bbot's blog

(rejected titles: "the gathering storm", "invest in gold", "oh god oh god oh god we're all screwed")

"Asia Needs Deal to Prevent Panic Selling of U.S. Debt"

It has been conventional wisdom that China, Japan, and other countries that run trade surpluses with the US, which means they fund our overconsumption by buying assets like US Treauries, would never restrict the flow of credit to us because it would lower their exports and hurt their growth. We've long been leery of the idea that unsustainable trends will have a life eternal, and Brad Setser has a simple reason why this process is self-limiting. Our foreign funding sources aren't just lending us money to buy their goods; they are also providing the funding for interest on the loans extended for past imports. At a certain point, the interest payments become so large relative to the value of the exports that the deal no longer makes sense.

The day of reckoning may be approaching well before Setser's tipping point. And the trigger is much simpler. We look like a lousy risk. The Freddie/Fannie conservatorship, the Lehman bankrutpcy, and the rescue of fallen Asian powerhouse AIG has, not surprisingly, lead to a reassessment of the US's creditworthiness.

"Snitow and Kaufman, Water Wars in America"

The spiraling collapse of the financial system may only intensify the quest for private investments in what is now the public sector. This flipping of public assets could be the next big phase of privatization, and it could happen even under an Obama administration, as local and state governments, starved during Bush's two terms in office, look to bail out on public assets, employees, and responsibilities. The Republican record of neglect of basic infrastructure reads like a police blotter: levees in New Orleans, a major bridge in Minneapolis, a collapsing power grid, bursting water mains, and outdated sewage treatment plants.

"Central banks dole out cash as bailout doubts grow"

SYDNEY/SINGAPORE (Reuters) - Central banks across Asia scrambled on Friday to meet a desperate demand for cash, both in their own currencies and the U.S. dollar, as the White House's $700 billion bailout plan ran into unexpected roadblocks.

News of the biggest ever U.S. bank failure only added to the thirst for liquidity, with the government brokering a last-ditch purchase of thrift Washington Mutual (WM.N: Quote, Profile, Research, Stock Buzz) by JPMorgan (JPM.N: Quote, Profile, Research, Stock Buzz).

"The market is just frozen at the moment," said Claudio Piron, a strategist at JPMorgan Chase Bank in Singapore.

"We are at such a point of absent liquidity that prices are beginning to fail in their usefulness as a signal - this in itself is disturbing," Piron said.

"Government Seizes WaMu and Sells Some Assets"

Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation's largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution.

Washington Mutual, with $307 billion in assets, is by far the biggest bank failure in history, eclipsing the 1984 failure of Continental Illinois National Bank and Trust in Chicago, an event that presaged the savings and loan crisis. IndyMac, which was seized by regulators in July, was one-tenth the size of WaMu.

($1.9 billion for $307 billion of assets! That's a pretty good deal.)

"Straws In The Wind"

Putting the jigsaw pieces together, you get a remarkably ugly picture:

* Old guy with 1-3 years to live
* Charismatic Evita Peron figure fronting for Karl Rove and the old gang, ready to step into his boots
* Battle-hardened infantry units (recruited from politically conservative areas, natch) being moved into position in the homeland
* Opposition members being harassed, bugged, arrested, beaten - before the junta steps in
* A gathering fiscal crisis which will leave a lot of very angry people looking for scapegoats to blame

("Junta" is strong; if this happens, which it won't, it'll just be another Republican victory, hardly a civil war at all)

"NKorea threatens to restart reactor, blaming US"

SEOUL, South Korea -- North Korea escalated its renewed confrontation with the U.S. on Friday, saying it is moving to restore a nuclear reactor and warning it "will go its own way" because Washington refuses to remove it from the U.S. terror blacklist.

The announcement was the communist regime's first confirmation it has started undoing the dismantlement of its nuclear program begun last November under an atomic disarmament deal that promised energy aid to the impoverished nation.

Things are lookin' good! Ayup.