Leveller

here we go again…

Originally uploaded by loungerie

American Republican’s say that because Ms Pelosi was mean to them, they decided to throw their toys out of the pram in a fit of pique. Apparently throwing themselves into a major recession it is more important so as to preserve their cherished beliefs in Reaganomic market voodoo.

Perhaps the next time they vote on this they’ll add a clause to grab back the $36 billion in bonuses the city spiv’s paid themselves last year.

EDIT: following the vote $1.2 trillion was wiped of US share prices.

That’s a big whack out of everyone’s 401K and all because Nancy made the Republican’s cry.

send in the clowns

The US Federal Reserve bails out AIG with almost $100,000,000,000 as its stock value crumbles. But what has brought this giant of insurance down? The answer appears to be that the value of AIG’s investments known as Credit Default Swaps (CDS), apparently these are supposed to be a form of insurance policy (AIG’s business is insurance) against bad debt.

At the end of last year concerns were being expressed that the value of these insurances were grossly overestimated resulting in a write down of $4.88 billion.

It seems that not only was AIG’s insurance risk assessment lacking but their Crisis Management Services just wasn’t up to the job either.

Over the last couple of decades companies like AIG have charged huge fees, and paid themselves massive bonuses, for advising on, and selling derivative investments like Credit Default Swaps.

Today many suspect these derivatives are worthless.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Workers leaving Merrill Lynch

Lehman Brothers file for bankruptcy, Merrill Lynch taken over by Bank of America, and stock markets plunge. Will any lessons be learnt? Of course not:

Lets run that again. These banks paid in bonuses an average of $212,000 per employee in the year when everything went tits up. Of course that 186,000 includes all the secretaries, cleaners, and other ancillary staff. Some people at the top of the pile got $millions upon $millions.

Now don’t let these CEOs and the like kid you that their jobs are risky. The average UK worker is in the same job for 5.5 years. The average job span of a CEO is a month or two less. When these guys get sacked in addition to the $millions they get in compensation, they immediately take up paid directorships in other companies, when the average worker losses their job they are out of work for 15 weeks.

From the BBC:

Liberal Democrat leader “No Shit Sherlock” has pledged to tackle “bad practice” in the City of London as he outlined plans for a better system of regulation.

The current turmoil is due to thieving by the financial institutions, at the moment we are focussing on the write downs that the banks are announcing, but in the end they will mostly recoup these ‘losses’ by selling the repossessed properties. In reality the losers are the poor in the USA who were duped into signing mortgage agreements. This whole fiasco is the largest transfer of equity from African Americans to City Financiers since the ending of slavery.

This isn’t the first time that financial institutions have been caught either. There was miss selling of pensions on the 1980s, miss selling of endowment mortgages in the 1990s, and now these sub-prime mortgages which sounds remarkably like Savings & Loans mk2.

You’ll hear the pundits, politicians, and industry apologists excuse the behaviour, they’ll tell you that no one could have foreseen it, and that extra regulation isn’t the answer. Well may be it isn’t, what we should do is pick ten or twenty of the leading bankers and chop their thieving fucking hands off.