What Bankers Fear
By David Ignatius
Sunday, December 16, 2007; Page B07
When airport rescue crews are worried that a damaged plane may have a crash landing, they sometimes spread the runway with foam to reduce the probability of fire on impact. That's what the Federal Reserve and other central banks are doing in pumping liquidity into severely damaged financial markets.
Make no mistake: The central bankers' announcement Wednesday of a new coordinated effort to pump cash into the global financial system is a sign of their nervousness. The global credit squeeze that began last summer still hasn't run its course, and the central bankers fear that the stressed financial system could pull the world economy into a deep recession.
Thus the bankers' decision to shower the system with money, through a new system of auctions that will allow banks to borrow more cheaply than they can through the commercial interbank market. What's unusual is that five leading central banks agreed to act as a joint rescue committee.
The aim isn't so much to prevent a downturn -- the bankers aren't sure that's possible, or even desirable -- as to mitigate its effects. Fed officials have decided that they need to let the adjustment happen in financial markets, with prices of mortgage-backed securities and other assets falling to levels that will allow the markets to clear.
"Helicopters start dropping bundles of cash," read the headline on a column by Martin Wolf in Thursday's Financial Times. This image of free money recalls the facetious prescription of John Maynard Keynes that to get money in circulation again during the Great Depression, the government could simply bury it underground and encourage unemployed workers to dig it up. This time the bankers won't even have to dig.
Fed officials want to avoid two mistakes made in past financial crises. They don't want to be overly harsh, as banking authorities were after the real estate collapse that hit New England in the early 1990s. Back then, regulators forced banks to clean up their balance sheets by selling off assets in a falling market, which made the downward cycle even worse.
The Fed also wants to avoid being overly tolerant, as Japanese authorities were during that country's long-running financial crisis. The Japanese banks were allowed to keep bad loans on their books, in the hope that they could gradually grow their way out of the crisis. Instead, this lenient policy simply delayed the day of reckoning.
What scares the central bankers now is the evaporation of trust from the system. Banks don't believe each other's numbers; since nobody knows the real value of some of the mortgage-backed securities everyone is holding, they assume the worst. They start hoarding cash as a buffer against their own losses and because they're nervous about lending to anyone else.
That's what bankers mean when they talk about lack of liquidity. It isn't so much a shortage of cash as an unwillingness to make it available to others. It was Keynes, again, who coined the term "liquidity preference" to describe a situation in which even high rates of return couldn't persuade frightened investors to commit their cash.
"The basic problem is that banks don't trust each other. They can't get financing, so they don't lend, and this can cause spillover into the larger economy," explains Ted Truman, a senior fellow at the Peterson Institute in Washington and the Fed's former top international economist.
A fresh portrait of this stressed system appeared last week in the latest quarterly report by the Bank of International Settlements. The report noted that net issuance of certain mortgage-backed securities fell to $3 billion in September, compared with $30 billion or more a month in 2005 and 2006. Borrowing in general declined sharply, with the net issuance of bonds and notes in the third quarter less than half that of the previous quarter.
What does this market feel like for players at ground zero? I asked the head of one of the leading hedge funds how he had traded his portfolio Wednesday, the day the joint rescue package was announced. He answered that he had stayed out of the market because he wasn't sure what to do. Trades that looked sensible at 10 a.m. would have turned out to be mistakes by noon.
"If someone would take me out of all my positions, long and short, I'd do it," he said. This is the financial market equivalent of saying you want to start over. Six months into the credit crunch, that's the way many exhausted players are feeling. The markets will have to sink a good deal more, alas, before the vultures arrive to carry off the debris and the process of rebuilding can start.
Monday, December 17, 2007
Emergency help for financial markets entered new territory on Monday night as the European Central Bank announced it would on Tuesday offer unlimited funds at below market interest rates in a special operation to head off a year-end liquidity crisis.
The surprise move, which follows last week's co-ordinated barrage of measures by the world's central banks to increase market liquidity, suggests the ECB is still frustrated at the failure to ease market tensions.
The ECB had already announced that Tuesday's regular weekly money market operation would mature on January 4 - covering the year-end when financial institutions will be under pressure to show strong liquidity on their books.
But on Monday night it said in addition that it would satisfy all bids offering 4.21 per cent or more. Prior to the announcement, the cost of borrowing two-week money had soared to 4.9 per cent but fell sharply afterwards as the ECB's move in effect put a cap on market interest rates.
The move could trigger a surge in demand for ECB liquidity. In last week's regular seven-day auction, the ECB allocated EU218.5bn at an average rate of 4.21 per cent - the rate chosen as the cap for Tuesday's operation.
The ECB offered little explanation for its move beyond saying that it was "fully consistent" with its aim of keeping interest rates close to its main policy rate of 4 per cent.
The latest move underlines the limited impact of last week's co-ordinated intervention which included a new liquidity facility at the US Federal Reserve.
http://news.yahoo.com/s/ft/20071217/bs_ft/fto121720071425318....
Note:
When banks have no money coming in from private sector investors, there is no money available to roll over, originate or service existing debt, that is what these emergency loans are being used for, without a loan, from the CBs, they are insolvent.
They are buying time that has run out.
There is no way these CB drops in the bucket can replace the amount of private sector money that is no longer available or the amounts that are flowing out due to default and redemptions.
The surprise move, which follows last week's co-ordinated barrage of measures by the world's central banks to increase market liquidity, suggests the ECB is still frustrated at the failure to ease market tensions.
The ECB had already announced that Tuesday's regular weekly money market operation would mature on January 4 - covering the year-end when financial institutions will be under pressure to show strong liquidity on their books.
But on Monday night it said in addition that it would satisfy all bids offering 4.21 per cent or more. Prior to the announcement, the cost of borrowing two-week money had soared to 4.9 per cent but fell sharply afterwards as the ECB's move in effect put a cap on market interest rates.
The move could trigger a surge in demand for ECB liquidity. In last week's regular seven-day auction, the ECB allocated EU218.5bn at an average rate of 4.21 per cent - the rate chosen as the cap for Tuesday's operation.
The ECB offered little explanation for its move beyond saying that it was "fully consistent" with its aim of keeping interest rates close to its main policy rate of 4 per cent.
The latest move underlines the limited impact of last week's co-ordinated intervention which included a new liquidity facility at the US Federal Reserve.
http://news.yahoo.com/s/ft/20071217/bs_ft/fto121720071425318....
Note:
When banks have no money coming in from private sector investors, there is no money available to roll over, originate or service existing debt, that is what these emergency loans are being used for, without a loan, from the CBs, they are insolvent.
They are buying time that has run out.
There is no way these CB drops in the bucket can replace the amount of private sector money that is no longer available or the amounts that are flowing out due to default and redemptions.
Thursday, December 13, 2007
Dec. 13 (Bloomberg) -- The interest rates banks charge each other for short-term loans in Europe failed to decline from the highest levels in seven years a day after central banks joined forces to break a logjam in money markets.
The cost to borrow for three months remained at 4.95 percent, the British Bankers' Association said today. That's 95 basis points, or 0.95 percentage point, more than the European Central Bank's benchmark interest rate, compared with 57 basis points a month ago. The difference averaged 25 basis points in the first half of the year, before losses on securities linked to U.S. subprime mortgages contaminated credit markets.
The highest short-term rates since December 2000 suggest that the first coordinated central bank action since the Sept. 11, 2001, terrorist attacks may not be enough to revive interbank lending. The cost of borrowing dollars fell 7 basis points to 4.99 percent, about half what was anticipated, based on prices of Libor futures contracts.
``It's not going to help us find an exit to this crisis,'' said Cyril Beuzit, head of interest-rate strategy at BNP Paribas SA in London. ``These measures aren't going to address the root cause of the crisis. Banks are still reluctant to lend money to each other because there are serious concerns about potential further bad news.''
Reacting to Losses
Central banks in the U.S., U.K., Canada, Switzerland and the euro region agreed yesterday to coordinate efforts to promote lending and restore confidence in money markets. Policy makers are reacting to more than $66 billion of losses announced by banks this year and estimates of about $300 billion more on securities linked to subprime mortgages, collateralized-debt obligations and structured investment vehicles, or SIVs.
Futures trading in Europe is signaling the measures won't succeed in bringing down borrowing rates into next year.
Implied yields on Euribor futures contracts expiring this month through June 2009 rose today, with the December contract climbing 6 basis points to 4.915 percent. The implied yield on the March 2008 contract gained 6 basis points to 4.6 percent.
``The markets don't expect spreads to go down,'' said Alexander Titsch-Rivero, head of derivatives and structured products in Frankfurt at BHF-Bank AG, a German private bank. ``The actions by the central banks were just a placebo, a tranquilizer that doesn't solve the problem of the mistrust among banks on one hand and the potential for more losses in credit on the other.''
Stocks, Bonds
The interest rate for euros compiled by the European Banking Federation was little changed at a seven-year high of 4.95 percent, compared with 4.18 percent at the start of July.
Stocks extended declines, with the Euro Stoxx 600 index falling 2 percent. Yields on three-month Treasury bills, regarded as a haven for investors in times of turmoil, held at 2.87 percent, close to the lowest since Aug. 20.
The difference between the interest banks and the government pay for three-month loans, called the TED spread, rose to 2.21 percentage points yesterday from 1.59 percentage point on Sept. 18, when the Fed began lowering rates.
``It's a very disturbing sign,'' said Christoph Rieger, a fixed-income strategist at Dresdner Kleinwort in Frankfurt. ``I'm alarmed by the impact this is having, which underscores that the funding difficulties out there are enormous.''
The Fed plans four auctions, including two this month that will add as much as $40 billion, to increase cash in the U.S. The Bank of England said it would widen the range of collateral it will accept on three-month loans.
Seized Up
Short-term credit markets seized up in August, raising concern that the lack of capital flow between banks will hurt the economy. Goldman Sachs Group Inc. in a report a month ago estimated losses related to record home foreclosures may be as high as $400 billion for financial companies. If accurate, banks, brokerages and hedge funds would need to cut lending by $2 trillion, triggering a ``substantial recession,'' the firm said.
Borrowing costs have soared over the past four weeks as banks sought loans that will cover their commitments through to the start of next year.
``We're coming up to a real end of the year liquidity squeeze,'' said Stewart Taylor, who trades Treasuries in Boston at Eaton Vance Management, which oversees about $4 billion of taxable bonds. ``A lot of people are just pumping into bills rather than lending. Why loan money over the end of the year if you don't have to.''
Brown, Geithner
U.K. Prime Minister Gordon Brown said the surge in credit costs should spur increased transparency in the banking industry and change the way credit-rating companies work.
``It's a wake-up call for the global economy,'' Brown told lawmakers in Parliament in London today. ``The existing institutions aren't good enough.''
Fed Bank of New York President Timothy Geithner said today central bankers are looking at ``additional instruments'' to provide funds to banks in times of stress.
``The market is underestimating the significance of the move by the central banks,'' said Ciaran O'Hagan, head of interest-rate research in Paris at Societe Generale SA. ``It's a strong action that will tide us safely over year-end and hopefully restore confidence to the money markets early in the new year.''
Turmoil in the credit markets has caused losses for everyone from shareholders of New York-based Citigroup Inc., the largest U.S. bank, to Florida schools and towns invested in a state-run fund that owned downgraded and defaulted securities issued by SIVs. Citigroup, which said its mortgage-related writedowns may reach $11 billion this quarter, has fallen 39 percent since June on the New York Stock Exchange.
The one-week rate for euros was unchanged at 4.13 percent, the EBF said today. The rate for three-month credit in U.K. pounds dropped 12 basis points to 6.51 percent, the BBA said.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
Wednesday, December 12, 2007
PORT WASHINGTON, N.Y. (MarketWatch) -- You can lead a horse to water, but you can't make it drink.
We learned this in the 1930s, when, after first shrinking the money supply enough to pull prices down by about 25%, the Federal Reserve of that era tried to force-feed liquidity into the economy with the hopes of pushing it out of its slump.
It didn't work. Lenders were reluctant to lend, while potential borrowers did not want to borrow.
Banks were struggling under mountains of loans gone sour and were in no frame of mind to throw good money after bad. For their part, most firms were not willing to assume new debts, since falling sales and earnings led them to conclude that there was little productive use they could make out of these borrowed funds.
The great economist John Maynard Keynes dubbed this phenomenon a "liquidity trap." It was perhaps the first realization that the Fed's powers were not as great as previously thought.
This was most disconcerting, since the main reason behind the creation of the Fed back in 1913 was to ensure that panics, such as the one in 1907 that was caused by insufficient liquidity in the economy, could be nipped in the bud - if not prevented altogether by a generous dollop of liquidity from the central bank.
The Panic of 1907, like others before it, led to a recession. The liquidity trap of the 1930s was part and parcel of what came to be known as the Great Depression.
Today there are some similarities to the liquidity trap of the 1930s. The credit crunch is clearly one of them. No matter what the Fed does on Tuesday, it will not be able to thaw out the frosty financial markets.
This is because the markets lack confidence. As I wrote two weeks ago, "fear, and not a lack of liquidity, is what's freezing up the credit markets ... and ... it's going to take a lot more than infusions of liquidity to thaw them." See Nov. 26 column
You know that fear is stronger than greed these days when banks refuse to lend to each other - never mind to businesses or to consumers.
A good indication of this is the three-month LIBOR spread against comparable maturity Treasuries. It's over 200 basis points (2 percentage points) today versus an average of about 25 bps between 2003 and this past spring.
What's driving this fear is uncertainty over the underlying value of securities backed by home mortgages.
Treasury Secretary Henry Paulson's offer to freeze interest rates for as long as five years for some subprime borrowers raises more questions than it answers - not the least of which is setting a precedent of government intervention changing the rules of the game for investors.
The value of these mortgage-backed securities will also be determined by what happens to housing prices, and as I wrote last week, nationally, median home prices will have to fall at least another 20% before families can afford to buy. See Dec. 3 column
There's little the Fed can do at this point other than injecting liquidity to push rates lower while persuading lenders to make credit more readily available.
However at some point the Fed will have to draw the line, lest it create not only a new moral hazard, but the groundwork for a new round of inflation as well. 
Why Your Camera Doesn't Matter
Why is it that with over 60 years of improvements in cameras, lens sharpness and film grain, resolution and dynamic range that no one has been able to equal what Ansel Adams did back in the 1940s?
Ansel didn't even have Photoshop! How did he do it? Most attempts fall short, some are as good but different like Jack Dykinga, but no one is the same.
Why is it that photographers loaded with the most extraordinary gear who use the internet to get the exact GPS coordinates of Jack's or Ansel's photo locations and hike out there with the image in hand to ensure an exact copy (illegal by US copyright laws and common decency), that they get something that might look similar, but lacks all the impact and emotion of the original they thought they copied?
I'm not kidding. A bunch of these turkeys used university astronomers to predict the one time in almost two decades that the conditions would match and had 300 of the clueless converge at just the right spot. They still didn't get the clouds, snow or shadows right. This makes Ansel or any other creative artist cringe. Of course they didn't get anything like what they wanted. Art is a lot more.
Compelling photographs come from inspiration, not duplication.
Why is it that even though everyone knows that Photoshop can be used to take any bad image and turn it into a masterpiece, that even after hours of massaging these images look worse than when one started?
Maybe because it's entirely an artist's eye, patience and skill that makes an image and not his tools. Even Ansel said "The single most important component
of a camera is the twelve inches behind it."
A camera catches your imagination. No imagination, no photo - just crap. The word "image" comes from the word "imagination." It doesn't come come from "lens sharpness" or "noise levels." David LaChapelle's work is all about his imagination, not his camera. Setting up these crazy shots is the hard part. Once set up, any camera could catch them. Give me David LaChapelle's camera and I won't get anything like he does, even if you give me the same star performers.
The only reason I have a huge lens in my photo on my home page is so I don't have to say "photographer" or "photography." The lens makes it obvious much quicker than words. That's what visual communication is all about: thinking long and hard to make your point clearly and quickly. I haven't used that huge lens in years.
Just about any camera, regardless of how good or bad it is, can be used to create outstanding photographs for magazine covers, winning photo contests and hanging in art galleries. The quality of a lens or camera has almost nothing do with the quality of images it can be used to produce.
Joe Holmes' limited-edition 13 x 19" prints of his American Museum of Natural History series sell at Manhattan's Jen Bekman Gallery for $650 each. They're made on a D70.
Another San Diego pro, Kirsten Gallon earns her living using Nikon's two very cheapest lenses, the 18-55 and 70-300 G.
There are plenty of shows selling shots from Holgas for a lot more money, just that those folks don't tell me about it. Holgas sell for $14.95, brand new, here. You can see an award-winning shot made with a Holga hanging in Washington, D.C.'s Hemicycle Gallery of the Corcoran Museum of Art in their 2006 Eyes of History competition of the White House News Photographers Association here.
Walker Evans once said "People always ask me what camera I use. It's not the camera, it's - - - " and he tapped his temple with his index finger.
Jesus Christ's dad Joseph built a masterpiece of a wooden staircase in a church in New Mexico in 1873, and does anyone care what tools he used? Search all you want, you'll find plenty of scholarly discussion but never of the tools.
Your equipment DOES NOT affect the quality of your image. The less time and effort you spend worrying about your equipment the more time and effort you can spend creating great images. The right equipment just makes it easier, faster or more convenient for you to get the results you need.
"Any good modern lens is corrected for maximum definition at the larger stops. Using a small stop only increases depth..." Ansel Adams, June 3, 1937, in a reply to Edward Weston asking for lens suggestions, page 244 of Ansel's autobiography. Ansel made fantastically sharp images seventy years ago without wasting time worrying about how sharp his lenses were. With seventy years of improvement we're far better off concentrating on making stunning photos than photographing test charts. Of course these large format lenses of the 1930s and today are slow, about f/5.6 typically. Small format and digital lenses work best at about 2 stops down.
Buying new gear will NOT improve your photography. For decades I thought "if I only had that new lens" that all my photo wants would be satisfied. Nope. I still want that "one more lens," and I've been shooting for over 30 years. There is always one more lens. Get over it. See "The Station" for a better explanation.
The camera's only job is to get out of the way of making photographs.
Ernst Haas commented on this in a workshop in 1985:
Two laddies from Nova Scotia had made a huge effort to be there and were great Leica fans, worked in a camera store, saved to have them and held Ernst on high for being a Leica user (although he used Nikons on his Marlboro shoots, when the chips were down).
About four days into the workshop, he finally maxxed out on the Leica adoration these kids displayed, and in the midst of a discussion, when one of them asked one more question aimed at establishing the superiority of Wetzlar, Ernst said, "Leica, schmeica. The camera doesn't make a bit of difference. All of them can record what you are seeing. But, you have to SEE."
Nobody talked about Leica, Nikon, Canon or any other brand of camera equipment for the rest of the workshop.
He also said, "Best wide-angle lens? 'Two steps backward' and 'look for the ah-ha'."
(This Haas anecdote comes from Murad Saÿen, the famous photographer from Oxford, Maine over whom people are all abuzz. Many say he emerged from the back woods as a cross between Eliot Porter and Henri Cartier Bresson. I found at least three websites claiming to be Haas' official one here and here.)
You can see some of the world's best photography here by a fellow who says the same thing here. Here's another load of data which also confirms why owning more lenses just makes worse photos. I made these B/W photos here with a 50 year old $3 box camera more primitive than today's disposables.
Andreas Feininger (French, b. 1905 - d. 1999), said "Photographers — idiots, of which there are so many — say, “Oh, if only I had a Nikon or a Leica, I could make great photographs.” That’s the dumbest thing I ever heard in my life. It’s nothing but a matter of seeing, thinking, and interest. That’s what makes a good photograph. And then rejecting anything that would be bad for the picture. The wrong light, the wrong background, time and so on. Just don’t do it, not matter how beautiful the subject is."
People know cars don't drive themselves, typewriters don't write novels by themselves and that Rembrandt's brushes didn't paint by themselves. So why do some otherwise intelligent people think cameras drive around and make pictures all by themselves? The most advanced, exotic and expensive car can't even stay in the same lane on the freeway by itself, much less drive you home. No matter how advanced your camera you still need to be responsible for getting it to the right place at the right time and pointing it in the right direction to get the photo you want. Every camera requires you to make manual adjustments now and then as well, regardless of how advanced it is. Never blame a camera for not knowing everything or making a wrong exposure or fuzzy image.
Even a good driver in a crummy car like a Geo Metro can escape from multi-car police chases in broad daylight. It's the driver, not the car. Read that one here.
Here's how I came to discover this:
When it comes to the arts, be it music, photography, surfing or anything, there is a mountain to be overcome. What happens is that for the first 20 years or so that you study any art you just know that if you had a better instrument, camera or surfboard that you would be just as good as the pros. You waste a lot of time worrying about your equipment and trying to afford better. After that first 20 years you finally get as good as all the other world-renowned artists, and one day when someone comes up to you asking for advice you have an epiphany where you realize that it's never been the equipment at all.
You finally realize that the right gear you've spent so much time accumulating just makes it easier to get your sound or your look or your moves, but that you could get them, albeit with a little more effort, on the same garbage with which you started. You realize the most important thing for the gear to do is just get out of your way. You then also realize that if you had spent all the time you wasted worrying about acquiring better gear woodshedding, making photos or catching more rides that you would have gotten where you wanted to be much sooner.
I met Phil Collins at a screening in December 2003. It came out that people always recognize his sound when they hear it. Some folks decided to play his drums when he walked away during a session, and guess what? It didn't sound like him. Likewise, on a hired kit (or "rented drum set" as we say in the USA) Phil still sounds like Phil. So do you still think it's his drums that give him his sound?
A fan from Michigan teaches auto racing at a large circuit. The daughter of one of his students wanted to come learn. She flew out and showed up at the track in an rented Chevy Cavalier. She outran the other students, middle aged balding guys with Corvettes and 911s. Why? Simple: she paid attention to the instructor and was smooth and steady and took the right lines, not posing while ham-fisting a lot of horsepower to try to make up for patience and skill. The dudes were really ticked, especially that they were outrun by a GIRL, and a 16 year old one at that.
Sure, if you're a pro driver you're good enough to elicit every ounce of performance from a car and will be limited by its performance, but if you're like most people the car, camera, running shoes or whatever have little to nothing to do with your performance since you are always the defining factor, not the tools.
Catch any virtuoso who's a complete master of their tools away from his or her sponsors and they'll share this with you.
So why do the artists whose works you admire tend to use fancy, expensive tools if the quality of the work is the same? Simple:
1.) Good tools just get out of the way and make it easier to get the results you want. Lesser tools may take more work.
2.) They add durability for people who use these tools hard all day, every day.
3.) Advanced users may find some of the minor extra features convenient. These conveniences make the photographer's life easier, but they don't make the photos any better.
4.) Hey, there's nothing wrong with the best tools, and if you have the money to blow why not? Just don't ever start thinking that the fancy tools are what created the work.
So why do I show snaps of myself with a huge lens on my pages? Simple: it saves me from having to say "Ken Rockwell Photography," which sounds lame and takes up more space. The big camera gets the message across much better and faster so I can just say "Ken Rockwell."
Here are photos made by a guy in the Philipines - with a cell phone camera!
One last example: I bought a used camera that wouldn't focus properly. It went back to the dealer a couple of times for repair, each time coming back the same way. As an artist I knew how to compensate for this error, which was a pain because I always had to apply a manual offset to the focus setting. In any case, I made one of my very favorite images of all time while testing it. This image here has won me all sorts of awards and even hung in a Los Angeles gallery where an original Ansel Adams came down and this image was hung. When my image came down Ansel went right up again. Remember, this was made with a camera that was returned to the dealer which they agreed was unrepairable.
The important part of that image is that I stayed around after my friends all blew off for dinner, while I suspected we were going to have an extraordinary sky event (the magenta sky, just like the photo shows.) I made a 4 minute exposure with a normal lens. I could have made it on the same $3 box camera that made the B/W images here and it would have looked the same.
Likewise, I occasionally get hate mail and phone calls from guys (never women) who disagree with my personal choice of tools. They take it personally just because I prefer something different than they do. Like anyone cares? These folks mean well, they probably just haven't made it past that mountain and still think that every tool has some absolute level of goodness, regardless of the application. They consider tools as physical extensions of their body so of course they take it personally if I poke fun of a certain tool as not being good for what I'm doing. For instance, the Leica collectors here have a real problem with this page. All gear has different values depending on what you want to do with it. What's great for you may not be for me, and vice-versa.
Just about any camera, regardless of how good or bad it is, can be used to create outstanding photographs for magazine covers, winning photo contests and hanging in art galleries. The quality of a lens or camera has almost nothing do with the quality of images it can be used to produce.
You probably already have all the equipment you need, if you'd just learn to make the best of it. Better gear will not make you any better photos, since the gear can't make you a better photographer.
Photographers make photos, not cameras.
It's sad how few people realize any of this, and spend all their time blaming poor results on their equipment, instead of spending that time learning how to see and learning how to manipulate and interpret light.
Buying newer cameras will ensure you get the same results you always have. Education is the way to better images, not more cameras.
Don't blame anything lacking in your photos on your equipment. If you doubt this, go to a good photo museum or photo history book and see the splendid technical quality people got 50 or 100 years ago. The advantage of modern equipment is convenience, NOT image quality. Go look at the B/W images in my Death Valley Gallery. Look sharp to you? They were made on a 50 year old fixed-focus, fixed exposure box camera for which I paid $3. This camera is more primitive than today's disposables.
I have made technically and artistically wonderful images on a $10 camera I bought at Goodwill, and have turned out a lot of crap with a $10,000 lens on my motor driven Nikon.
The great Edward Steichen photographed Isadora Duncan at the Acropolis, Athens in 1921. He used a Kodak borrowed from the head waiter at his hotel. The images are, of course, brilliant. Steichen had not taken his own camera because the original plan had been to work only with movie equipment. This image was on display at The Whitney in 2000 - 2001.
You need to learn to see and compose. The more time you waste worrying about your equipment the less time you'll have to put into creating great images. Worry about your images, not your equipment.
Everyone knows that the brand of typewriter (or the ability to fix that typewriter) has nothing to do with the ability to compose a compelling novel, although a better typewriter may make typing a little more pleasant. So why do so many otherwise reasonable people think that what sort of camera one has, or the intimate knowledge of shutter speeds, lens design or camera technology has anything do with the ability to create an interesting photo other than catering to the convenience of the photographer?
Just as one needs to know how to use a typewriter to compose a script, one does need to know how to operate a camera to make photos, but that's only a tiny part of the process. Do you have any idea what brand of computer or software I used to create what you're reading right now? Of course not, unless you read my about page. It matters to me, but not to you, the viewer. Likewise, no one who looks at your pictures can tell or cares about what camera you used. It just doesn't matter.
Knowing how to do something is entirely different from being able to do it at all, much less do it well.
We all know how to play the piano: you just press the keys and step on the pedals now and then. The ability to play it, much less the ability to stir emotion in those who hear your playing, is an entirely different matter.
Don't presume the most expensive gear is the best. Having too much camera equipment is the best way to get the worst photos.
© 2006 Ken Rockwell
Why is it that with over 60 years of improvements in cameras, lens sharpness and film grain, resolution and dynamic range that no one has been able to equal what Ansel Adams did back in the 1940s?
Ansel didn't even have Photoshop! How did he do it? Most attempts fall short, some are as good but different like Jack Dykinga, but no one is the same.
Why is it that photographers loaded with the most extraordinary gear who use the internet to get the exact GPS coordinates of Jack's or Ansel's photo locations and hike out there with the image in hand to ensure an exact copy (illegal by US copyright laws and common decency), that they get something that might look similar, but lacks all the impact and emotion of the original they thought they copied?
I'm not kidding. A bunch of these turkeys used university astronomers to predict the one time in almost two decades that the conditions would match and had 300 of the clueless converge at just the right spot. They still didn't get the clouds, snow or shadows right. This makes Ansel or any other creative artist cringe. Of course they didn't get anything like what they wanted. Art is a lot more.
Compelling photographs come from inspiration, not duplication.
Why is it that even though everyone knows that Photoshop can be used to take any bad image and turn it into a masterpiece, that even after hours of massaging these images look worse than when one started?
Maybe because it's entirely an artist's eye, patience and skill that makes an image and not his tools. Even Ansel said "The single most important component
of a camera is the twelve inches behind it."
A camera catches your imagination. No imagination, no photo - just crap. The word "image" comes from the word "imagination." It doesn't come come from "lens sharpness" or "noise levels." David LaChapelle's work is all about his imagination, not his camera. Setting up these crazy shots is the hard part. Once set up, any camera could catch them. Give me David LaChapelle's camera and I won't get anything like he does, even if you give me the same star performers.
The only reason I have a huge lens in my photo on my home page is so I don't have to say "photographer" or "photography." The lens makes it obvious much quicker than words. That's what visual communication is all about: thinking long and hard to make your point clearly and quickly. I haven't used that huge lens in years.
Just about any camera, regardless of how good or bad it is, can be used to create outstanding photographs for magazine covers, winning photo contests and hanging in art galleries. The quality of a lens or camera has almost nothing do with the quality of images it can be used to produce.
Joe Holmes' limited-edition 13 x 19" prints of his American Museum of Natural History series sell at Manhattan's Jen Bekman Gallery for $650 each. They're made on a D70.
Another San Diego pro, Kirsten Gallon earns her living using Nikon's two very cheapest lenses, the 18-55 and 70-300 G.
There are plenty of shows selling shots from Holgas for a lot more money, just that those folks don't tell me about it. Holgas sell for $14.95, brand new, here. You can see an award-winning shot made with a Holga hanging in Washington, D.C.'s Hemicycle Gallery of the Corcoran Museum of Art in their 2006 Eyes of History competition of the White House News Photographers Association here.
Walker Evans once said "People always ask me what camera I use. It's not the camera, it's - - - " and he tapped his temple with his index finger.
Jesus Christ's dad Joseph built a masterpiece of a wooden staircase in a church in New Mexico in 1873, and does anyone care what tools he used? Search all you want, you'll find plenty of scholarly discussion but never of the tools.
Your equipment DOES NOT affect the quality of your image. The less time and effort you spend worrying about your equipment the more time and effort you can spend creating great images. The right equipment just makes it easier, faster or more convenient for you to get the results you need.
"Any good modern lens is corrected for maximum definition at the larger stops. Using a small stop only increases depth..." Ansel Adams, June 3, 1937, in a reply to Edward Weston asking for lens suggestions, page 244 of Ansel's autobiography. Ansel made fantastically sharp images seventy years ago without wasting time worrying about how sharp his lenses were. With seventy years of improvement we're far better off concentrating on making stunning photos than photographing test charts. Of course these large format lenses of the 1930s and today are slow, about f/5.6 typically. Small format and digital lenses work best at about 2 stops down.
Buying new gear will NOT improve your photography. For decades I thought "if I only had that new lens" that all my photo wants would be satisfied. Nope. I still want that "one more lens," and I've been shooting for over 30 years. There is always one more lens. Get over it. See "The Station" for a better explanation.
The camera's only job is to get out of the way of making photographs.
Ernst Haas commented on this in a workshop in 1985:
Two laddies from Nova Scotia had made a huge effort to be there and were great Leica fans, worked in a camera store, saved to have them and held Ernst on high for being a Leica user (although he used Nikons on his Marlboro shoots, when the chips were down).
About four days into the workshop, he finally maxxed out on the Leica adoration these kids displayed, and in the midst of a discussion, when one of them asked one more question aimed at establishing the superiority of Wetzlar, Ernst said, "Leica, schmeica. The camera doesn't make a bit of difference. All of them can record what you are seeing. But, you have to SEE."
Nobody talked about Leica, Nikon, Canon or any other brand of camera equipment for the rest of the workshop.
He also said, "Best wide-angle lens? 'Two steps backward' and 'look for the ah-ha'."
(This Haas anecdote comes from Murad Saÿen, the famous photographer from Oxford, Maine over whom people are all abuzz. Many say he emerged from the back woods as a cross between Eliot Porter and Henri Cartier Bresson. I found at least three websites claiming to be Haas' official one here and here.)
You can see some of the world's best photography here by a fellow who says the same thing here. Here's another load of data which also confirms why owning more lenses just makes worse photos. I made these B/W photos here with a 50 year old $3 box camera more primitive than today's disposables.
Andreas Feininger (French, b. 1905 - d. 1999), said "Photographers — idiots, of which there are so many — say, “Oh, if only I had a Nikon or a Leica, I could make great photographs.” That’s the dumbest thing I ever heard in my life. It’s nothing but a matter of seeing, thinking, and interest. That’s what makes a good photograph. And then rejecting anything that would be bad for the picture. The wrong light, the wrong background, time and so on. Just don’t do it, not matter how beautiful the subject is."
People know cars don't drive themselves, typewriters don't write novels by themselves and that Rembrandt's brushes didn't paint by themselves. So why do some otherwise intelligent people think cameras drive around and make pictures all by themselves? The most advanced, exotic and expensive car can't even stay in the same lane on the freeway by itself, much less drive you home. No matter how advanced your camera you still need to be responsible for getting it to the right place at the right time and pointing it in the right direction to get the photo you want. Every camera requires you to make manual adjustments now and then as well, regardless of how advanced it is. Never blame a camera for not knowing everything or making a wrong exposure or fuzzy image.
Even a good driver in a crummy car like a Geo Metro can escape from multi-car police chases in broad daylight. It's the driver, not the car. Read that one here.
Here's how I came to discover this:
When it comes to the arts, be it music, photography, surfing or anything, there is a mountain to be overcome. What happens is that for the first 20 years or so that you study any art you just know that if you had a better instrument, camera or surfboard that you would be just as good as the pros. You waste a lot of time worrying about your equipment and trying to afford better. After that first 20 years you finally get as good as all the other world-renowned artists, and one day when someone comes up to you asking for advice you have an epiphany where you realize that it's never been the equipment at all.
You finally realize that the right gear you've spent so much time accumulating just makes it easier to get your sound or your look or your moves, but that you could get them, albeit with a little more effort, on the same garbage with which you started. You realize the most important thing for the gear to do is just get out of your way. You then also realize that if you had spent all the time you wasted worrying about acquiring better gear woodshedding, making photos or catching more rides that you would have gotten where you wanted to be much sooner.
I met Phil Collins at a screening in December 2003. It came out that people always recognize his sound when they hear it. Some folks decided to play his drums when he walked away during a session, and guess what? It didn't sound like him. Likewise, on a hired kit (or "rented drum set" as we say in the USA) Phil still sounds like Phil. So do you still think it's his drums that give him his sound?
A fan from Michigan teaches auto racing at a large circuit. The daughter of one of his students wanted to come learn. She flew out and showed up at the track in an rented Chevy Cavalier. She outran the other students, middle aged balding guys with Corvettes and 911s. Why? Simple: she paid attention to the instructor and was smooth and steady and took the right lines, not posing while ham-fisting a lot of horsepower to try to make up for patience and skill. The dudes were really ticked, especially that they were outrun by a GIRL, and a 16 year old one at that.
Sure, if you're a pro driver you're good enough to elicit every ounce of performance from a car and will be limited by its performance, but if you're like most people the car, camera, running shoes or whatever have little to nothing to do with your performance since you are always the defining factor, not the tools.
Catch any virtuoso who's a complete master of their tools away from his or her sponsors and they'll share this with you.
So why do the artists whose works you admire tend to use fancy, expensive tools if the quality of the work is the same? Simple:
1.) Good tools just get out of the way and make it easier to get the results you want. Lesser tools may take more work.
2.) They add durability for people who use these tools hard all day, every day.
3.) Advanced users may find some of the minor extra features convenient. These conveniences make the photographer's life easier, but they don't make the photos any better.
4.) Hey, there's nothing wrong with the best tools, and if you have the money to blow why not? Just don't ever start thinking that the fancy tools are what created the work.
So why do I show snaps of myself with a huge lens on my pages? Simple: it saves me from having to say "Ken Rockwell Photography," which sounds lame and takes up more space. The big camera gets the message across much better and faster so I can just say "Ken Rockwell."
Here are photos made by a guy in the Philipines - with a cell phone camera!
One last example: I bought a used camera that wouldn't focus properly. It went back to the dealer a couple of times for repair, each time coming back the same way. As an artist I knew how to compensate for this error, which was a pain because I always had to apply a manual offset to the focus setting. In any case, I made one of my very favorite images of all time while testing it. This image here has won me all sorts of awards and even hung in a Los Angeles gallery where an original Ansel Adams came down and this image was hung. When my image came down Ansel went right up again. Remember, this was made with a camera that was returned to the dealer which they agreed was unrepairable.
The important part of that image is that I stayed around after my friends all blew off for dinner, while I suspected we were going to have an extraordinary sky event (the magenta sky, just like the photo shows.) I made a 4 minute exposure with a normal lens. I could have made it on the same $3 box camera that made the B/W images here and it would have looked the same.
Likewise, I occasionally get hate mail and phone calls from guys (never women) who disagree with my personal choice of tools. They take it personally just because I prefer something different than they do. Like anyone cares? These folks mean well, they probably just haven't made it past that mountain and still think that every tool has some absolute level of goodness, regardless of the application. They consider tools as physical extensions of their body so of course they take it personally if I poke fun of a certain tool as not being good for what I'm doing. For instance, the Leica collectors here have a real problem with this page. All gear has different values depending on what you want to do with it. What's great for you may not be for me, and vice-versa.
Just about any camera, regardless of how good or bad it is, can be used to create outstanding photographs for magazine covers, winning photo contests and hanging in art galleries. The quality of a lens or camera has almost nothing do with the quality of images it can be used to produce.
You probably already have all the equipment you need, if you'd just learn to make the best of it. Better gear will not make you any better photos, since the gear can't make you a better photographer.
Photographers make photos, not cameras.
It's sad how few people realize any of this, and spend all their time blaming poor results on their equipment, instead of spending that time learning how to see and learning how to manipulate and interpret light.
Buying newer cameras will ensure you get the same results you always have. Education is the way to better images, not more cameras.
Don't blame anything lacking in your photos on your equipment. If you doubt this, go to a good photo museum or photo history book and see the splendid technical quality people got 50 or 100 years ago. The advantage of modern equipment is convenience, NOT image quality. Go look at the B/W images in my Death Valley Gallery. Look sharp to you? They were made on a 50 year old fixed-focus, fixed exposure box camera for which I paid $3. This camera is more primitive than today's disposables.
I have made technically and artistically wonderful images on a $10 camera I bought at Goodwill, and have turned out a lot of crap with a $10,000 lens on my motor driven Nikon.
The great Edward Steichen photographed Isadora Duncan at the Acropolis, Athens in 1921. He used a Kodak borrowed from the head waiter at his hotel. The images are, of course, brilliant. Steichen had not taken his own camera because the original plan had been to work only with movie equipment. This image was on display at The Whitney in 2000 - 2001.
You need to learn to see and compose. The more time you waste worrying about your equipment the less time you'll have to put into creating great images. Worry about your images, not your equipment.
Everyone knows that the brand of typewriter (or the ability to fix that typewriter) has nothing to do with the ability to compose a compelling novel, although a better typewriter may make typing a little more pleasant. So why do so many otherwise reasonable people think that what sort of camera one has, or the intimate knowledge of shutter speeds, lens design or camera technology has anything do with the ability to create an interesting photo other than catering to the convenience of the photographer?
Just as one needs to know how to use a typewriter to compose a script, one does need to know how to operate a camera to make photos, but that's only a tiny part of the process. Do you have any idea what brand of computer or software I used to create what you're reading right now? Of course not, unless you read my about page. It matters to me, but not to you, the viewer. Likewise, no one who looks at your pictures can tell or cares about what camera you used. It just doesn't matter.
Knowing how to do something is entirely different from being able to do it at all, much less do it well.
We all know how to play the piano: you just press the keys and step on the pedals now and then. The ability to play it, much less the ability to stir emotion in those who hear your playing, is an entirely different matter.
Don't presume the most expensive gear is the best. Having too much camera equipment is the best way to get the worst photos.
© 2006 Ken Rockwell
http://www.marketwatch.com/News/Story/us-foreclosures-up-318-november/story.aspx?guid=%7BDC9123A6%2D7276%2D456D%2D9865%2D1D641FDD7628%7D
U.S. foreclosures up 31.8% in November from previous month
LONDON (MarketWatch) -- U.S. home repossessions in November totalled 72,101, up 31.8% from the previous month, according to data from Foreclosures.com. For the first 11 months of the year, around 527,000 homes ended up back in the hands of lenders, up 41% from the same time last year. The report noted that there had been areas where the number of foreclosures and pre-foreclosure filings had actually fallen from a year ago.
U.S. foreclosures up 31.8% in November from previous month
LONDON (MarketWatch) -- U.S. home repossessions in November totalled 72,101, up 31.8% from the previous month, according to data from Foreclosures.com. For the first 11 months of the year, around 527,000 homes ended up back in the hands of lenders, up 41% from the same time last year. The report noted that there had been areas where the number of foreclosures and pre-foreclosure filings had actually fallen from a year ago.
Tuesday, December 11, 2007
Washington Mutual to lay off more than 3,000
Due to mortgage problems savings and loan will also shut down offices
updated 8:30 a.m. ET, Tues., Dec. 11, 2007
SEATTLE - Washington Mutual Inc., the nation’s largest savings and loan, said Monday that problems in the mortgage and credit markets are forcing it to close offices, lay off more than 3,000 workers and set aside up to $1.6 billion for loan losses in the fourth quarter.
WaMu is also slashing its quarterly dividend 73 percent and plans a $2.5 billion offering of preferred stock that is convertible to common shares. WaMu has not yet priced the offering, but increasing the total number of company shares will dilute their value for existing stockholders. In after-hours trading, WaMu shares fell $1.76, or nearly 9 percent, to $18.12 following the company’s announcement.
The offering follows recent announcements by other big banks and mortgage-related companies to sell special stock to shore up their finances.
Story continues below ↓advertisement
“These actions ... should ensure that it has the financial strength to address difficult conditions in the credit and housing markets in 2008,” the company said in a statement.
After dismantling much of its subprime mortgage operation in September, Seattle-based WaMu will now get out of the business entirely. The company said it will close about 190 of its 335 home loan centers and sales offices, shut down nine call centers and eliminate 2,600 home loan workers and 550 corporate and support jobs.
It had already cut 1,000 jobs related to the sale of home loans to people with questionable credit.
The company also said it will shutter WaMu Capital Corp. and rely on third party broker-dealers to sell mortgage-backed securities.
These changes, meant to address what WaMu called “unprecedented challenges in the mortgage and credit markets,” will save the thrift $140 million in the fourth quarter. But the company still expects to post a loss, due in part to a $1.6 billion charge for the writedown of goodwill associated with the shrinking home loans business.
On top of that, WaMu now expects to set aside between $1.5 billion and $1.6 billion for loan losses in the fourth quarter, from the $1.1 billion to $1.3 billion predicted by executives in early November.
For the first quarter of 2008, the company said it expects loan losses to total $1.8 billion to $2 billion. Loan losses will remain high throughout the year, WaMu added.
Word of WaMu’s convertible preferred stock offering came just hours after Switzerland-based UBS AG said it would sell $11.5 billion in shares to Government of Singapore Investment Corp., a sovereign-wealth fund, and to an unidentified investor in the Middle East. And last month, Citigroup Inc. took a $7.5 billion investment from the Abu Dhabi Investment Authority in exchange for up to 4.9 percent of Citigroup’s equity.
Government-sponsored mortgage finance companies Freddie Mac and Fannie Mae both recently announced plans to sell preferred stock totaling $6 billion and $7 billion, respectively.
WaMu has not yet priced its offering, and it may have to settle for less-than-favorable terms if the other recent deals are any indication. In exchange for its cash, the Abu Dhabi fund will get an 11 percent annual yield from Citigroup. The Freddie Mac offering have a fixed dividend rate of 8.375 percent, almost 2 percentage points higher than its last sale of preferred stock, in September.
WaMu also slashed its quarterly dividend to 15 cents per share from its most recent dividend of 56 cents per share, for savings of more than $1 billion.
Moody’s Investors Service downgraded several long-term and short-term ratings for WaMu and said in a statement that the move “was based on its view that credit losses from WaMu’s mortgage operations will be noticeably higher than previously estimated.” The credit rating agency said it doesn’t expect WaMu’s profitability to begin to recover until 2010.
Fitch Ratings also downgraded WaMu’s credit ratings.
http://www.msnbc.msn.com/id/22189126/
Due to mortgage problems savings and loan will also shut down offices
updated 8:30 a.m. ET, Tues., Dec. 11, 2007
SEATTLE - Washington Mutual Inc., the nation’s largest savings and loan, said Monday that problems in the mortgage and credit markets are forcing it to close offices, lay off more than 3,000 workers and set aside up to $1.6 billion for loan losses in the fourth quarter.
WaMu is also slashing its quarterly dividend 73 percent and plans a $2.5 billion offering of preferred stock that is convertible to common shares. WaMu has not yet priced the offering, but increasing the total number of company shares will dilute their value for existing stockholders. In after-hours trading, WaMu shares fell $1.76, or nearly 9 percent, to $18.12 following the company’s announcement.
The offering follows recent announcements by other big banks and mortgage-related companies to sell special stock to shore up their finances.
Story continues below ↓advertisement
“These actions ... should ensure that it has the financial strength to address difficult conditions in the credit and housing markets in 2008,” the company said in a statement.
After dismantling much of its subprime mortgage operation in September, Seattle-based WaMu will now get out of the business entirely. The company said it will close about 190 of its 335 home loan centers and sales offices, shut down nine call centers and eliminate 2,600 home loan workers and 550 corporate and support jobs.
It had already cut 1,000 jobs related to the sale of home loans to people with questionable credit.
The company also said it will shutter WaMu Capital Corp. and rely on third party broker-dealers to sell mortgage-backed securities.
These changes, meant to address what WaMu called “unprecedented challenges in the mortgage and credit markets,” will save the thrift $140 million in the fourth quarter. But the company still expects to post a loss, due in part to a $1.6 billion charge for the writedown of goodwill associated with the shrinking home loans business.
On top of that, WaMu now expects to set aside between $1.5 billion and $1.6 billion for loan losses in the fourth quarter, from the $1.1 billion to $1.3 billion predicted by executives in early November.
For the first quarter of 2008, the company said it expects loan losses to total $1.8 billion to $2 billion. Loan losses will remain high throughout the year, WaMu added.
Word of WaMu’s convertible preferred stock offering came just hours after Switzerland-based UBS AG said it would sell $11.5 billion in shares to Government of Singapore Investment Corp., a sovereign-wealth fund, and to an unidentified investor in the Middle East. And last month, Citigroup Inc. took a $7.5 billion investment from the Abu Dhabi Investment Authority in exchange for up to 4.9 percent of Citigroup’s equity.
Government-sponsored mortgage finance companies Freddie Mac and Fannie Mae both recently announced plans to sell preferred stock totaling $6 billion and $7 billion, respectively.
WaMu has not yet priced its offering, and it may have to settle for less-than-favorable terms if the other recent deals are any indication. In exchange for its cash, the Abu Dhabi fund will get an 11 percent annual yield from Citigroup. The Freddie Mac offering have a fixed dividend rate of 8.375 percent, almost 2 percentage points higher than its last sale of preferred stock, in September.
WaMu also slashed its quarterly dividend to 15 cents per share from its most recent dividend of 56 cents per share, for savings of more than $1 billion.
Moody’s Investors Service downgraded several long-term and short-term ratings for WaMu and said in a statement that the move “was based on its view that credit losses from WaMu’s mortgage operations will be noticeably higher than previously estimated.” The credit rating agency said it doesn’t expect WaMu’s profitability to begin to recover until 2010.
Fitch Ratings also downgraded WaMu’s credit ratings.
http://www.msnbc.msn.com/id/22189126/
http://money.cnn.com/2007/12/11/news/economy/mall_traffic/index.htm?cnn=yes
Holiday shopping hits the skids
Mall traffic drops dramatically in the final run-up to Christmas, and chain stores see only modest sales increase.
By Parija B. Kavilanz, CNNMoney.com senior writer
December 11 2007: 10:24 AM EST
NEW YORK (CNNMoney.com) -- After getting off to a fast start last month, holiday sales at some of the nation's largest retailers have slowed to an excruciatingly slow pace and mall traffic has dropped dramatically.
The results, coming two weeks before Christmas, jeopardize an already weak holiday sales period.
Chain-store sales rose a mere 0.2 percent for the week ended Dec. 8, following a disappointing 2 percent sales decline in the prior week, according to a report released Tuesday by the International Council of Shopping Centers.
"Consumers continue to be slow in finishing their holiday shopping," said Michael Niemira, the council's chief economist. "As such, we will be watching the next few weeks to determine how successful this holiday shopping season will be for retailers."
Niemira said he expects total December sales to increase a modest 1.5 percent unless retailers get a much-needed "surge in demand" over the next few days.
Meanwhile, mall traffic has also hit the skids.
According to ShopperTrak, which monitors shopping activity at 50,000 malls and other retail sites in the United States, traffic for the week that ended Dec. 1 was 4.7 percent less than the same week last year.
Compared to the previous week this year, which included the heavy Black Friday and Thanksgiving weekend shopping periods, last week's traffic plunged 22.3 percent.
"Many consumers might be waiting until the last minute to wrap up their holiday spending," said Bill Martin, co-founder of ShopperTrak.
Separately, Britt Beemer, president of America's Research Group, said his research showed that mall traffic was down between 8 and 14 percent since late November. He attributed the decline to more value-conscious consumers were shopping for better prices at discounters like Wal-Mart (Charts, Fortune 500) and Costco (Charts, Fortune 500) instead of specialty stores that haven't slashed prices as aggressively this holiday season.
"Our consumer surveys tell us that more people think malls are inefficient," Beemer said. "They can't park near the stores where they want to shop and they can't get in and out [of malls] quickly."
Beemer added that the next two weekends - especially the Saturday before Christmas, which is typically the biggest shopping day of the year - will be crucial for retailers.
"More than 50 percent of consumers still have to complete their holiday shopping," Beemer said. "There's always a final shopping surge right before Christmas but will it be enough to make up for the early December [sales] shortfall?"
The National Retail Federation, the industry's largest trade group, has forecast that holiday sales in November and December will increase 4 percent, or the smallest holiday sales growth since 2002.
The two-month period accounts for as much as 50 percent of retailers' annual profits and sales.
The retail federation blamed the housing downturn, credit market crunch and higher gas prices for eating away at the discretionary incomes of many low- to mid-income American households.
Since consumer spending also fuels two-thirds of the nation's economy, weaker-than-holiday sales will raise fresh concerns that the resilience of American consumers may be waning, leading to slower economic growth in 2008.
Marshal Cohen, a retail analyst at NPD Group, said stores are partly to blame for the tepid shopping pace.
"Retailers have to be careful what they wish for," said Cohen. "Many wanted a big start to the season so they discounted heavily very early. A lot of people have already finished their gift shopping."
"When you extend the season by doing that, it's more difficult to keep the sales momentum going. Shopping fatigue sets in," Cohen added. "That could be why we're seeing this lull now."
Holiday shopping hits the skids
Mall traffic drops dramatically in the final run-up to Christmas, and chain stores see only modest sales increase.
By Parija B. Kavilanz, CNNMoney.com senior writer
December 11 2007: 10:24 AM EST
NEW YORK (CNNMoney.com) -- After getting off to a fast start last month, holiday sales at some of the nation's largest retailers have slowed to an excruciatingly slow pace and mall traffic has dropped dramatically.
The results, coming two weeks before Christmas, jeopardize an already weak holiday sales period.
Chain-store sales rose a mere 0.2 percent for the week ended Dec. 8, following a disappointing 2 percent sales decline in the prior week, according to a report released Tuesday by the International Council of Shopping Centers.
"Consumers continue to be slow in finishing their holiday shopping," said Michael Niemira, the council's chief economist. "As such, we will be watching the next few weeks to determine how successful this holiday shopping season will be for retailers."
Niemira said he expects total December sales to increase a modest 1.5 percent unless retailers get a much-needed "surge in demand" over the next few days.
Meanwhile, mall traffic has also hit the skids.
According to ShopperTrak, which monitors shopping activity at 50,000 malls and other retail sites in the United States, traffic for the week that ended Dec. 1 was 4.7 percent less than the same week last year.
Compared to the previous week this year, which included the heavy Black Friday and Thanksgiving weekend shopping periods, last week's traffic plunged 22.3 percent.
"Many consumers might be waiting until the last minute to wrap up their holiday spending," said Bill Martin, co-founder of ShopperTrak.
Separately, Britt Beemer, president of America's Research Group, said his research showed that mall traffic was down between 8 and 14 percent since late November. He attributed the decline to more value-conscious consumers were shopping for better prices at discounters like Wal-Mart (Charts, Fortune 500) and Costco (Charts, Fortune 500) instead of specialty stores that haven't slashed prices as aggressively this holiday season.
"Our consumer surveys tell us that more people think malls are inefficient," Beemer said. "They can't park near the stores where they want to shop and they can't get in and out [of malls] quickly."
Beemer added that the next two weekends - especially the Saturday before Christmas, which is typically the biggest shopping day of the year - will be crucial for retailers.
"More than 50 percent of consumers still have to complete their holiday shopping," Beemer said. "There's always a final shopping surge right before Christmas but will it be enough to make up for the early December [sales] shortfall?"
The National Retail Federation, the industry's largest trade group, has forecast that holiday sales in November and December will increase 4 percent, or the smallest holiday sales growth since 2002.
The two-month period accounts for as much as 50 percent of retailers' annual profits and sales.
The retail federation blamed the housing downturn, credit market crunch and higher gas prices for eating away at the discretionary incomes of many low- to mid-income American households.
Since consumer spending also fuels two-thirds of the nation's economy, weaker-than-holiday sales will raise fresh concerns that the resilience of American consumers may be waning, leading to slower economic growth in 2008.
Marshal Cohen, a retail analyst at NPD Group, said stores are partly to blame for the tepid shopping pace.
"Retailers have to be careful what they wish for," said Cohen. "Many wanted a big start to the season so they discounted heavily very early. A lot of people have already finished their gift shopping."
"When you extend the season by doing that, it's more difficult to keep the sales momentum going. Shopping fatigue sets in," Cohen added. "That could be why we're seeing this lull now."
Dec. 11 (Bloomberg) -- U.S. economic growth will slow to 1 percent in the fourth quarter as consumer spending cools and the housing slump enters its third year, a survey showed.
Economists cut their estimates for the expansion this quarter from November's 1.5 percent forecast, according to the median of 63 estimates in a Bloomberg News survey taken Dec. 3 to Dec. 10. Gross domestic product in the first three months of next year will also be less than previously projected.
Spending, which accounts for more than two-thirds of the economy, will grow in 2008 at the slowest pace in 17 years as higher fuel costs and falling home values limit consumers' buying power. The Federal Reserve will probably lower interest rates today and again early next year to fend off recession, the survey said.
``Everything is going against the consumer,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who lowered his growth forecast to 0.5 percent for this quarter. ``Confidence is off quite a bit, and gasoline is going to take a toll. We're very, very close to a recession.''
http://www.bloomberg.com/apps/news?pid=20601087&sid=axc2icqL....
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Here is one blogger's take:
http://suddendebt.blogspot.com/2007/12/hand-to-mouth-factor.....
The mechanism that kept consumer spending high and rising over the years, was quite simple: less saving and more borrowing. Starting in the mid-1980's the saving rate (the portion of disposable income not spent) moved lower, eventually reaching zero, and household debt rose sharply from 65% to 135% of disposable income. Not to mince words, Americans live hand-to-mouth and are in debt up to their eyeballs. Under these circumstances, it is little wonder that consumer spending is kept aloft. But what's lurking down below?
Economists cut their estimates for the expansion this quarter from November's 1.5 percent forecast, according to the median of 63 estimates in a Bloomberg News survey taken Dec. 3 to Dec. 10. Gross domestic product in the first three months of next year will also be less than previously projected.
Spending, which accounts for more than two-thirds of the economy, will grow in 2008 at the slowest pace in 17 years as higher fuel costs and falling home values limit consumers' buying power. The Federal Reserve will probably lower interest rates today and again early next year to fend off recession, the survey said.
``Everything is going against the consumer,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who lowered his growth forecast to 0.5 percent for this quarter. ``Confidence is off quite a bit, and gasoline is going to take a toll. We're very, very close to a recession.''
http://www.bloomberg.com/apps/news?pid=20601087&sid=axc2icqL....
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Here is one blogger's take:
http://suddendebt.blogspot.com/2007/12/hand-to-mouth-factor.....
The mechanism that kept consumer spending high and rising over the years, was quite simple: less saving and more borrowing. Starting in the mid-1980's the saving rate (the portion of disposable income not spent) moved lower, eventually reaching zero, and household debt rose sharply from 65% to 135% of disposable income. Not to mince words, Americans live hand-to-mouth and are in debt up to their eyeballs. Under these circumstances, it is little wonder that consumer spending is kept aloft. But what's lurking down below?
Friday, December 07, 2007
Second Saturday in historic downtown McKinney is a great reason to enjoy some of the local flavor of the town. This particular Second Saturday, December 8th, will mark the last show of the art galleries in the historic old Collin County Prison, and I will am both pleased and honored to be able to show selected black and white prints of my own on the second floor in Studio Duende...please join us if you can, anytime after 4PM, to give these galleries a great sendoff and wish them well in their new endevours. Since moving into the old prison Carrie Cameron's Galleria d'Arte, and more recently Studio Duende and Aristeia Gallery have become one of the main focal points of the Second Saturday events in downtown McKinney - and the loss of these great venues will be deeply felt in the months to come here. Unfortunately the only constant in life is change, and the new owner of the old prison has different plans for the building...so all these galleries have to find a new home. Some of the galleries will move on, and some will close permanently, or at least for the foreseeable future, creating a huge vacuum in McKinney's bid to continue to be "the place for art" in Collin County. As a consequence, the best thing that those of us who have enjoyed this great venue can do for these artists is to show up and show our support for their efforts, drink some good booze in their honor, and maybe even buy some art.
Second Saturday in 2008 will just not be the same without them!
A reminder:
“The Grinch Presents Justin Hunt” - at Carrie Cameron Garner’s Galleria d’Arte
Justin Hunt, one of Galleria d’Arte’s most successful and popular artists, will be the last featured artist in “The Grinch Presents Justin Hunt.” Hunt is a master of the ancient technique of reverse glass painting. His newest works will be on exhibit from December 8 to December 24, 2007, at Carrie Cameron Garner’s Galleria d’Arte at 115 South Kentucky Street in downtown McKinney.
You are cordially invited to join us for our final Second Saturday celebration on Saturday, December 8 beginning early at 4:00, with an artist’s reception. We would like to extend our thanks to our patrons of the last 2 ½ years. We have made so many wonderful friends and acquaintances it is with a heavy heart that we will permanently close our doors on December 24, 2007. The downtown area of McKinney has become a cultural destination with the McKinney Performing Arts Center, art galleries, a multitude of restaurants and music venues. Our hope is that it continues to build on that in spite of our closing. In other words, Second Saturday's will continue without us.
We have loved being “in prison” for the past six months, so to celebrate appropriately, Galleria d’Arte will be hosting the “After Party” immediately following the artist’s reception on December 8. At 7PM, DJ Crocodile will be spinning the tunes in the cellblocks on the third floor, and we will dance the night away. This may be your last opportunity to see the old Collin County Prison, so be sure and make time to join our duo celebrations on December 8.
MeSo Lounge is currently located on the first floor of Galleria d’Arte, and will be closing on December 24 in conjunction the art gallery’s closing. As an added appreciation to all our male patrons, MeSo Lounge will host “Gentlemen’s Night” on December 20. A manly feast of barbeque will be served along with scotch and bourbon tastings. Hand rolled cigars will be availble to enjoy by the fireplace on our patio. Our sales staff will be happy to help you select the perfect gifts for the ladies in your life…or a special something for yourself! For more information, please call the gallery or MeSo Lounge at 469-742-9509.
Wednesday, December 05, 2007
PAULSON VS. THE FREE MARKET
by Michael Pento
Delta Global Advisors, Inc.
December 5, 2007
Joining the Fed's effort to meddle with the free market is Treasury Secretary Hank Paulson and his plan to rescue the housing market. The essence of his plan is to convince the owners of sub- prime adjustable mortgage debt to freeze the interest rate resets for a period of about five years, a proposal which is supposedly only to be available to those who will become indigent once the higher rates become effective. Ostensibly, this will ameliorate the anticipated surge in mortgage foreclosures and prevent a further decline in home prices.
The first reason to eschew Mr. Paulson's plan is that his deal, if successful, may serve to protract the issues with housing for years to come. Offering to freeze the rate for only those who cannot afford higher rates is silly and we will certainly see claims of indigence from many who can actually pay. Unfair speculation on my part? Just read this article on the amount of fraudulent Katrina aid relief claims.
After all, who would voluntarily pay the higher rate when they can keep their existing rate by pleading poverty? The result will be an even further decline in CDO prices and even less availability of credit, not more. At this time it is projected by HUD's Secretary Alphonso Jackson that no more than 25% of consumers will foreclose on their sub-prime loans. Which is better financially for the holders of these mortgage products, to have 75% pay the higher rate or to have nearly all sub-prime mortgage holders pay the introductory rate for five years or longer? I know which one is moral.
Another consequence of the Paulson plan will be that future loans will carry a much higher interest rate. Underwriters in the primary market and buyers in the secondary market must be compensated for the increased risk of having the government intervening in a private contract. If the government forces the abrogation of these contracts it will cause tremendous long term damage to the housing market. If it merely acts as a facilitator between the two parties the damage may be less but the impact will be negligible. Since the holders of the debt are no longer local banks but foreign buyers, I have my doubts as to Treasury's ability to bring any far-flung parties together. In addition, there is nothing currently preventing the parties from getting together if they both so desired--making Treasury's role a public relations move, at best, unspoken coercion, at worst.
Most importantly, Paulson's anti-capitalist plan serves to reward those who behaved irresponsibly and punish those who lived within their means. It will act as a disincentive for consumers who, during the housing bubble, either rented or purchased a more modest home while simultaneously rewarding consumers that spent recklessly! Not only is it morally bankrupt but is also detrimental to the economy in the long term because after the period of abeyance expires, the adjustable rate mortgages would theoretically reset. Therefore, all that is accomplished will be to prolong the inevitable crisis-does anyone truly expect those who got the free lunch to begin paying for it after five years? Those sloppy financial habits will only be more deeply ingrained by then.
In an attempt to aid the real estate market, the Treasury and Fed are actually serving to exacerbate the problems associated with housing. If they would allow the free market to work, home prices would fall, allowing solid buyers to enter the market at lower prices. Would it be a pain-free process? Certainly not-we're well past that point-but by keeping unqualified consumers as home owners they foster an artificial environment of unfairness and inflation. Mr. Paulson's scheme is thus destined to fail, and it will likely make today's housing-related problems even worse in the process.
by Michael Pento
Delta Global Advisors, Inc.
December 5, 2007
Joining the Fed's effort to meddle with the free market is Treasury Secretary Hank Paulson and his plan to rescue the housing market. The essence of his plan is to convince the owners of sub- prime adjustable mortgage debt to freeze the interest rate resets for a period of about five years, a proposal which is supposedly only to be available to those who will become indigent once the higher rates become effective. Ostensibly, this will ameliorate the anticipated surge in mortgage foreclosures and prevent a further decline in home prices.
The first reason to eschew Mr. Paulson's plan is that his deal, if successful, may serve to protract the issues with housing for years to come. Offering to freeze the rate for only those who cannot afford higher rates is silly and we will certainly see claims of indigence from many who can actually pay. Unfair speculation on my part? Just read this article on the amount of fraudulent Katrina aid relief claims.
After all, who would voluntarily pay the higher rate when they can keep their existing rate by pleading poverty? The result will be an even further decline in CDO prices and even less availability of credit, not more. At this time it is projected by HUD's Secretary Alphonso Jackson that no more than 25% of consumers will foreclose on their sub-prime loans. Which is better financially for the holders of these mortgage products, to have 75% pay the higher rate or to have nearly all sub-prime mortgage holders pay the introductory rate for five years or longer? I know which one is moral.
Another consequence of the Paulson plan will be that future loans will carry a much higher interest rate. Underwriters in the primary market and buyers in the secondary market must be compensated for the increased risk of having the government intervening in a private contract. If the government forces the abrogation of these contracts it will cause tremendous long term damage to the housing market. If it merely acts as a facilitator between the two parties the damage may be less but the impact will be negligible. Since the holders of the debt are no longer local banks but foreign buyers, I have my doubts as to Treasury's ability to bring any far-flung parties together. In addition, there is nothing currently preventing the parties from getting together if they both so desired--making Treasury's role a public relations move, at best, unspoken coercion, at worst.
Most importantly, Paulson's anti-capitalist plan serves to reward those who behaved irresponsibly and punish those who lived within their means. It will act as a disincentive for consumers who, during the housing bubble, either rented or purchased a more modest home while simultaneously rewarding consumers that spent recklessly! Not only is it morally bankrupt but is also detrimental to the economy in the long term because after the period of abeyance expires, the adjustable rate mortgages would theoretically reset. Therefore, all that is accomplished will be to prolong the inevitable crisis-does anyone truly expect those who got the free lunch to begin paying for it after five years? Those sloppy financial habits will only be more deeply ingrained by then.
In an attempt to aid the real estate market, the Treasury and Fed are actually serving to exacerbate the problems associated with housing. If they would allow the free market to work, home prices would fall, allowing solid buyers to enter the market at lower prices. Would it be a pain-free process? Certainly not-we're well past that point-but by keeping unqualified consumers as home owners they foster an artificial environment of unfairness and inflation. Mr. Paulson's scheme is thus destined to fail, and it will likely make today's housing-related problems even worse in the process.
Tuesday, December 04, 2007
http://money.cnn.com/news/newsfeeds/articles/djf500/200712021916DOWJONESDJONLINE000344_FORTUNE5.htm
Banks Urge UK Clients To Stop Borrowing
"Banks have asked top U.K. corporate clients not to draw on lending facilities to which they are entitled in order to preserve their balance sheets as they approach the financial year end.
The banks are urging some of their biggest clients not to draw on standby credit facilities as the sub-prime crisis and squeeze on interbank lending have affected banks' ability to fund themselves.
The problems started with the closure of the commercial paper market as a means of cheap funding for companies in the summer. Banks have to provide standby financing of up to 100% to backstop commercial paper programs. With banks struggling for their sources of financing through the interbank market, the drawdowns are having a direct effect on their balance sheets.
Several bankers have said Citigroup (C) is one of those most affected and that the bank was asking some clients not to use standby facilities, which are part of the normal relationship banking arrangements made between banks and companies.
A Citigroup spokesman said: "Citigroup honors its commitments to its clients but, as part of our normal business, we discuss with clients the potential use of our balance sheet. This is standard industry practice."
Simon Allocca, head of non-French corporate origination at BNP Paribas ( 13110.FR), said: "By the end of the summer, the principal problem facing banks was not U.S. sub-prime or collateralized debt obligation exposure but the drawing down of standby loans and bilaterals. In some cases banks are seeking to avoid further balance sheet capital pressure by asking clients not to use their standby facilities."
Standby financing is typically for 364 days and when undrawn has a zero risk weighting. When it is drawn, the risk weighting goes to 100%. This makes the sums involved significant. If a company is unable to tap the markets for commercial paper to the tune of, say, GBP4 billion (EUR5.6 billion), banks may have to provide that amount in standby financing."
Banks Urge UK Clients To Stop Borrowing
"Banks have asked top U.K. corporate clients not to draw on lending facilities to which they are entitled in order to preserve their balance sheets as they approach the financial year end.
The banks are urging some of their biggest clients not to draw on standby credit facilities as the sub-prime crisis and squeeze on interbank lending have affected banks' ability to fund themselves.
The problems started with the closure of the commercial paper market as a means of cheap funding for companies in the summer. Banks have to provide standby financing of up to 100% to backstop commercial paper programs. With banks struggling for their sources of financing through the interbank market, the drawdowns are having a direct effect on their balance sheets.
Several bankers have said Citigroup (C) is one of those most affected and that the bank was asking some clients not to use standby facilities, which are part of the normal relationship banking arrangements made between banks and companies.
A Citigroup spokesman said: "Citigroup honors its commitments to its clients but, as part of our normal business, we discuss with clients the potential use of our balance sheet. This is standard industry practice."
Simon Allocca, head of non-French corporate origination at BNP Paribas ( 13110.FR), said: "By the end of the summer, the principal problem facing banks was not U.S. sub-prime or collateralized debt obligation exposure but the drawing down of standby loans and bilaterals. In some cases banks are seeking to avoid further balance sheet capital pressure by asking clients not to use their standby facilities."
Standby financing is typically for 364 days and when undrawn has a zero risk weighting. When it is drawn, the risk weighting goes to 100%. This makes the sums involved significant. If a company is unable to tap the markets for commercial paper to the tune of, say, GBP4 billion (EUR5.6 billion), banks may have to provide that amount in standby financing."
Wednesday, November 28, 2007
McKinney, Texas – November 28, 2007
“The Grinch Presents Justin Hunt” - at Carrie Garner’s Galleria d’Arte
Justin Hunt, one of Galleria d’Arte’s most successful and popular artists, will be the last featured artist in “The Grinch Presents Justin Hunt.” Hunt is a master of the ancient technique of reverse glass painting. His newest works will be on exhibit from December 8 to December 24, 2007, at Carrie Cameron Garner’s Galleria d’Arte at 115 South Kentucky Street in downtown McKinney.
You are cordially invited to join us for our final Second Saturday celebration on Saturday, December 8 from 4PM to 7PM with an artist’s reception. We would like to extend our thanks to our patrons of the last 2 ½ years. We have made so many wonderful friends and acquaintances it is with a heavy heart that we will permanently close our doors on December 24, 2007.
We have loved being “in prison” for the past six months, so to celebrate appropriately, Galleria d’Arte will be hosting the “After Party” immediately following the artist’s reception on December 8. At 7PM, DJ Crocodile will be spinning the tunes in the cellblocks on the third floor, and we will dance the night away. This may be your last opportunity to see the old Collin County Prison, so be sure and make time to join our duo celebrations on December 8.
MeSo Lounge is currently located on the first floor of Galleria d’Arte, and will be closing on December 24 in conjunction the art gallery’s closing. As an added appreciation to all our male patrons, MeSo Lounge will host “Gentlemen’s Night” on December 20. Our sales staff will be happy to help you select the perfect gifts for the ladies in your life…or a special something for yourself! For more information, please call the gallery or MeSo Lounge at 469-742-9509.
“The Grinch Presents Justin Hunt” - at Carrie Garner’s Galleria d’Arte
Justin Hunt, one of Galleria d’Arte’s most successful and popular artists, will be the last featured artist in “The Grinch Presents Justin Hunt.” Hunt is a master of the ancient technique of reverse glass painting. His newest works will be on exhibit from December 8 to December 24, 2007, at Carrie Cameron Garner’s Galleria d’Arte at 115 South Kentucky Street in downtown McKinney.
You are cordially invited to join us for our final Second Saturday celebration on Saturday, December 8 from 4PM to 7PM with an artist’s reception. We would like to extend our thanks to our patrons of the last 2 ½ years. We have made so many wonderful friends and acquaintances it is with a heavy heart that we will permanently close our doors on December 24, 2007.
We have loved being “in prison” for the past six months, so to celebrate appropriately, Galleria d’Arte will be hosting the “After Party” immediately following the artist’s reception on December 8. At 7PM, DJ Crocodile will be spinning the tunes in the cellblocks on the third floor, and we will dance the night away. This may be your last opportunity to see the old Collin County Prison, so be sure and make time to join our duo celebrations on December 8.
MeSo Lounge is currently located on the first floor of Galleria d’Arte, and will be closing on December 24 in conjunction the art gallery’s closing. As an added appreciation to all our male patrons, MeSo Lounge will host “Gentlemen’s Night” on December 20. Our sales staff will be happy to help you select the perfect gifts for the ladies in your life…or a special something for yourself! For more information, please call the gallery or MeSo Lounge at 469-742-9509.
Monday, November 26, 2007
Reuters
Citigroup planning major job cuts: report
Monday November 26, 8:34 am ET
CNBC said that no exact number had yet been set, though some jobs were already being eliminated. It estimated that the cuts could total anywhere between 17,000 and 45,000.
Citigroup officials were not immediately available for comment.
International banks get dragged into financial crisis’ « black hole »:
Four triggering factors of a major financial bankruptcy
http://moneyfiles.org/
LEAP/E2020 now estimates that at least one large US financial institution (bank, insurance, investment fund) will file for bankruptcy before February 2008, sparking off bankruptcies among a series of other financial institutions and banks in Europe (in the UK especially), in Asia and in various emerging countries... (page 2)
(En savoir +)
Factor N° 1 - Drastic drop in revenues for banks operating in the US
The CDOs altogether are now dragged into a general confidence crisis, and they represent a large part of bank assets since, in the past few years, large banks from lenders became investors and speculators, like hedge funds… (page 4)
(En savoir +)
Factor N°2 - Slumping value of assets owned by these banks resulting from new US banking regulation (FASB regulation 157)
On November 15, 2007, a regulatory factor, the FASB 157 standard (designed to enhance transparency of financial statements of financial institutions operating in the US) speeds up the pace of financial organisations’ collapses (American and others)… (page 7)
(En savoir +)
Factor N°3 – Increasing weakness of bond insurers
Bond insurers are financial markets’ « supports ». Completely unknown to the public today, their names could soon become as common as the word « subprime » has… (page 9)
(En savoir +)
Factor N°4 – Economic recession in the US
As a complement to our anticipations of the impact of the US economic recession for banks operating in the US, we find it useful to analyse here how much US official statistics have become totally surrealistic… (page 12)
(En savoir +)
Strategic advice / Operational recommendations for the intention of individual investors, corporate treasurers, financial operators(page 15)
(En savoir +)
GlobalEurometre - Results & Analyses
The Europeans seem to make no illusion on the evolution of US policies after the next presidential election, with 65% of the respondents who estimate that G. W. Bush’s successor will not change significantly the American policy… (page 17) (En savoir +)
Four triggering factors of a major financial bankruptcy
http://moneyfiles.org/
LEAP/E2020 now estimates that at least one large US financial institution (bank, insurance, investment fund) will file for bankruptcy before February 2008, sparking off bankruptcies among a series of other financial institutions and banks in Europe (in the UK especially), in Asia and in various emerging countries... (page 2)
(En savoir +)
Factor N° 1 - Drastic drop in revenues for banks operating in the US
The CDOs altogether are now dragged into a general confidence crisis, and they represent a large part of bank assets since, in the past few years, large banks from lenders became investors and speculators, like hedge funds… (page 4)
(En savoir +)
Factor N°2 - Slumping value of assets owned by these banks resulting from new US banking regulation (FASB regulation 157)
On November 15, 2007, a regulatory factor, the FASB 157 standard (designed to enhance transparency of financial statements of financial institutions operating in the US) speeds up the pace of financial organisations’ collapses (American and others)… (page 7)
(En savoir +)
Factor N°3 – Increasing weakness of bond insurers
Bond insurers are financial markets’ « supports ». Completely unknown to the public today, their names could soon become as common as the word « subprime » has… (page 9)
(En savoir +)
Factor N°4 – Economic recession in the US
As a complement to our anticipations of the impact of the US economic recession for banks operating in the US, we find it useful to analyse here how much US official statistics have become totally surrealistic… (page 12)
(En savoir +)
Strategic advice / Operational recommendations for the intention of individual investors, corporate treasurers, financial operators(page 15)
(En savoir +)
GlobalEurometre - Results & Analyses
The Europeans seem to make no illusion on the evolution of US policies after the next presidential election, with 65% of the respondents who estimate that G. W. Bush’s successor will not change significantly the American policy… (page 17) (En savoir +)
Thursday, November 22, 2007
Wednesday, November 21, 2007
Interesting set of stats:
NYMEX Light Sweet Crude Oil Futures Prices
Jan 1997 - $25.00
Jan 1998 - $18.00
Jan 1999 - $12.00
Jan 2000 - $25.00
Jan 2001 - $27.00
Jan 2002 - $21.00
Jan 2003 - $31.00
Jan 2004 - $33.00
Jan 2005 - $42.00
Jan 2006 - $63.00
Jan 2007 - $58.00
..... and today we're looking at $98.00
http://www.eia.doe.gov/emeu/international/crude2.html
NYMEX Light Sweet Crude Oil Futures Prices
Jan 1997 - $25.00
Jan 1998 - $18.00
Jan 1999 - $12.00
Jan 2000 - $25.00
Jan 2001 - $27.00
Jan 2002 - $21.00
Jan 2003 - $31.00
Jan 2004 - $33.00
Jan 2005 - $42.00
Jan 2006 - $63.00
Jan 2007 - $58.00
..... and today we're looking at $98.00
http://www.eia.doe.gov/emeu/international/crude2.html
BLACK FRIDAY: WHY THIS ONE IS ESPECIALLY DARK, By Carolyn Baker
Wednesday, 21 November 2007
A few moments ago I posted on my site the MSNBC version of "The Coming Consumer Crunch" which forecasts severe and painful belt-tightening for American families in 2008. Then when I checked my inbox, a Truthout bulletin listing Kelpie Wilson's latest article "Give Thanks For Oil" appeared. One paragraph leapt out at me:
Why should we give thanks that the future holds no cheap oil? There are several reasons, but the first is that cheap oil has fueled a 50-year-long party in the industrialized West that has left us with an unsustainable economy that is wrecking the planet. The recent awareness of global warming is beginning to put a damper on our out-of-control binge, but not fast enough to slow the heating of the planet. Rising oil prices will force a cutback in consumption. Rising oil prices will also chill the fantasy of endless growth and force us to confront the reality of planetary limits.
I have no crystal ball, nor do I claim to have well-developed psychic powers, but I'd be willing to bet almost anything that next Thanksgiving season will be dramatically different from this one. A dark curtain of despair has descended, along with $100 oil, on Wall Street, and the amount of debt that the American working and middle classes are trying to juggle is, as Stan Goff so eloquently stated in his article on my site, "Middle Class Angst", nothing less than "pre-volcanic."
Cheap oil will allow us to travel "over the river and through the woods" to grandmother's or someone else's house, or we may prepare our food orgy at home using gas or electric ranges, savoring the turkey and trimmings made possible by low-cost hydrocarbon energy. While the feast will be more expensive than it was last year, its cost may pale by comparison with the price of next year's gastronomical adventure-if indeed we can afford one. The after-dinner experience is likely to consist of television or movie viewing at home or another car trek to the local cine-plex for a new Thanksgiving Day release or two. A walk or bike ride requiring no use of hydrocarbon energy would be ideal, but it will take much more energy depletion than we are now experiencing to make that option viable for most Americans.
On Friday, millions of shoppers will descend on malls and box stores where the bells and whistles of credit card transactions will reverberate every few seconds, non-stop for perhaps seventy-two hours. Those bills will come due for those shoppers in a post-holiday hangover of dollar plummeting hysteria, monumental levels of debt, foreclosure, bankruptcy, unemployment, energy depletion, skyrocketing gas and food prices, illnesses treated without health insurance coverage-or just not treated, unprecedented levels of homelessness, and by all indications, within a few months into 2008, America will be well on the road to a re-run of 1929-or something inconceivably worse.
None of this, of course, includes the likelihood of an attack on or invasion by the U.S. of yet another country in one of its serial oil-addiction binges, nor does it include another terrorist attack orchestrated by the U.S. government, nor does it include a natural disaster or two where Blackwater troops storm into the homes of innocent American citizens followed by another fraudulent election engineered by the Democratic Party or the cancellation of an election entirely.
As I continue to write and talk about collapse, the "tell-me-what-to-do" supplications escalate, and when I speak my truth in reply, my words are met with responses only slightly less hostile than eye-rolling. Americans not only refuse to accept the limits the earth is pounding them with, but demand that their response to those limits be effortless, cheery, hopeful, and above all not require them to change anything about their lives. Any suggestion that introspection, dramatically altering one's lifestyle, and pondering one's values, priorities, and life's work are as important, if not more important, than voting for Green Party candidates, consuming less energy, or purchasing environmentally-friendly products is met with blank stares or my favorite response, the accusation of "fear-mongering."
Two hundred species or more of life forms died today on planet earth, and two hundred will die tomorrow, but I'm not supposed to remind you because that wouldn't be "hopeful"?
Today, Gerald Celente, Director of Trends Research Institute stated that "We are going to see economic times the likes of which no living person has seen", as he forecasted a "Panic of 2008." Celente continued to say very non-hopeful things like:
"I would not be surprised if giants tumble to their deaths" and "The ‘Panic of 2008' will lead to a lower U.S. standard of living."
"A result will be a drop in holiday spending a year from now, followed by a permanent end of the ‘retail holiday frenzy' that has driven the U.S. economy since the 1940s," says Celente.
On this Thanksgiving Day I will shudder as I do every day for those clueless individuals and families who in a few years or even months may be daily visiting food banks which are already experiencing shortages. I will feel deep grief as I contemplate the teeming masses of innocent humans who will die because of Peak Oil, climate change, global pandemics, and species die-off and who because they didn't want to have their bubble of hope burst, called people like me a fear-monger while continuing their suicidal courses of action. I will be painfully aware that the food I eat for Thanksgiving dinner is on my plate because of cheap oil, and as I settle into a comfortable seat at the movie theater, I will be acutely aware that my two-and-a-half hour escape from reality is only possible because of the natural gas that powers the digital video and sound systems that dazzle me with what is unquestionably my favorite art form of all. What will I do in a post-collapse world when I don't have it? Make my own art perhaps?
Yet another part of me-a different part of my physiology experiences a bit of relief-perhaps a release and expansion in my cells as I realize that empire is reaching the end of the line, that the slogan my friend Matt Savinar has at the top of his website is not only true, but unfolding faster than I or anyone else could have imagined:
Deal with reality, or reality will deal with you.
So on this Thanksgiving week as stomachs are stuffed and the cacophony of credit card transactions deafens and defies the reality of global economic meltdown, I will celebrate that we are now closer to the total collapse of civilization than we have ever been, and that for all the rampant suffering it will evoke around the world, the soul-murdering, mind-numbing, body obliterating culture of empire is terminally ill and on life-support. I know not how many, if any of us, will survive its collapse, but I do know that until it has fallen fatally silent, no life form on earth will ever experience freedom or fullness of life.
These are the "good ole days" to be remembered when we have almost nothing that we now take for granted or feel entitled to. And at the same time, these are dark new days that begin and end amid the sea change occurring all around us. That darkness signals and end to holidays as we have known them. This year, like all those other years, we will lament that despite our best intentions, we ate too much. In what year will we remember Thanksgivings of the past and weep and salivate as we search for whatever morsels of food we can find? I am convinced that absolutely nothing will awaken Americans except starvation, but by the time they have arrived at that horrifying circumstance, it will be far too late.
In these dark new days when readers email me with questions or arguments about aliens or engage in nit-picking philosophical posturing, I refuse to respond with anything other than the following questions: What will you do when you have no food to eat and no water to drink? How will you obtain healthcare when it no longer exists? What have you done to liberate yourself from debt? Where are you living and how sustainable is it? If you need to relocate, why haven't you done so? I then refer them to the Survival Acres banner ad at the top of my site and the Preparedness Store at Matt Savinar's site. In other words, does it really matter what I or anyone else thinks about aliens or what method of intellectual masturbation we prefer when we have no food or water?
These are the good ole days, my friend, and these are also the dark new days. Happy Thanksgiving; savor every bite.
http://carolynbaker.net/site/index2....4&pop=1&page=0
Wednesday, 21 November 2007
A few moments ago I posted on my site the MSNBC version of "The Coming Consumer Crunch" which forecasts severe and painful belt-tightening for American families in 2008. Then when I checked my inbox, a Truthout bulletin listing Kelpie Wilson's latest article "Give Thanks For Oil" appeared. One paragraph leapt out at me:
Why should we give thanks that the future holds no cheap oil? There are several reasons, but the first is that cheap oil has fueled a 50-year-long party in the industrialized West that has left us with an unsustainable economy that is wrecking the planet. The recent awareness of global warming is beginning to put a damper on our out-of-control binge, but not fast enough to slow the heating of the planet. Rising oil prices will force a cutback in consumption. Rising oil prices will also chill the fantasy of endless growth and force us to confront the reality of planetary limits.
I have no crystal ball, nor do I claim to have well-developed psychic powers, but I'd be willing to bet almost anything that next Thanksgiving season will be dramatically different from this one. A dark curtain of despair has descended, along with $100 oil, on Wall Street, and the amount of debt that the American working and middle classes are trying to juggle is, as Stan Goff so eloquently stated in his article on my site, "Middle Class Angst", nothing less than "pre-volcanic."
Cheap oil will allow us to travel "over the river and through the woods" to grandmother's or someone else's house, or we may prepare our food orgy at home using gas or electric ranges, savoring the turkey and trimmings made possible by low-cost hydrocarbon energy. While the feast will be more expensive than it was last year, its cost may pale by comparison with the price of next year's gastronomical adventure-if indeed we can afford one. The after-dinner experience is likely to consist of television or movie viewing at home or another car trek to the local cine-plex for a new Thanksgiving Day release or two. A walk or bike ride requiring no use of hydrocarbon energy would be ideal, but it will take much more energy depletion than we are now experiencing to make that option viable for most Americans.
On Friday, millions of shoppers will descend on malls and box stores where the bells and whistles of credit card transactions will reverberate every few seconds, non-stop for perhaps seventy-two hours. Those bills will come due for those shoppers in a post-holiday hangover of dollar plummeting hysteria, monumental levels of debt, foreclosure, bankruptcy, unemployment, energy depletion, skyrocketing gas and food prices, illnesses treated without health insurance coverage-or just not treated, unprecedented levels of homelessness, and by all indications, within a few months into 2008, America will be well on the road to a re-run of 1929-or something inconceivably worse.
None of this, of course, includes the likelihood of an attack on or invasion by the U.S. of yet another country in one of its serial oil-addiction binges, nor does it include another terrorist attack orchestrated by the U.S. government, nor does it include a natural disaster or two where Blackwater troops storm into the homes of innocent American citizens followed by another fraudulent election engineered by the Democratic Party or the cancellation of an election entirely.
As I continue to write and talk about collapse, the "tell-me-what-to-do" supplications escalate, and when I speak my truth in reply, my words are met with responses only slightly less hostile than eye-rolling. Americans not only refuse to accept the limits the earth is pounding them with, but demand that their response to those limits be effortless, cheery, hopeful, and above all not require them to change anything about their lives. Any suggestion that introspection, dramatically altering one's lifestyle, and pondering one's values, priorities, and life's work are as important, if not more important, than voting for Green Party candidates, consuming less energy, or purchasing environmentally-friendly products is met with blank stares or my favorite response, the accusation of "fear-mongering."
Two hundred species or more of life forms died today on planet earth, and two hundred will die tomorrow, but I'm not supposed to remind you because that wouldn't be "hopeful"?
Today, Gerald Celente, Director of Trends Research Institute stated that "We are going to see economic times the likes of which no living person has seen", as he forecasted a "Panic of 2008." Celente continued to say very non-hopeful things like:
"I would not be surprised if giants tumble to their deaths" and "The ‘Panic of 2008' will lead to a lower U.S. standard of living."
"A result will be a drop in holiday spending a year from now, followed by a permanent end of the ‘retail holiday frenzy' that has driven the U.S. economy since the 1940s," says Celente.
On this Thanksgiving Day I will shudder as I do every day for those clueless individuals and families who in a few years or even months may be daily visiting food banks which are already experiencing shortages. I will feel deep grief as I contemplate the teeming masses of innocent humans who will die because of Peak Oil, climate change, global pandemics, and species die-off and who because they didn't want to have their bubble of hope burst, called people like me a fear-monger while continuing their suicidal courses of action. I will be painfully aware that the food I eat for Thanksgiving dinner is on my plate because of cheap oil, and as I settle into a comfortable seat at the movie theater, I will be acutely aware that my two-and-a-half hour escape from reality is only possible because of the natural gas that powers the digital video and sound systems that dazzle me with what is unquestionably my favorite art form of all. What will I do in a post-collapse world when I don't have it? Make my own art perhaps?
Yet another part of me-a different part of my physiology experiences a bit of relief-perhaps a release and expansion in my cells as I realize that empire is reaching the end of the line, that the slogan my friend Matt Savinar has at the top of his website is not only true, but unfolding faster than I or anyone else could have imagined:
Deal with reality, or reality will deal with you.
So on this Thanksgiving week as stomachs are stuffed and the cacophony of credit card transactions deafens and defies the reality of global economic meltdown, I will celebrate that we are now closer to the total collapse of civilization than we have ever been, and that for all the rampant suffering it will evoke around the world, the soul-murdering, mind-numbing, body obliterating culture of empire is terminally ill and on life-support. I know not how many, if any of us, will survive its collapse, but I do know that until it has fallen fatally silent, no life form on earth will ever experience freedom or fullness of life.
These are the "good ole days" to be remembered when we have almost nothing that we now take for granted or feel entitled to. And at the same time, these are dark new days that begin and end amid the sea change occurring all around us. That darkness signals and end to holidays as we have known them. This year, like all those other years, we will lament that despite our best intentions, we ate too much. In what year will we remember Thanksgivings of the past and weep and salivate as we search for whatever morsels of food we can find? I am convinced that absolutely nothing will awaken Americans except starvation, but by the time they have arrived at that horrifying circumstance, it will be far too late.
In these dark new days when readers email me with questions or arguments about aliens or engage in nit-picking philosophical posturing, I refuse to respond with anything other than the following questions: What will you do when you have no food to eat and no water to drink? How will you obtain healthcare when it no longer exists? What have you done to liberate yourself from debt? Where are you living and how sustainable is it? If you need to relocate, why haven't you done so? I then refer them to the Survival Acres banner ad at the top of my site and the Preparedness Store at Matt Savinar's site. In other words, does it really matter what I or anyone else thinks about aliens or what method of intellectual masturbation we prefer when we have no food or water?
These are the good ole days, my friend, and these are also the dark new days. Happy Thanksgiving; savor every bite.
http://carolynbaker.net/site/index2....4&pop=1&page=0
Tuesday, November 20, 2007
Not a very cheery wake me up is it?
U.S. Dollar Could Plunge 90 Percent
http://www.hispanicbusiness.com/news/newsbyid.asp?id=82...
RHINEBECK, N.Y. -- A financial crisis will likely send the U.S. dollar into a free fall of as much as 90 percent and gold soaring to $2,000 an ounce, a trends researcher said.
"We are going to see economic times the likes of which no living person has seen," Trends Research Institute Director Gerald Celente said, forecasting a "Panic of 2008."
"The bigger they are, the harder they'll fall," he said in an interview with New York's Hudson Valley Business Journal.
Celente -- who forecast the subprime mortgage financial crisis and the dollar's decline a year ago and gold's current rise in May -- told the newspaper the subprime mortgage meltdown was just the first "small, high-risk segment of the market" to collapse.
Derivative dealers, hedge funds, buyout firms and other market players will also unravel, he said.
Massive corporate losses, such as those recently posted by Citigroup Inc. and General Motors Corp., will also be fairly common "for some time to come," he said.
He said he would not "be surprised if giants tumble to their deaths," Celente said.
The Panic of 2008 will lead to a lower U.S. standard of living, he said.
A result will be a drop in holiday spending a year from now, followed by a permanent end of the "retail holiday frenzy" that has driven the U.S. economy since the 1940s, he said.
U.S. Dollar Could Plunge 90 Percent
http://www.hispanicbusiness.com/news/newsbyid.asp?id=82...
RHINEBECK, N.Y. -- A financial crisis will likely send the U.S. dollar into a free fall of as much as 90 percent and gold soaring to $2,000 an ounce, a trends researcher said.
"We are going to see economic times the likes of which no living person has seen," Trends Research Institute Director Gerald Celente said, forecasting a "Panic of 2008."
"The bigger they are, the harder they'll fall," he said in an interview with New York's Hudson Valley Business Journal.
Celente -- who forecast the subprime mortgage financial crisis and the dollar's decline a year ago and gold's current rise in May -- told the newspaper the subprime mortgage meltdown was just the first "small, high-risk segment of the market" to collapse.
Derivative dealers, hedge funds, buyout firms and other market players will also unravel, he said.
Massive corporate losses, such as those recently posted by Citigroup Inc. and General Motors Corp., will also be fairly common "for some time to come," he said.
He said he would not "be surprised if giants tumble to their deaths," Celente said.
The Panic of 2008 will lead to a lower U.S. standard of living, he said.
A result will be a drop in holiday spending a year from now, followed by a permanent end of the "retail holiday frenzy" that has driven the U.S. economy since the 1940s, he said.
Sunday, November 18, 2007
Delinkage Oil Price From Dollar Under Assessment
By Sven Ridley-Wordich
17 Nov 2007 at 06:20 PM GMT-05:00
RIYADH (ResourceInvestor.com) -- The linkage between high crude oil prices and devaluation of the dollar on the global markets has become one of the issues discussed in the sidelines of the OPEC Summit. During the behind-closed-doors discussions of the OPEC Ministers, Iran and Venezuela have proposed to delink crude oil from dollar denominations. Ministers have been discussing openly, as sources present during the meeting stated, whether oil should continue to be valued in dollars. Iran and Venezuela have already been openly urging members to consider the option. However, as OPEC officials stated after the meeting, even the mentioning of a possibility would currently have a debilitating effect on the position of the dollar. Still, Iran and Venezuela seem to be heading towards an implementation of the idea. Already, most Asian traders are being asked by Iran to have contracts set up in either Euros or Yen. Some negative effects currently hurting the dollar value worldwide could be contributed to the proposal.
Discussions presently seem to be heading towards a possible study of the de-linkage, even that OPEC will not include the option in its statement on Sunday. During other meetings, Saudi Minister of Foreign Affairs, Prince Saud Al Faisal, has warned parties not even to discuss the latter as it is very sensitive. The possible consequences of a move toward the euro or other international currencies could undermine the already very weak position the dollar has. Some financial analysts have repeatedly claimed that the dollar could keep its global position only to the fact that it’s the main currency oil is traded in. Taking this basis away, the dollar could plunge even more.
Most Arab Gulf countries fear the possibility of a further devaluation of the dollar, which will put increased pressure on their overall oil and gas revenues, on which the majority of their international trade is still based. Some OPEC countries have refuted claims that they could have negative impact on the dollar, as the majority of crude oil is manufactured by non-OPEC producers. Al Feisal has stated to the press, showing his concerns, that if such a decision will have to be taken, this only will be possible if non-OPEC countries are involved.
Iranian officials are not complying, however, to the OPEC views, as they have still asked members to consider the option to counter the weak position of dollar. Nigeria, Saudi Arabia and Qatar, all three vastly connected to the American sphere of influence via trade or political-strategic considerations, have refused to take the idea on board.
The idea will not become one of the main issues discussed by OPEC it seems, but developments such as the de-linkage need to be kept in mind for the coming years. In a rational way, the Iranian Venezuelan proposal could be effective and maybe even worthwhile taking. Economically it could support the hard-needed economic diversification projects of the OPEC members, leaving more value in the hands of governments. But as analysts also indicated, it would not only hurt global economy, which is still based on dollar transactions, push down American economic growth, but also have a very negative effect on the developing world. A crude oil sector based on euros will crush most developing countries’ already struggling economic development. Most African countries are energy importers, paying crude oil imports in dollars, while exporting products to Europe extensively. The revenues gained from the latter are needed to improve their own economies. If all will need to be paid in euros, the positive effects of the latter are removed, while higher crude oil prices will hurt directly all sectors in the end.
The obvious other link between the Venezuelan-Iranian proposal is to hurt American policies. A slowdown of the American economy and a weaker dollar is obviously seen by Tehran and Caracas as a nice way of confronting American president George W Bush. Oil is politics, the latter is currently also making headlines in Riyadh.
http://www.resourceinvestor.com/pebble.asp?relid=37958
By Sven Ridley-Wordich
17 Nov 2007 at 06:20 PM GMT-05:00
RIYADH (ResourceInvestor.com) -- The linkage between high crude oil prices and devaluation of the dollar on the global markets has become one of the issues discussed in the sidelines of the OPEC Summit. During the behind-closed-doors discussions of the OPEC Ministers, Iran and Venezuela have proposed to delink crude oil from dollar denominations. Ministers have been discussing openly, as sources present during the meeting stated, whether oil should continue to be valued in dollars. Iran and Venezuela have already been openly urging members to consider the option. However, as OPEC officials stated after the meeting, even the mentioning of a possibility would currently have a debilitating effect on the position of the dollar. Still, Iran and Venezuela seem to be heading towards an implementation of the idea. Already, most Asian traders are being asked by Iran to have contracts set up in either Euros or Yen. Some negative effects currently hurting the dollar value worldwide could be contributed to the proposal.
Discussions presently seem to be heading towards a possible study of the de-linkage, even that OPEC will not include the option in its statement on Sunday. During other meetings, Saudi Minister of Foreign Affairs, Prince Saud Al Faisal, has warned parties not even to discuss the latter as it is very sensitive. The possible consequences of a move toward the euro or other international currencies could undermine the already very weak position the dollar has. Some financial analysts have repeatedly claimed that the dollar could keep its global position only to the fact that it’s the main currency oil is traded in. Taking this basis away, the dollar could plunge even more.
Most Arab Gulf countries fear the possibility of a further devaluation of the dollar, which will put increased pressure on their overall oil and gas revenues, on which the majority of their international trade is still based. Some OPEC countries have refuted claims that they could have negative impact on the dollar, as the majority of crude oil is manufactured by non-OPEC producers. Al Feisal has stated to the press, showing his concerns, that if such a decision will have to be taken, this only will be possible if non-OPEC countries are involved.
Iranian officials are not complying, however, to the OPEC views, as they have still asked members to consider the option to counter the weak position of dollar. Nigeria, Saudi Arabia and Qatar, all three vastly connected to the American sphere of influence via trade or political-strategic considerations, have refused to take the idea on board.
The idea will not become one of the main issues discussed by OPEC it seems, but developments such as the de-linkage need to be kept in mind for the coming years. In a rational way, the Iranian Venezuelan proposal could be effective and maybe even worthwhile taking. Economically it could support the hard-needed economic diversification projects of the OPEC members, leaving more value in the hands of governments. But as analysts also indicated, it would not only hurt global economy, which is still based on dollar transactions, push down American economic growth, but also have a very negative effect on the developing world. A crude oil sector based on euros will crush most developing countries’ already struggling economic development. Most African countries are energy importers, paying crude oil imports in dollars, while exporting products to Europe extensively. The revenues gained from the latter are needed to improve their own economies. If all will need to be paid in euros, the positive effects of the latter are removed, while higher crude oil prices will hurt directly all sectors in the end.
The obvious other link between the Venezuelan-Iranian proposal is to hurt American policies. A slowdown of the American economy and a weaker dollar is obviously seen by Tehran and Caracas as a nice way of confronting American president George W Bush. Oil is politics, the latter is currently also making headlines in Riyadh.
http://www.resourceinvestor.com/pebble.asp?relid=37958
Saturday, November 17, 2007
There ought to be a law against this stuff!
by Laura Rowley
Virginia grandmother Ruby Fauntleroy, 74, knew something was wrong when her rent payment bounced shortly after her Social Security check had been direct-deposited into her bank account.
Fauntleroy went to the bank, where a teller told her that the account was frozen following notice of a court judgment and garnishment order by Capital One. Fauntleroy had been trying to pay off this $4,000 credit card debt for years, but dropped her monthly payment to $100 after her husband died and her income declined. Capital One sued, and won a judgment.
"I was just numb, I couldn't believe this could happen," said Fauntleroy. "I told the bank, 'You know nobody is supposed to take a government check,' but they did. I couldn't sleep at night, I couldn't eat. I thought, why are they doing this to me when I was trying to pay [my debt]?"
When Exempt Isn't
Legal aid agencies across the country say they've been flooded with calls from seniors and disabled people whose accounts have been frozen by bill collectors. This is happening even though the federal government specifically prohibits the garnishment of exempt funds such as Social Security and veterans benefits.
In the worst cases, seniors go hungry or without medication because they have no access to funds -- in some cases, for months at a time. "People can really bumble around for months trying to get their accounts unfrozen because the procedures they have to follow are so Byzantine," says Claudia Wilner, attorney with the New York-based Neighborhood Economic Development Advocacy Project (NEDAP), which handles about 200 such cases a year.
In August, three senators asked the inspector general of the Social Security Administration to investigate the extent of the problem, querying the nation's largest banks on how often the practice occurs. The Senate Finance Committee held hearings on the issue in September.
Slow to Respond
The problem comes amid enormous growth in consumer debt, and changes in technology that make it easier and cheaper for creditors to seize bank accounts. Although banks can tell whether an account contains exempt funds before they issue a freeze, they argue that ignoring a restraining order would leave them in contempt of state court.
But even when both the creditor and the bank agree a mistake has been made, bureaucracy can leave seniors in limbo for weeks. Laurie Doran, staff attorney for South Jersey Legal Services, had a client who discovered the levy on her account when she went to buy medication. "They zapped both her savings and checking, and she didn't have access to any funds," says Doran. "She came over from the pharmacy in an absolute panic."
Although attorneys for both the creditor and the bank immediately agreed to lift the freeze, it couldn't be done because the levy officer -- a liaison between the court and the bank -- was unresponsive. It took two weeks to unravel, during which the elderly woman's health deteriorated.
Death by a Thousand Fees
Moreover, some banks are making a profit off these account holders through exorbitant fees. Banks typically charge a non-refundable legal processing fee of $100 to $150 for the freeze itself. Then, when the consumer, unaware of the freeze, pays their bills, they can incur significant overdraft fees.
In one case, Chase Bank froze the checking account of a New York retiree -- whose only income was from Social Security -- following a $920 judgment for an unpaid dental bill. The woman had $929.54 in her account, but the dentist never got anything. "Chase Bank managed to grab the entire account," says her attorney, Jim Baker of the Northern Manhattan Improvement Project.
The 72-year-old wrote nine checks against the account without realizing it had been frozen; several of those checks were presented twice for payment. Chase charged $30 each time. In addition, the bank was debiting 45 cents a month from her account for credit insurance. "Every time the first of month rolled by and Chase couldn't debit its 45 cents, they charged her another $30," says Baker. In four months, the account was empty.
Even when a freeze is lifted and garnished funds are restored, banks often refuse to refund fees. "The banks say they have the right to charge fees because it's a deposit agreement," says Wilner. "They say they are not acting through the legal process, but through a contractual agreement, so the regulatory exemption doesn't apply to them."
Trolling for Delinquencies
The problems are becoming more frequent because of the burgeoning debt collection industry. In 2005, $110 billion in face-value debt was purchased by third-party debt buyers, 90 percent of it credit card receivables, according to the Association of Credit and Collection Professionals.
In New York City, the number of consumer debt cases filed in civil court has grown 300 percent in 5 years, to 320,000 cases in 2006, according to a new report from the Urban Justice Center. Ninety percent were brought by third-party debt buyers. Almost $1 billion in claims were made against New York City residents, and creditors obtained judgments of nearly $800 million, the center estimates.
Once a default judgment goes through, the creditor's attorney sends an electronic information subpoena and restraining notice, which has the same power as a court order. The cost is minimal. "The volume of collection activity is way up," says Baker. "Creditors used to have to have some reason for thinking someone had an account at a specific bank. Now they simply send out a blanket email to every bank in the tri-state area, and say, 'If so-and-so has an account, freeze it.'"
On the consumer side, the problem is compounded by direct deposit: This year, 85 percent of Social Security recipients received their payments electronically, up from 41.5 percent in 1985. Someone who encounters a freeze may have subsequent checks slip into the account before they're able to find their way through the legal maze.
Frozen and Refrozen
Meanwhile, creditors who are rebuffed often turn around and file a new claim for the same debt. New Yorker Waverly Taliaferro, 70, worked for decades as a photographer before retiring in 2001. He and his wife lived off of his Social Security payment and her income. In 2003, when she was laid off, they fell behind on a credit card bill. Their account was frozen in 2006, which Taliaferro discovered on his way to the grocery store. Over the next 23 days, he says, he and his wife survived on a 10-pound bag of brown rice.
After his lawyer was able to remove the freeze, Taliaferro began receiving his check by mail, and paying $23 to a check-cashing service to cash it. Six months later, his attorney told him that Chase Bank had issued a policy not to freeze exempt funds, so Taliaferro opened an account -- and received a $100 bonus from the bank for using direct deposit. The account was frozen 16 days later because it contained non-exempt funds -- what was left of the bonus money from Chase.
"Absolutely nothing will stop that debt buyer from trying to freeze it again," says Taliaferro's attorney, Johnson Tyler of South Brooklyn Legal Services. "When a credit card company sells off a debt, they don't sell it with a red flag that says, 'We tried to collect and she's on Social Security.' It's sold as part of a bundle of debt. We have cases where the debt buyer froze the account three times in a row on a client who is homeless and mentally impaired. A judge ordered them to stop and they still did it."
A Modern-Day Debtors' Prison?
Consumer advocates say Congress should adopt federal legislation modeled after a California law that prohibits a restraint on the first $2,500 of any account into which Social Security funds are directly deposited. "That would simplify things for the banks, and essentially effectuate the whole purpose of what Congress wanted to accomplish with exemption laws," says Tyler.
For her part, Fauntleroy says she's done with credit cards, although she still gets daily offers in the mail. "They keep trying, but I won't bite -- I even got one from Capital One," she says. "Either they're crazy or they think I am!"
Like Fauntleroy, many seniors try to make good on their debts, legal advocates say. "Many of our clients made payments for years until they couldn't do it anymore," says Patricia Duecy, a paralegal with Legal Services of Northern Virginia who worked on Fauntleroy's case. "Some of them did pay them off -- if you looked at what they actually charged, outside of late fees and interest.
"A long time ago the country made a decision that when a person is old or poor, they should have a subsistence income to pay for rent, food, and medicine," Duecy adds. "The money is supposed to be going to their basic needs and not going into the hands of debt collectors. If we can't protect the most vulnerable among us, what are we doing?"
http://finance.yahoo.com/expert/article/moneyhappy/53832;_ylt=Amrh1yvfAiIX5ABZEslCrLhO7sMF
by Laura Rowley
Virginia grandmother Ruby Fauntleroy, 74, knew something was wrong when her rent payment bounced shortly after her Social Security check had been direct-deposited into her bank account.
Fauntleroy went to the bank, where a teller told her that the account was frozen following notice of a court judgment and garnishment order by Capital One. Fauntleroy had been trying to pay off this $4,000 credit card debt for years, but dropped her monthly payment to $100 after her husband died and her income declined. Capital One sued, and won a judgment.
"I was just numb, I couldn't believe this could happen," said Fauntleroy. "I told the bank, 'You know nobody is supposed to take a government check,' but they did. I couldn't sleep at night, I couldn't eat. I thought, why are they doing this to me when I was trying to pay [my debt]?"
When Exempt Isn't
Legal aid agencies across the country say they've been flooded with calls from seniors and disabled people whose accounts have been frozen by bill collectors. This is happening even though the federal government specifically prohibits the garnishment of exempt funds such as Social Security and veterans benefits.
In the worst cases, seniors go hungry or without medication because they have no access to funds -- in some cases, for months at a time. "People can really bumble around for months trying to get their accounts unfrozen because the procedures they have to follow are so Byzantine," says Claudia Wilner, attorney with the New York-based Neighborhood Economic Development Advocacy Project (NEDAP), which handles about 200 such cases a year.
In August, three senators asked the inspector general of the Social Security Administration to investigate the extent of the problem, querying the nation's largest banks on how often the practice occurs. The Senate Finance Committee held hearings on the issue in September.
Slow to Respond
The problem comes amid enormous growth in consumer debt, and changes in technology that make it easier and cheaper for creditors to seize bank accounts. Although banks can tell whether an account contains exempt funds before they issue a freeze, they argue that ignoring a restraining order would leave them in contempt of state court.
But even when both the creditor and the bank agree a mistake has been made, bureaucracy can leave seniors in limbo for weeks. Laurie Doran, staff attorney for South Jersey Legal Services, had a client who discovered the levy on her account when she went to buy medication. "They zapped both her savings and checking, and she didn't have access to any funds," says Doran. "She came over from the pharmacy in an absolute panic."
Although attorneys for both the creditor and the bank immediately agreed to lift the freeze, it couldn't be done because the levy officer -- a liaison between the court and the bank -- was unresponsive. It took two weeks to unravel, during which the elderly woman's health deteriorated.
Death by a Thousand Fees
Moreover, some banks are making a profit off these account holders through exorbitant fees. Banks typically charge a non-refundable legal processing fee of $100 to $150 for the freeze itself. Then, when the consumer, unaware of the freeze, pays their bills, they can incur significant overdraft fees.
In one case, Chase Bank froze the checking account of a New York retiree -- whose only income was from Social Security -- following a $920 judgment for an unpaid dental bill. The woman had $929.54 in her account, but the dentist never got anything. "Chase Bank managed to grab the entire account," says her attorney, Jim Baker of the Northern Manhattan Improvement Project.
The 72-year-old wrote nine checks against the account without realizing it had been frozen; several of those checks were presented twice for payment. Chase charged $30 each time. In addition, the bank was debiting 45 cents a month from her account for credit insurance. "Every time the first of month rolled by and Chase couldn't debit its 45 cents, they charged her another $30," says Baker. In four months, the account was empty.
Even when a freeze is lifted and garnished funds are restored, banks often refuse to refund fees. "The banks say they have the right to charge fees because it's a deposit agreement," says Wilner. "They say they are not acting through the legal process, but through a contractual agreement, so the regulatory exemption doesn't apply to them."
Trolling for Delinquencies
The problems are becoming more frequent because of the burgeoning debt collection industry. In 2005, $110 billion in face-value debt was purchased by third-party debt buyers, 90 percent of it credit card receivables, according to the Association of Credit and Collection Professionals.
In New York City, the number of consumer debt cases filed in civil court has grown 300 percent in 5 years, to 320,000 cases in 2006, according to a new report from the Urban Justice Center. Ninety percent were brought by third-party debt buyers. Almost $1 billion in claims were made against New York City residents, and creditors obtained judgments of nearly $800 million, the center estimates.
Once a default judgment goes through, the creditor's attorney sends an electronic information subpoena and restraining notice, which has the same power as a court order. The cost is minimal. "The volume of collection activity is way up," says Baker. "Creditors used to have to have some reason for thinking someone had an account at a specific bank. Now they simply send out a blanket email to every bank in the tri-state area, and say, 'If so-and-so has an account, freeze it.'"
On the consumer side, the problem is compounded by direct deposit: This year, 85 percent of Social Security recipients received their payments electronically, up from 41.5 percent in 1985. Someone who encounters a freeze may have subsequent checks slip into the account before they're able to find their way through the legal maze.
Frozen and Refrozen
Meanwhile, creditors who are rebuffed often turn around and file a new claim for the same debt. New Yorker Waverly Taliaferro, 70, worked for decades as a photographer before retiring in 2001. He and his wife lived off of his Social Security payment and her income. In 2003, when she was laid off, they fell behind on a credit card bill. Their account was frozen in 2006, which Taliaferro discovered on his way to the grocery store. Over the next 23 days, he says, he and his wife survived on a 10-pound bag of brown rice.
After his lawyer was able to remove the freeze, Taliaferro began receiving his check by mail, and paying $23 to a check-cashing service to cash it. Six months later, his attorney told him that Chase Bank had issued a policy not to freeze exempt funds, so Taliaferro opened an account -- and received a $100 bonus from the bank for using direct deposit. The account was frozen 16 days later because it contained non-exempt funds -- what was left of the bonus money from Chase.
"Absolutely nothing will stop that debt buyer from trying to freeze it again," says Taliaferro's attorney, Johnson Tyler of South Brooklyn Legal Services. "When a credit card company sells off a debt, they don't sell it with a red flag that says, 'We tried to collect and she's on Social Security.' It's sold as part of a bundle of debt. We have cases where the debt buyer froze the account three times in a row on a client who is homeless and mentally impaired. A judge ordered them to stop and they still did it."
A Modern-Day Debtors' Prison?
Consumer advocates say Congress should adopt federal legislation modeled after a California law that prohibits a restraint on the first $2,500 of any account into which Social Security funds are directly deposited. "That would simplify things for the banks, and essentially effectuate the whole purpose of what Congress wanted to accomplish with exemption laws," says Tyler.
For her part, Fauntleroy says she's done with credit cards, although she still gets daily offers in the mail. "They keep trying, but I won't bite -- I even got one from Capital One," she says. "Either they're crazy or they think I am!"
Like Fauntleroy, many seniors try to make good on their debts, legal advocates say. "Many of our clients made payments for years until they couldn't do it anymore," says Patricia Duecy, a paralegal with Legal Services of Northern Virginia who worked on Fauntleroy's case. "Some of them did pay them off -- if you looked at what they actually charged, outside of late fees and interest.
"A long time ago the country made a decision that when a person is old or poor, they should have a subsistence income to pay for rent, food, and medicine," Duecy adds. "The money is supposed to be going to their basic needs and not going into the hands of debt collectors. If we can't protect the most vulnerable among us, what are we doing?"
http://finance.yahoo.com/expert/article/moneyhappy/53832;_ylt=Amrh1yvfAiIX5ABZEslCrLhO7sMF
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