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  • Greek Euro Exit: 60% Currency Devaluation, Default, Banking Sector Collapse
    being forced to leave by its peers This essentially leaves two scenarios which the UBS note takes into account a weak country exit Greece Ireland Portugal for example and a strong country exit Germany France for example We are going to focus on the former Read Risk Of Euro Break Up Higher Than Ever As Political Storm Hits In September As an aside UBS analysts point to the legal difficulties of a member country leaving the Eurozone The EU constituted by a series of treaties including the Lisbon Treaty the Maastricht Treaty and the Rome Treaty wasn t built to deal with break up and doing so would require amending the treaties and face protracted political limbo Sovereign nations though could unilaterally leave So what would happen if say Greece left the Euro The costs of leaving the monetary union and establishing a new national currency NNC are huge according to UBS The first major hurdle would be a sovereign default Secession from the EU would practically require a redenomination of foreign debt in NNC so as to guarantee some sort of control over the debt This would constitute default in the eyes of most investors Default means billions in losses for EU banks local banks creditors and probably debtors around the globe Currency devaluation would be severe While many have said a 15 to 20 devaluation would help weak countries gain competitiveness the situation would be much more extreme UBS estimates our weak country would see its currency fall by 60 taking Argentina and the fall of the US monetary union in the 30s as precedents This in turn would lead to a spike in the cost of capital At a very conservative estimate this would entail a 700bp risk premium surge If the banking system is completely paralyzed then the cost of capital de facto increases an infinite amount In the extreme paralysis of finance capital is not available at any price Rising capital costs would both take their toll on local firms from large to small and banks Firms would collapse as funding dries up and the possibility of bringing in money from abroad becomes increasingly difficult people have to accept the new NNC The banking system would completely collapse Investors will withdraw money en masse in response to the uncertainty surrounding the forcible revaluation of accounts into NNC From the note Confronted with the obvious uncertainties surrounding the establishment of a NNC the obvious response of anyone with exposure to the secessionist banking system is to withdraw money from the bank as quickly as possible This could be done electronically unless the government puts in place stringent capital controls In that event the wise depositor anticipating the creation of a NNC would withdraw their money in physical Euro form pack it into a suitcase and head over the nearest international border unless the government seals their borders to the movement of people In that event the sensible depositor would withdraw their money in physical Euro form

    Original URL path: http://www.911omissionreport.com/euro_60percent_collapse.html (2016-02-14)
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  • IMF’s Resources May Not Be Enough If Global Economy Worsens, Lagarde Says
    of the Group of 20 leaders response to the global recession in 2009 As the European debt crisis threatens to spread and further damp the global recovery the IMF was asked by its steering committee today to review whether its resources are sufficient The IMF has a limited financial ability to staunch an escalation of the crisis that envelops major European economies like Spain and Italy said Eswar Prasad a senior fellow at the Brookings Institution in Washington and a professor at Cornell University in Ithaca New York At the same time the current economic and political climate in advanced economies makes it highly unlikely that they are in a position to provide additional resources to the IMF he said BRICS Support Finance officials from Brazil Russia India China and South Africa the so called BRICS said in a Sept 22 statement they are open to contributing to global financial stability through the IMF or other international financial institutions It is too early to say what the BRICS can do to help Europe where nations need to put into place the measures they agreed to in July to enhance their bailout fund Chinese Central Bank Governor Zhou Xiaochuan said in Washington today He earlier said in a speech that IMF available resources may not be adequate to meet the potential needs of the crisis hit countries U S Treasury Secretary Timothy Geithner today did not mention IMF resources as an issue saying member countries have acted decisively to give the Fund the resources and facilities to respond to crises The Washington based IMF which is contributing to bailout packages for Greece Ireland and Portugal along with the European Union said today it stands ready to strongly support efforts of the euro region to solve the debt crisis Emergency Lending The

    Original URL path: http://www.911omissionreport.com/imf_not_enough.html (2016-02-14)
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  • IMF chief warns dollar may suffer 'abrupt fall'
    the European single currency hit a new high of 1 4347 dollars and global equity markets tumbled amid growing fears a US housing related credit crunch could pitch the world s biggest economy into recession The uncertainty comes from downside risks that are much higher than they were six months ago The turbulence in the credit markets is a warning that we cannot take the benign economic environment of recent years for granted he said We still do not know the full effects of the decline in the housing market and the subprime problems of the US economy Further disruption in financial markets and further falls in housing prices could lead to a global economic downturn A crisis in the risky US subprime mortgage sector where loans are given to homebuyers with poor credit histories erupted this year as borrowers defaulted on mortgages amid rising interest rates and a sharp slump in US housing prices The spillover of the US credit crunch into global financial markets roiled stock markets worldwide in August and although they have recovered somewhat the uncertainties of the extent of the credit problems continues to weigh on investors Rato warned that a downturn would exacerbate other risks that already exist in the world economy citing some emerging economies reliance on capital inflows and the potential that central banks may not curb rising inflationary pressures Some emerging economies that have relied on external financing to fund large current account deficits could be tipped into crisis by a combination of reduced demand for their exports and tighter financial market conditions he said adding that those developments would also worsen the prospects of low income countries And there is a risk that central banks may falter in fighting the inflation which has been spurred in some countries by higher

    Original URL path: http://www.911omissionreport.com/imf_chief_warns_dollar_fall.html (2016-02-14)
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  • Fed made $9 trillion in emergency overnight loans
    their loans but that s not good enough he said It s clear the demands the Fed made were not enough The Wall Street firm that received the most assistance was Merrill Lynch which received 2 1 trillion spread across 226 loans The firm did not survive the crisis as an independent company and was purchased by Bank of America just as Lehman Brothers was failing Citigroup which ended up with a majority of its shares owned by the Treasury Department due to a separate federal bailout was No 2 on the list with 279 loans totaling 2 trillion Morgan Stanley was third with 1 9 trillion coming from 212 loans As we have previously disclosed Morgan Stanley utilized some of the Federal Reserve s emergency lending facilities during a time of immense financial turmoil throughout the banking sector and the broader market Morgan Stanley said in a statement Wednesday The Fed s actions were timely and critical and we commend them for providing liquidity and stabilizing the financial system during that period The largest single loan was by Barclays Capital which borrowed 47 9 billion on Sept 18 2008 in the days after the Lehman bankruptcy The loan financed Barclays purchase of Lehman s remaining assets Some Wall Street firms disputed the way the Fed reported the numbers An executive from one of the firms said that many of the overnight loans were rolled over for days at a time and that each day it was counted as a new loan It s being double triple quadruple counted in some cases said the executive Not all the major banks needed much help from the Fed JPMorgan Chase received only three loans from this program for a total of 3 billion The last loan was made under the program in

    Original URL path: http://www.911omissionreport.com/9trl_emergency_loans.html (2016-02-14)
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  • A Secret Scandal
    the Congress these same banks had been borrowing massive amounts from the government to remain afloat The total numbers are staggering 7 7 trillion of credit one half of the GDP of the entire nation 460 billion was lent to J P Morgan Bank of America Citibank Wells Fargo Goldman Sachs and Morgan Stanley alone without anybody other than a few select officials at the Fed and the Treasury knowing This was perhaps the single most massive allocation of capital from public to private hands in our history and nobody was told This was not TARP This was secret Fed lending And although it has since been repaid it is clear why the banks didn t want us to know about it They didn t want to admit the magnitude of their financial distress The banks claims of financial stability and solvency appear at a minimum to have been misleading and may have been worse Misleading statements and deception of this sort would ordinarily put a small market player or borrower on the wrong end of a criminal investigation So where are the inquiries into the false statements made by the bank CEOs And where are the inquiries about the Fed and Treasury officials who stood by silently as bank representatives made claims that were false misleading or worse Only now because of superb analysis done by Bloomberg reporters who litigated against the Fed and the banks for years to get the information are we getting a full picture of the Fed and Treasury lending The reporters also calculated that recipient banks and other borrowers benefited by approximately 13 billion simply by taking advantage of the spread between their cost of capital in these almost interest free loans and their ability to lend the capital In addition to the secrecy what is appalling is that these loans were made with no strings attached no conditions and no negotiation to achieve any broader public purpose Even if one accepts the notion that the stability of the financial system could not be sacrificed those who dispensed trillions of dollars to private parties made no apparent effort to impose even minimal obligations to condition the loans on the structural reforms needed to prevent another crisis made no effort to require that those responsible for creating the crisis be relieved of their jobs took zero steps towards the genuine mortgage reform that is so necessary to begin a process of economic renewal The dollars lent were simply a free bridge loan so the banks could push onto others the responsibility for the banks own risk taking If ever there was an event to justify the darkest most conspiratorial view held by many that the alliance of big money on Wall Street and big government produces nothing but secret deals that profit insiders this is it So what to do The revelations of the secret loan program may provide the opportunity for Occupy Wall Street to suggest a few concrete steps that would be difficult

    Original URL path: http://www.911omissionreport.com/secret_scandal.html (2016-02-14)
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  • Bailouts could cost U.S. $23 trillion
    all these programs would be maxed out at the same time Still the eye popping price tag provoked an immediate reaction on Capitol Hill The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn t even imaginable said Rep Darrell Issa R Calif the ranking member of the House Oversight Committee If you spent a million dollars a day going back to the birth of Christ that wouldn t even come close to just one trillion dollars 23 7 trillion is a staggering figure Congressional Democrats say they will call for Treasury to meet transparency requirements suggested by the inspector general said a spokeswoman for the Oversight committee The American people need to know what s going on with their money said committee spokeswoman Jenny Rosenberg In his prepared remarks Barofsky writes Since the onset of the financial crisis in 2007 the Federal Government through many agencies has implemented dozens of programs that are broadly designed to support the economy and financial system The total potential Federal Government support could reach up to 23 7 trillion The comment comes in the context of a quarterly report to Congress by the special inspector general Barofsky will testify Tuesday before the House Committee on Oversight and Government Reform The office of the special inspector general was created to serve as an auditor of the federal bailout by the same legislation that launched the TARP program itself Originally TARP was intended Barofsky writes to facilitate the purchase management and sale of up to 700 billion of toxic assets primarily troubled mortgages and mortgage backed securities But that plan was soon rejected and the TARP instead became a grab bag of bailout initiatives including bailouts for GM Chrysler and auto parts suppliers as the federal

    Original URL path: http://www.911omissionreport.com/23trln_bailout.html (2016-02-14)
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  • Canada set to unveil stimulus package
    the government said at the opening of parliament on Monday that the measures will be targeted they will inject immediate stimulus while promoting long term growth and they will avoid a return to permanent deficits The finance ministry forecasts a C 34bn 28bn 20bn 21bn deficit for the fiscal year starting on April 1 followed by a C 30bn shortfall in 2010 11 It has warned that a return to a balanced budget could take five years The stimulus package which forms part of the annual budget will include an extra C 7bn in spending on infrastructure including roads water and sewage facilities universities and environmentally friendly projects The government will require that a newly created infrastructure fund must be spent within two years to provide maximum impact Public private partnerships will be encouraged The budget marks a sharp turnaround for the Tories who insisted just two months ago that extra stimulus was not required and that the government could balance its books for the foreseeable future Last November s mini budget foresaw spending cuts The three opposition parties dismissed the forecast as unrealistic in the current economic climate and threatened to join forces to bring down the government But the prime minister Stephen Harper averted a no confidence vote by persuading the governor general to prorogue parliament until this week Since then both Mr Harper and the opposition Liberals new leader Michael Ignatieff have taken a more conciliatory approach Mr Ignatieff has dampened talk of an opposition coalition and is widely expected to instruct his MPs either to support or abstain from the budget vote Canada has so far been spared a housing crisis on the scale that the US has seen However sliding exports to the US the slump in oil and metal prices and a pullback in

    Original URL path: http://www.911omissionreport.com/canada_stimulus_package.html (2016-02-14)
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  • China Announces 4 Trillion Yuan Economic Stimulus
    s economy from slowing further as the global economy is certainly in a recession China is taking steps to bolster its economy the biggest contributor to global expansion less than a week before Premier Wen Jiabao goes to Washington for talks with world leaders on ways to address the economic slump People s Bank of China Governor Zhou Xiaochuan said yesterday boosting spending at home is the best way China can help China accounted for 27 percent of global economic growth last year more than any other nation the International Monetary Fund said in a report in April this year Taiwan which counts China as its largest trading partner today cut interest rates for the fourth time in two months after exports dropped in October by the most in three years Over the past two months the global financial crisis has been intensifying daily the State Council said in today s statement In expanding investment we must be fast and heavy handed Housing Infrastructure The package announced today of which 100 billion yuan is earmarked for this quarter will go toward low rent housing infrastructure in rural areas as well as roads railways and airports the State Council said The government will also allow tax deductions for purchases of fixed assets such as machinery to stimulate investment a move that will reduce companies costs by an estimated 120 billion yuan In addition grain purchase prices and subsidies for farmers will be raised as will allowances for low income urban households The government also scrapped loan quotas to help boost lending to small businesses The stimulus plan may boost China s economic growth by 2 percentage points next year said Xing Ziqiang an economist at China International Capital Corp in Beijing UBS AG and Credit Suisse AG before today s announcement

    Original URL path: http://www.911omissionreport.com/china_stimulus.html (2016-02-14)
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