Topic: WE'RE STUFFED!!!

[Michael]

We are into the thick of it now. No one knows where this will end. They are saying by every country fully guaranteeing their bank's deposits, which Ireland and Greece have done as well as many others giving the nod, it will unfreeze the inter-organisational credit flow.... and all will be well.

Excuse me if I sound a little sceptical. Iceland is about to declare national bankruptcy! I've never heard of that before.

It is most likely members of this forum will be affected severely by this crisis. That means some may not be able to connect up. But worse than that, they may be plunged into serious financial problems, meaning much more than money.

We should respond. In the only way we know how to: send a ring of protection around the members of Soma, that they will at least find their Path in what follows.

I expect this forum will remain open - I have paid for another year, and anyway it is quite cheap, which is why we had so many problems (which have reduced significantly I should add).

But this is an anti-room of world-waves. This is where we apply all that we have been practising... well, at least talking about.

[erik]

Well, as for myself, our government is about to raise the pension age to 67 that is 2 years over the average lifespan for an average Estonian male. So I have only 50% chance of even reaching the age where the savings ought to sustain me. We talked about it with Tiina and it all seems to go the way we guessed long ago - no happy idle old age on the horizon. Thus it is the esoteric path of dance with the death embodied - what matters is now.

[erik]

We should respond. In the only way we know how to: send a ring of protection around the members of Soma, that they will at least find their Path in what follows.

That could be done. Chances could be enhanced a bit.

[nichi]

It is most likely members of this forum will be affected severely by this crisis. That means some may not be able to connect up. But worse than that, they may be plunged into serious financial problems, meaning much more than money.

We should respond. In the only way we know how to: send a ring of protection around the members of Soma, that they will at least find their Path in what follows.

I expect this forum will remain open - I have paid for another year, and anyway it is quite cheap, which is why we had so many problems (which have reduced significantly I should add).

But this is an anti-room of world-waves. This is where we apply all that we have been practising... well, at least talking about.

Agreed!

[Jennifer-]

We should respond. In the only way we know how to: send a ring of protection around the members of Soma, that they will at least find their Path in what follows.

[erik]

Iceland freezes all bank share trades

http://www.thisislondon.co.uk/standard-business/article-23564262-details/Iceland+freezes+all+bank+share+trades/article.do

Nick Goodway
07.10.08
Click here!

Trading in the shares of all Iceland's banks and financial institutions was suspended on the Nordic Exchange today ahead of a long-awaited bailout plan from the government.

The Icelandic krona fell 7% to a record low of 174 against the euro.

Prime Minister Geir Haarde had been looking at a variety of solutions including the potential merger of the main three banks: Kaupthing, ­Landsbanki and Glitnir, which was partially nationalised last week.

Kaupthing and Landsbanki both run internet savings accounts — Kaupthing Edge and Icesave — in the UK. Their ­competitive rates have attracted thousands of British depositors.

The Icelandic government today said it is drafting a plan to deal with the financial crisis engulfing the country as banks agreed to sell off some of their foreign assets.

Business Affairs Minister Bjorgvin Sigurdsson told state radio a draft of the plan is “well on its way”. It is expected to see further sell-offs of foreign-owned assets including Singer & Friedlander, Kaupthing's City investment bank, which has already seen potential buyers circling. Last week Landsbanki sold stockbroker Teather & Greenwood and corporate finance boutique Bridgewell.

The Icelandic banks are big lenders to British entrepreneurs ranging from Robert Tchenguiz to celebrity chef ­Gordon Ramsay.

Kaupthing is also one of the prime movers behind Baugur, the Icelandic retail investor that owns Hamleys, Karen Millen, Debenhams and Oasis in the UK High Street.

Baugur chief executive Gunnar Sigurdsson admitted that any enforced merger of Icelandic banks may affect the firm's loans but denied any exposure to the wider problems in the country's economy.

He said: “We are worried for our family and friends in Iceland, but not for Baugur. While it is true we borrow from the Icelandic banks, our UK operations are performing strongly.”

Haarde held talks all yesterday with bankers and pension-fund officials. One solution being discussed was that the ­country's pension funds, which have assets of ¤12 billion (£9.3 billion), could be called upon to bail out the banks.

Iceland has a population of 300,000 and its economy is worth around $20 billion (£11.4 billion) a year, while the three main banks hold assets worth more than 10 times that.

But the economy has been thrown into turmoil with the krona ­plummeting, imports dropping and inflation soaring.

[erik]

Iceland nationalises another bank

http://news.smh.com.au/business/iceland-nationalises-another-bank-20081008-4w1p.html

October 8, 2008 - 7:04AM


Iceland has nationalised the second of its three largest banks, locked its currency into a fixed exchange system and sought a large loan from Russia to fend off potential national bankruptcy.

"The Icelandic Financial Supervisory Authority (IFSA) has, under powers granted by the Icelandic parliament, proceeded to take control of Landsbanki," Iceland's second-biggest bank, the government agency said in a statement.

The announcement came a day after Prime Minister Geir Haarde unveiled emergency laws to save the country's economy, including allowing the government to take control of all banks and financial institutions, take over assets, merge institutions and force institutions to declare bankruptcy.

"There is a very real danger ... that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could be national bankruptcy," Haarde said in a televised address.

The nationalisation of Landsbanki came just a week after the government took 75 per cent of the country's third-largest bank, Glitnir, and as the biggest bank Kaupthing said it had received a 500 million euros ($A951.75 million) loan from the central bank "to facilitate operations."

Iceland, long dependent on its fishing industry, is a nation of just 313,000 people whose banks have invested aggressively abroad in recent years, enabling it to experience ballooning prosperity and become one of the world's wealthiest nations.

Soaring growth in Iceland's finance sector, whose assets represent eight times the country's gross domestic product, however made the icy island particularly vulnerable to the current global financial turmoil.

Banks and investment funds are interlinked through cross share dealings so any damage to one side has an automatic knock-on effect on other institutions.

As the country boomed, the economy has overheated, with inflation soaring to 14.5 percent and the central bank increasing its main interest rate sharply to 15.5 percent as a result.

The IFSA on Tuesday stressed that its takeover of Landsbanki was "a necessary first step in achieving the objectives of the Icelandic government and parliament to ensure the continued orderly operation of domestic banking and the safety of domestic deposits.

"Landsbanki's domestic branches, call centres, cash machines and Internet operations will be open for business as usual," it said.

The bank meanwhile insisted it had "not been put into liquidation but is in receivership which gives it a temporary protection from payment of debts and obligations as they fall due.

"The objective ... is to ensure the continued operations of the commercial banking operations of Landsbanki ... in Iceland," the bank said, adding that "a public notice to debtors will not be issued."

The central bank also said Tuesday it was negotiating a loan from Russia of 4 billion euros ($A7.61 billion).

"This loan significantly bolsters the foreign exchange reserves of the central bank of Iceland and thus underpins the stability of the exchange rate of the krona," it said.

The central bank also pegged the plunging krona Tuesday to a basket of currencies, weighted to reflect their importance in the country's trading profile, in an attempt to stabilise the unit and peg back inflation.

"The exchange rate of the krona has depreciated sharply in recent weeks and is now lower than is compatible with a balanced economy," the bank said in a statement, adding that the one euro would now buy 131 krona.

Since the beginning of the year, Iceland's currency has plunged 33 per cent, losing 12.3 per cent since Monday alone.

In yet another move to stabilise the markets, the IFSA said Tuesday it would with immediate effect ban short selling of shares on the Reykjavik stock exchange.

Short selling occurs when investors sell stock they do not yet own in order to profit later from an anticipated fall in prices, something critics say can be used to manipulate share prices.

Trading in nearly all financial shares, including all the major banks, meanwhile remained suspended on the Reykjavik stock exchange Tuesday after a full day of non-trading Monday.

Haarde tried to prepare Icelanders for the worst in his speech Monday, saying the authorities' task in coming days was to "make sure that chaos does not ensue if the Icelandic banks become to some extent non-operational."

He also tried to put the crisis into perspective.

"We need to explain to our children that the world is not on the edge of a precipice and we all need to find an inner courage to look to the future."

[Jahn]

We are into the thick of it now. No one knows where this will end. They are saying by every country fully guaranteeing their bank's deposits, which Ireland and Greece have done as well as many others giving the nod, it will unfreeze the inter-organisational credit flow.... and all will be well.

Excuse me if I sound a little sceptical. Iceland is about to declare national bankruptcy! I've never heard of that before.

The Swedish Riksbank will support one of the Iceland banks that are located in Sweden.

As Juhani found out:
"Soaring growth in Iceland's finance sector, whose assets represent eight times the country's gross domestic product, however made the icy island particularly vulnerable to the current global financial turmoil.

Banks and investment funds are interlinked through cross share dealings so any damage to one side has an automatic knock-on effect on other institutions.

As the country boomed, the economy has overheated, with inflation soaring to 14.5 percent and the central bank increasing its main interest rate sharply to 15.5 percent as a result."

An increased unemployment are ahead here now, Volvo gave notice today to about another 3 000 employees which will make a total of 6 000 this year that has to go.

It is most likely members of this forum will be affected severely by this crisis. That means some may not be able to connect up. But worse than that, they may be plunged into serious financial problems, meaning much more than money.

We should respond. In the only way we know how to: send a ring of protection around the members of Soma, that they will at least find their Path in what follows.

I expect this forum will remain open - I have paid for another year, and anyway it is quite cheap, which is why we had so many problems (which have reduced significantly I should add).

But this is an anti-room of world-waves. This is where we apply all that we have been practising... well, at least talking about.

Yes, let us try to create a protective aura around our small group.

[tangerine dream]

Yes, let us try to create a protective aura around our small group.

[Jahn]

Well, as for myself, our government is about to raise the pension age to 67 that is 2 years over the average lifespan for an average Estonian male. So I have only 50% chance of even reaching the age where the savings ought to sustain me. We talked about it with Tiina and it all seems to go the way we guessed long ago - no happy idle old age on the horizon. Thus it is the esoteric path of dance with the death embodied - what matters is now.

I suppose that you belong to "upper class" - professor and all - so the average life span in your country is perhaps a poor predictor for you in that sense. Professors here quite often want to remain in the academic system so they can extend their regular work from 65 to 67 without any special arrangement but after that they inevitable become Emeritus professors and only guaranteed 20 or 30 percent of their normal salary from the University. However it is possible to obtain own funding and thereby significant increase the salary, along with the pension.

The average life span is now about 79 for males and 80 for women in Sweden.

[Jahn]

Marc Faber says US bailout won't stop recession, buy gold!
Posted: 30-09-2008

"INTERNATIONAL. Any proposal to rescue the US financial system will fail to avert a recession said Marc Faber, the Swiss fund manager and Gloom Boom & Doom editor and publisher, now based in Thailand.

A stock rally in the event that a package is approved will be temporary and should be used as 'an opportunity' to sell, said Faber.

"The rejection of the package is good because it shows that some people in the US are still sane," Faber said in a phone interview with Bloomberg. "A bailout will not buy the US a way out. The government is less powerful than markets in fixing this mess."

"Most of the investment community are focusing on the financial crisis," Faber told TV newswire last night.

"But what they should be focusing on is that earnings will continue to disappoint for a long time, and that global growth is going to go down substantially. Most economies already today are in recession."

Noting that the US Dollar should continue to find support as investors rush to try and re-pay their debts "I think gold will be a relatively good investment under any kind of scenario until the US government bans the ownership of Gold in the United States.

"They are very good at changing the rules of the game – now banning short sales [of financial and other US equities].

"So yes – physical gold, you should own. Not derivatives with Citigroup, J.P.Morgan, UBS and investment banks, but physical and outside the US."

Any rebound in equities triggered by an eventual rescue package for the US financial system will not lead to 'new highs' for stock markets.

"We live in very uncertain times and nobody knows the extent of the damage from the slowdown of credit growth," he said. "It will be good to diversify."

The economy probably shrank in the third quarter. A further contraction is likely in the next two quarters, some economists predicted, making the recession the longest since 1981-82. "

[Taimyr]

Economy is sucha weird thing, I don't understand much about it. It all seems so artificial. According to my understanding life could be very simple... 

[Jahn]

Faber Says Rate Cuts Will Fail to Stem Equities Rout (Update2)

By Ian C. Sayson

Oct. 8 (Bloomberg) -- Investor Marc Faber said a series of coordinated interest-rate cuts by central banks including the Federal Reserve to ease the economic effects of the global financial crisis won't halt a worldwide slide in equities.

``Artificially low interest rates'' that encouraged consumers and banks to take on more debt were the main cause of the credit-market turmoil that caused the failure of Bear Stearns Cos. and Lehman Brothers Holdings Inc."., according to Faber, who predicted the 1987 stock-market crash

"The slashing of interest rates will not help very much,'' Faber, who manages $300 million, said in an interview in Manila. "They may cushion somewhat the decline but make matters worse.''

The Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each cut their benchmark rates by half a percentage point in a bid to unfreeze global credit markets. The deepening credit crisis caused a worldwide sell-off in stocks that has dragged the MSCI World Index down by 35 percent this year.

The Bank of Japan, which didn't participate in the move, said it supported the action. Switzerland also took part. Separately, China's central bank lowered its key one-year lending rate by 0.27 percentage point.

Today's decision follows a global meltdown that sent U.S. stock indexes heading for their biggest annual decline since 1937. Japan's benchmark today had the worst drop in two decades. Policy makers are aiming to unfreeze credit markets after the premium on the three-month London interbank offered rate over the Fed's main rate doubled in two weeks to a record.

Speculative Investments

Policy makers are reducing rates as economies weaken around the world. The International Monetary Fund said the global economy is heading for a recession in 2009 and increased its estimate of losses from the financial crisis to $1.4 trillion.

The Fed cut its key rate to 1.5 percent, a level last seen in September 2004. Low interest rates on deposits have pushed consumers to speculate on higher yields in other assets including stocks, real estate and commodities, Faber said.

"``Had central banks around the world kept interest rates that encourage saving we won't have these problems today,'' the investor [Faber]said.

Faber, publisher of the Gloom, Boom & Doom report, told investors to sell U.S. stocks a week before 1987's so-called Black Monday crash, according to his Web site, and recommended buying gold at the start of its six-year rally.
To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net

Last Updated: October 8, 2008 10:02 EDT

[erik]

I suppose that you belong to "upper class" - professor and all - so the average life span in your country is perhaps a poor predictor for you in that sense. Professors here quite often want to remain in the academic system so they can extend their regular work from 65 to 67 without any special arrangement but after that they inevitable become Emeritus professors and only guaranteed 20 or 30 percent of their normal salary from the University. However it is possible to obtain own funding and thereby significant increase the salary, along with the pension.

The average life span is now about 79 for males and 80 for women in Sweden.

That is a bit of optimistic assessment. Life in academe in Estonia differs considerably from that of our Nordic neighbours. It tends to be pretty hard and cut-throat here. One has to run faster and faster to stay at one place.

[tangerine dream]

It all seems so artificial. According to my understanding life could be very simple... 

I agree.