From The Sunday Times
May 11, 2008
Hillary Clinton’s suicidal gamble with race poison
Andrew Sullivan

From the very beginning, the premise and the promise of Barack Obama’s campaign was that it would transcend race. And last autumn the Obama team also knew this was the only way it could win.

The Clinton brand among black voters was so strong, so unbreakable, so resilient a force that even the first credible black candidate for the presidency remained stuck 20-30% behind Hillary Clinton among African-American voters. She was, after all, the wife of the “first black president”, as the author Toni Morrison called Bill.

She had almost all the black political establishment behind her. Her husband, from his days in Arkansas during the civil rights movement, had forged a deep, durable bond with black America. And Obama’s only hope as a young insurgent was in winning a surprise victory in Iowa or New Hampshire, where black votes were close to nonexistent.

A biracial man reared by one white mother and two white grandparents knew that his ability to touch and inspire white voters was his greatest strength. Especially among younger voters, it was critical. And this appeal wasn’t geared only to white audiences. I will not forget a rally over a year ago, filled with predominantly black donors and activists, when Obama recounted how a supporter greeted him at the anniversary of Martin Luther King’s march on Selma.

“That was a great celebration of African-American history,” the supporter said, to which Obama immediately responded: “No, no, no, no, no. That was not a great celebration of African-American history. That was a celebration of American history.” The postracial appeal wasn’t just about necessity. It was also Obama’s core conviction about his own political message.

And after the primaries in Iowa and New Hampshire, where Obama scored extensive white support, the Clintons realised this as well. Flummoxed by this young, charismatic pretender to their dynastic throne, they made a fateful decision: not to compete aggressively for black votes, but to push Obama into the “black candidate” box and leverage white ethnic and Hispanic support instead. And as the Clintons’ losses mounted, the hints became harder and harder to miss.

Before Super Tuesday, Clinton campaign operatives aired rumours that Obama had been a drug dealer – hint, hint – in his younger days. When Obama scored a landslide in South Carolina, Bill Clinton reminded the media that Jesse Jackson had won the state as well. He called Obama a “kid”, perilously close to calling him a “boy”, prompting the former Clinton operative Donna Brazile to say: “I tell you, as an African-American, I find his words and his tone to be very depressing.” The black civil rights icon John Lewis switched from Clinton to Obama. When Clinton told white rural voters that Obama didn’t care about “people like you”, it stung.

In the last months, the Clintons pushed the story about Jeremiah Wright (Obama’s fiery pastor) hard, but the media did all the heavy lifting. The Clintons shrewdly focused their efforts on older, white Democrats in Ohio, Pennsylvania and Indiana (the kind who had once voted for Ronald Reagan) and refused to shoot down categorically rumours that Obama was a closet Muslim, and stopped even addressing predominantly black audiences in North Carolina.

Last Thursday, Senator Clinton – dazed from a brutal setback in last Tuesday’s primaries – went even further. She told USA Today to consult an Associated Press story “that found how Senator Obama’s support among working, hard-working Americans, white Americans, is weakening again, and how whites in both states who had not completed college were supporting me”.

Yes: a candidate was explicitly arguing that she was the candidate of white Americans. No Republican would be so crude, certainly not John McCain. And that became her primary rationale for carrying on. After North Carolina, the short-term electoral costs have evaporated: West Virginia has a black population of just 3.3%, Kentucky has 7.5%, Oregon has 1.9%, Montana and South Dakota both have less than 1%. There are no black superdelegates willing to switch from Obama to Clinton at this point.

And so a strategy that was essentially telling superdelegates that a black man could not win the general election became Hillary’s last resort. In this, the Clintons were egged on by the less principled members of the Republican right.

Boris Johnson CON 1,168,738
Ken Livingstone LAB 1,028,966

Seriously! What were they thinking? Ken Livingstone was a bit arrogant at times, but he was a damn good Mayor these last 8 years and played a key role in helping London to become one of the "greatest cities of the 21st Century." He willed be missed.

Peter Brookes cartoon via The Times.

Banks must come clean, says EU commissioner
David Gow in Brussels guardian.co.uk
Wednesday April 16 2008

The only way to restore confidence in global financial markets is for banks to come completely clean about their exposures, Charlie McCreevy, EU internal market commissioner, said today.

McCreevy told guardian.co.uk: "There's no commercial paper market in Europe and it appears that last week's rate cut by the Bank of England made no difference at all because there's no confidence at all."

"What we need is a situation where every financial institution puts all its cards on the table so everybody can see clearly what they have and how they have valued things - and over a period of time that's the only way to put confidence back into the world."

The Irish commissioner also highlighted the time it would take for banks to regain consumer and regulatory confidence. "This excessiveness built up over a long, long number of years and didn't happen just in the last six months. It would be lovely to think that would be finished in a couple of months but it will only wash itself out over a period of time."

As for the tax rebate mentioned in the article, well I recently got a letter from the IRS indicating that I'll find out in May if I'm entitled to the payment. I'm assuming every taxpayer from last year got this same letter. What a complete waste!

Recession unlikely if US economy gets through next two crucial months

From The Times

April 7, 2008

Anatole Kaletsky: Economic view


After last Friday's announcement of the third consecutive drop in US employment figures, following hot on the heels of Ben Bernanke's admission that the American economy is already in recession - or more precisely that “a recession is possible ... there's a chance that for the first half as a whole, there might be a slight contraction” - I am probably the only economist left in the world who still believes that a US recession is likely to be avoided.

Obviously, I drew some encouragement for this view from the surprisingly decent ISM index, which triggered the huge rally in global stock markets on Tuesday (with some help from UBS and Lehman and the news of further regulatory moves to ease the credit crunch).

But the monthly employment figures are widely regarded as the real litmus test for the recession/soft landing debate.

So does Friday's 80,000 employment decline mean that the US is in recession? And does it matter anyway whether the technical definition of a recession is or is not satisfied? The answer to the first question is No and the answer to the second is Yes.

Economic Scene
Can’t Grasp Credit Crisis? Join the Club
By DAVID LEONHARDT, The New York Times, Published: March 19, 2008

Raise your hand if you don’t quite understand this whole financial crisis.

It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.

But the overwhelming majority of homeowners are doing just fine. So how is it that a mess concentrated in one part of the mortgage business — subprime loans — has frozen the credit markets, sent stock markets gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?

I’m here to urge you not to feel sheepish. This may not be entirely comforting, but your confusion is shared by many people who are in the middle of the crisis.

“We’re exposing parts of the capital markets that most of us had never heard of,” Ethan Harris, a top Lehman Brothers economist, said last week. Robert Rubin, the former Treasury secretary and current Citigroup executive, has said that he hadn’t heard of “liquidity puts,” an obscure kind of financial contract, until they started causing big problems for Citigroup.

I spent a good part of the last few days calling people on Wall Street and in the government to ask one question, “Can you try to explain this to me?” When they finished, I often had a highly sophisticated follow-up question: “Can you try again?”

I emerged thinking that all the uncertainty has created a panic that is partly unfounded. That said, the crisis isn’t close to ending, either. Ben Bernanke, the Federal Reserve chairman, won’t be able to wave a magic wand and make everything better, no matter how many more times he cuts rates. As Mr. Bernanke himself has suggested, the only thing that will end the crisis is the end of the housing bust.

Thus, for those of you in London, a good book to read is, All you need to know about the city: Who does what and why in London's financial markets by Christopher Stoakes. I wouldn’t say that it is riveting, but it is written in plain conversational English and helps to demystify the city so that even novices like myself can start to understand what the heck is going on and just how everything connects.

HBOS: Malicious traders in the City try to topple the Halifax bank
Christine Seib, From The Times, March 20, 2008

Stock market manipulators yesterday tried to bring down one of Britain’s biggest banks by spreading false rumours through the City.

The Bank of England was forced to issue an unprecedented denial that HBOS was in trouble.

The Financial Services Authority (FSA) said that it would pursue traders guilty of “market abuse” by spreading untrue claims that banks were on the brink of collapse.

The authorities believe that the fear and uncertainty in financial markets are allowing unscrupulous traders to make multimillion-pound profits by whipping up hysteria about the stability of big banks.

And having purchased a home just last September, I am concerned about getting into negative equity. However, I do take comfort in the fact that my deposit was 10% and prices for my area seem to be holding steady. Case in point, a similar house on my street went up for sale this week and the seller egged on by the estate agent is asking for approximately £60K more than I paid. Granted no two properties are the same, but I find it hard to believe that they’ll achieve that price point in this market. Of course only time will tell.

I also take comfort as had I waited to get on the property ladder, I probably would not have the same buying power, as while prices may have dipped, interest rates have gone up -- so monthly repayments would be higher. Also, banks have tightened their lending criteria and some are even asking for a 25% deposit to be eligible for the best mortgage deals. That’s just outrageous when you consider that the entry point for a two bedroom place at the lower end on the London property market is about £250K. At that price point, a buyer would have to come up with £62K for the deposit plus a further £5K-£7K to cover stamp duty, attorney fees and other cost associated with the purchase. At these levels, the barriers to entry are higher, especially for first time buyers who experts all agree are the lifeblood of the property market. Particularly as, if people can't sell on their starter homes, they can't move up the ladder which in turn means that everything grinds to a halt.

So I am going to try my best to ignore all this doom and gloom talk. Especially as even if I move on from the UK, the plan is to hold on to this property for many years to come. Plus once prices start to fall, unless you absolutely have to sell, the best strategy in these cases is to do nothing. Otherwise, selling will just crystallise any potential loss -- which would not be a good thing at ALL!

That said, I can't believe that Bear Stearns was sold to JP Morgan Chase for $240million. Even when you factor in the two failed hedge funds, the company had significant assets which apparently could be sold off for least $7.7 billion. However, I suppose timing is everything and Bear Stearns simply didn't have that on their side --not when other financial institutions refused to do business with them. So bad for Bear Stearns, but really good for Jamie Dimon and JP Morgan Chase -- especially, since the amount pledge by the Federal Bank of New York to back the Bear Stearns assets is $30 billion+.

All of this just makes you wonder, could a bailout by the US government of sub prime homeowners who kicked off this whole crisis be far behind? It seems only fair.

JPMorgan Surges After Striking Deal for Bear Stearns (Update1)

By Yalman Onaran

March 17 (Bloomberg) -- JPMorgan Chase & Co. surged in New York trading after striking a deal backed by the Federal Reserve to buy Bear Stearns Cos. for $2 a share, 90 percent less than the 85-year old firm's market value last week.

JPMorgan, the third-biggest U.S. bank by assets, rose $3.86, or 11 percent, to $40.44 at 4 p.m. in New York Stock Exchange composite trading while the Amex Securities Broker/Dealer Index fell 10 percent. The bank said yesterday it will pay about $240 million for the fifth-largest securities firm in a transaction in which the Fed will guarantee as much as $30 billion of Bear Stearns's ``less-liquid'' assets.

JPMorgan Chief Executive Officer Jamie Dimon bought Bear Stearns, once the biggest underwriter of U.S. mortgage bonds, for less than the value of its real estate after clients, alarmed by speculation about a cash shortage, withdrew $17 billion in two days. Faced with the prospect of bankruptcy, Bear Stearns CEO Alan Schwartz was forced to accept the deal less than five days after he assured investors that the company's ``liquidity cushion'' was sufficient to weather credit-market losses.

``Dimon got the best side of the deal,'' said Peter Sorrentino, a portfolio manager at Huntington Asset Advisors in Cincinnati, which oversees $15 billion including JPMorgan shares. ``He got a motivated seller and a lot of people willing to facilitate the deal for him. It's not like he had to put a lot of JPMorgan's capital at risk.''

Shareholders of Bear Stearns will get stock in JPMorgan equivalent to about $2 a share, compared with $30 at the close on March 14, the New York-based companies said in a statement late yesterday.

Fed leads Bear Stearns rescue

By Francesco Guerrera and Ben White in New York, and Krishna Guha in Washington

Financial Times, Published: March 14 2008 14:05 | Last updated: March 14 2008 23:21

The credit crisis on Friday engulfed one of Wall Street’s most important investment banks as the Federal Reserve and JPMorgan Chase combined to provide emergency finance for 85-year-old Bear Stearns and prevent further upheaval in global markets.

The decision by the monetary authorities to throw a temporary lifeline to Bear followed a night of deliberations involving regulators, led by Timothy Geithner, president of the New York Fed, and came after Bear’s shares plunged and its access to overnight funding dramatically diminished. It is likely to pave the way for a sale or liquidation of the company in the coming weeks. However, people close to the situation said Bear was also talking to strategic investors about a capital injection.

The rescue marked the first time in four decades that the US central bank has agreed to provide emergency finance to any financial institution other than a traditional commercial bank.

Fed officials told the Financial Times that it acted because of the systemic risks involved in the potential sudden failure of the fifth-biggest US investment bank at a moment of extreme fragility in the markets.

At the beginning of the month I handed in my resignation at work. This wasn’t the easiest thing in the world as I really like the people I work with but after 5 ½ years it was definitely time to move on. Mainly as there are things I wish to achieve personally and professionally and after serious reflection, came to the realisation that this required moving to pastures new.

I had hoped that I would be immediately sent on garden leave, however, as I wasn't going to work for a competitor, I was required to serve out the one month notice per the terms of my contact. I kid you not folks, a month! Thankfully, I had already booked vacation for what would have been my last week of work. Thus I only had to put in place a coping strategy for three weeks.

For the first two weeks, it was almost business as usual which was most annoying. Don’t get me wrong, I wanted to do all that I could to help the business before I left but once I’d given notice I was emotionally checked out. So I switched tactic on the third week and focused on putting together a 26 page transition document.

During the third week, there was a bit of drama that was just surreal. The CEO and Chairman of the Board for my then employer’s parent company were forced out. While I won’t go into great detail as the company is listed on the London Stock Exchange, lets just say that when they realised they could no longer hold on to power, the troops were gathered for a champagne celebration! This wasn’t given by the outside investors who had instigated this coup, but by the CEO and Chairman who jumped on the boardroom table and gave a rousing speech about their achievements over the last 8+ years.

Leaving all that drama behind on the 21st February, I spent the next week entertaining Racquetball Guy here in London. For those of you who have read my blog for sometime, I’m sure this will come as a surprise. Our relationship fizzled out when I left Chicago for London and I wrote some not so nice things about him. Mainly because I was angry as for a while he stopped talking to me. Since I couldn't get him out of my head, I never stopped trying and we started seriously talking again in January. Will things work out this second time? I don’t know. I want to be optimistic but we are oceans apart and without a clear roadmap it will be quite the challenge. Despite all that, the romantic in me is hoping for the happily ever after. However, if that doesn’t happen, maybe this time I’ll get proper closure.

In the meantime, I am looking forward to starting my new job on Monday. These last two weeks off have been great, but I’m ready to get back in the thick of things!

Video found via Crunk + Disorderly.

Yeah it sucks for the shareholders, but had the government not propped up the bank with £55B in loans and guarantees, the bank would have gone under months ago. Their business plan of relying on cheap loans from other financial institutions left then overly exposed when the global credit crunch hit! These loans simply became too expensive. Thus the shareholders have no one to blame but the reckless executives and the Financial Services Authority who failed to provide appropriate oversight.

So long term, while the bank needs to return to the private sector, nationalisation is currently the most appropriate action to protect the taxpayers investment.

Chancellor to nationalise Northern Rock

Dominic Walsh, From Times Online, February 17, 2008

The Chancellor Alistair Darling announced today that Northern Rock is to be nationalised after deciding it was the best way to safeguard the £55 billion of taxpayers' money pledged in loans and guarantees.

Mr Darling decided that neither of the two remaining private sector bids to buy the troubled bank delivered “sufficient value for money to the taxpayer”.

Shares of Northern Rock will be suspended on the London Stock Exchange tomorrow morning and legislation will be passed to allow the Govenment to take it into temporary public ownership.

Mr Darling said that the level of compensation to Northern Rock shareholders, which analysts expect to be minimal, would be determined by an “independent valuer” who had yet to be appointed.

The news was announced at a hastily convened press conference at the Treasury this afternoon.