The scenes from France are familiar, but not so familiar to President Nicolas Sarkozy, confronting the first big wave of industrial unrest of his time in the Elysée Palace.

Sarkozy has spent most of his time in office trying to fix the world's problems, with less attention devoted to the home front. From Gaza to Georgia, Russia to Washington, Sarkozy has been a man in a hurry to mediate in trouble spots and grab the credit for peacemaking.

France, meanwhile, is moving into recession and unemployment is going up. The latest jobless figures were to have been released yesterday, but were held back, apparently for fear of inflaming the protests.
Budapest

A balance of payments crisis last autumn, heavy indebtedness and a disastrous budget made Hungary the first European candidate for an international rescue. The $26bn (£18bn) IMF-led bail-out shows scant sign of working. Industrial output is at its lowest for 16 years, the national currency - the forint - sank to a record low against the euro yesterday and the government also announced another round of spending cuts yesterday.

So far the streets have been relatively quiet. The Hungarian misery highlights a key difference between eastern and western Europe. While the UK, Germany, France and others plough hundreds of billions into public spending, tax cuts, bank bailouts and guarantees to industry, the east Europeans (plus Iceland and Ireland) are broke, ordering budget cuts, tax rises, and pleading for international help to shore up their economies.

The austerity and the soaring costs of repaying bank loans and mortgages taken out in hard foreign currencies (euro, yen and dollar) are fuelling the misery.
Kiev

The east European upheavals of 1989 hit Ukraine late, maturing into the Orange Revolution on the streets of Kiev only five years ago. The fresh start promised by President Viktor Yushchenko has, though, dissolved into messy, corrupt, and brutal political infighting, with the economy, growing strongly a few years ago, going into freefall.

Three weeks of gas wars with Russia this month ended in defeat and will cost Ukraine dearly. The national currency, at less than half the value of six months ago, is akin to the fate of Iceland's wrecked krona. Ukrainians have been buying dollars by the billion. In November the IMF waded in with the first payments in a $16bn rescue package.

The vicious power struggles between Yushchenko and the prime minister, Yuliya Tymoshenko, are consuming the ruling elite's energy, paralysing government and leaving the economy dysfunctional. Russia is doing its best to keep things that way.
Reykjavik

Proud of its status as one of the world's most developed, most productive and most equal societies, Iceland is in the throes of what is, by its staid standards, a revolution.

Riot police in Reykjavik, the coolest of capitals. Building bonfires in front of the world's oldest parliament. The yoghurt flying at the free market men who have run the country for decades and brought it to its knees.

An openly gay prime minister takes over today as head of a caretaker government. The neocon right has been ditched. The hard left Greens are, at least for the moment, the most popular party in the small Arctic state with a population the size of Bradford.

The IMF's bailout teams have moved in with $11bn. The national currency, the krona, appears to be finished. Iceland is a test case of how one of the most successful societies on the globe suddenly failed.