Systemic Banking Crisis In The US?

(via CalculatedRisk): All claws, teeth, and fur (head out to the last paragraph of the PDF)
What will be the consequence of losses of over $1 trillion and, possibly, as high as $2 trillion? That would wipe out most of the capital of most of the US banking system and lead most of US banks and mortgage lenders – that are massively exposed to real estate – to go belly up. You would then have a systemic banking crisis of proportions that would be several orders of magnitude larger than the S&L crisis, a crisis that ended up with a fiscal bailout cost of over $120 billion dollars. And the worrisome part of this scenario is that – with home prices likely to fall by 20% or more – this scenario of systemic banking crisis is becoming increasingly likely.
What impact would that have on Udayan's long bull run?

Drug Companies Rigging The Markets?

From The Hindu:
...the real story goes way beyond the question of Prozac. This new study — published, paradoxically, in an open-access journal — tells a fascinating story of buried data and of our collective failure, as a society, over half a century, to adequately regulate the colossal global $550b pharmaceutical industry.

The key issue is simple. In any situation, to make any kind of sensible decision about which treatment is best, a doctor must be able to take into account all of the available information. But drug companies have repeatedly been shown to bury unflattering data.

Sometimes they bury data that shows drugs to be actively harmful. This happened in the case of Vioxx and heart attacks, and SSRIs and suicidal thoughts. Such stories feel, intuitively, like cover-ups. But there are also more subtle issues at stake in the burying of results showing minimal efficacy, and these have only been revealed through the investigative work of medical academics.

One example came just last month (January). As I reported at the time, a paper in the New England Journal of Medicine dug out a list of all trials on SSRIs that had ever been registered with the U.S. Food and Drug Administration, and then went to look for those same trials in the academic literature. There were 37 studies which were assessed by the FDA as positive and, with a single exception, every one of those positive trials was written up, proudly, and published in full. But there were also 33 studies which had negative or iffy results and, of those, 22 were simply not published at all — they were buried — while 11 were written up and published in a way that portrayed them as having a positive outcome.
But I thought the markets were sifting the wheat from the chaff, rewarding the good companies and punishing the bad. But what do I know.


Pesky Questions

From The Hindu:

The Americans hate to admit that they were wrong - nobody does, for that matter. But few have taken so many undemocratic and illegal actions in world policy as they have. In the United States, those guilty of such actions may face life imprisonment, if not a lethal injection, electrocution or gas chamber (how can democracy be preached by a country where 35 states allow capital punishment by such revolting methods?). Erosion of international law started with Serbia - the bombing of Belgrade in 1999. Iraq followed.

Robbery and murder
In terms of criminal law, these global actions qualify as robbery and murder. In Arkansas and Texas, these crimes are punishable by death penalty. These are home states of the last two Presidents that started wars in Yugoslavia and Iraq in violation of international law. But at home, U.S. Presidents do not behave like this - they are decent gentlemen playing the sax and riding a bike. But once they go outside, everyone had better scatter.
The last two Presidents liked to talk about the U.S. mission before the start of a war: "The United States is called upon to guarantee...." Depending on the situation, they would continue with such phrases as "Kosovo's freedom," "peace and prosperity," or "democracy all over the world." None of them has specified who imbued the United States with this mission and what rights they had for that.
But these are details that ordinary Americans should not go into until someone in their family is killed in action. For the time being, Americans are not dying in Kosovo like they do in Iraq; and for this reason they don't ask who has urged America to help the Kosovars and whether the Kosovars had the right to do so.
Have the Kosovars appealed to the Americans? What if the Basques, Catalans, or Corsicans appeal to them? Quebec has a hard life as part of Canada, and is closer to the United States. Does the United States want to help the Turkish Kurds? Probably not, separatism is a bad word in Turkey.


Making Up For The Missing Posts

Was unable to post for some days due to various reasons. I'm back and hope to be more regular - 'hope' is the the keyword. Anyway, wanted to highlight some stories that I did not post about but wanted to.

This killing comment from The Hindu's editor about the Kosovo seccession and Bush's comment on it was priceless:
Kosovo’s unilateral declaration of independence has thrown the fragile Balkan peace into question again and caused much disquiet elsewhere in the world. The reactions of other states will be crucial. U.S. President George W Bush, with his characteristic grasp of international affairs, initially said: “The Kosovoans are now independent”;
Then there was the Rice testimony on the nuclear deal to the US Congress which justifies one of the criticisms put forward by the Left against the deal:
Washington: The Bush administration has said an agreement between India and the Nuclear Suppliers Group which will allow New Delhi to engage in nuclear trade will be supported by the U.S. only if it is “consistent” with the Hyde Act.
“We will support nothing with India in the NSG that is in contradiction to the Hyde Act. It will have to be completely consistent with the obligations of the Hyde Act,” Secretary of State Condoleezza Rice told the House Foreign Affairs Panel.
Ms. Rice said if the Bush administration did not adhere to the Hyde Act — which, according to opposition parties in India, takes away the country’s nuclear sovereignty — U.S. lawmakers will eventually refuse to pass the India-U.S. civilian nuclear deal if and when it comes up in the Congress.
“We’ll have to be consistent with the Hyde Act or I don’t believe we can count on the Congress to make the next step,” Ms. Rice said in response to a query from the Chairman of the panel, Howard Berman.
Another thing, that was actually good to see, was the Congress giving back to the BJP on the issue of terrorism, over two days. Here and here. That's right - say it loudly and clearly and very publicly. After all, the last thing we need is another right-wing party coming to power on the basis of being 'strong' on terror.

Another story which I saw on cnet.com reinforces that the Internet has made so many things possible. And a lot of them are a force for the good. Like exposing Swiss Banks that apparently help launder money among other shady activities:

A federal judge in California has pulled the plug on Wikileaks.org, a Web site that specializes in posting leaked documents often provided by whistleblowers.
U.S. District Judge Jeffrey White on Friday ordered that the domain name be disabled at the behest of a group of Swiss bankers who filed a lawsuit alleging that confidential information appeared on Wikileaks.org.
... Wikileaks' summary of the leaked documents centers on Rudolf Elmer, the former chief operating officer of Bank Julius Baer in the Cayman Islands. The summary alleges the bank supports "ultra-rich's (sic) offshore tax avoidance, tax evasion, asset hiding and money laundering." The bank has refused to comment.

Privatise Profits, Socialise Losses

From Calculated Risk:
Over the last two decades, few industries have lobbied more ferociously or effectively than banks to get the government out of its business and to obtain freer rein for “financial innovation.”

But as losses from bad mortgages and mortgage-backed securities climb past $200 billion, talk among banking executives for an epic government rescue plan is suddenly coming into fashion.

A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.
The line from the title is borrowed from countless commenters on the above blog and many other blogs. Says it well.
Another instance of the same, here.


American Primaries : Democracy In Action Or...

Ramesh Thakur in The Hindu:
... let us pay homage to America and the American dream more generally. Later this year, the Democratic Party will have either a black or a woman as its presidential standard bearer. The party’s field of candidates is already America at its most glorious best: Barack Obama, son of a white Christian woman from Kansas and a black Muslim father from Kenya who grew up in Hawaii and Indonesia, victorious in 96 per cent white Iowa; Hillary Clinton, a woman; and Bill Richardson, a Hispanic-American, among others.

America matters, what America does and does not do matters, and so the choice of who leads America matters to the rest of us. ... it is impossible for outsiders not to celebrate when America presents its most attractive face to the world which no other country, still, can match.

After that rhapsody he has gone on to endorse Mr Obama:
“A president like my father,” Caroline Kennedy wrote that in Mr. Obama she saw an echo of the force of inspiration that people told her they had felt with her father but she herself had never experienced. She was supporting Mr. Obama for a mix of “patriotic, political and personal” reasons that are intertwined. Touchingly, it was her children who first made her realise that Mr. Obama “is the president we need”.
Mr. Obama’s victory speech was another rousing oration that dipped deep into the wellsprings of hope, optimism and unity. There were also flashes of hard-edged anger, condemning those who will say and do anything to win, denouncing those who are so partisan that they will demonise any crediting of ideas to a Republican, and rejecting all attempts to file candidates and voters into ethnic and gender boxes.
But he has completely skipped over Mr Edwards - "the most progressive candidate on issues and the most electable on paper" - ignored him, made him invisible - as the American media has. And there in lies the real story of the American system - media and big-money dictates who gets a chance and who doesn't.

Paul Krugman on Edwards contribution to the race:
So John Edwards has dropped out of the race for the presidency. By normal political standards, his campaign fell short.

But Mr. Edwards, far more than is usual in modern politics, ran a campaign based on ideas. And even as his personal quest for the White House faltered, his ideas triumphed: both candidates left standing are, to a large extent, running on the platform Mr. Edwards built.

If 2008 is different, it will be largely thanks to Mr. Edwards. He made a habit of introducing bold policy proposals — and they were met with such enthusiasm among Democrats that his rivals were more or less forced to follow suit.

Unfortunately for Mr. Edwards, the willingness of his rivals to emulate his policy proposals made it hard for him to differentiate himself as a candidate; meanwhile, those rivals had far larger financial resources and received vastly more media attention. Even The Times’s own public editor chided the paper for giving Mr. Edwards so little coverage.

Eric Alterman on how the media marginalised Edwards :
The Edwards campaign was a surreal experience that should inspire a doctoral dissertation or two. He was both the most progressive candidate on issues and the most electable on paper, and yet he did not get the support of most progressives or most professionals. This despite the fact that he actually ran a terrific campaign and, more than Obama and Hillary, defined it in a positive direction. That he forced the other candidates to respond did not end up mattering as much as the media’s fascination with all things Clintonian, Obamian, and the egregiously awful coverage of Edwards. The Washington Post deserves special mention for its idiotic 1,300-word piece on his haircut and an even longer one on his house. Richard Cohen and Michael Dobbs both called him a liar and presented no evidence. The editorial board attacked him constantly. The New York Times also went in for the “How can you care about poor people when you’re so rich?” line of questioning, which implies that poor people are unentitled to representation in the American political system, since it allows for only wealthy people to run. And Maureen Dowd was her usual awful, substanceless self, helping to set the tone for the rest, to the shame of all of us.
More from :
The 28% of the American adult population with college degrees defines the country's values, its policies, its laws, what is stylish and how you get to the top, including the White House. And what it has defined has exacted no small price from the remaining 72%. For example, just in the past eight years, the following have gotten significantly worse:

Median income
Number of manufacturing jobs
Number of new private jobs
Percent of workers with company based health insurance
Consumer credit debt
Number of housing foreclosures
Cost of heating oil & gas
Number without health insurance
Wages in manufacturing
Income gap between rich and poor
Wealth of the bottom 40% of Americans
Number of older families with pensions
Number of workers covered by defined benefit pensions
Use of soup kitchens
Personal bankruptcies
Median rent

Yet when John Edwards tried to build a campaign around these issues he was subjected not only to the opposition of the establishment and its media but a notable tone of ridicule whose subtext was: why would anyone want to bother with such things? Especially a guy as rich as Edwards?

And when he pulled out of the race, Edwards was treated to more of the same, especially from such faux hip websites as Gawker, Radar and Fark:

Radar: The pretty-boy presidential candidate scored just 14 percent of the vote in yesterday's Florida primaries. . .

Fark: John Edwards announces he will drop out of race today to spend more time with his hair.

Gawker: John Edwards will end his 49th run for president Wednesday after failing to capitalize on his angry hobo-under-the-bridge message.

These sites, like much of elite America, are led by spoiled offspring of generations who had to struggle with just the sort of issues Edwards was trying to raise, but from which they now consider themselves immune by their education, status and cleverness.

Edwards' problem was that he made the smug set of American liberalism extremely uncomfortable. He showed them what they should really be thinking about and what they might do about it. And they didn't like it. Far better to relax in the self-righteousness of choosing between a Harvard Law School black and a Yale Law School woman.

And so, once again, the Democratic Party drifts further away from what once made it worth bragging about.
One of the comments to the above post:
Both Obama and Clinton have elite megabucks backing them. The Kerry and Kennedy endorsement of Obama represent billions in famlity net worth, in addition to the billions - for example, from the heiress to the Hyatt Hotel fortune, Karen Pritzker - already backing him. There is, to my thinking, no "democracy" in this "Democratic" party two-fold choice.
So that is what is happening in the American primary contest.


Spreading Democracy

Via Digby:
An Iraqi MP preferred to remain anonymous told the newspaper that highly confidential negotiations took place by representatives from American oil companies, offering $5 million to each MP who votes in favor of the Oil and Gas law.

The amount that could be paid to pass the votes do not exceed $150 million dollars in the case of $5 million to each MP, pointing out that the Oil law requires 138 votes to pass, which the Americans want to guarantee in many ways, including vote-buying, intimidation and threats!