Big Five tapped Fed for funds during financial crisis

Peacenik seems to recall lots of talk about how strong Canada's banking system is. How it is different from the U.S. banking system (which is bankrupt). Lots of talk about how Canada won't suffer the same housing meltdown that is occurring in the U.S. Peacenik didn't believe it then and Peacenik doesn't believe it now. The black hole of debt that is sucking European countries into its vortex right now is getting bigger and bigger. And of course the media accepts glib explanations from the banks. Peacenik wonders why it is not a matter of public record that a publicly traded company is borrowing big sums of money from the U.S. fed. What about all that superior Canadian bank regulation? Peacenik doesn't believe the banks and Peacenik doesn't believe the politicians. Something stinks.



Canada’s major banks were among numerous financial institutions across the globe which accessed funding from the U.S. Federal Reserve as part of its efforts to stave off economic collapse.

Among the thousands of transactions revealed by the Fed on Wednesday were a number involving Canadian banks, which took advantage of one program to borrow roughly $111-billion (U.S.) through their operations in the U.S.

Obliged to disclose the information under a new financial-reform law, the Fed provided an unprecedented look Wednesday inside a host of programs it used starting in 2007 to shore up a tottering U.S. banking system. The records show in stark terms how the Fed acted as a lender of last resort to a variety of players in the U.S. and beyond, extending low-cost loans and other sources of funding in a desperate effort to get financial markets functioning again.

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Britain Details Radical Cuts in Spending, Citing Debt

Coming to a country near you. Maybe even your country. Sovereign debt levels are unsustainable. The black hole of debt that Peacenik has been watching for years is sucking economies and societies into it, faster and faster. The Brits are even going to cut military spending and of course welfare. Ireland has just about disappeared down the drain. The French are at the abyss.

And what about Canada? Canada is facing record debt levels, a collapsing economy, soaring unemployment and the pricking of a U.S. style housing bubble. Peacenik wonders how Canadians will respond to the inevitable British medicine. Peacenik wonders how you will respond. Peacenik wonders how Peacenik will respond.

LONDON — Britain’s Chancellor of the Exchequer unveiled the country’s steepest public spending cuts in decades on Wednesday, sharply reducing welfare benefits and eliminating almost half a million public sector jobs over the next four years as the country seeks to free itself of crushing debt from the global financial crisis.

“Today is the day when Britain steps back from the brink,” George Osborne, the Chancellor, told Parliament.

“It is a hard road but it leads to a better future,” he said, but “to back down now would be the road to economic ruin.”

He said that 490,000 public sector jobs would be lost over the four-year savings program and the size of government departments in London would be cut by one third. Public spending would be cut by a total 83 billion pounds, or around $130 billion, by 2015.

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Debt

Peacenik has been writing about the black hole of debt for a while. Trillions upon trillions of dollars of debt that has to be dealt with. It can't be forgiven. It can't be forgotten. It can't be ignored. But that's what our leaders are doing. Why are governments and corporations and banks and Wall Street ignoring their debt? Because they have no solution....other than going further into debt. Can you ignore your debt? Peacenik can't ignore Peacenik's.

June 10 2009: One simple four letter word.

Ilargi: You can talk about the economy till you’re blue in the face, make a case for or against a possible recovery, bottoms and tops, green shoots, yellow weeds, whatever tickles your fancy and your preferred belief system. And you're sure to find at least a few handfuls of kindred souls and spirits while you’re at it. After all, with worsening data continuing to spout from the real economy, the one that pays your salary if you still have one, which pays your mortgage if you still have one and so on, while stock markets seem to be going up, there is enough confusion to go around for everyone.

But in the end, when all the convincing sounding arguments have been made in the heated discussions that fill hour after hour of street corners, TV screens, worried kitchen tables, barrooms and bordellos, day after confusing day, it all comes down to one simple four letter word. Debt.

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Magic Bank Profits

“Although perfectly legal, this move is also perfectly delusional, because some day soon these assets will be written down to their fair value, and it won’t be pretty.”

-Steven Roth, professor of management at the Tuck School of Business at Dartmouth College, on Bank of America’s earnings fraud

We been discussing how many of the recent profits were not “real” — i.e., based on one time sleights of hands — losing a losing month, AIG flow throughs, bailout monies, etc.

Thus, it is gratifying to see on the front page of the NYT Business section, Andrew Ross Sorkin’s article with the provocative but accurate title, Bank Profits Appear Out of Thin Air.

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Lately Peacenik hasn't mentioned the "black hole" that has been sucking the world's delusional wealth away. Obama's and CNBC's PR campaign had a lot of people thinking the worst was over. The DOW had it's best rally since 1938. But. But the black hole has not gone away. The PR is failing. Yesterday the DOW lost almost 300 points. The public is no longer believing in the banks' mysterious profits. Today the Globe reports that banks are bracing for huge credit card losses. Today we learn again that pension plans are woefully underfunded. States, provinces, countries, cities, towns, companies, and people are all broke. Can a world-wide run on banks happen in 2009? Do you have enough cash to last a couple of weeks? Peacenik's black hole sensor is tingling.

Financial Policy Despair

By PAUL KRUGMAN
Published: March 22, 2009

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

This is more than disappointing. In fact, it fills me with a sense of despair.

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Peacenik was getting bummed out by some of the hockey results on the weekend. Habs lose to the lowly leafs. Canucks lose to the lowly Coyotes. And Peacenik isn't winning the March Madness pool. Then Peacenik read the reviews for Obama's "new" rescue of the banks and their toxic assets. Then Peacenik sees on the front page of this morning's Globe that Ottawa and Canadian banks are taking action on mortgages. But Ottawa just told Peacenik that there were no problems in Canada. That Canada was special.

The black hole of financial armagedden is staring Peacenik and the world in the face this cool Monday morning. Krugman thinks the world may be down to its last chance. Read Taibbi in the Rolling Stone, or this from Naked Capitalism. Wall St. and the banks don't deserve to be rescued. They deserve to be in jail. But Wall St. will probably rally a bit on Obama's rescue plan. Then reality will bite hard. The banks can't be rescued. The economy can't be saved. The black hole wins.