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Reporting from Paris: Europe Very Apprehensive About The Economic Turmoil

SOME THOUGHTS FROM PARIS

Just before I boarded the flight to Paris on Thursday night, I sat at a bar at JFK airport with a group of shell shocked travelers watching CNN's report on yesterday's market drop: another 679 points. I boarded the flight in front of a man who seemed to be articulating an "off with their heads" attitude towards our banker breatheren. Here in Paris, the International Herald Tribune today features a column by Floyd Norris of the Times that concludes, "the global crisis erupted because many wouldn't admit that the system was broken."

The one economist who has been calling all of this correctly is Nouriel Roubini.

Today: "Nouriel Roubini argues that it is now clear that the U.S. financial system - and now even the corporate sector's system of financing- is now in cardiac arrest and at a risk of a systemic financial meltdown."

MORE:

Nouriel Roubini: The world is at severe risk of a global systemic financial meltdown and a severe global depression

The U.S. and advanced economies' financial systems are now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof. There is now the beginning of a generalized run on the banking system of these economies; a collapse of the shadow banking system, i.e. those non-banks (broker dealers, non-bank mortgage lenders, SIV and conduits, hedge funds, money market funds, private equity firms) that, like banks, borrow short and liquid, are highly leveraged and lend and invest long and illiquid, and are thus at risk of a run on their short-term liabilities; and now a roll-off of the short term liabilities of the corporate sectors that may lead to widespread bankruptcies of solvent but illiquid financial and non-financial firms.

On the real economic side, all the advanced economies representing 55% of global GDP (U.S., Eurozone, UK, other smaller European countries, Canada, Japan, Australia, New Zealand, Japan) entered a recession even before the massive financial shocks that started in the late summer made the liquidity and credit crunch even more virulent and will thus cause an even more severe recession than the one that started in the spring. So we have a severe recession, a severe financial crisis and a severe banking crisis in advanced economies.

COMMENTS ON MY CALL FOR NATIONAL TEACH-INS ON THE ECONOMY

Richard Gardener from Marblehead Ma:

Thank you for drawing attention to the final killing off of the vast majority of Americans who scrape and struggle to just get by every day. I applaud you.

You hit on reality for most, having said the following:

"Look at our "real economy." Inequality has deepened over decades. Wages have not risen. Unemployment is growing. A social safety net has been largely shredded. Free market ideologues have dominated the discourse."

Yes, that describes me - I symbolize the so-called new economy as well as any; I have not been able to keep up; each passing year, my wages fall relative to my core living costs. Saving or investing, impossible. Insane ideologues - ususally rich and powerful with top government connections (this is no doubt a rich vs. poor class war) - cynically become happier as society gets meaner more unequal, more unfair.

Wanting desperately to do something about this but feeling hopeless about what, this passage resonated:

"What to do as an economic war against most Americans is unleashed? We need to fight back. We need an economic justice movement because the Democratic Party is vacillating. One way to start might be the way the movement against the Vietnam War started-with a national teach-in movement on campuses and communities to educate the change-oriented community to put this issue and some real solutions on the agenda. - Who will fund it? Who will join me? If not now, when?"

Your heart is absolutely in the right place. Truly, there is not much difference anymore between the two major parties; each carry the water for corporate American. Also, the realities of life will dictate (unless there's mass starvation) the necessity of funding from enlightened benevolent sources to building a social movement for economic justice that could tilt the scales enough to change our corrupt economic and trade policies that have empowered wealthy corporations at the expense of individuals.

I would like to help in any way I could. There are so many small progressive democratic organizations and groups that could be united to form the foundation of a movement. It would have to be very well organized - almost like a third party political campaign - because we are moving into dangerous, more authoritarian and meaner times. And even many people who might be on your side "theoretically" in practice will have had "conservatism" so ingrained as to make civil disobedience a high hurdle to clear.

Like you, I too believe we are at the edge of the abyss. And I feel many others do as well. They just need to be reached, organized and emboldened to act.

Again, I salute this article and your direct appeal. If I can get involved, please, I am interested.

David Tesar writes:

Danny,

I heard you the other day on Tom Ashbrook's On Point. Excellent show. Your article (posted on CommonDreams.org) pretty well sums up the problem we face. It is a surreal moment and our leaders are in a state of denial. There is one more national TV debate. Bob Scheiffer is one of the most respected journalists. Perhaps we could start an email campaign to pose some questions to the candidates, and this time he should not waffle and take some ambiguous answer. Keep asking the same question until he gets an answer and if he doesn't the would-be president can forfeit his next opportunity to spout half-truths and lies.

Mike Gross writes:

First let me say, thank you for the great article. I see only two possible solutions to change the current course we are on: legislation or revolution. I would put my money…if I had any…on the latter.

John Luebben writes:

Count me in - where and when do we start the campaign against corporate socialism?

Michael Blomquist writes from California:

Posted the following on your forum and below is confirmation of a complaint I filed with the FTC. I also sent emails to rep and HUD.

What a joke! Unfair business practices; what about advertising a non-existent program? I guess ML-implode is responsible for Congress ditching the DPA.

Hopefully Dick Fuld doesn't come after you ; )

Time to rally the troops, especially those in Maryland.

Fraud, deception and entitlements created this crisis and more of the same should NOT be tolerated.

As of October 1, 2008 the FHA did away with the seller assisted programs because the program was a huge failure. Unless borrowers had skin in the game they walked; in addition if you can't save 3% for a downpayment how will you be able to handle any unforeseen expenses.

Why are GLOBAL DIRECT SALES, LLC, PENOBSCOT, INDIAN NATION, CHRISTOPHER RUSSELL and RYAN HILL still advertising such a program on October 9, 2008?

http://www.pinfha.org/Programs.html

Ironically the third cause of action complains of unfair business practices, but continuing to advertise seller assisted down payments are unfair business practices. Potential borrowers will be captured and directed to the Plaintiff's business affiliates. Can you say bait and switch?

Call, fax, email representative Donna Edwards (Maryland Rep)
http://donnaedwards.house.gov/contact.shtml
and demand she restrains the Plaintiff for false and deceptive advertising.

Congresswoman Donna Edwards
(301) 773-4094
9200 Basil Court
Suite 221
Largo, MD 20774

Washington, DC (202) 225-8699
Fax: (202) 225-8714
Email: 4mddistrict@mail.house.gov

You should also contact the following an make sure to include the link
http://www.pinfha.org/Programs.html

1)HUD
http://www.hud.gov/offices/hsg…..rcectr.cfm
(800) 225-5342
hud@custhelp.com

2)FTC
http://www.ftc.gov/ftc/contact.shtm
Report Violations
* Online: Use our secure complaint form.
* Phone: Call our toll-free Do Not Call helpline: 1-888-382-1222; TTY: 1-866-290-4236

We have received your complaint.

Thank you for contacting the FTC. Your complaint has been entered into Consumer Sentinel, a secure online database available to thousands of civil and criminal law enforcement agencies worldwide.

Bill Bowles writes from the UK

British taxpayers could lose up to £5bn in Iceland alone - nobody really knows.

British savers in bankrupt Icelandic institutions will lose virtually nothing because of government guarantees. But those guarantees are going to cost us all dear.

The murky area is offshore banking with Icelandic institutions, and there it's impossible to know what's going to happen. But a lot of people are likely to lose their shirts.

The Iceland farrago has always to run yet. This is a completely madcap situation in which vast amounts of British real estate and banking were gobbled up by operatives in Iceland, who amassed holdings and obligations that represented 10, 15, maybe 25 times the entire Icelandic economy.

The implications for Britain's high streets are not good - Icelandic banks or companies are significant shareholders or funders of companies from House of Fraser to Hamleys and the frozen food store Iceland.

How was it that this diminutive economy was allowed to set up and operate so much stuff in Britain with apparently little or no check?

And, of course, I haven't even mentioned the local authorities, who seem collectively to have lost around £400m - that is nurseries, libraries, jobs of all sorts, spring flowering for next year's parks and gardens. The cost is unknowable at this stage.

But their exposure has revealed the extent to which local authorities and other public bodies like the police, and Transport for London, had huge holdings in the Icesave account.

Watch yesterday's report on Icelandic banks: http://tinyurl.com/4wjutj

Channel 4 News's report on risky Icelandic funds: http://tinyurl.com/4n2v5o

Barbara Hensley writes:

I wake up every morning and the first thing I do is turn on the computer and read Common Dreams. Thank you for the splendid article.

The people in this country have to realize that they are the solution to solving the problems of this country. They have to get involved. It will take some energy and sacrifice.

Yes, they are already sacrificing. However, if the energy for this project is not directed in a positive manner, I fear that all maybe lost. On the other hand, history shows that sometimes the best of social movements have been born out of the shedding of blood of some of the believers.

Keep me informed if there is any way I can help.quote

Richard Cook Sends His Recent Article on the Meltdown.

Some of you ask where you can my book PLUNDER. You can get it here at Amazon or at other online bookstores.

I am seriously jet lagged and can't do any more right now. Have a great weekend. Thanks to a web tv group Atlantis/La TeleLibreFr for doing an interview with me in Paris. I hope I was coherent.

Thanks to Frank and Mish for Hospitality. I am here on my way to a media forum in Gabon at the invite of the editor of Africa International.

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