Banking System Takeover By The Carlyle Group — Only The Carlyle Group Has The Capability To Study The Risks And Rewards Of Financial Institutions And To Supply The Necessary Funds

So what’s Treasury Secretary Henry Paulson’s call for changes in regulation of the financial markets all about? A clue may have been revealed today by Randal Quarles, former Under Secretary of the Treasury who led the Treasury Department’s effort in the coordination of the President’s Working Group on Financial Markets and is a current Managing Director at Carlyle Group. Quarles spoke at a luncheon meeting of the Washington DC-based National Economists Club. His topic: “Restructuring Financial Regulation”. Quarles told the luncheon group that he chose the topic in January. Hmmm. Didn’t Treasury Paulson just make the proposal to restructure the financial regulatory agencies last week? How did Quarles pick this topic back in January? Short-answer, Quarles is a major insider and his comments should be monitored to get a sense for what insiders are thinking. In his talk, Quarles said that estimates go into the hundreds of billions in terms of capital that will be required by the financial industry because of losses sustained as a result of the current crisis. He said there will be more financial institutions that will go under in coming months. He said that public markets will not supply the necessary funds because they don’t have the capabilities to study in detail the risks and potential rewards of the complex financials of financial institutions. He said private equity firms have the capabilities to do so and to supply the necessary funds. (N.B. Carlyle Group is a private equity firm). Quarles stated that some changes in the structure of regulations that Paulson proposed were necessary, but would take time to develop. He specifically stated that one regulation that needed to be changed is the limitation on the size of positions that non-banks can take in banks. (Note: Limitations in the size of non-banks positions in banks would limit Carlyle Group from taking large positions in banks). During the Q & A session, one questioner summarized Quarles talk this way: So what you said here today is that you would like to see regulatory changes to make it easier for private equity to take major positions in banks? And private equity, through various entities on and offshore gets its money from banks. So what you want is an environment where private equity can borrow from banks to takeover banks? In response, Quarles laughed. We might add this private equity acquisition of financial institutions will go on as the general public is scared off from investing in the financial institutions by scare headlines, or as Quarles would put it, “Public markets just don’t have the capabilities to judge the risks and rewards of the various financial institutions.” Translation: The public is not clued in on which firms the insiders have decided to let survive, like JPMorgan, and which they are going to takedown, like Bear Stearns.

[01]
http://www.economicanalyticsgroup.com/2008/04/carlyle-groups-plan-to-take-over.html
[02]
http://www.metro.co.uk/money/article.html?in_article_id=132794&in_page_id=36
[03]
http://sg.news.yahoo.com/rtrs/20080402/tbs-markets-global-7318940.html
[04]
http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=437012&in_page_id=3&ito=1565
[05]
http://www.thisislondon.co.uk/news/article-23471332-details/Triple%20credit%20crunch:%20Repayments%20up%20for%2070%25%20of%20fixed-rate%20deals,%20First%20Direct%20says%20no%20to%20new%20customers%20and%20consumers%20shift%20debt%20to%20plastic/article.do
[06]
http://www.rttnews.com/FOREX/FXTopStory.asp?date=04/03/2008&item=17
[07]
http://news.scotsman.com/uk/Halifax-may-slam-door-on.3942258.jp
[08]
http://www.turkishdailynews.com.tr/article.php?enewsid=100641
[09]
http://www.24dash.com/news/Housing/2008-04-02-Three-million-families-face-negative-equity
[10]
http://online.wsj.com/article/SB120709807127882047.html?mod=googlenews_wsj
[11]
http://www.freedom4um.com/cgi-bin/readart.cgi?ArtNum=77083
[12]
http://www.star-telegram.com/190/story/553182.html
[13]
http://rncnyc2004.blogspot.com/2008/03/secretary-henry-m-paulson-jr-on.html
[14]
http://freethemarketman.wordpress.com/2008/03/31/neutering-the-markets/
[15]
http://www.kentucky.com/473/story/361625.html
[16]
http://casadelogo.typepad.com/factesque/2008/03/bush-and-the-ba.html

Employment, Economic Growth, And Most Important Of All, The Foreclosure Rate From Real Economists

.. ..the U.S. economy is going through a very difficult period.. ..Congress’ Joint Economic Committee.. ..the Joint Economic Committee.. ..Federal Reserve Chairman Ben S. Bernanke.. ..a U.S. economic recession is possible.. ..debt market - both here and abroad - went sour big-time.. ..Bear Stearns (BSC, Fortune 500) let two of its hedge funds collapse.. ..recent actions taken by the Federal Reserve.. ..the National Bureau of Economic Research.. ..deterioration in the near-term outlook.. ..the great housing bust and credit crunch of 2007-08 suddenly fade away like a bad dream.. ..we’re in a dangerous and messy situation.. ..an economic slowdown.. ..we define a “depression” as.. ..inflation is defined as.. ..economic slumps in the housing, credit and financial areas.. ..mortgage-backed-securities problems.. ..Bernanke’s testimony before the Joint Economic Committee of Congress.. ..pessimistic assessment of the economy’s immediate prospects.. ..intensified strains in financial markets.. ..a continued rise in unemployment.. ..the economic outlook has worsened since the Fed’s last forecast.. ..consumers whose spending is indispensable to economic vitality.. ..we aren’t in a time of economic prosperity.. ..

[01]
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/02/AR2008040201273.html?nav=rss_business/industries
[02]
http://www.latimes.com/news/la-fi-bernanke3apr03,1,571378.story?track=rss
[03]
http://www.guardian.co.uk/business/2008/apr/02/useconomy.creditcrunch?gusrc=rss&feed=networkfront
[04]
http://www.financialarmageddon.com/2008/04/the-great-depre.html
[05]
http://www.bloomberg.com/apps/news?pid=20601087&sid=azJMg3HjKm90&refer=home
[06]
http://us-recession-2007.blogspot.com/2008/04/bernanke-sees-recession-risk.html
[07]
http://suzieqq.wordpress.com/2008/04/01/whack-a-mole-finance/
[08]
http://nevadathunder.com/?p=5310
[09]
http://mothanskin.blog-city.com/bernanke_and_paulson_are_already_on_it.htm
[10]
http://money.cnn.com/2008/04/02/markets/markets_newyork/index.htm?section=money_latest
[11]
http://joelwestlund.featuredblog.com/?p=64
[12]
http://getbillions.blogspot.com/2008/04/bernanke-us-may-slip-into-recession.html
[13]
http://10in3.blogspot.com/2008/04/recession-is-possible-for-us-economy.html

Senators Focus Their Attention On How To Help The Troubled U.S. Housing Market

.. ..Senators to be debating a bipartisan housing relief measure.. ..Senators agree to make deal on housing.. ..Senators agreed to cast partisan differences aside and put housing relief on the fast track.. ..pledged to work together to forge a housing solution.. ..the unprecedented role the Federal Reserve played by stepping into.. ..broader government action is needed to prevent a torrent of new foreclosures.. ..Senators set to debate housing crisis.. ..the different environment caused by last month’s collapse of Bear Stearns.. ..the new pledge of cooperation was the latest sign of fast-growing consensus among Congress.. ..further collapse of the housing and residential mortgage markets.. ..rising foreclosures and freezing credit markets.. ..Senate leaders acted under pressure to help Main Street.. ..Republican and Democratic leaders agreed to come up with a bill to aid homeowners and the market.. ..Senator Dodd says the package will deal with the core issues in the housing market.. ..resignation of Alphonso Jackson, the Bush administration’s secretary of Housing and Urban Development.. ..the government saved a Wall Street firm from bankruptcy.. ..Republicans were able to block the bill in February.. ..accusations that Mr. Jackson threatened to withdraw federal aid from the Philadelphia Housing Authority.. ..

[01]
http://www.westchesterrealestateblog.com/2008/04/a-bipartisan-so.html
[02]
http://www.wbir.com/news/national/story.aspx?storyid=56265&provider=rss
[03]
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/01/AR2008040100156.html?nav=rss_business/industries
[04]
http://www.usnews.com/usnews/politics/bulletin/bulletin_080402.htm#p1
[05]
http://www.marketwatch.com/news/story/story.aspx?guid=%7BB10F71FA%2D6E16%2D4A32%2D9AED%2DA2DE74F9DF94%7D&siteid=rss
[06]
http://www.marketwatch.com/news/story/senate-may-vote-housing-aid/story.aspx?guid=%7BB10F71FA-6E16-4A32-9AED-A2DE74F9DF94%7D&dist=msr_4
[07]
http://www.businessweek.com/bwdaily/dnflash/content/apr2008/db2008042_470576.htm?campaign_id=rss_daily
[08]
http://www.pbs.org/nbr/site/onair/transcripts/080401b/
[09]
http://www.usnews.com/articles/news/politics/2008/03/31/senators-set-to-debate-housing-crisis.html
[10]
http://www.nytimes.com/2008/03/31/washington/31cnd-jackson.html?em&ex=1207195200&en=65429d13306b2931&ei=5087%0A

$1 Trillion Worth Of Defaults And Writedowns Expected Before Arriving At The Far Side Of The Bursting Credit Bubble

They’re Going To Have To Give Them Away In Florida
Senate’s Dodd: Paulson Plan “Not Even Close”
Truckers Protest Fuel Prices In Harrisburg
Wal-Mart Cancels 45 Superstore Projects
On Behalf Of Participants And Beneficiaries Of The Bear Stearns Companies
Fed Eyes Nordic-Style Nationalisation Of US Banks
Paulson: Change Rules For Wall Street

.. ..If the authorities threw the real estate crooks in jail.. ..is in denial about the RE market.. ..many people now view them as pitiful hasbeens clinging desperately to a chimera.. ..realtor millionaire-wannabes driving Hummers drenched in advertising.. ..selling cardboard boxes known recently as “houses” to the gullible.. ..they will not face the fact that their days as pseudo big shots are now over.. ..

[1]
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/31/cnfed131.xml
[2]
http://www.post-gazette.com/pg/08091/869366-100.stm
[3]
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHCnscodO1s0
[4]
http://money.cnn.com/2008/03/31/news/economy/paulson_regulation/?postversion=2008033109
[5]
http://news.yahoo.com/s/nm/20080331/pl_nm/usa_economy_regulation_dodd_dc
[6]
http://www.huffingtonpost.com/al-norman/walmart-cancels-45-super_b_94112.html?view=print
[7]
http://thehousingbubbleblog.com/?p=4333
[8]
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/03-27-2008/0004781648&EDATE=

Unemployment Expected To Grow

Wyeth Cutting 1,200 U.S. Jobs In Restructuring
Aloha Air Shuts Passenger Unit, Affecting 1,900 Jobs
Food Stamp Use In U.S. At Record Pace As Jobs Vanish
As Jobs Vanish And Prices Rise, Food Stamp Use Nears Record
Summer Job Outlook Tough As Sacramento Youth Find Out
Manhattan Hospital Cuts Jobs, Programs
City Workers Feeling The Credit Squeeze
Stocks May Trip On Jobs, Earnings View

.. ..inflation in prices of basic goods that leave more families feeling pinched.. ..

[1]
http://www.nytimes.com/2008/03/31/us/31foodstamps.html?ex=1364616000&en=cda9b249dabb4413&ei=5088&partner=rssnyt&emc=rss
[2]
http://www.marketwatch.com/news/story/story.aspx?guid=%7B8B2423EE%2D4B34%2D42C0%2DB0F8%2DBAD8D1441EB7%7D&siteid=breitbart
[3]
http://www.iht.com/articles/2008/03/31/america/31foodstamps.php
[4]
http://news.sky.com/skynews/article/0,,30400-1311198,00.html?f=rss
[5]
http://www.earthtimes.org/articles/show/195508,stocks-may-trip-on-jobs-earnings-view.html
[6]
http://www.kansas.com/business/healthcare/story/355824.html
[7]
http://www.chinapost.com.tw/business/americas/2008/03/29/149445/Wyeth%2Dcutting.htm
[8]
http://www.news10.net/display_story.aspx?storyid=40019

The Bottomless Pit of Cash — AKA — The Federal Reserve

Even the chairman of the House Banking Committee claimed that the Federal Reserve is a government agency, and that it is not privately owned. The fact is that the government has never owned a single share of Federal Reserve Bank stock. This charade stems from the fact that the President of the United States appoints the Governors of the Federal Reserve Board, who are then confirmed by the Senate. The secret author of the Act, banker Paul Warburg, a representative of the Rothschild bank, coined the name “Federal” from thin air for the Act, which he wrote to achieve two of his pet aspirations, an “elastic currency”, read (rubber check), and to facilitate trading in acceptances, international trade credits. Warburg was founder and president of the International Acceptance Corporation, and made billions in profits by trading in this commercial paper. Section 7 of the Federal Reserve Act provides “Federal reserve banks, including the capital and surplus therein, and income derived therefrom, shall be exempt from Federal, state and local taxation, except taxes on real estate.”

[01]
http://propagandamatrix.com/archivefederalreserve.html
[02]
http://michaeljournal.org/fedreserve.htm
[03]
http://www.geocities.com/northstarzone/FED.html
[04]
http://www.federalreserve.gov/kids/
[05]
http://www.apfn.org/apfn/reserve.htm
[06]
http://news.yahoo.com/s/ap/in_fed_we_trust
[07]
http://www.wndu.com/consumernews/headlines/16381451.html
[08]
http://www.federalreserveeducation.org/fed101_html/policy/money_print.htm
[09]
http://www.federalreserve.gov/monetarypolicy/fomc.htm
[10]
http://www.save-a-patriot.org/files/view/frcourt.html
[11]
http://www.fdrs.org/fed.html
[12]
http://www.lewrockwell.com/north/north564.html
[13]
http://sonic.net/sentinel/naij2.html
[14]
http://www.strike-the-root.com/62/walker/walker1.html
[15]
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=51078
[16]
http://www.federalreserve.gov/
[17]
http://www.libertydollar.org/
[18]
http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt
[19]
http://www.federalreserve.gov/releases/h6/Current/

The Federal Reserve — A Bottomless Pit of Cash and Protector of Wall Street

***The Fed has made a special lending facility — essentially a bottomless pit of cash — available to large investment banks for at least the next six months. Even if that program is allowed to expire this fall, the Fed’s actions will have lasting impact, economists and Wall Street veterans said***

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/27/AR2008032703662_pf.html

Suspicion That Adjustable-Rate Mortgages Were Sold Under Fraudulent Pretenses

Justice Department Gathering Data On Mortgage Industry

The Justice Department is gathering evidence to determine if it needs to create a special task force to investigate possible wrongdoing in the mortgage lending industry, Michael B. Mukasey, the attorney general, said Friday. The F.B.I. is in the middle of a criminal investigation focusing on 17 firms that may have engaged in corporate fraud, an F.B.I. official confirmed this week. In an interview with reporters that covered a range of topics, Mr. Mukasey said the Justice Department was “trying to see what prosecutions are being and can be brought and figuring out whether there is a larger criminal story to be told here.” Asked by reporters whether his agency was considering appointing a task force, similar to the one formed in late 2001 to investigate the collapse of the energy giant Enron, Mr. Mukasey said: “No. In order to have a task force you need to identify the task. That is what we are doing now.” American mortgage foreclosures have been rapidly expanding in recent months, spreading from subprime lenders to the housing market over all. Federal law enforcement officials have been looking at industry fraud and lax documentation in loan applications, which allowed for loans based on false values or income. The crisis has shaken Wall Street and major financial institutions, including Bear Stearns, which collapsed and was sold to JPMorgan Chase last weekend. Before the subprime lending scandal began unfolding, the government was mostly prosecuting individuals for mortgage fraud, Justice Department officials said. Many people who bought their homes during the housing boom with little or no down payment and low introductory interest rates now face foreclosure because their loan rates have adjusted significantly higher. The government is investigating whether many of these adjustable-rate mortgages were sold under fraudulent pretenses.

[01]
http://www.nytimes.com/2008/03/22/business/22subprime.html?_r=1&ref=business&oref=slogin
[02]
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/21/AR2008032103130.html?hpid=topnews
[03]
http://online.wsj.com/article/SB120614819289156741.html?mod=googlenews_wsj
[04]
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/20/AR2008032003252.html
[05]
http://www.thestate.com/business/story/352286.html
[06]
http://www.star-telegram.com/business/story/540832.html
[07]
http://www.centredaily.com/business/story/479256.html
[08]
http://www.baltimoresun.com/news/local/politics/bal-te.md.foreclose21mar21,0,1207550.story
[09]
http://columbiabusinesstimes.com/1119/2008/03/21/housing-crisis-hits-home
[10]
http://news.bbc.co.uk/2/hi/americas/7297093.stm
[11]
http://news.bbc.co.uk/2/hi/business/7289292.stm
[12]
http://news.bbc.co.uk/2/hi/business/7284101.stm
[13]
http://news.bbc.co.uk/2/hi/business/7281719.stm
[14]
http://news.bbc.co.uk/2/hi/business/7277606.stm

Russia’s Severstal To Buy U.S. Steel Mill

Severstal, Russia’s largest steel producer, is to purchase a steel mill in the U.S. for $810 million, the company announced on Friday. “The purchase of the Sparrows Point [steel mill] adds to our portfolio of American assets. The plant already has significant value and possesses the potential for growth,” the company said in a press-release by its CEO, Alexei Mordashev. Sparrows Point is located in Baltimore County, Maryland, and is owned by ArcelorMittal, a joint venture between Indian Mittal and Luxemburg Arcelor. The U.S. Department of Justice demanded in February 2007 that ArcelorMittal sell Sparrows Point in a bid to prevent a monopolization of the market after the merger of Mittal Steel and Luxemburg Arcelor. Sparrows Point produces 3.6m tons of steel per year. It is the only integrated producer of rolled metal on the east Coast of the U.S., and is also one of the leading American suppliers of tin. “The deal will create additional sales opportunities for the company and expand the geographical scope of the delivery of “Severstal” products, creating the opportunity for direct ocean transportation…and provide proximity to a large number of U.S. railroads and highways,” the press release said. Severstal is represented on both the Russian and the London stock exchanges. In 2007, it produced 17.5 million tons of steel and reported $15.2bn in revenues. ArcelorMittal was created in 2006 as a result of a merger between Indian Mittal Steel and Luxembourg Arcelor. It is now the world’s largest steel producing company and controls 10% of global steel output. Indian billionaire industrialist Lakshmi Mittal is the president of Arcelor Mittal and holds a controlling interest in the company.

http://www.bizjournals.com/baltimore/stories/2008/03/17/daily40.html

http://www.ft.com/cms/s/ed9ad178-f74d-11dc-ac40-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fed9ad178-f74d-11dc-ac40-000077b07658.html&_i_referer=

Numbers Of Laid-Off Workers Highest In Recent Weeks

The number of newly laid-off workers filing for unemployment benefits rose last week to the highest level in nearly two months, providing more evidence that the weak economy is having an adverse impact on the labor market. The Labor Department said Thursday that applications for jobless benefits totaled 378,000 last week. That was an increase of 22,000 from the previous week and was a far bigger jump than had been expected. The four-week average for new claims rose to 365,250, which was the highest level since a flood of claims caused by the 2005 Gulf Coast hurricanes. For the week ending March 8, 28 states and territories reported an increase in jobless claims and 25 reported declines. The states with the biggest increases were California, up by 3,755; Michigan, up by 2,236, and Indiana, with an increase of 2,158. The layoffs in Michigan and Indiana were attributed in part to higher layoffs in the auto industry. The current economic slowdown, which many economists believe has already turned into a full-blown recession, is starting to show up in the labor market in terms of higher layoffs and weaker hiring numbers. The total number of payroll jobs fell by 63,000 in February, an even bigger decline that the drop of 22,000 jobs in January, which had been the first monthly decline since mid-2003. “We have no doubt that the trend in claims is upwards and is approaching the levels seen in the earlier stage of the recession in 2001,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics. Part of the increase in benefit applications in recent weeks occurred because of a three-week strike at a major parts supplier to General Motors Corp., which has forced GM to close all or part of 28 plants, affecting more than 37,000 hourly workers. The number of unemployed workers who are receiving benefits totaled 2.865 million, the largest amount since late August 2004. The Federal Reserve this week cut a key interest rate by a sizable three-quarters of 1 percent, wrapping up the most aggressive two months of credit easing by the central bank in a quarter century. The Fed has also greatly expanded its loans to cash-strapped banks and used a Depression-era process to supply money to Wall Street investment houses in an effort to keep a serious credit squeeze from pushing the country into a deep recession. The states with the biggest drop in claims two weeks ago were New York, down by 13,504, and Connecticut, which fell by 2,228.

[1]
http://www.9wsyr.com/news/national/story.aspx?content_id=d852cb78-9dd7-4750-8685-aedc1e13bd7a&rss=114
[2]
http://wcbstv.com/national/jobs.unemployment.laid.2.681632.html
[3]
http://news.yahoo.com/s/ap/20080320/ap_on_bi_go_ec_fi/jobless_claims_24
[4]
http://www.wsbt.com/news/indiana/16851331.html
[5]
http://webworkerdaily.com/2008/01/21/recession-proof-your-career/

“If You Bail Out Every Investment Bank That Gets In Trouble, That’s Not Capitalism, That’s ‘Socialism For The Rich’”

Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished as a way to boost the falling dollar and speed up the recovery of the U.S. economy, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe Wednesday. Federal Reserve. The Federal Reserve headquarters in Washington, DC. Asked what he would do if he were in Bernanke’s shoes, Rogers, who slammed the Fed for pouring liquidity in the system and accepting mortgage-backed securities as guarantees, said: “I would abolish the Federal Reserve and I would resign.” If this happened, “we don’t have anybody printing money, we don’t have inflation in the land, we don’t have a collapsing U.S. dollar,” he told “Squawk Box Europe.” The Federal Reserve announced on Wednesday a rescue package that it would put around $200 billion into banks and investment houses and allow them to put up risky home-loan packages as collateral. Wall Street responded to the news with the biggest rally of the year, but Rogers reminisced of the 1970s, when the Fed printed money to avert a recession, boosting inflation and then forcing interest rates to more than 20 percent to keep a lid on price rises. “No country in the world has ever succeeded by debasing its currency,” he said. “That’s what this man is trying to do. He’s trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term.” ‘Socialism for the Rich’ The Fed’s move to accept risky collateral is not part of the central bank’s business, he added. “What is Bernanke going to do? Get in his helicopter and fly around the world and collect rents? That’s absurd,” Rogers said. A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession, Rogers said. Also, investment banks should be allowed to fail. “Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes — if you bail out every investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich,” he said. The weakest financial institution is Fannie Mae, in Rogers’ opinion, “but all of them have problems.” Video: Why the Fed Matters Stock Picks to Beat Recession Tech, Infrastructure and Energy Stocks He said he had a short position on all investment banks and is buying agricultural commodities such as cotton, wheat, coffee and sugar and was also buying the Chinese yuan and the Japanese yen. “Buy agriculture. Agriculture is one of the few places where you’re going to make a fortune in the next years,” Rogers said.

[01]
http://www.cnbc.com/id/23588079
[02]
http://thehousingbubbleblog.com/?p=4264
[03]
http://www.informationliberation.com/?id=24789
[04]
http://seekingalpha.com/article/66208-who-is-blowing-bubbles-in-the-commodity-markets?source=yahoo
[05]
http://www.wealthbuildinglessons.com/2008/02/21/how-to-invest-like-jim-rogers/
[06]
http://money.cnn.com/2008/01/30/news/international/okeefe_rogers.fortune/index.htm?section=money_topstories
[07]
http://blog.mises.org/archives/007726.asp
[08]
http://registeredrep.com/wealthmanagement/recession_talk/
[09]
http://www.msnbc.msn.com/id/22636679/
[10]
http://www.earthtimes.org/articles/show/136988.html
[11]
http://finance.yahoo.com/expert/article/futureinvest/43359
[12]
http://news.neilrogers.com/news/articles/2008011409.html

Carlyle Capital Collapse

Leverage Wipes Out Carlyle Capital: Implications Are Ominous

The Wall Street Journal is reporting Carlyle Capital Nears Collapse As Accord Can’t Be Reached. The credit crisis has claimed another victim. Carlyle Capital Corp. said late Wednesday it expects its lenders will seize its assets, causing the likely liquidation of the fund, which until recently owned $21.7 billion in mortgage securities. The news comes just one week after Carlyle Group began pleading with some of the world’s largest banks to hold off on margin calls and the liquidation of its mortgage assets. Several of the lenders, led by Deutsche Bank and J.P. Morgan Chase & Co. ignored Carlyle’s request. Wednesday night, they began selling the fund’s assets, which were committed as collateral against huge borrowings. By Monday, dealers had sold $5.7 billion of the fund’s assets. The fund’s collapse shows how Wall Street’s biggest players have begun playing hardball with some of their best clients. And they reveal how jittery banks have become about their own loan exposures. In the case of Carlyle, 12 banks had lent the fund about $21 billion, or $20 for every dollar of initial capital. Leverage Licks Carlyle. Selling begets when you use leverage like that. I talked about that in Margin Selling Chain Reaction a few days ago. Today Professor Andrew Jeffery is writing Leverage Licks Carlyle. In hindsight, 32 times leverage seems excessive. That we are now referring to Carlyle Capital with hindsight is astounding. Stock market futures sold off hard this morning on news that Carlyle Capital, a division of private equity firm Carlyle Group, is on the verge of collapse. According to The Wall Street Journal, lenders led by Deutsche Bank (DB) and JP Morgan (JPM) are set to seize and sell what’s left of the fund’s assets. Writedowns on their own mortgage-related holdings are forcing banks into capital preservation mode. Under normal circumstances, lenders would be willing to work with a fund like Carlyle to sell assets, raise money, roll over debt or find some other solution that would prevent the fund’s liquidation. These, however, are not normal times and banks have enough problems without having to worry about their clients blowing up, too. That such a large block of agency paper — securities backed by Fannie and Freddie — is about to flood the market is worrisome. Lehman Recommends MBS. Given that a “flood” of paper is hitting the market today I am more than a little suspicious about the timing of this recommendation yesterday: Lehman Brothers moves to MBS overweight. Lehman Brothers Holdings Inc (LEH) said it raised its U.S. mortgage-backed securities recommended allocation to an overweight position. The Wall Street investment bank said late Tuesday it raised its allocation from a 3 percent underweight to a 5 percent overweight in response to the Federal Reserve’s action to inject liquidity into credit markets. The new Term Securities Lending Facility, or TSLF, is the Federal Reserve’s latest proposal that contains provisions especially targeted to mortgages and operates among primary dealers instead of depositary institutions. And in taking another look at The Fed’s Swap Meet , the picture becomes even more clear. Part of the rationale behind TSLF deal was simply to give banks liquidating Carlyle Capital a place to dump that flood of supply of MBS. For what happens 28 days later, please read the above link. The implications are ominous.

[01]
http://www.npr.org/templates/story/story.php?storyId=88188855&ft=1&f=1001
[02]
http://seekingalpha.com/article/68519-leverage-wipes-out-carlyle-capital-implications-are-ominous?source=feed
[03]
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3549632.ece
[04]
http://news.yahoo.com/s/ap/20080313/ap_on_bi_ge/carlyle_group_fund_24
[05]
http://news.yahoo.com/s/nm/20080313/bs_nm/carlylecapital_lenders_dc_6
[06]
http://www.bloomberg.com/apps/news?pid=20601102&sid=aYJm_RAjqUWU&refer=uk
[07]
http://www.forbes.com/markets/feeds/afx/2008/03/13/afx4769381.html
[08]
http://www.forbes.com/markets/feeds/afx/2008/03/14/afx4771970.html
[09]
http://www.ft.com/cms/s/0/66b143c4-f0cf-11dc-a91a-0000779fd2ac.html?nclick_check=1
[10]
http://www.iht.com/articles/2008/03/13/business/markets.php
[11]
http://www.vccircle.com/2008/03/14/carlyle-capitals-16-billion-debt-default-hits-markets-ms-warns-india-capital-flows-to-slow/

Michigan For Sale

……Beyond the industrial auction houses that have seen steady growth in recent years, there are a wide range of players who show up at events like Wednesday’s industrial auction of Synergis Technologies Group, once one of the largest tool-and-die makers in the Grand Rapids area. There’s middle-age men in work boots and blue jeans who show up during the beginning of the auctions and bid on small items like tool cabinets and small machinery. They tend to be former tool-and-die workers like Jim Gabrielson, who owned a shop in Detroit that closed three years ago. “I just want to buy something so I can make something again,” Gabrielson said. As the bigger machinery — like a 30-ton hydraulic press — begins to be auctioned later in the day, scrap dealers like Mike Becker, owner of PMS Excavating in Olivet, start bidding. “We go to as many of these things as we can,” said Becker, who’s already been to 10 this year. By midday, when the truly heavy machinery comes up for bid, the crowd begins to change to men in loafers and expensive-looking sweaters wielding Blackberries. The Webcast bidders, mostly representing out-of-state and foreign bidders, become much more active. “This type of machinery is in much demand in Europe and Asia,” said Jason Pak of Ann Arbor, who owns PK Solutions. “I know it’s tough here, and no one wants that, of course. But the American economy is so inventive. Everyone always expects it to adjust and be innovative.” Many of the bidders represent successful manufacturers in the American South. During the past 15 years, foreign auto companies have built more than half a dozen auto assembly plants in the southeastern United States — taking advantage of cheap land, an eager work force and other incentives. “Things are growing pretty good right now” said Chuck Tucker, who owns an overhead crane business in Birmingham, Ala. “There’s quite a few automotive suppliers setting up shop down there. It’s a good business to be in right now.” Hustling for work on the sidelines are representatives of transport companies like Ed Reid of Reid Machinery Inc. in Lansing, which specializes in hauling things like a used 450-ton stamping press. “This type of work is some of the most steady work available right now,” Reid said. “If you understand what that means, then, you understand why it makes a lot of people upset and sad.”……

[1]
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080307/BIZ/803070405/1001
[2]
http://blog.mlive.com/grpress/2008/03/synergis_auction_draws_former.html
[3]
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080307/BIZ/803070404/1001/BIZ
[4]
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/02-21-2008/0004760194&EDATE=

It’s Time The Conspiracy Theorists Accepted That Oil Had Nothing To Do With The U.S. Invasion Of Afghanistan

After almost every article I have written about Afghanistan, the words “oil” and “pipeline” have appeared in the comments box. Often they are in one of the first responses, and sometimes they are practically the only words used - as if the commenter had glanced at the headline and rushed to click the “post your comments” button without bothering to read anything else. According to this theory, the US did not intervene in Afghanistan in response to the attacks of September 11 2001, but at the behest of the oil company Unocal in order to facilitate the building of a pipeline from Turkmenistan to Pakistan. Some accounts say the Taliban met representatives of the US government a month before the 9/11 attacks and were offered the choice between the pipeline, and diplomatic recognition or military attack. Of course, if you really do believe that the “pipeline project” was “the main reason for the invasion and occupation”, then all other discussion becomes superfluous. But, even on its own terms, the theory makes absolutely no sense. It is true that Unocal, for which Karzai never worked, was interested in building a pipeline in Afghanistan in the mid-1990s. And a case can be made that the Clinton administration was prepared to overlook the Taliban’s appalling human rights record, at this time because it hoped that the stability this might bring to the country could facilitate the project. But where is this pipeline? Fahrenheit 9/11 shows footage of a pipeline being laid, but this certainly is not the pipeline in question since, to date, no western company has shown any interest in building one. Unocal shut down its office in Turkmenistan in 1998 and says it has no plans to return to the region. The north and central regions of the country, through which any proposed pipeline would have to be built, remain largely in the hands of warlords who have closer ties to Russia, Iran, Tajikistan and Uzbekistan than they do to the west. The fact that the US armed these forces and provided them with logistical support against the Taliban also flies against the “pipeline project” theory. I remain unconvinced by the claims of the supporters of the “pipeline project”. But before I get accused of being a “CIA agent”, an antisemite or a “Zionist media whore”, let me make it clear that I am perfectly prepared to accept the sincerity of those who argue the case. If they are right, it would have very significant implications for the analysis of western policy, and this makes it worth subjecting their claims to some scrutiny.

http://commentisfree.guardian.co.uk/conor_foley/2008/02/dude_wheres_the_pipeline_1.html

Haecus: http://commdocs.house.gov/committees/intlrel/hfa48119.000/hfa48119_0.htm#1
(several other documents are available in the event of debate)

“It’s Time The Conspiracy Theorists Accepted That Oil Had Nothing To Do With The U.S. Invasion Of Afghanistan”

First point to debate:

Is it time to accept that oil had something to do with the invasion of Iraq?

Insurance Program Secured for Construction of Silverstein Properties´ World Trade Center Towers

World Trade Center developer Larry A. Silverstein today announced the placement of the Workers´ Compensation, General Liability, Excess Liability, and Specialty insurance programs for the construction of Towers 2, 3, and 4 (200, 175, and 150 Greenwich Street). The insurance programs were readied in anticipation of the recent turnover to Silverstein by the WTC site´s owner, the Port Authority of New York and New Jersey, of the sites for Towers 3 and 4 to Silverstein Properties. “This is a significant step in our efforts to build these three building