Friday, October 10, 2008

Roundup: October 10


President Bush gave an inexplicable speech on the financial crisis this morning, running over the actions the US has taken to stem the downwards tide. Thin stuff -- he actually wasted time discussing the SEC's enforcement actions against market manipulators -- and nothing new to announce. This week saw the biggest decline on the Dow since the week ending December 14, 1914.

The major Russian oligarchs have eaten a combined $230bn in paper losses in the past weeks' turmoil on the MiCEX.

No one has any idea what the Treasury will do as it seeks to use its authority to stabilize the markets. But CNBC is speculating Paulson may offer capital injections to "all banks" and Germany is reportedly drawing up a plan to guarantee interbank lending and supply banks with additional capital. The G-7 is panicking - finance ministers meet this weekend. Alistair Darling has insisted it is key to start "doing things." But it's important to remember that the emergency measures we take now will help shape the future institutional environment. Meanwhile, Western journalists haven't yet learned that Silvio Berlusconi will mouth off about anything -- they picked up remarks he made today suggesting that financial markets around the world would be closed while some kind of new paradigm for regulation is installed. Tsar of All the Markets, Neel Kashkari, will give a speech on the bailout program on Monday.

Paul Volcker makes us wish he were still Fed Chairman. Willem Buiter points out the vast shortcomings of regulatory action so far. Slavoj Zizek's "In Soviet Russia, the market sells you" jokes are wearing a little thin -- anyway, he's calling for people to think more seriously than he does, which we can only approve. We will be writing on monday about the mismanagement of the crisis, pending further news.

Lehman CDS have been priced -- 91.375. Bloomberg cites a Paribas analyst (very spivvy) saying writers of CDS may need to pay up to $270bn -- a lot of cash to raise in this market. (Did he just divide the gross by 2?) Three-month Libor actually rose today (!), to 4.82%, despite the "liquidity" being added to the financial system. Time to think harder what that word means. In slightly better news, IBM brought $3.9bn of 5-, 10-, and 30-year debt to the market today, between Treasuries + 3.875% and + 4%.

Ford CFO Don Leclair is retiring, as Ford and GM CDS point towards bankruptcy. Morgan Stanley CDS are trading 28% upfront (!) + 500bp, as Morgan's market cap falls below the $9bn Mitsubishi UFG was to invest in the company.

The SEC is said to have met with NYSE and Nasdaq and is considering circuit breakers on short-selling in individual names -- if a stock falls by 20%, shorting will be prohibited for the following three days.

The UK is bailing out local governments that have lost up to GBP1bn in failed Icelandic banks. And has invoked an anti-terrorist law to seize Icelandic assets! Buiter has stood firm against British encroachments on civil liberties -- and in favor of habeas corpus and the rights of Englishmen -- and still does. Hear, hear.

Grain is piling up in Canadian ports and FT Alphaville says banks are refusing to honor each others' letters of credit, bringing international trade to a halt.

The U.S. auto market may collapse in the next year. Shares of auto companies are plummeting.

Goldman Sachs is sick of Nouriel Roubini raining on their parade.


Shame hangs over the United States today. A Sudanese detainee at Guantanamo has described the torture he faced there. And Counterpunch describes the treatment of 17 wrongly imprisoned Uighurs in the US court system. And NSA officers intercepted and recorded the personal calls of US citizens abroad and passed them around out of "prurient interest" -- including calls made by Red Cross and other aid workers who they were ordered to continue monitoring "just in case."

Martti Ahtisaari, former president of Finland and a UN mediator, received the Nobel for Peace.

The State department issues a report on Iraq.

Sergei Lavrov has called for naval forces in the Gulf of Aden to coordinate their antipiracy efforts. Although President Bush mentioned piracy, along with slavery and terrorism, in his speech before the UN, the US has not yet been a leader in antipiracy operations.

Mikhail Khordorkovsky, the expropriated former head of Yukos, has been put into solitary confinement, supposedly for granting an interview to Esquire.

The IMF has revised its growth projection for Russia down to 7% for 2008. The IEA has slashed its projection for global oil demand growth, while OPEC has called an emergency meeting to discuss reducing supply quotas in a bid to support prices.

What forces for change are there in North Korea? Where are the dissidents?

Nigeria's oil and gas workers' unions are threatening to strike in the next fourteen days.

Iceland may see a shift in the workforce back to fishing after the collapse of its banking system.


The GAO says that the FDA has failed to educate customers and prevent fraud with its food labeling systems, and calls for reform.

The EIA has a useful primer on the domestic natural gas transmission network.

The EPA has made its first move toward regulating nanomaterials, with a preliminary notice issued about carbon nanotubes. Nanomaterials hold untold promises for technological development but no one has any information about their long-term interactions with the environment and the human body. Australia has made a similar move toward disclosure of nanoparticles contained in food.

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