Monday, October 13, 2008

Roundup: October 13


Markets were up today on thin statements from the G7 and the Eurozone finance ministers. And, to be fair, on Mitsubishi UFG not walking away from Morgan Stanley, although at better terms -- after being assured by Federal regulators their investment would be protected.

Neel Kashkari, Tsar of all the Markets, said Treasury is developing a standardized equity purchase plan for "healthy" banks. Paulson is to meet with bank CEOs today. Meanwhile, Fannie and Freddie have each been ordered by their overlords to buy $20bn a month in subprime, Alt-A, and non-performing prime loans. House Democrats are calling for a new, enlarged, fiscal stimulus plan.

The ECB, Bank of England, and Swiss National Bank said they were ready to offer unlimited dollar-denominated funding at periods up to 84 days.

RBS will raise GBP20bn and suspend dividend payments, as the British government buys GBP5bn of preference shares and appoints three directors to the board. Government will buy an additional GBP4bn of preference shares from Lloyds-HBOS; government will end up controlling about 60% of RBS and 43.5% of the merged Lloyds and HBOS. Barclays said it will raise GBP6.6bn from investors and will not resort to government facilities.

Germany will give Peer Steinbrueck authority to guarantee up to EUR400mn of bank debt and control over a EUR100mn financial market stabilization fund -- the FT says Steinbrueck will have more control over the German economy than anyone "since Albert Speer was put in charge of the country's entire production capacities by Adolf Hitler in 1942." Angela Merkel has said he may be permitted to order banks to lend to companies.

France will guarantee EUR320bn of bank debt and set up a EUR40bn fund. Austria will set up a EUR85bn clearinghouse to lend against illiquid bank assets. The Netherlands will guarantee up to EUR200bn of interbank loans. Italy will guarantee an unspecified amount of bank debt.

Spain will guarantee up to EUR100mn of new debt issued in 2008 and an unspecified amount of debt next year. Santander will buy the 75% of Sovereign Bancorp it does not own for shares worth around $1.8bn, and is injecting another GBP1bn into its UK business, including Abbey.

Australia and New Zealand guaranteed bank deposits, as did the UAE.

China Investment Corp may have as much as $5.4bn frozen in The Reserve's money market account.

Net payouts on Lehman CDS will total around $6bn -- settlement is October 21.

Goldman Sachs has been restricted from making a market in a daily oil trading window.

Russian depositors withdrew $1.4bn from private banks in September.


Thabo Mbeki is headed to Zimbabwe to try to save the power-sharing deal between MDC and ZANU-PF after Mugabe said he would unilaterally assign key cabinet posts to ZANU-PF members. Inflation continues to spiral out of control and there is no seed corn available for farmers.

Icelanders are stocking up on food as grocery stores run out of foreign currency to pay for inventory. Iceland has denied it is considering giving Russia access to the Keflavik airbase in exchange for a EUR4bn loan -- discussions in Moscow over the terms of the loan will begin tomorrow.

An Alaskan inquiry panel has found Sarah Palin unlawfully abused her power in what is being called Troopergate. Time's election blog says the report isn't a campaign-killer but does confirm Palin's Alaska administration was "shockingly amateurish."

The Somali pirates who have seized a Ukrainian ship full of military equipment are threatening to blow it up if they don't get paid. And the Puntland government has raided another ship also hijacked by pirates. Meanwhile, Islamic insurgents have blockaded the airport in Mogadishu.

North Korea will resume dismantling its nuclear program and readmit inspectors to Yongbyon after the US removed it from the list of state sponsors of terrorism.

Saeed Shah writes in the Globe and Mail on the consequences of economic meltdown for ordinary Pakistanis.

40bn bbl of Iraqi oil reserves were for sale today in London.

Taliban attacked the capital of Afghanistan's Helmand province Saturday and were repelled by NATO forces.

Prince Alwaleed is planning to build the world's tallest skyscraper in Jeddah.


Paul Krugman, oddly, won the Nobel Prize in Economics.

Beijing has reintroduced some traffic restrictions after complaints from citizens who wanted the city's clean air measures extended past the Olympics.

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