Britannia Radio

Gordon Brown is a dangerous fool or a psychopathic liar or a little of
each..  

I told a colleague in Athens at least 7
years ago there was financial melt down coming.  This financial death of the
US and the UK was foreseen at least as far
back as 2002.
One member of the eurorealist divested all of their stocks and shares in mid
2006 as they saw the future.
In 2001 Greg Lance Watkins had proposed economic disaster was to follow in
the wake of 911 as did many others - 

some with blogs or web sites and some by email.   

There must have been thousands who saw
Global Crossing and all the other huge disasters in the USA as straws in the
wind.  

Who here has forgotten Cable and Wireless once the flagship of British commerce being reduced to a shell practically overnight?

When?   2002

http://www.telegraph.co.uk/finance/2837764/Telecoms-crash-%27like-the-South-Sea-Bubble%27.html

Telecoms crash 'like the South Sea Bubble'

By Dominic White
Last Updated: 6:47PM GMT 29 Dec 2002

Legal & General called it "the worst period of capital destruction in modern
financial history" and "the modern-day equivalent of the South Sea Bubble in
the 18th century".



HOW QUICKLY WE FORGET!!!   Do you remember

2002?

http://www.firstam.com/content.cfm?id=3032

a.. On July 21, 2002, telecommunications giant WorldCom filed for Chapter 11
protection with the U.S. Bankruptcy Court in the Southern District of New
York. This is the largest bankruptcy filing by a public company in U.S.
history. The company's petition lists $107 billion in assets (although the
actual worth of these assets may be significantly less) and $41 billion in
liabilities. In terms of jobs lost, the collapse of WorldCom was four times
as big as the collapse of Enron. In terms of dollars, it was six times as
big. The company, which plans to sell certain non-core assets, claims that
it will be able to continue its global operations. The company announced
arranged $2 billion in debtor-in-possession financing from Citibank, J.P.
Morgan Chase and GE Capital. The bankruptcy filing includes almost all of
WorldCom's U.S. subsidiaries, but not its non-U.S. companies. The company
admitted that it had incorrectly classified several billions of dollars in
ordinary expenses as capital expenditures. The SEC is investigating these
accounting irregularities, and has opened a separate wide- ranging
investigation into WorldCom including a review of $408 million in loans made
to former CEO Bernard Ebbers.
a.. On December 9, 2002, United Airlines (UAL), the second largest airline,
filed a Chapter 11 petition with the U.S. Bankruptcy Court in the Northern
District of Illinois. Financial analysts are sharply divided over the
ability of UAL to successfully reorganize and emerge from bankruptcy. United
has a solid brand name and good cash position, but is burdened by management
missteps, thin liquidity, and employee and labor unrest. Incorporating
proposed DIP (debtor in possession) financing of $800 million would leave
the carrier with approximately $1.6 billion in liquidity, according to
estimates. On September 12, 2004, US Airways Group, Inc. announced that the
airline and certain of its subsidiaries had filed voluntary petitions for
reorganization under Chapter 11 with the U.S. Bankruptcy Court the Eastern
District of Virginia. US Airways, which emerged from a previous Chapter 11
filing in March 2003, faced September 30, 2004 covenant tests relating to
its Air Transportation Stabilization Board loan. Despite efforts undertaken
for several months with its major work groups, the Company was unable to
reach out- of-court negotiated agreements. The airline has cash of about
$1.45 billion and assets totaling $8.8 billion. It also has an agreement
with the Air Transportation Stabilization Board to use about $750 million in
cash for operations as part of the $900 million loan guarantee that the
federal panel approved for the airline. During its previous bankruptcy
filing, the US Airways had about $600 million in cash, $7.81 billion in
assets and $7.83 billion in debt. US Airways becomes the second carrier to
operate under bankruptcy protection. As noted above, United Airlines, the
nation's second largest carrier, has been restructuring in bankruptcy for
nearly two years. Delta Air Lines Inc. said that it might also have to file
for bankruptcy if it is unable to secure about $1 billion in cost cuts from
its pilots. U.S. Airways is not the first airline to file for bankruptcy
more than once. Continental Airlines, the nation's fifth largest carrier,
filed twice and is considered a financially strong airline today. But
Braniff International and Trans World Airlines both filed three times and
eventually went out of business.
a.. On December 17, 2002, Conseco Inc. (an insurance and finance company),
facing $6.5 billion in debt and a federal investigation of its accounting
practices, filed for Chapter 11 protection with the U.S. Bankruptcy Court in
the Northern District of Illinois. With stated assets of $63 billion, this
makes it the third-largest bankruptcy in history, behind only WorldCom and
Enron.


http://www.voanews.com/english/archive/2002-07/a-2002-07-23-32-How.cfm

      How Will WorldCom's Bankruptcy Be Handled?

      Washington
      23 July 2002

cashdan washington bankruptcy 23july02.rm - Download (Real)
cashdan washington bankruptcy 23july02.rm - Listen (Real)





WorldCom's bankruptcy filing, the largest in U.S. history, has sent tremors
throughout the financial markets. However, analysts insist U.S. bankruptcy
laws are designed to stabilize a troubled company, for the sake of its
creditors, employees and consumers.

http://www.worldproutassembly.org/archives/2008/08/the_bankruptcy.html
AUGUST 2008



2003

Bush Wants To Bankrupt America: There is Method To His Madness

By Sam Hamod

07/01/03: "ICH" -- - Some have wondered if GW Bush knows what he's doing
with his tax cut that benefits the corporations and the very rich, and cuts
away the remaining money of the poor and the middle class. I say yes, he
does know what he'd up to, as do his corporate advisors and his neo-con
economist friends and theorists, chief among them Grover Norquist. Norquist
has been the chief architect behind the dismantling of the American federal
financial structure in terms of benefits for the common citizen, but has
helped to create the superstructure of tax breaks for the very rich and the
corporatocracy that now has a choke-hold on America.

The plan is very simple, but not obvious on first blush. Make sure that all
the money is gone from the U.S. treasury, make sure the deficits are so
great that all social and educational programs are cut, increase the
military and security budgets to "protect our nation" with all these monies
going to corporations and security firms who are extra-national (not tied to
any country, but actually more than multi-national in that they are outside
the purview of any nation at any single moment) and stave in the social
security fund by allowing it to go to private corporations for
"investment"-and you have the perfect scenario for saying, "only the private
sector can save us-we're broke and they have the money to run every program,
fund every program, but of course, at huge costs and profits for the private
corporations." Our only resource will be the corporate lenders, especially
the large extra-national corporations who will have loyalty to no one except
their corporate coffers and large share owners throughout the world.

This plan is so obvious at this point that it is hard to believe because it
is happening so fast and the Democrats and even conservative non- neo-con
Republicans don't realize what Bush and his neo-con buddies are up to.

2005

AMERICA IS BANKRUPT

http://www.lewrockwell.com/rogers/rogers171.html

LEW ROCKWELL

Americans are always boasting about how they are the richest and the freest,
etc., etc. But from the eyes of this American son, America’s twilight has
fallen. It is getting dark. I cannot see any way out of the disaster you
folks are headed for. The problems are too numerous, the needed debate
unheard, and the psyche already destroyed.

September 12, 2005



2005
Solvent airlines could benefit from bankruptcies - claim
 - 2005-09-15

AIRLINE INDUSTRY INFORMATION-C1997-2005 M2 COMMUNICATIONS LTD Analysts have
suggested that American Airlines and Continental Airlines may benefit from
the fact that Delta Air Lines and Northwest Airlines have filed for Chapter
11 bankruptcy protection. Analyst Michael Linenberg at Merrill Lynch
suggested that the expected capacity reduction from Delta...


ALL OF THE ABOVE TOOK 10 MINUTES TO FIND - ANYONE IN BANKING WHO COULD NOT
SEE THE WRITING ON THE WALL WAS A FOOL.  MY LATE BROTHER IN LAW WARNED THIS
WOULD HAPPEN AS FAR BACK AS THE 1980"S
IF YOU WANT MORE I SUGGEST YOU GET GOOGLING. AS FOR THE ECONOMIC FUTURE IT
WILL CONTINUE TO GET WORSE

Sunday January 25th 2009.




The wages of globalism - Gordon Grim admits I know nothing about
finance and economics


Daily telegraph

UK recession: Gordon Brown admits he failed to see economic crisis
Gordon Brown has admitted that he failed to see the looming economic
crisis and warned that Britain will not emerge from recession this year
unless there is emergency action in the Far East, America and Europe as
well.


By Andrew Porter Political Editor
Last Updated: 9:58AM GMT 23 Jan 2009


Gordon Brown admits he did not see 'the possibility of markets failure'
Photo: GETTY IMAGES He said that despite warning about the possibility
of some breakdown in the markets it was impossible to predict over the
past 10 years that they would seize up totally. The Prime Minister
refused to admit that Britain was living through "a bust" and repeatedly
failed to say that in fact he had not abolished "boom and bust" - an
achievement he often claimed while he was Chancellor. Mr Brown said that
previously the whole of economic policy had been focussed on "how to
control inflation". The Government had recognised there had been a
danger of "institutional failure in the banking system" and acted to
bolster national regulation, he insisted. But he added that the global
financial crisis was "completely new territory". He told the BBC: "What
we did not see, nobody saw, was the possibility of markets failure." He
comments came on the day Britain will officially enter a recession with
growth figures released by the Office of National Statistics. Mr Brown
attacked both the opposition and speculators who have advised investing
in Britain. David Cameron warned on Thursday that Mr Brown could be
forced to go to the International Monetary Fund for a cash bail out. Mr
Brown said: "If you think we are going to build our policy around the
comments of a few speculators who want to make money out of Britain then
you are very, very wrong indeed. "The decisions we take about the future
of the economy are based on what is right for Britain." On the Tory
leader's comments he added: "I think this is ridiculous behaviour on
behalf of opposition parties. The situation in Britain is this: that we
have low public debt, we have low inflation, wages are under control."
Repeatedly he was asked to admit whether he claims to have abolished
"boom and bust" were now laughable. But he said that the unique
circumstances of the financial crisis made this situation completely
different to any other recession, because it was not driven by high
inflation and wages.
He refused to say how long Britain could be in recession. But he said
"common action" was now central to the recovery and that President Obama
was about to announce his own economic measures.
He said: "Every country is facing these problems and I believe we are
doing it with a great deal more determination than a lot of people are
giving the credit for."


daily telegraph

Gordon Brown's policy is collapsing under the weight of its own
contradictions The Prime Minister must know that nationalisation of the
banks would be a nightmare, and yet this outcome seems increasingly
likely, says Charles Moore.


By Charles Moore
Last Updated: 8:50PM GMT 23 Jan 2009
Comments 3 | Comment on this article

Sir Fred Goodwin, the former chief executive of RBS, and Gordon Brown,
our Prime Minister, are both brilliant, loner Scots, regarded by those
who work with them as “control freaks”. Both were tremendous hits in
their jobs, once. For many years, both believed that they had
successfully suspended the laws of financial gravity, and they persuaded
others to believe them. Both presided over massive expansion of their
respective organisations.
Both then overreached. RBS this week posted the biggest loss in British
corporate history. Mr Brown is heading the British Government towards
the biggest budget deficit since the Second World War, and yesterday,
officially, took us into recession.
What is the difference between Sir Fred and Mr Brown? Mr Brown is still
in his job. There are, as has often been pointed out, deep, global,
systemic and technical reasons for the crisis we are in, but when one
tries to analyse how this country is dealing with them, one cannot
ignore the human factor. Who are dealing with it, where are they
“coming from” and where on earth are they going? When you think
about this, it becomes easier to understand why this week’s enormous
rescue plan, which contained reasonable ideas such as government
insurance of the banks’ toxic assets, has brought, in the short term,
greater panic.
In this drama, all the institutions and most of the senior individuals
involved, are compromised. Even the most admirable are vulnerable. The
intelligent and honourable Mervyn King, the Governor of the Bank of
England, is believed by the bankers to have failed to help the interbank
lending market in 2007. That failure, they say, ensured the collapse of
Northern Rock, and precipitated everything else.
Even those bankers, such as the equally intelligent and decent John
Varley of Barclays, who have so far kept their companies out of the
hands of government, are not believed in the markets. They are accused
of misvaluing their assets and concealing their liabilities. This week,
the market put a valuation on Barclays which was much the same as its
latest profits. By any normal calculation, you would think that Barclays
shares are insanely cheap.
But you dare not make that calculation. Everyone is thinking too much
about the game that everyone else is playing to be able to be rational.
People are fighting to justify their past actions, to stay in their
jobs, or looking for ways out or for others to blame.
There is supposed to be a “tripartite” system for managing our
difficulties – the Bank, the Financial Services Authority and the
Treasury – but those who have to work the system tell me that they
cannot locate authority in it. They have what they think are rational
conversations with Alistair Darling, the Chancellor. But they notice
that Number 10 seems to do something different, without the Chancellor
necessarily knowing. It is not easy to present these complicated rescues
to the world if you have been kept in the dark until 24 hours before
lift-off.
And they find themselves assailed by Baroness Vadera, a junior minister
at what, with tragic pathos, was last year renamed the Department for
Business, Enterprise and Regulatory Reform. It is she who carries the
messages in and out of the Brown bunker. The Treasury which, for all its
faults, tends to try to convey uncomfortable financial truths to prime
ministers in difficult times, is often cut out by Number?10.
No one is more conflicted in the crisis than the Prime Minister himself.
You can feel him longing to attack bankers – both because everyone
hates them at present and because of how Labour politics works. But he
knows that the now-excoriated Sir Fred was once his close associate. Mr
Brown boasted last autumn that it was his quiet word with his friend Sir
Victor Blank, that persuaded Sir Victor’s company, Lloyds, to hurry up
and take over HBOS – a move which seems to have turned both banks into
the living dead.
The other day, he had an assortment of big shots to lunch at Chequers.
One of them, Mervyn Davies, another big banker (Standard Chartered),
came away with a peerage and a ministerial post. An enterprising
reporter should work through all the years of Labour’s intimate
relations with the bankers – the party links, the titles, the holidays
and dinners, the putting them on boring prime ministerial commissions
about “vulnerable employment” or innovation, the questions not
asked, the favours granted.
If I were a socialist, I would be upset by the collusion between
capitalists and the Labour Government. As a free-marketeer, I am
horrified. You can make ever more money, was Brown’s devil’s
bargain, so long as I can take ever more of it. Socialists and free
marketers alike should cry: “What about the workers?”
This week, another of Mr Brown’s crony capitalists popped up in the
papers. He is Paul Myners. He is an ex-director of NatWest, ex-chairman
of the Low Pay Commission – not a case of “Le patron mange ici” –
and of Marks and Spencer and of The Guardian. Last year, Mr Brown made
him Lord Myners and Financial Services Secretary. Lord Myners has been
sent on a mission to explain to frightened markets that the Government
is not trying to nationalise the banks. It wants “a return to an
effective commercial banking sector”, he wrote. And probably, in some
sense, that is true. Even with his abiding faith in the beneficence of
government and of himself, Mr Brown must know that nationalisation of
the banks would be a nightmare. Either it would require compensation
(£125 billion on the latest book value of the banks concerned), which
would cause taxpayer outrage, or expropriation, which might make markets
lose all faith in this Government. He must realise that he would have to
adjudicate, impossibly, between the needs of banks to restore order in
their balance sheets and “national needs” such as lending to small
businesses, or, more basely, pouring money into marginal constituencies.
He would need legislation, and he would face court cases (as is going on
in relation to Northern Rock). There would be endless rows with other
banks and the European Commission and the World Trade Organisation about
competition. He would collapse overseas bank business and undermine a
once-huge tax
 base.
But it may be that the banks are so flattened by their folly and by his,
that Mr Brown is nationalising them whether he consciously wishes to or
not. The markets certainly think so.

Mr Brown’s intentions are, anyway, beside the point. His policy is, as
Marxists put it, collapsing under the weight of its own contradictions,
with the rest of us buried in the rubble.


Note: The really nasty recessions in the past 150 years have all been
when the laissez faire ideology has been dominant. Learn the lesson. RH


daily telegraph


UK recession: How does this one compare to those since 1945 Britain has
now endured eight recessions since the Second World War. The early ones
in the late 1950s and early 1960s were both short-lived and relatively
shallow.

By George Buckley, chief UK economist at Deutsche Bank Last Updated:
10:21AM GMT 23 Jan 2009

Then, in the early to mid-1970s, an oil price shock helped cause larger
contractions in output and a surge in inflation – so called
"stagflation". If there were any decade over the past fifty years we'd
rather forget, then this would be it.
The recession at the start of the 1980s was by far the worst in recent
memory – not only did it last for more than a year, but economic
output contracted by nearly 5pc - quiet a turnaround from the 4pc
expansion before the Winter of Discontent took its toll.
Prior to the present episode, the last time that output fell in the UK
was in 1990 to 1991. Just like the recession ten years before, output
fell for just over a year. But the drop was not as sharp as it was in
the early 1980s – we saw a fall of 2.5pc.
In the 1980s and 1990s recessions, unemployment rose sharply – by
close to two million people during the former, and around one million
people in the latter. These increases eclipsed those in the 1970s. This
was probably because back then powerful unions and legislation made it
more difficult to get rid of workers when output collapsed.
Also, in the 1970s there were fewer consecutive falls in output –
possibly making firms think that the recession would be mild, and that
they could get away with making fewer redundancies. This time round,
unemployment is set to rise sharply. Not only is the recession likely to
be prolonged and deep, but past liberalisation of the labour market
makes it easier for firms to get rid of their staff when times get hard.
The number of people out of work currently stands at almost two million.
Given the rate at which the economy is deteriorating this could easily
be above three million in a year's time.
No two recessions are alike, and that applies to the current slowdown
also. It has been caused by a shock to the availability of credit, a
massive build up of debt (which needs to be unwound) – and crucially
is occurring across the entire globe.
This could make the scale of the fall in output particularly large,
taking unemployment up to worryingly high levels. The government and the
Bank of England have their work cut out to provide enough stimulus to
prevent deflation and depression, but not too much that it eventually
causes excessive inflation once the recession is over.
Recessions: How they rank
1956:
Second quarter: -0.3pc, third quarter: -0.2pc
1957:
Second quarter: -0.1pc, third quarter: -0.7pc
1961:
Third quarter: -0.2pc, fourth quarter: -0.6pc
1973 and 1974:
Third quarter: -0.8pc, fourth quarter: -0.2pc. First quarter 1974:
-2.4pc
1975:
Second quarter: -0.7pc, third quarter: -0.2pc
1980 and 1981:
First quarter: -0.8pc, second quarter: -1.8pc, third quarter: -0.3pc,
fourth quarter: -1.2pc. 1981: first quarter: -0.5pc 1990 and 1991: Third
quarter: -1.2pc, fourth quarter: -0.6pc. 1991: first quarter: -0.1pc,
second quarter: -0.3pc, third quarter: -0.4pc.



???



Daily telegraph
UK recession: It's now official
The UK is officially in recession. Confirmation came this morning when
figures published by the Office for National Statistics showed the
economy shrank by 1.5pc in the final three months of last year.




By Angela Monaghan
Last Updated: 10:05AM GMT 23 Jan 2009


Recession Timeline
It follows a 0.6pc fall in the third quarter of 2008, and is the
steepest quarterly contraction since 1980. Economists had been
predicting a 1.2pc fall for the final quarter. Sterling tumbled on the
news and was down almost 3 cents against the dollar at $1.3570 shortly
after 9:30am and was also almost a penny weaker against the euro. "The
sheer fall in GDP is staggering, " said Stephen Gifford, Chief Economist
at Grant Thornton. "Financial meltdown has probably been averted but the
economy has now entered a recession which is sure to be as bad as the
early 80s." Economists and policymakers have been predicting the
recession - which technically occurs when the economy contracts for two
successive quarters - for months after the collapse in the once-booming
housing market triggered a crisis in the banking system. Rising
unemployment, business failures and bleak news from the manufacturing
and services sectors have all followed in waves. The Government has
twice bailed out the country's battered banks and the Bank of England
has slashed interest rates as they together try to pull the economy back
from the brink. "The government and the Bank of England have their work
cut out to provide enough stimulus to prevent deflation and depression,
" said George Buckley, an economist at Deutsche Bank. The crisis that
began in 2007 in the US housing market has now spread to almost all
sectors of the UK economy, hitting businesses and consumers alike.
Experts are now trying to predict how deep and how long this recession
will be. Most believe that it will be longer than the recessions of the
early 1980s and 1990s, when GDP shrank for five successive quarters, but
the jury is still out. "Until recently we have felt this recession was
as bad in scale and duration as the early 1990s, but not as bad as the
early 1980s. We've moved beyond that now," said John Cridland, deputy
director general at the CBI. "The main difference now is that this is
truly global. That is a worry because normally one market pulls up
another. But when it is global, everyone suffers," he added. The hope
had been that the recent weakness of sterling would help make Britain's
exports more competitive. However, the downturns in Britain's key export
markets - the US and Europe - has meant the boost has been negligible so
far. The recession is also likely to drive unemployment to levels not
seen since at least the 1980s as companies cut back in the face of
falling demand. Unemployment jumped by 131,000 in the three months to
November to reach 1.92m – the highest level since September 1997. It
is expected to peak at more than 3m in 2010.



Daily telegraph
UK recession: it's official but will it be the worst? Recession has
reared its ugly head with official confirmation of Britain's first
downturn since the early 1990s, writes Angela Monaghan




Last Updated: 10:06AM GMT 23 Jan 2009

The first official confirmation that the UK is in recession came on
Friday after figures from the Office for National Statistics showed
gross domestic product fell 1.5pc in the final quarter of 2008. That
followed a 0.6pc contraction in the third quarter and two quarters of
contraction means we're are technically in recession is here. The number
was significantly worse than the 1.2pc expected by economists, and is
the biggest three-month GDP fall since the second quarter of 1980 when
it shrank by 1.8pc. That means we are already in a recession deeper than
that of the early 1990s, when the most the economy shrank in a single
quarter was 1.2pc. How long this recession stays, and whether it
overtakes the 1980s in terms of depth, is less certain. The news that we
are a nation in recession will come as no surprise, but it will do
nothing to quash the uncertainty that is feeding economic decline.
Commenting on the figures, Stephen Gifford, Grant Thornton's chief
economist, said: "The sheer fall in GDP is staggering. Financial
meltdown has probably been averted but the economy has now entered a
recession which is sure to be as bad as the early 80s." "UK output is
likely to fall by more than 2pc in 2009 with the first signs of recovery
early next year as interest rates fall close to zero to stimulate the
economy and to counter deflation. But the real worry is unemployment,
with the number of jobless set to rise to more than 3 million by the end
of 2010, it will certainly be a worrying and depressing year for many UK
households". Most forecasters, excluding the Chancellor, are predicting
the economy will shrink for at least six successive quarters this time
around, starting with the third quarter of 2008. That would make it
longer than the recessions in both the early 1980s and the early 1990s,
when GDP fell for five consecutive quarters. There are mixed views on
how severe the recession will be, and the goal-posts seem to be shifting
on a weekly basis as retailers go to the wall, company profits plunge,
unemployment rises, and the housing market stands stubbornly still. John
Cridland, deputy director general of business group the CBI, said:
"Until recently we have felt this recession was as bad in scale and
duration as the early 1990s, but not as bad as the early 1980s. We've
moved beyond that now." However, Mr Cridland said the UK is not yet
suffering as much as in the early 1980s, when GDP fell by 6pc peak to
trough. He said the economy is likely to shrink more than the 2.5pc peak
to trough fall the UK experienced in the last recession. In contrast
think-tank NIESR predicts that this recession will be at least as nasty
as the early 1980s, a period characterised by high unemployment as the
lifeblood of the British mining community ebbed away in the midst of
Thatcherite reforms. "And, if you want to take a really gloomy view you
could go back to the Great Depression," said Martin Weale, NIESR
director. Those who have never worked or even lived through a recession
are embarking on a new, rather unpleasant experience. But even those who
have lived and worked through times of economic gloom will find the
going differs. "The main difference now is that this is truly global.
That is a worry because normally one market pulls up another, but when
it is global, everyone suffers," said Mr Cridland. "Often a recession
has a heart in one sector and that is buoyed by others. This one started
in the construction sector but it has now spread to pretty much all
sectors." Ultimately a crisis that began in the US banking sector and is
characterised by a credit squeeze has filtered through to the broader UK
economy.
On a slightly more positive note, Mr Weale said that British
manufacturers are in a much better position - more robust and efficient
- when those famous green shoots start to sprout and the country emerges
from recession, than they have been in past downturns.
As the country contends with a recession, it also contends with a weak
currency which so far has failed to fulfil its one major benefit:
boosting exports. The pound has fallen this week to its lowest level
since 1980, the year in which sterling was only prevented from dipping
beneath parity against the dollar by the Plaza Accord - an historic G7
meeting on currencies in New York.
Investors have abandoned the pound amid fears that the UK's sovereign
rating may face a downgrade, following the Government's second bail-out
of the banking sector in only three months. Merrill Lynch said sterling
had now dropped to a level that accounted for Britain losing its
flawless credit rating, with strategist Emma Lawson arguing that "the
market is now pricing the pound in expectation of a downgrade." French
economic minister Christine Lagarde has urged the Bank of England to
intervene to support the currency, but few think such an eventuality is
likely. Sterling marked time against the dollar on Thursday, rising a
tenth of a cent to $1.3748, and was half a penny down against the euro,
which closed at 94.27 pence. But shortly after the announcement it
weakened further against a basket of major currencies. ???

Daily telegraph

Britain on the brink of an economic depression, say experts Britain is
heading for economic depression for the first time since the 1930s,
economists have warned.




By Edmund Conway, Economics Editor
Last Updated: 8:22AM GMT 24 Jan 2009

Families must brace themselves for a slump of far greater severity and
longevity than the recessions of the 1980s and 1990s, they warned. They
said the current crisis will be of a scale to rival the biggest
peace-time crisis in modern history — the Great Depression. The
warning was delivered by economists and politicians after the Office for
National Statistics revealed that the economy shrank by 1.5 per cent in
the final three months of 2008 alone. The contraction follows a 0.6 per
cent fall in gross domestic product (GDP) — the most comprehensive
measure of Britain’s wealth generation — during the previous three
months. This means Britain fulfils the criteria for a technical
recession — two successive quarters of negative output. The news sent
the pound sliding to its lowest level since 1985. Sterling dropped more
than three quarters of a cent to $1.3688 as investors speculated that
the Bank of England may be forced to cut interest rates towards zero in
response to the recession.
John McFall, the Labour chairman of the Treasury select committee,
sounded a more optimistic note. He said: "We know that 2009 is going to
be really tough for many people. There is a determination in Britain and
across Europe to keep people in work, to avoid unemployment, so
people’s contribution will not be lost."
Confirmation that the economy has entered recession capped a week in
which Gordon Brown was forced to announce a new £350?billion bank
rescue plan. Unemployment has almost reached two million. President
Barack Obama discussed the financial crisis with the Prime Minister on
the telephone yesterday, his first call to a European leader.
The fall in GDP is the sharpest since 1980, when Britain was mired in
its most severe post-war recession. The news is an embarrassment for Mr
Brown, who pledged as Chancellor not to return Britain to "boom and
bust". Britain is likely to suffer more than other economies due to its
heavy reliance on the financial services sector, which has all but
imploded in the wake of the economic crisis, experts said.
Others raised the spectre of an outright economic depression, often
defined by experts as a peak-to-trough economic contraction of 10 per
cent. Aside from the demobilisation periods following the First and
Second World Wars, this kind of contraction has never taken place —
not even in the 1930s’ Great Depression.
Roger Bootle, the managing director of Capital Economics, said: "I think
there’s a very good chance this recession will be the worst since the
1930s. I suspect the economy could shrink by 6 per cent from last year
to the end of next year — and that might not be the end.
The plight facing Britain is uncannily similar to the 1930s, since
prices of many assets —from shares to house prices — are falling at
record rates, but the value of the debt against which they are held
remains unchanged. This “debt deflation” is among the most painful
of all economic phenomena, since it means the amount families owe
increases each year even if they borrow no more. Albert Edwards, a
strategist at Société Générale, likened the British economy to a
Ponzi scheme — a fraudulent debt mountain like that allegedly used by
the New York hedge fund manager Bernard Madoff. “What I find amazing
is that people aren’t really nailing Gordon Brown and [Bank of England
Governor] Mervyn King for this,” he said. “At least in the US they
had the excuse of the arrival of sub-prime — a new sector of the
market. We didn’t really have anything similar but we ended up with a
bigger national Ponzi scheme than the US.”

EU OBSERVER    21.1.09
Eastern Europe risks further riots as economic crisis bites
        LEIGH PHILLIPS

  BRUSSELS - Civil unrest is spreading in eastern Europe as the
economic crisis hits the region harder than western states, with anti-
government riots kicking off in Lithuania and Bulgaria in recent days
and with Estonia and Hungary at risk.

On Friday (16 January), demonstrators attacked the Lithuanian
parliament building in Vilnius with stones, smoke bombs, eggs and
ice, breaking windows and calling on the government to resign. by Google

Police dispersed the crowds - estimated to number some 7,000
according to authorities, with tear gas and rubber-tipped bullets -
while Prime Minister Andrius Kubilius to hold [sic] alled an
emergency cabinet meeting. A total of 86 individuals were arrested.

Organised by the Lithuanian Trade Union Confederation, the protest
denounced public sector wage cuts and increases in taxes aimed at
aiding the country's battered economy.

The violent protests come two days after similar events shook Sofia,
the capital of Bulgaria, and follows on from riots protesting
International Monetary Fund (IMF)-agreed austerity measures in Latvia
earlier in the week.

In Sofia last Wednesday some 2,000 students, farmers and green
activists also took up stones, snowballs and bottles against their
parliament building and demanded the government resign. A total of
150 were arrested and around 30 injured.

Last week also saw saw the biggest protest Latvia has witnessed since
the demonstrations that led to the country's independence from the
Soviet Union in 1990. A crowd of young people broke away from around
10,000 peaceful protesters, overturning a police van and breaking
windows at the finance ministry.

Lithuanian President Adamkus has suggested that the Vilnius riot was
organised by outside elements.
"The idea arises that disturbances are organised from the outside.
They started in Estonia with 'the Bronze Soldier'," he said according
to the ELTA news agency. "Then followed the event in Riga, and today
it was Vilnius. It makes one think about certain sorts of thoughts."

The Bronze Soldier riots broke out in 2007 after Tallinn moved a
Soviet-era WWII memorial, amid accusations that clashes between
ethnic Russians and Estonians were organised by the Kremlin.

Greek inspiration
But Latvian officials dismiss the idea that the protests are anything
other than citizens frustrated at the collapse of their economies.
"It was just spontaneous," Inese Allika, Latvian diplomat, told the
EUobserver. "Latvians are normally very quiet, and people obviously
are seeing what is happening in other countries in the rest of
Europe, such as Greece, and they thought 'Why are we so calm?'"
"There had been a huge economic boom in recent years, then all of a
sudden, everything stops."

The riots are not isolated events but a wave of predictable reactions
to the economic crisis, Dorothee Bohle, a political scientist at the
Central European University in Budapest told this website.
"After a few years of relatively high growth and social advancement,
it's all come to an abrupt end and they've been slapped with a very
harsh austerity package," she said. "This is essentially a return of
the 'IMF riots' we were used to from Latin America in the eighties
and nineties."

In mid-December, the head of the IMF, Dominique Strauss-Kahn, warned
such civil disturbances were likely.
"Social unrest may happen in many countries – including advanced
economies," as a result of the crisis, he said at the time.

Hungary next?
Estonia could also be hit by the unrest, despite holding relatively
high currency reserves, and Hungary is "deeply unstable," the expert
warned.
"While Hungary has not hit the headlines in recent weeks, this is
only because the country hasn't really stopped having riots since
2006.  [!!!] It keeps coming back sporadically. During national
holidays, there has been street fighting regularly since 2006."

In Hungary, as in Greece - where a police shooting sparked violent
protests in December - the riots have unique domestic political
reasons that combine with the wider economic background, Ms Bohle
explained.
"In Hungary's case, it was the prime minister's being caught lying
that social supports could continue and then delivering an austerity
package," she said.
"[There is] a mistrust and lack of legitimacy in the government. On
top of this is the existence of the far right, which may make it into
parliament. Hungary is deeply politically unstable."

Daily telegraph

S&P strips Spain of its AAA credit rating
Standard & Poor's has stripped Spain of its coveted AAA status in the
first such move against a top-rated country since the global crisis
began, reflecting the deep damage suffered by Spanish public finances as
the debt bubble bursts.




By Ambrose Evans-Pritchard
Last Updated: 6:24AM GMT 20 Jan 2009


Spanish Prime Minister Jose Luis Zapatero had to deal with labour
protests over the weekend Photo: AFP The credit-rating agency's
downgrade comes at a delicate moment for Euroland's weaker bloc. Several
states already face difficulties raising money on the bond markets. The
yield spreads on Spanish debt rose yesterday to a post-EMU high of 122
basis points above German Bunds, though still below levels for Italy,
Ireland and Greece. Explaining the downgrade, S&P cited the "structural
weaknesses in the Spanish economy" and predicted a long recession that
will raise public debt by 18pc of GDP and may entail a huge bank
bail-out. Brussels predicted that unemployment in Spain would reach 19pc
by next year, pushing the jobless total to near 4.5m. Opposition leader
Mariano Rajoy called on finance minister Pedro Solbes to step down as a
"patriotic duty". "This is a man who has thrown in the towel. He's given
up, he's got no ideas left and no clue what to do next," he said.
Myriam Fernández, S&P's lead analyst, said Spain's euro membership
provided stability but also tied Madrid's hands as it tries to respond
to the crisis. "It doesn't have control over monetary policy and lacks
the flexibility to correct its current account by devaluation," she
said.
Alberto Mattelan, an economist at Inverseguros, said the key risk over
the next two years is Spanish companies' debt load. "They are very
dependent on external credit. At 10pc of GDP, it's the highest in
Europe. There won't be a real recovery until 2011," he said.
Spanish politics may not wait that long. Some 35,000 trade unionists
marched through Zaragoza, in the county's north-east, on Sunday to
demand "job protection" after a clutch of factory closures in Aragon's
industrial hub. It was the first big labour protest against the
Socialist government of Jose Luis Zapatero. "We're paying the bill for
this crisis and we are not going to pay the bill any longer," said union
leader Julian Buey. ???Daily telegraph



The world will feel China's economic pain
Latest figures show that China's juggernaut is slowing down and perhaps
even grinding to a halt




Telegraph View
Last Updated: 7:32PM GMT 22 Jan 2009
Comments 1 | Comment on this article

By opening its society to market forces three decades ago, China entered
an era of rapid economic growth with no precedent in human history. When
Deng Xiaoping began the reforms he called "socialism with Chinese
characteristics", he aimed to quadruple the size of his nation's economy
by the turn of the millennium. This goal was handsomely achieved and the
consequences may yet be epoch-making. But the cold vice of global
recession now holds even China in its grip.
The latest figures show that China's juggernaut is slowing down and
perhaps even grinding to a halt. Its economy expanded by 6.8 per cent
last year, compared with 13 per cent in 2007. For those of us enduring
outright recession, possessing an economy that grew at all, let alone by
nearly 7 per cent, hardly seems a cause for alarm. But China's vast
population of
1.2 billion ensures that tens of millions of people enter the workforce
every year, while colossal numbers migrate from the impoverished
countryside to the cities of the eastern seaboard. Providing these
rootless masses with jobs and homes means that China must run simply to
stand still. In effect, a growth rate of
6.8 per cent leaves China perilously close to outright recession.
Other indicators suggest this extraordinary juncture may already have
arrived. Electricity output in the final quarter of last year was 6 per
cent lower than in the same period of 2007. Previously, power generation
had expanded by an annual average of 15 per cent. Like the rest of us,
China is suffering from a collapse of consumer demand in its key export
markets and the crisis of global finance. If its breakneck expansion
comes to a juddering halt, the possible consequences could scarcely be
of greater moment. Within China, stability and national unity under the
Communist Party's iron rule rest upon economic success. Mass
unemployment and poverty might eventually threaten this political
compact. Economic failure would risk upheaval on an extraordinary scale
– a spectre that haunts China's leaders who bitterly remember two
centuries of turmoil before the onset of Mr Deng's reforms in 1979.
Our own plight would be immeasurably worsened by a recession in China.
With unconscious irony, David Miliband, the Foreign Secretary, chose
yesterday to launch a new document on Britain's relations with China,
based on the assumption that Asia's giant will continue to be a "motor"
for the global economy. If that engine falters, all of us will suffer.
Much has been written about the alleged dangers of China's rise. They
are as nothing compared with the consequences of China's possible
decline. ??
Daily telegraph
Weak economies tempted to quit the euro face a fate worse that the
current squeeze It's easy to see why there's increasing chit-chat about
the single European currency being blown apart by the economic crisis.




By Hugo Dixon, breakingviews.com
Last Updated: 4:21PM GMT 23 Jan 2009

Monetary policy in the eurozone is relatively tight. The same goes for
fiscal policy in Germany, the largest and strongest economy. As a
result, the euro has been relatively strong. Not surprisingly, the
eurozone's weak economies - Spain, Ireland, Italy, Portugal and Greece -
are hurting. In Spain, unemployment is already 13.9pc. If only they
could bring back the peseta, punt, lira, escudo and drachma, one might
think. In the "good" old days, when these economies got into difficulty,
they allowed their currencies to fall - giving local industry a
breathing space. They weren't constrained by a one-size-fits-all
monetary policy that seems best tailored to Germany's needs. Such
thinking is seductive but fallacious. The eurozone's weak economies are
drowning in debt. In Italy and Greece's case, the government's debt is
hovering around 100pc of GDP. In Spain and Ireland, which had
liquidity-fuelled property manias, there's debt in the private sector.
And of course, there's the debt in the banks. The lion's share of these
debts are denominated in euros. They certainly aren't denominated in
pesetas and punts. If any country quit the euro, its new currency would
sink - perhaps something of the order of 30pc-50pc. Although that would
give a fillip to exporters, the value of its debts when translated into
the new devalued currency would soar. Governments, private-sector
borrowers and banks would find "hard currency" debts virtually
impossible to service. The end result would probably be bankruptcy - a
fate far worse than the current squeeze. Politicians driven can, of
course, make errors. But pulling out of the euro would be so crass the
even populist politicians will surely avoid it.

Website of the Telegraph Media Group with breaking news, sport,
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UK recession sends pound to new low
The pound slid to the lowest level since 1985 after Britain fell into
its first technical recession in 17 years.

By Edmund Conway and Angela Monaghan
Last Updated: 9:15AM GMT 24 Jan 2009

The downturn is already statistically more severe than the last
recession, with Britain's economy shrinking last quarter at the fastest
rate since 1980. The pound slid by more than three quarters of a cent
against the dollar to $1.3668 – closing at the lowest level in 24
years. The fall came after the Office for National Statistics announced
that the UK's economy shrank by 1.5pc in the final three months of 2008.
That was the sharpest three-month contraction since gross domestic
product fell by 1.8pc in the second quarter of 1980. It follows a 0.6pc
fall in the third quarter of 2008, which brought an abrupt end to 64
consecutive quarters of growth in the UK. The cumulative fall in GDP of
2.1pc in the second half of last year is not far shy of the 2.6pc total
peak-to-trough fall experienced in the entire 1990s recession.
"Today's figures are the final nail in the coffin for Prime Minister
Gordon Brown's claim to have 'ended boom and bust'," said Charles Davis
at the Centre for Economics and Business Research. "The UK's economy is
most definitely bust at the moment.
"It is not just the fact that the UK has officially entered recession
that will cause concern; it is the size of the contraction. This
supports our view that in 2009 the economy is set for the steepest
contraction in the post-War era, with a fall in the region of 3pc
year-on-year" he added.
The manufacturing sector, which accounts for 14pc of the economy, was
hit particularly hard in the fourth quarter, with a 4.6pc decline in
output. The services sector, which contributes three quarters of GDP,
shrank by 1pc. Some had hoped that sterling's recent weakness would help
make Britain's exports more competitive. However, downturns in Britain's
key export markets – the US and Europe – mean that so far the boost
has been negligible. Although the pound, which is about 25pc weaker than
a year ago, dropped against the dollar, it regained some strength
against the euro. At one point yesterday the FTSE 100 fell below the
psychologically important 4,000 mark, but regained ground to close up
0.24 points – or just 0.01pc – at 4052.47. Philip Booth, of the
Institute for Economic Affairs, said: "This is already a pretty serious
recession. There are two aspects which make it worse than in the 1990s.
The first is that there is a banking crisis; which begs comparisons with
the 1930s. The second is a labour market issue: in the 1990s employment
bounced back very quickly, but this time the greater burden of
regulations, taxes and restrictions on labour might mean there is no
easy recovery." The ONS also announced that retail sales rose by 1.6pc
in December. Although some claimed that the figures could show a sudden
spurt in purchasing following the Government's VAT cut, analysts warned
that the statistics may overstate the scale of the retail recovery.
???Daily telegraph


Bernard Madoff

Millionaire widow becomes cleaner after losing fortune in Madoff's
alleged Ponzi scheme A millionaire widow who lost her fortune to Bernard
Madoff's alleged $50 billion Ponzi scheme has turned to cleaning and
care work to make ends meet.

By Catherine Elsworth in Los Angeles
Last Updated: 5:09PM GMT 23 Jan 2009

But after Mr Madoff's alleged confession that the scheme was 'all just
one big lie', a revelation that shook the investment world, Mrs Ebel
realised she had nothing Photo: GETTY Maureen Ebel, 60, of West Chester,
Pennsylvania, thought she had $7.3 million invested with the New York
financier when he was arrested last month and charged with running a
massive hedge fun scam, possibly the largest financial fraud in history.
But after Mr Madoff's alleged confession that the scheme was "all just
one big lie", a revelation that shook the investment world, Mrs Ebel
realised she had nothing. She went from an annual income from her
investments of 400,000 dollars to worrying about how to pay her next
bill and picking up coins in the street. In less than a week following
Madoff's arrest, Mrs Ebel found a job caring for a 93-year-old woman,
cleaning her home and ironing. "This is my fate," the retired nurse,
whose doctor husband died in 2000 aged 53, told the Philadelphia
Inquirer. "I was married, had a fabulous marriage to a man I loved and
worshipped, a physician. We travelled. We had a very fine life. And he's
dead. He died, and every penny I had in the world has gone."
Mrs Ebel, one of hundreds if not thousands of investors who together
lost tens of billions of dollars in the scheme, has raised some cash by
selling off jewellery and a painting and returned thousands of dollars
worth of items recently bought on credit cards.
She is now desperately trying to offload her two-bedroom holiday home
near West Palm Beach, Florida, and Lexus SUV while calculating that to
afford her mortgage, she must return to nursing and take in a lodger.
Mrs Ebel's uncle Leonard, 80, introduced her to Madoff's fund after her
husband's death.
"At that time, when he got me into Madoff, he had been a Madoff investor
for 25 years," she told the Philadelphia Inquirer. "And now he's a
Madoff investor and broke after 30 years."
She initially invested 4.5 million dollars and received detailed monthly
statements and a cheque four times a year. She has registered with the
FBI as a victim of Madoff's scheme.
Now when she visits Florida she says she feels "like an alien".
"Everyone is going riding their horses and playing tennis, playing
golf," Mrs Ebel said. "If there's a nickel on the street, I'm picking it
up."
???