“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Sunday, September 14, 2008

Worldwide Reprecussions to Lehman Brothers Failure.

'More big firms will fail': Greenspan

The Fed has decided to stand aside and there seems to be no appetite from the major financial players to jump in to save Lehman. Fasten your seat belts.


Wall Street giant Lehman Brothers hanging by a thread as Greenspan warns of 'worst economic crisis I've ever seen'
By KARL WEST Daily Mail

Wall Street giant Lehman Brothers was staring bankruptcy in the face last night after Barclays and Bank of America turned their backs on a rescue bid.

News of the prestigious bank’s perilous position will send shockwaves through fragile global markets and economies, including here at home, as the credit crunch worsens.

Experts claimed other banks could go to the wall and conditions was worse than that faced in the 1929 Wall Street Crash.

Lehman’s 4,000 workers based in the City of London, many of whom are now likely to face the axe.

It could also sparking a mass cull of jobs across the financial sector that could stretch into the tens of thousands.

Fears are rising that if Lehman goes down, the crisis of confidence in the sector could spread to others and spark a wave of panic selling when global stock markets open today.
Describing the prospect of Lehman's demise as 'Armageddon', one source warned a collapse could slash as much as 1,000 points off the value of America's main stock exchange, the Dow Jones.

Such a precipitous fall would drag other stock markets into the mire, including Britain’s bluechip index, the FTSE 100.

And is not only City workers who would be affected.

This all comes on the back of huge losses in the City in recent times.

The disaster for Lehman Brothers comes after nearly £100billion was wiped off the value of top companies in Britain a week ago.

The five-day fall on the stock market was the worst since the dotcom bubble burst six years ago.

It would also blow another hole in the government's attempts to relaunch the economy.

Further losses are expected when trading resumes this morning.

Last night moves were already afoot to try and restore confidence with reports suggesting that the Bank of America was trying to save the next bank in trouble, Merrill Lynch.

The BoA was desperately trying to strike a merger with Merrill after ditching talks with Lehman.

If no new funding is found before Wall Street opens today Lehman, will seek Chapter 11 bankruptcy protection.

This will protect the bank from its creditors while allowing it some breathing space to try and trade its way out of difficulties.

Accountancy giant PricewaterhouseCoopers has been lined up to run Lehman’s UK operations, which will be seen as bad news for staff.

Barclays and Bank of America were scared off from ‘writing a blank cheque’ for Lehman after the US authorities refused to provide guarantees that would protect them against potential losses from the stricken investment bank.

A Barclays spokesman confirmed that it had ended its interest.

"It's over as far as we are concerned. We had a team look at it over the weekend ... but we just couldn't write a blank cheque for that in the time we were given."

Bank of America - which was working on the bid with US private equity firm JC Flowers and Chinese state investment fund China Investment Corporation - was said to be unconvinced that a deal with Lehman was in the best interests of its shareholders.

A source close to the rescue talks, being led by the US government and central bank the Federal Reserve, warned that if Lehman goes under it could lead to other high profile financial outfits folding.

The investment bank was put up for sale as concerns about its long term financial viability hammered the group's shares down 80pc last week after it reported a £2.2bn quarterly loss.

Increasingly desperate talks to save the bank continued late into the night.

But these efforts came to nothing as Lehman’s last two hopes of a commercial rescue backed away.

The former head of America's central bank added to the growing crisis of confidence in financial markets last night saying he suspected "we will see other major firms fail".

Alan Greenspan, describing the banking crisis as the worst of his career and possibly the worst in a century including the 1929 Wall Street crash, added however that companies collapsing may not be a problem.

'It depends on how it is handled and how the liquidations take place,' he said.

'And indeed we shouldn't try to protect every single institution. The ordinary course of financial change has winners and losers.'

Appearing on US TV, he said: 'Let's recognize that this is a once-in- a-half-century, probably once-in-a-century type of event' - the worst 'by far' in his career, he added.

'There's no question that this is in the process of outstripping anything I've seen, and it still is not resolved and it still has a way to go.

'And indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes.

'That will induce a series of events around the globe which will stabilize the system,' he added.

The US Federal Reserve and US Treasury secretary Hank Paulson stepped in at the weekend to summon the bosses of rival Wall Street banks - Goldman Sachs, Merrill Lynch, Citigroup, and JP Morgan Chase - to emergency talks.

They were asked to contribute to a fund that would buy Lehman's £15bn-plus of poor investments in commercial property and mortgage related assets.

This would help the authorities to clean up the troubled bank's balance sheet and make it more appealing to those interested in buying the rest of Lehman.

It is thought the Wall Street chiefs objected to being railroaded by the authorities into taking on all Lehman's risky investments, while BoA and Barclays were offered the good bits on the cheap.

A source said: 'They (the authorities) want to get something done before markets open in Asia.'

The speed at which the US authorities moved to find a solution to Lehman's woes echoes the swift sale of Wall Street rival Bear Stearns to JP Morgan Chase earlier this year.

It also follows last week's government-sponsored rescue of home loans giants Freddie Mac and Fannie Mae, which hit trouble because of the collapse of the subprime mortgage market in America.

However, Mr Paulson was adamant that no taxpayer funds would be used to sort out Lehman.

This is because the authorities do not want to be accused of excessive risk-taking by bailing out yet another irresponsible investment bank that took too many bad bets on the property market.


  1. "It depends on how it is handled and how the liquidations take place," ... "And indeed we shouldn't try to protect every single institution. The ordinary course of financial change has winners and losers"


  2. Any statement I made on this would have as much authority as me pronouncing on the Higgs Boson.

    Ask me about bison. I've seen one of those.

  3. However these are concepts I can understand:

    How the 158-year-year institution came to this is a tale of hubris and overreaching -- and a big dose of bad luck.

    "Fuld went wrong in not taking seriously enough the impairment of his balance sheet," said Charles Peabody.

    Hubris Contributed To Meltdown

    Any Higgs Bosons down your way, Sam?

  4. We can work our way out of this by exporting Weapons

    Arm everyone to the teeth.

    More seriously, I don't blame Bush. He was trying to get a handle on Fannie and Freddie early on, I read.

    If we elect Obama & Company, I'd think raising taxes would be adding fuel to the fire. Isn't that what Hoover did, that, and put up trade barriers?

  5. I think it was at Maggies Farm that, upon news of Bear Stearns going down, I told Buddy Larsen, et al, that Lehman was next, and Merril Lynch was possible. Looks like a "Parlay."

    No big deal, tomorrow, I think. It's already priced in. A screw-up This Big has to take down a couple of "Generals." They'll probably decide (they probably have, already) to "hold the line" at Merril.

    A quarter point rate "cut" might be in the offing.

  6. Yes, Bob; and, the idiot Federal Reserve raised rates too soon.

    The Smoot-Hawley Tariffs were the "killing" blow, though.

    That, and FDR's war against "business"

  7. Rufus, a headline just popped up saying Bank of America just bought Merrill-Lynch.

  8. In a rushed bid to ride out the storm sweeping American finance, 94-year-old Merrill Lynch & Co. agreed late Sunday to sell itself to Bank of America Corp. for roughly $44 billion.

    "to sell itself"

    Sounds like whoring, to me.

    Bank of America Reaches Deal for Merrill

  9. Eh, from my mouth to God's ears, huh?

    Well, that's good. Stanched the bleedin.

  10. Sounds like whoring, to me.

    Well, yeah, Bob. That IS the "Job Description," ya know.

  11. What this country needs is Mike Klonsky as Obama's transition captain. :(

  12. Do I believe in guilt by association?


    I'd take Palin's Alaskan friends over Obama's deep thinkers any day, even a day with only 6 hours of sunlight.

  13. No Boson's down here, Bob. Or bison for that matter. I think the croc's got 'em all. A beam of light is supposed to shoot out from the middle of the Indian Ocean in '12 'though. Stay tuned.

  14. I changed my 401-K to shift a bit more to gov't bonds rather than (in)securities. Stand by for heavy rolls tomorrow.

  15. Bobal: I'd take Palin's Alaskan friends over Obama's deep thinkers any day, even a day with only 6 hours of sunlight.

    National Review has a moving story about Down's children from a brother of one, calls them ambassadors of God, congratulates the Palin family for being entrusted with one. And the pro-death Left wants to impugn Sarah for not opting to flush li'l Trig.

  16. Before the Charlotte rally, Biden also appeared at a fundraiser at the home of Crandall Bowles, wife of Erskine Bowles. Erskine Bowles is president of the University of North Carolina system and a former chief of staff in the White House of Bill Clinton.

    Biden said the campaign has some 375 paid staff members and 20,000 volunteers in North Carolina.

    "We take this state very seriously," he said.

    Black President is Transformative

  17. I'll tell you what we be transformative. If blacks were supporting Obama 65%, he would win. At 97% support the only conclusion is that it is a black thing and white votes are lost.

  18. The difference is white women. Before the convention, Sen. Obama held an eight percentage point lead with that group; after it, Sen. McCain had a 12-point edge.

    It would be foolish to pretend that the change wasn’t at least partly due to Gov. Palin’s presence on the ticket. The question is whether this trend will continue until November.

    If so, Sen. McCain has a good chance to win the presidency, which would certainly provoke a serious dispute about who best represents 21st century American women.

    Class War Among Women

  19. The Blacks have always voted like that, duece. Went 95% for Clinton, was that a racial thing, too?

    Probobly was.

    It's how they are, proven by past performance.
    Time will tell if Team obama can boost the voter rolls ...
    and get them to the polls, Charlie Wilson style.

  20. You couldn't blow them white wimmin out of the McCain/Palin camp with a train-load of c4.

    If McCain doesn't have a Goddawful Debate(s) it's all over for Obemassiah.

  21. The fact that Gov. Palin doesn’t come from Washington, D.C., New York, Los Angeles or San Francisco; that she didn’t go to an Ivy League school;

    from Sam's post

    I do want everyone to know that though Palin didn't go to an 'Ivy League School' she did go to a school that has many nice old buildings with much ivy on them.

    U of I

    U of I Answers

  22. The McCain campaign says they will be at a rally Friday morning in the Key Air Hangar at the Anoka County-Blaine Airport. Tickets to the event are available at the campaign's Minnesota website or at any of the nine McCain's Minnesota campaign offices.

    It will be the first visit to Minnesota by any of the presidential or vice presidential candidates since McCain and Palin accepted their respective nominations at the Republican National Convention in St. Paul during the first week of September.

    The visit comes as a new Star Tribune Minnesota Poll finds that McCain and Democrat Barack Obama are tied in Minnesota at 45 percent each.

    Campaign in Minnesota

  23. If they are really tied in Minnesota, that really means something. Minnesota was further off the map than Michigan. Maybe McCain will win Michigan, Minnesota, Wisconsin, Ohio, practically the whole darn shooting match.

    All because of one good U of I grad. :)

    Barack Obama's Big Blunders

  24. They're gonna lose the whole thing all on account of Michelle.

    This will be fun to watch.

  25. Bobal: Ask me about bison. I've seen one of those.

    One? You are so deprived.


  26. Michelle's gonna blow her gaskets after the election, if they lose:)

    She is dangerous. She is not just pro-life, she's anti-life. She is the suppression of human feeling and instinct. She is a slave to the compromises dictated by her own desire for power and control. Sarah Palin is untethered from her own needs and those of her family, which is in crisis, with a pregnant daughter, a son on the way to Iraq and a special-needs infant.

    Pissed About Palin Rant

  27. Hell, trish, NATO be leaving Afghanistan, in 2010, along with the Canadians. It'll have been the better part of a decade, that we'd been at it, there. The Candian PM, he seemed to think that long enough.
    Results, like performance, count, eventually.

    We best have that factored in to the "Plan"

    As for Obama as CiC, he may feel a need to make his bones.
    Betcha he would.

    Sun Sep 14, 07:25:00 PM EDT

    NATO ain't goin' nowhere.

    As far as either Obama or McCain makin' their bones, the biggest change I foresee - at the behest of the PTB - is a reinvigoration of covert ops.

  28. T., somebody, maybe the Nez Perce, had a herd of big ones on the way to Wallowa, Oregon.

    And, I mean those full sized bulls are Big. Really impressive.

    You can buy buffalo meat around here. Every once in a while some comes along through the stores.

  29. Facing exile by Senate Democrats, will Lieberman take a job from old friend McCain?

    "It's my intent to stay in the Senate," he began. Again, however, Lieberman spun his answer: "If John gets elected, everything is hypothetical."

    He's a serene guy, but Joe Lieberman's public life remains in flux.

    Old Friend McCain

  30. from the Daily Kos, no less. Writer ran for some political office back in Ohio I think, was in the military.--Good analysis, then advises to go personal nuclear mode.

    Obama is losing Ohio
    by Paul Hackett

    Fri Sep 12, 2008 at 07:48:58 AM PDT

    Obama is losing Ohio and contrary to Mr. Plouffe’s assertion that Obama can win without Ohio history indicates otherwise.

    There are at least three issues that lead me to believe that the Obama campaign does not grasp the situation in Ohio.

    Unreliable polling
    No organized presence in Southern Ohio
    No attack strategy against Palin/McCain coupled with a lack of defense of the Obama central theme of change.
    Paul Hackett's diary :: ::

    If one believes the polling in Ohio Obama is in a neck and neck race with Palin/McCain to win the state. Additionally it must be remembered that Obama has yet to win over the support of middle of the road Ohioans or solidify the support of Hillary Clinton’s constituents post primary. Recall that Obama was handily beaten by Clinton in the Ohio primary.

    While the polling is close I believe it is far worse than the numbers reflect given social apprehension of middle of the road uncommitted respondents to appear racist by not supporting Obama. There has been much speculation across America regarding this phenomenon and as such can impact the accuracy of polling by at least 5 points. Thus instead of being down in Ohio by 3 or 4 points I would argue that for planning purposes the working assumption should indicate that Obama is down in Ohio by roughly 10 points. That’s a lot of ground to make up in less than 60 days, and as such there must be an aggressive offense to cover such a distance.

    The Obama campaign has no organized presence in Southern Ohio; southern Ohio defined as south of Interstate 70 which runs east west and loosely divides the state in half both geographically and culturally. The Obama campaign’s focus of effort is evident in the traditionally Democratic strongholds of northeast Ohio, the Cleveland area and Mahoning Valley, in addition to Franklin County/Columbus in the center of the state.

    Certainly these are densely populated areas with huge numbers of Democratic constituents, however, they voted for Clinton in the primary, and even if they have increased the registered democrats in these areas the state still can not be won without a majority of the independent hardscrabble rural voter spread throughout southern Ohio from West Virginia to Indiana. Focusing on Columbus, Cleveland, and Dayton is like campaigning in California; it feels good but we’ve already won there.

    Southern Ohio is made up of rural people who make judgments based on the recommendation of close friends and family or personal experience. While TV and radio play a supporting role its impact is not decisive and in order to cover Southern Ohio completely one has to buy into roughly 7 media markets.

    In other words one has to spend a tremendous amount of money to reach a sparsely but indispensable population spread throughout a region of the country that is not well understood by “outsiders” in order to win the state and therefore the White House. Outsiders is defined as someone who grew up 20 miles away.

    This hardscrabble population that largely has a self reliant history that predisposes itself to apparently vote against its economic self interests values perhaps one quality in a person above all others; a fighting spirit. Given McCain’s recent selection of Governor Palin as his running mate it’s clear the Republicans understand the dynamic in not only Southern Ohio but like minded communities throughout rural America.

    The Palin/McCain ticket reflects a course of action on the part of the Republican party that deftly understands both the strengths and weaknesses of the Democratic ticket and aggressively attacks both. The only antidote for such an assault is a comprehensive and aggressive personal attack on the Republican ticket focusing on how the personal lives of Palin/McCain evidence their personal unreliability and therefore their lack of character and values to lead America coupled with an aggressive defense of the Democratic central theme of Change.

    Both elements of strategy, an offensive and defensive plan appear to be absent in Southern Ohio.

    The solution rests with local surrogates on the ground spreading the attack face to face coupled with an air campaign via radio and TV.

    The message is simple and the professionals can refine it but essentially it should contain these elements:

    "Sarah Palin? Can't keep her solemn oath of devotion to her husband and had sex with his employee. Sarah Palin? Accidentally got pregnant at age 43 and the tax payers of Alaska have to pay for the care of her disabled child. Sarah Palin? Unable to teach her 16 year old daughter right from wrong and now another teenager is pregnant. Sarah Palin? Can you trust Sarah Palin and her values with America's future? John McCain? Divorced from his first wife one month and marries a billionaire influence peddler and convicted felon. John McCain, a record of rash and impulsive decisions. That’s not change that’s more of the same.”

    Like it or not the path to the White House requires paying the Ohio Toll, and traipsing around Columbus or Cleveland and preaching to the converted is no substitute, and for that matter nor is duck hunting with Governor Strickland; See John Kerry, 2004.

  31. Bison Burgers!

    Elk Jerky!

    Met a nice family on a day hike up into Cochise Stronghold in the Dragoons. Son-in-law therein, his dad had been high up in Arizona Fish and Game until he got cross-ways politically. Now he manages a bison ranching operation for Ted Turner in Wyoming or Montana. I shared some jerky with them I'd picked up in Texas a couple days earlier. Like bringing a Big Mac to a Texas bbq. They were polite.

  32. Pictures McCain and Palin holding out in a last stand in the White House, machine guns blazing out the windows, over the balcony. Can you picture Obama in this scene?

    Paglia on Palin
    From today’s Sunday Times, Camille Paglia on Sarah Palin:

    In the US, the ultimate glass ceiling has been fiendishly complicated for women. Our president must also serve as commander-in-chief of the armed forces, so a woman candidate for president must show a potential capacity for military affairs and decision-making. As a dissident feminist, I have been arguing for 20 years that young American women aspiring to political power should be studying military history rather than women’s studies with their rote agenda of never-ending grievances.

    The gun-toting Palin is a brash ambassador from America’s pioneer past. She immediately reminded me of the frontier women of the western states, which first granted women the right to vote after the civil war — long before the federal amendment guaranteeing universal suffrage was passed in 1919. Frontier women faced the same harsh challenges and had to tackle the same chores as men, which is why men could regard them as equals — unlike the genteel, corseted ladies of the eastern seaboard… Feminism, which should be about equal rights and equal opportunity, should not be a closed club requiring an ideological litmus test for membership.

    My other half once suggested a political thought experiment. When deciding who to vote for, you should try to imagine that the country has been invaded and the streets are teeming with Nazis, Communists, aliens or some other uncongenial presence. Can you picture your PM or president among the last line of resistance, gun in hand, fighting to the bitter end?

    Well, I can’t picture Obama doing that. For one thing, his neck is just too thin. More importantly, in the immediate aftermath of the 9/11 atrocities, Obama urged Americans to “[understand] the sources of such madness” and the “fundamental absence of empathy on the part of the attackers” – both of which, he maintained, had nothing at all to do with any particular religion and how it is taught, but instead “grows out of a climate of poverty and ignorance, helplessness and despair.”

    I can, however, picture McCain and Palin leaning out of a White House window wielding automatic firearms. And, improbable as that scenario may be, I think the ability to picture it matters.

  33. Idaho--Palin/McCain +39
    Utah---Palin/McCain +38
    Alaska-Palin/McCain +31

    :) We lead the country, even Alaska we beat.

  34. Lindsay writes, "Is it a sin to be gay? Should it be a sin to be straight?

    Or to use birth control? Or to have sex before marriage?

    Or even to have a child out of wedlock?"

    Lindsay says she was trying to remain politically neutral but now her support is with the Democratic Party. "I would have liked to have remained impartial; however I am afraid that the 'lipstick on a pig' comments will overshadow the issues and the fact that I believe Barack Obama is the best choice, in this election, for President."

    Same-sex Views

  35. RCP's still got Obama +8 in delegates.

  36. I'm predicting Nevada will go for Palin/McCain, based on there still being a fair number of Mormons around, despite the recent massive influx of citified foreigners. The Mormons will like Palin.

    Within the United States in Utah about sixty percent of the population are members. That puts the state population of Saints at just over 1.5 million members. In Idaho, fourteen percent of the population are LDS; in Nevada, nine percent; Arizona, six percent; Oregon, four percent; and the rest of the states are at about three percent.

  37. Gerard

    Jill Greenberg and her photos of McCain.

    Lists corporate clients of Greenberg with suggestion to ruin her career. Good idea.

  38. Find out where you're at politically with this Nolan Chart

    Apparently I'm a libertarian.

  39. Well they're not gaining any votes by it, and losing some. It's a sad picture--of the photographer.

  40. Well, it says I'm libertarian after taking the test.

    Stupid internet and HTML linking.

  41. I'm not a Statist! Or a satanist! Or a Stalinist!

    Stupid internet!

  42. This comment has been removed by the author.

  43. I came out as a Conservative/Libertarian leaning Palinite Centrist. If I told that to my wife, she'd say I'm babbling again.

  44. Yeah, I posted my chart, and, like your chart, it came up statist or whatever, so I took it down.

  45. The yellow star on Sam's chart shows him to be such a 'statist' he's almost off the chart.

    All to the state! Within the state, everything, outside the state, nothing! One leader, one folk, one state!:)

  46. Liberatarian, poised to tumble off for the long slide into rightwing oblivion.

    These tests? Easy to pass. Like the military aptitude tests I took in basic trg.

    Question: Would you rather go hunting and fishing, or sort books in a library? Sarah as the librarian was not an option.

  47. :)

    On the KGO news--German Shepard, trained to pust a button that dials 9-11 if his owner goes into a seizure, does so, saving the guys life. Dog is heard whimpering on the tapes prerecorded message for help.

    Man's best friend, indeed.

    Man is recovering successfully.

  48. To be a bit more specific, the way my star is positioned, i'm a right-leaning libertarian.

  49. What's Robert Mugabe's take on this election? All the other biggies, Castro, Hamas, Chavez on and on have weighed in, but I haven't heard of Mugabe's choice? Surely, he must be an Obama man.

    We should also consider looking to Mugabe for suggestions as to how to fix our economic problems here.

  50. Wonder what their Nolan Charts look like?

    Might give my extreme Statist result a run for it's money.

  51. Ya reckon Michelle will be proud of her country when her husband loses?

  52. I think they got Michelle so boxed up that she'll absolutely blow her top past the moon if Obama loses, with the pent up energy. And, if some speculation is right, she'll have been the main reason for it, if she was the main one that nixed Hillary.

    I'm getting a great deal of pleasure following this thing this year.

    Remember when we were moaning about Hillary? :) No, no, not Hillary---and Michelle comes through for us, nixing her even for VP, bringing the whole house of cards down on the both of them.

    And they pick Biden, o my.

  53. Thanks for that SNL clip, bob.
    Fabulous stuff they do there.

    SNL & Morning Joe
    GE, brings good things to life, duece.

  54. Obama, he should have put Janet Napalitano in that VP slot.
    Would have busted Mavericks balls, with that move, but he picked old Joe.

    Not a tasty pudding, at all.

    Nato, with no whirrlybirds, not much of an asset, whether they stay or go.

    But the Canucks, they be in Nato, too. Unless Mr Harper be a liar, they be headin' for the door, 2010 he said.

  55. So Nato will stay, as long as we do, 'cause we be Nato, too. Just the other member countries, they'll not send combat troops.

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