Bank Regulators in Africa in the wake of the financial meltdown: When Ignorance is Bliss.

While answering questions from a panel of journalists about the risk exposure of Financial Institutions (F.I) in Cameroun and Countries of the BEAC region to the financial crisis, the finance minister of Cameroon said with such bravado that the risk was non-existant. He further explained that there was no risk whatsoever because banks in the BEAC zone were not allowed to invest in all those toxic assets that brought major financial institutions down.

However, he failed to mention the exposure of the Central Bank to the same toxic assets that translated in a huge loss in million of Euros. But the explanation given by the Finance Minister was applauded as some kind of foresighting of the upcoming trouble. That type of Monday morning quarterbacking is somewhat intriguing because it makes it seems that  Banks in the BEAC Zone and elsewhere in the SSA region were not allowed to invest in those types of vehicles because the regulating body (COBAC) already knew they were toxic (highly doubtful). Or was it simply because the regulators could not understand them to begin with, since those complex financial instruments required a high level of monitoring and risk assessment structures ?

In hindsight, we can all appreciate financial institutions all over the World that while able to comprehend and have access to some very complex financial instruments, chose very carefully when and what to invest in.  But I cannot co-sign ignorance being used as a sign of wisdom when it’s obvious African F.I didn’t participate in the feast because the regulators couldn’t figure out what the hell was on the menu.

Jon Stewart’s Jim Cramer interview:

Cramer Responds to Stewart w/ Help from Scarborough:

On “The Daily Show,” Stewart puts pressure on Cramer and his network, CNBC. Then, Cramer goes on MSNBC’s “Morning Joe” where Joe Scarborough called Jon Stewart an ideologue. Isn’t the word ideologue normally reserved for advocates of an uncompromising idea (e.g., the politics of president George W. Bush)? Certainly, liberalism as an idea is much more accepting and much more all encompassing than conservatism—especially neoconservatism. Furthermore, the Republicans of Newt Gingrich and Tom Delay were far from compromising.

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They’re not too big to fail.

via Open Left

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Jon Stewart does a excellent job illustrating why we shouldn’t follow CNBC’s financial advice.

Jon Stewart’s Epic CNBC Rant: Best Moments: Condensed version of the video above

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An interesting chart comparing historical and more recent bear markets can be found at dshort.com. The current bear or declining market is updated daily at dshort.com as well.

Via Andrew Sullivan

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First I want to say that I am so sorry for the loss of Cori. I feel very badly for all of her family and friends and want to let them know I have given the police all the information I received. I also talked to some of Cori’s friends which confirmed some of what I had told the police and had e-mail correspondence with her father whom I will be more than happy to help if he wants me to.  I’ve gotten a flood of e-mails from her friends. She was obviously a very powerful presence and touched many people’s lives. I’m sorry if you have e-mailed me and I haven’t gotten back to you. I haven’t had a lot of time recently. 

Now onto the Stimulus Package which upon further reflection and after seeing the Governor of Louisiana on Meet the Press tonight, brought to light one of the aspects in the Stimulus Package chart. That is the Uranus Saturn opposition which is the ideological tug between the conservative status quo way we have been dealing with the economy since Reagan’s “Trickle Down Economics” and “no new taxes,” mantra. Both of which were falacies even then as wealth never ended up trickling down and we went into a recession in the early 90s because of the overspending hole Reagan put us in, as it turned out Reagan did also raise taxes. He actually invented or re-applied new ones like the Capital Gains tax so when you sold your home that you had already paid taxes for every year, not to mention the income tax you had to pay before you bought the home, but you were then taxed on any profit you may have made on your home. The only way to avoid this was by buying a home of equal or greater value.

So all those people who were middle class wanting to scale down, use their equity to retire on, screw them! They had to pay this extra ridiculous double tax. Again, this was a slimy way to tax the middle class and allow the wealthy to weasel out of their fair share.

This broken ideology is the cornerstone of the Republican party. Yet until Bush “broke the world,” as Seth Meyers joked on Saturday Night Live a couple weeks back, they were getting away with the bait and switch, doing what they accused the Democrats of doing (which they actually weren’t) like creating huge deficit spending (remember that surplus at the end of the Clinton era, seems like a thousand years ago now), they were selling their party as fiscally conservative — read help the wealthy save their money so they can buy more yachts while the schizophrenic guy gets dumped onto the streets from a half-way house because, damn it, he should “pull himself up by his own bootstraps,” theory.

They went after unions under the guise of their outdated uselessness and once they were destroyed the jobs with health care benefits and 401Ks and all those extra perks began slipping away. Until they were finally shipped overseas. And interestingly the border from Mexico became very porous while Reagan was in office. One needs desperate people to work for nothing if your desire is to exploit them.

I always said they were trying to turn this country into a third world nation, a country of very rich and very poor, nothing in-between. But even I couldn’t entirely believe it. It seemed too disgusting, greedy, evil and vile to really be true. Surely, there was something I was missing, perhaps a different ideology about economics that I didn’t get. Not that old timey way of doing things like indentured servitude and slavery, and people working for nothing so that their bosses could live like kings. No. Who would want to walk down a street and see people starving, who could do that and feel nothing? Oh, yeah, I think we had that answer, the people who were in charge the last 8 years. And the people who supported them, often not knowing what they were really supporting, thinking they were for “family values” and gun rights and the right to life and even Christianity. When in reality these people were really for greed, selfishness, and whoever has the most stuff wins. Not very Christian, not very “family values,” to let your grand kids pay for your spending sprees and live in a contaminated world so you could make a few extra bucks off that oil well.

Now the new Republican face is supposedly Bobby Jindal, Governor of Louisiana and he’s saying he won’t take the Stimulus Package money to help the people of his state, most of whom live in poverty, many still are not settled due to Katrina, because of “ideological” discrepancies with the plan. Meaning he wants more, “read my lips, NO NEW TAXES,” for the rich and is willing to commit political Harri Kari to carry the broken down smoldering torch of Reaganomics. Is he kidding? What are these idiotic Republicans thinking? Really? Really? I mean REALLY?

We are about to plunge headlong into a world wide depression because of their ideology. America voted them out of power in every branch of the government and they actually have the gall to criticize this bill. Really? Seriously, they actually tried to get in the way of it. And this Bobby Jindal is going to turn down relief for the starving people of Louisiana because it’s going to make the deficit worse? That’s his supposed excuse. Where was he when we invaded Iraq with now hundreds of thousands of dead innocent Iraqi people, thousands of our soldiers and a trillion, bazillion majillion dollar deficit from what was a bungled mess and total violation of the Geneva convention. 

So back to the astrology of this. This idiotic commitment to a failed economic ideology that the Republicans are still in love with will end up pushing this stimulus package into a more and more radical stance. As things worsen, the reaction will have to be more extreme, more radical and dare I say it, more about spreading the wealth. I know these guys hate that idea. I mean only they deserve to be wealthy. But lets face it, if they are the only ones with money, then its kind of hard to have an economy.

The best metaphor I heard about what has happened is this: Imagine you are playing a poker game and one guy keeps winning and winning until he’s taken all the money from all the players. Well, the game’s over. That’s a major ideological hole in Trickle Down economics.

And what happens when the rich just get richer? They literally clog the economic colon of the country. They can’t possibly move around enough money to sustain everyone. When the wealth is spread around, and there are a lot of middle class people spending money, we actually have more jobs, more productivity, more to go around. This was the basic theory behind Clinton’s economic ideology  and it worked very well. Actually, incredibly well.

So if anyone implies spreading the wealth around is a bad thing tell them to go back in their time machine to the 1950s when McCarthy and the Red scare was happening, and leave the rest of us alone — those of us who live in the 21st century and know that some of the most productive and wealthiest nations in the world are actually social democracies, like Norway, Sweden and Denmark.

Countries where they have the highest standard of living and where the people are statistically proven to be the most content of anywhere in the world. Lands where no one starves on the street, the mentally ill are treated, and you not only have free health care, but if you apply yourself academically you can get a free higher education.

Now those don’t sound like such bad ideas to me.  

A land where both parents get something like six months paid maternity/paternity leave. Where the kids are brought to work, and put in company daycare where the parents work. You know all those family values we like to talk about, but don’t actually like to do anything about.

It actually sounds surprisingly evolved and civilized. Hope we can drop that weird anti-pinko, left over cold war brainwashing that makes it impossible for us to see things clearly.

Best wishes and many blessings,

Denise

Keith Olbermann sums up a false right-wing smear that went viral on cable news regarding the claim that the “economic recovery act would permit the government to control health care.”  Drug company attack dog and propagandist Betsy McCaughey has before and currently is perpetuating false claims in order to kill health care reform and advance right-wing politics by knowingly and purposely spreading falsities. From Media Matters for America:

During February 10 appearances on CNN’s Lou Dobbs Tonight and Fox News’ Glenn Beck, hosts Lou Dobbs and Glenn Beck allowed former New York Lt. Gov. Betsy McCaughey to advance the false claim that provisions in the economic recovery act would permit the government to control health care.

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As Media Matters for America has noted, talk show host Rush Limbaugh, Internet gossip Matt Drudge, Wall Street Journal senior economic writer Stephen Moore, and Fox News anchors Bill Hemmer and Megyn Kelly have previously forwarded McCaughey’s falsehoods about the health care provisions in the recovery bill.

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Is it possible to be pro-markets while being anti stock exchanges when it comes to some developing economies?

The price of a stock is a function of multiple factors among which the markets participants play a major part. When the participants are panicking and dumping stocks, prices crumble and it becomes inevitable to request a “bailout” especially if the tumbling companies are a vital part of the economy or major component of GDP.

When it comes to Africa, let’s consider the example of any country with it’s own currency, a vibrant private sector, and a decent local consumption level. If there was to be a major economic downgrade, what will happen then is that, their central bank will issue bonds to help sustain the crisis. Local and foreign institutional investors in the best scenario will purchase that debt. The debt from that country has a market value only because investors foresee a chance to recoup their money ! (It’s that simple).

Now, let’s take the example of an African country in the CFA zone. Lately, they have been pushing hard for the public to embrace and show more enthusiasm towards the creation/extension of their local stock exchanges. If any of these countries major indexes or leading publicly traded corporations were ever to tumble for whatever reason (market manip, naked option shorting, etc..), their entire economic system would collapse (Iceland). Not “might” but “will” collapse.

In the aftermath, no financial institution will be crazy enough to purchase bonds from those states to help them refinance and re-structure their growing debt, simply because there’s no constant local demand to speak of (mostly). So, the only other option will be to hand the key of the country to Bretton Woods and let them run it as they see fit. But in most of those countries, Bretton Woods already got those keys !

Bottom line: Let’s make sure the foundation is solid and the safeguards are there, before moving forward.

I become angry and annoyed every time I watch cash for gold commercials, because these companies are taking advantage of individuals by severely underpaying them for their valuables.

When the economy is tanking, people are better off hoarding their valuables such as gold, silver, gems, and other precious metals, because paper money is arguably worthless (gold is climbing as the dollar declines in value).

Furthermore, we must manage our finances conservatively instead of trading in our valuables to complete strangers. Some folks even argue that these cash for gold schemes are a modern day gold seizure, since paper money is essentially worthless.

A WSYR-TV investigative team mailed $766.74 worth of jewelry to “Cash 4 Gold.” Two weeks later, the team received a check for $112.34. However, the offer was rejected, so Cash 4 Gold made a second offer of $302.

Remember, cashing the check is equivalent to accepting the offer. Likewise, waiting too long to reject an offer may constitute an acceptance. People are better off taking their valuables to a local, trusted pawnshop or jeweler—especially if a relationship already exists.

If you have to mail in your valuables for cash, then have them appraised, inventoried, and send your valuables by registered mail. Insuring your items is a smart move too. Additionally, any direct deposit options that you consent to may hurt your bargaining power, so it’s probably smart not to sign up for direct deposit. From NewsChannel 9 WSYR:

We’ve all seen the commercials telling us to send in our old gold and get cash for it right away. It sounds enticing, but our investigation found it may not be the best way to get the most out of your jewelry.

The check you get for the same exact gold can vary dramatically depending on where you send it or take it, sometimes to the tune of several hundred dollars.

Here’s The Real Deal on how to make sure you’re getting the best price.

We wondered just how much you can you can really make by cleaning out your jewelry box so, we ordered a gold kit from “Cash 4 Gold” and sent in two gold necklaces, six bracelets, a pair of earrings, three rings and a charm, ranging from 10 to 24 karat. Two weeks later, we got a check for $112.34.

Might not sound that bad, but what we didn’t tell Cash 4 Gold was that we had taken the exact same pieces to a pawn shop the week before and they were going to give us $766.74.

When we sent the check back and asked for our jewelry to be returned, Cash 4 Gold came back with a second offer of $302.

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Photo source for attribution. The author or licensor of this image does not endorse my work or me and their image is protected under an attribution license.

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I don’t think most people appreciate or understand how fragile and underfunded our country’s infrastructure is.  Our roads, bridges, schools, and other public works, in addition to the infrastructure that delivers our electricity are literally crumbling.  Recently, the American Society of Civil Engineers rated the country’s infrastructure at a “D” level.  Furthermore, those engineers are arguing that the controversial stimulus package is too little, since the price tag for remedying our country’s crumbling infrastructure alone is over $2 trillion dollars. From CNNMoney.com:

The nation’s roads, bridges, power grid, water supply, schools and transit systems are all in a state of disrepair due to under-funding – and the proposed stimulus plan will not go far enough to solve the problem, according to a report released Wednesday.

The American Society of Civil Engineers, which represents 146,000 engineers across the country and grades the nation’s infrastructure every four years, assigned a “D” grade to the country’s infrastructure. The group said the cost to repair crumbling public structures has risen to $2.2 trillion from $1.7 trillion in 2005.

“The nation’s infrastructure crisis is endangering our future prosperity,” ASCE President Wayne Klotz said at a press conference. “Crumbling infrastructure has a direct impact on our personal and economic health.”

The group rated 15 infrastructure categories, none of which received a grader higher than “C+.” Drinking water, inland waterways, levees, roads and wastewater facilities all received a “D-,” the lowest grades on the 2009 report card.

Roads got a particularly poor grade, as Americans spend an estimated 4.2 billion hours a year stuck in traffic, which costs the economy about $78.2 billion a year, according to ASCE. Highway construction is set to receive $30 billion from the stimulus plan – the largest portion of infrastructure spending in the bill.

The national power grid, another key project in the stimulus plan, got a “D+.” ASCE said public investment on the grid has not met rising demand for power and electric utility investment needs could rise to $1.5 trillion in 20 years. President Obama has proposed updating the existing structure to a new “smart” grid.

But even if the federal government passes its economic stimulus plan, ASCE still estimates that infrastructure will be under-funded by $1.1 trillion. State and federal spending will only amount to $903 billion in the next five years, according to the group’s estimates, and stimulus spending is expected to be less than $100 billion.

The group said the stimulus program would amount to a good start, but the country “clearly still has a long way to go.”

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It’s funny how things often turn out.

You know all those sayings people have:  how only a leader shines in time of crisis. How it’s harder to be different when everyone else is doing the exact same thing. How daring to go against the herd always reveal a winner etc… If those sayings apply to the current situation (crisis) and the financial sector in Emerging Countries (E.M), we could have new leaders at the end. Given how some financial companies have performed under the tough business environment in E.M, shouldn’t they be the new models ?

Indeed, what I’ve actually found out is that some E.M deserve more credit than they get for staying put and sticking to their accounting practices when everyone else adjusted theirs ! The change and modifications that were allowed under new accounting rules created a mess more complex than complexity itself (!). There is not a firm out there capable to effectively deconstruct what’s what: where the junk assets are, who they belong to, how much they’re worth. Sometimes, the underlying asset attached is just non-existent !

Don’t get me wrong, before trying to nullify my remarks by reminding me of all the structural differences between the West and E.M, all I’m saying is all should be fair in warfare. If the top executives and leaders in management are picked from their OUTSTANDING performance despite the hostile environment, then the best are no longer in the West ! Bottom line.

I’m just saying…

In a way, can the run amuck free market system and American consumption be applied to the tragedy of the commons?  Nonetheless, I believe this is an important quote from Garrett Hardin in his The Tragedy of the Commons:

Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all….

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It’s so huge!  Imagine if we can find the political will to spend such massive amounts of money on education, the environment, or health care.  Certainly, we could alleviate a majority of civilization’s troubles.

Image Found Here

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THERE IS NOW A REAL RISK OF A POTENTIAL BANK RUN SOMEWHERE IN THE U.S BANKING SYSTEM !!!

In the Afermath of the Indymac Bank collapse on Friday, many fear that some banks might witness a run for deposits as customers reach to get their savings out in fear of further banks collapses. This is due to the fact that many banking clients were not aware that the term “FDIC Insured” only meant: “Up to $100K “. The remaining part cannot be recovered (unless the bank assets sale generates enough liquidity). This leaves us with a spike in the general public looking for more information about their savings, checkings or money-market accounts. It’s interesting to know for example that if you have multiple accounts in one bank with each holding less than 100k, you also need to make sure that the total amount in all those accounts (combined) with that particular institution is less or equal to $100K. Otherwise, your money is still not safe (that is, if anything was to happen) !

It doesn’t help that the Fed and other banking regulators now admit that there is a potential for more potential banking failures in the horizon but the FDIC would not be able to handle all of’em at the same time.

The next 72 hours would prove to be crucial as regional banks would be first in line to reassure not only depositors but investors as well.