The American Dream Is Dead

http://www.alternet.org/workplace/98930/working_harder_to_fall_behind%3A_the_american_dream_is_dead/

Wall Street Collapses

As the Dow hemorrhages, Wall Street firms are betting on which one will bite the dust next, and Federal Reserve Chairman Ben Bernanke probably wishes he could leave as the next administration sets up shop, no one is proposing the long-term solution to the banking crisis: regulating the industry.
The Fed was right to turn Lehman Brothers away from its window during those final moments of doom on Sunday night. As such, the resulting $613 billion Chapter 11 filing, the largest bankruptcy in U.S. history (WorldCom dropped to second with a mere $104 billion in assets) was secured.
It was wrong to back the $30 billion bailout of Bear Stearns in March, which facilitated JPM Chase's acquisition of Bear. It should not be the Fed's responsibility, or the government's, to back investment bank speculation. Instead, regulators should have been more vigilant as speculation outpaced available capital, and transparent quantification of risk went out the window.
However, it should be the government's job to stabilize the financial system; the question is how. Unfortunately, neither the Federal Reserve, nor the government, nor the presidential candidates have the slightest clue. Neither a blame game nor desperate piecemeal fixes will work. This is not about Republican or Democratic policies, but systemic bipartisan deregulation. Only a quick bout of sweeping and decisive regulation can fix what's broken.
In 1932, three years after the 1929 stock market crash, the banking system last stood at a brink of implosion. Franklin Delano Roosevelt zoomed past Herbert Hoover into the White House. The country was struggling through a Great Depression unleashed by the forces of unregulated economic greed. FDR stood up to the unrestrained power of Wall Street and contained it. The resultant New Deal included a stoplight at the heavy intersection of financial capital and unregulated greed, called the Glass-Steagall Act of 1933.
Decisively, the Glass-Steagall Act forced institutions within the banking community to pick a side. If you want to deal with the population at large, take their deposits, give them a safe place for their savings and make reasonable loans for which you are as responsible as the borrowers -- terrific. As a commercial bank, you will have the newly established Federal Deposit Insurance Corporation (FDIC) backing your depositors. We, the federal government, will regulate you.
If you want to raise capital through speculative investors at home or overseas -- fine. But as an investment bank, you don't get our backing and you don't get to mix it up with citizens' lives or use their capital to fund your trading activities.
That simple premise, the pristine logic of the Glass-Steagall Act, not only kept consumer and speculative capital from intertwining within the same institution; it simplified the ability to understand the activities of all financial organizations. Transparency was not perfect, but it was more easily accomplished.
Lehman Brothers got a taste of the intent of Glass-Steagall. Its demise is ugly, not just because of its 156-year history, the 25,000 employees who are suddenly without jobs, or the long list of institutions to which Lehman owed money that will be slugging it out in bankruptcy court.
It is ugly because it underscores the supreme gutlessness of the executive and congressional branches of government. Bernanke is desperately trying to figure out how to save the banking industry from itself. Treasury Secretary Hank Paulson can't wait until the election saves him from himself. And the presidential candidates are giving Wall Street, and each other, a barrage of verbal shellacking.
None of this changes the playing field.
The catalyst for this current crisis may be the housing market -- not because individual borrowers slightly overleveraged, but because the entire banking industry massively overleveraged. The larger culprit is the killing of Glass-Steagall, which paved the way for this recklessness.
Yet, rather than considering the massive risks of merging commercial and speculative banking interests, given the overwhelming evidence, federal officials actually pushed for Bank of America's $50 billion all-stock takeover of Merrill Lynch, rather than questioned it.
I worked on Wall Street, at Lehman and Bear and Goldman Sachs. Take my word for it: You cannot merge risk management systems more quickly than this economic crisis can continue to unfold. It is technologically impossible.
This knee-jerk move follows the same dangerous green-lighting of mega-mergers that began when Citigroup took over Salomon Brothers after Congress killed Glass-Steagall in November 1999, and continued with Chase taking over JPM and recently Bear Stearns.
The Fed wants to avoid another huge failure in Merrill Lynch by pushing it under the rug of Bank of America. That is bad policy. Bank of America cannot possibly have a clue about the extent of Merrill's potential losses. This commercial bank taking over a speculative giant is much more dangerous than Lehman Brothers tanking. The Fed was within all of its rights and sanity to say no to Lehman's plea for a bailout. But it won't be able to do the same thing with Bank of America, which, unlike Lehman or Bear, is responsible for the accounts of millions of customers -- real people with real money on the line.
The speculative nature of the industry, in which commercial and investment banks can borrow beyond their abilities to repay, is a threat to national economic security. It requires a serious exit strategy.
There is no easy answer, but there is only one solution -- and it lies polar opposite to the Bank of America-Merrill Lynch merger logic. The only real way to stabilize the financial industry is to take it apart, quantify and separate its risks, and begin again. We can do this. FDR did it. The market is larger now, and more global. That is not an excuse for inaction; it belies a screaming need for useful action and meaningful regulation. Period.

the end of american dream...

More Financial Turmoil To Come

The collapse of Lehman Brothers , and attendant weakness of other major financial institutions, has now produced perhaps the worst U.S. financial crisis since the banking panic that faced former President Franklin Roosevelt at the beginning of his administration in March 1933.

The uncertainty created by the reluctance of the Treasury and Federal Reserve to subsidize the acquisition of Lehman (along the lines of JPMorgan Chase's March takeover of Bear Stearns), and the process of unwinding Lehman's huge portfolio of securities and derivatives trades, is likely to produce a major surge in counter-party risk aversion. The resulting unwinding of leverage and flight to quality threatens to destabilize the global financial system, which may thus be facing a period of rapid change and re-regulation.
Regulatory response

Market anxiety has been heightened by the government's unwillingness to prevent the failure of such a large investment bank. Measured by assets, Lehman is larger than Bear Stearns before its March 16 collapse. This has increased uncertainty, as Wall Street has been left to guess how large an institution must be before regulators deem it to be "too big to fail."
Treasury Secretary Henry Paulson, a former chief executive officer of Goldman Sachs , understands the risks posed by such uncertainty. However, with other, much larger U.S. thrifts and insurers in an increasingly precarious financial position, he has been increasingly reluctant to put taxpayers' dollars at risk backstopping less than indispensable institutions.
Spreading contagion

The bankruptcy of Lehman Brothers , combined with the potential insolvency of the insurer American International Group threatens to saddle financial institutions around the world with new losses. Those could come if Lehman's creditors dump its poorer-quality investments onto markets, forcing investors who own similar securities to write-down their value, or AIG's contracts in credit default swaps, a type of insurance for securities, become worthless. Another concern is that financial regulators outside of the United States may lack resources to bail out institutions in their jurisdictions.
Back to basics?

Undoubtedly, the financial sector is likely to see important mergers and acquisition activity as the crisis persists. A larger question is whether more traditional banking interests with access to retail deposits will acquire independent broker dealers, such as Goldman Sachs and Morgan Stanley --the two remaining independent players. In the last decade, investment banks have increasingly become hedge-fund-like entities, utilizing high degrees of leverage and making significant income from proprietary operations. With more traditional banking interests retaking the lead, major players are likely to be seen taking less risk. High-risk/high- leverage activity will continue, but in the boutique market (i.e., hedge funds).
Shadow banking?

The bigger worry is the state of the shadow-banking sector-- hedge funds and structured investment vehicles. These entities tend to have short-term liabilities, while their assets are long-term, and in many cases illiquid. As primary brokers continue to have their own difficulties, it will be harder and harder for them to service this sector. In the short-term many of these will likely fail. Whether their counter-party risk is enough to cause further knock-on effects remains uncertain.
Coordinated response?

The toolkit for monetary and fiscal policy remains relatively constrained at the moment. A continuation of the crisis might manifest more policy coordination among major central banks, though a coordinated fiscal response remains unlikely. Given inflation pressures have eased as commodity prices continue their decline, central banks may feel inclined to lower interest rates sooner. It appears likely that the Fed may lower rates following its decision to relax its the collateral quality requirements associated with its existing term-auction facility. The ECB and Bank of England could also reduce interest rates, having today already injected close to $50 billion into the financial system.
Wither recovery?

Even if the immediate systemic risks posed by Lehman's failure are contained, a U.S. (and global) economic recovery is not a near-term prospect. Stabilization of the U.S. housing market is a necessary condition for the end of the global credit crisis--given that most of the problematic assets that trouble the balance sheets of major financial institutions are linked to U.S. housing. However, there is little indication that U.S. housing prices will stabilize until mid-2009, at the earliest. This means that banks and financial firms face further write-downs, greatly increasing the chances of additional failures.

the treachery continues....

the personal vengence is so self consuming that they will do anything to kill the life that hasstarted to grow in the workers movement....."Rise like Lions after slumberIn unvanquishable number,Shake your chains to earth like dewWhich in sleep had fallen on you–Ye are many–they are few."

this is interesting....

http://www.tni.org/detail_page.phtml?act_id=18660

War over potable water looms in Davao

The people of Davao were recently gripped by great anticipation— or apprehension— on who will emerge winner in the battle of two giants over potable water, a natural resource that Davao City is known for having one of the best in the world.
For the Davao City Water District (DCWD), the future of the city’s water supply depends on the Tamugan-Panigan rivers, an alternative to the supply of potable water extracted from the Talomo-Lipadas Watershed now reaching the homes of 750,000 people or around 156,000 households.
The Tamugan-Panigan River is expected to produce about 200,000 cubic meter daily to service an additional 30,000 households in 25 villages of the second district. This could mean that current consumers will have better quality of service.
DCWD officials assert that the river “is the only alternative water source that has the required quality, quantity and viability for the city’s long-term water supply development plan.”
The same water source is also being considered by Hedcor, the country’s leading developer of run-of-water hydropower and an affiliate of the Aboitiz Group, as the site of a P6-billion hydroelectric project expected to generate 34 megawatts of electricity.
That output is enough to help avert the looming power crisis in Mindanao which is expected to hit its critical period in 2009.
Attractive project
Hedcor’s presentation paper is attractive. It is peppered with benefits amounting to millions of pesos not only for the national and local governments but also waiting for the local communities to be “hit” by the project.
The company intends to distribute electricity starting 2010.
It will be paying the eight communities that will host the project—Wines, Tawan-Tawan, Suawan, Tambobong, Salaysay, Carmen, Cadalian and Tamayong—about P2 million to P3 million as sharing benefit, with P0.01 per kilowatt-hour every year from the first year of operation. Its four indigenous communities will be given P3 million as shares annually, apart from the land rentals expected to reach P1.8 million.
Davao City will also get P5.4 million or 2 percent of the gross sales during the first year. Hedcor will also pay about P40 million in property tax and P3 million in business tax.
The project will improve access roads and open new ones, and provide irrigation water, watershed management and barangay electrification.
Memo of agreement
In January, Hedcor executives headed by Rene Ronquillo, president and chief operations officer, signed a memorandum of agreement with leaders of the host communities and the indigenous communities for the three run-of-river hydroelectric project.
Ronquillo said the company had started building a good relationship with the people in the eight villages in 2006, no wonder many of the village leaders favored its project over that of the DCWD.
Datu Pedro Lagao, chief of the tribal group in Tambobong, said their approval to Hedcor’s project was based on the promised development and jobs. The project will create about 900 jobs, mostly for the local residents, Ronquillo said.
But, according to the DCWD, the presence of Hedcor will “seriously threaten the city’s water supply … The hydropower plant will compromise the DCWD’s mandate to provide the most basic need of the populace—water.”
The proposed hydropower plant of Hedcor will be built upstream of the infiltration gallery of the DCWD, or the upper portion of the Tamugan-Panigan River.
Fears of drying up
The water district said Hedcor’s project could not coexist with that of the DCWD based on their original plans because the setup would dry up portions of the river vital to the volume needed by the DCWD’s concessionaires.
Hedcor originally proposed to put up its plant above the infiltration gallery, at the junction of the two rivers at the lower portion of Barangay Tawan-Tawan. This would dry up a long stretch of 10.439 kilometers from the infiltration gallery to Hedcor’s hydroplant because the power firm will be diverting the flow of water to course through its weirs (dams).
Hedcor will put up weirs from the upper reaches of the Tamugan and Panigan rivers, which will meet at a conveyance box junction at 530 meters above sea level, or 130 meters higher than the infiltration gallery of the DCWD. From that point, a single weir of more than 2 km will be built to end at a Hedcor pondage, which is connected by another 4.6-km weir leading to the Hedcor power house and switch.
“This setup will dry up vital portions of these rivers, which will lead to both immediate and long-term adverse effects on our project,” a DCWD paper said.
Rodora Gamboa, general manager of DCWD, said the plan of Hedcor might seriously deplete water supply in the area, affecting the public access to potable water. She said the city’s future water source would be compromised.
Water permit, but no ECC
She criticized the granting of a water permit for the Tamugan-Panigan rivers to the hydroelectric firm by the National Water Resources Board (NWRB). The permit, however, is pending after the DCWD raised a protest. The Environmental Management Bureau has refused to give the power firm an environmental compliance certificate (ECC). Ronquillo, of course, was not happy. He said the permit is the only a ticket for them to get started.
“We don’t understand it. The policy is clear. We cannot get a water permit if we cannot get the ECC, but the EMB is saying that we must get the water permit first before they issue the ECC. It’s really confusing us. You see, if we can’t get the permit, we cannot build the plant,” Ronquillo said.
EMB regional director Metudio Turbella, in letter to Ronquillo said the issue of water rights must be settled first by the NWRB. “It pertains to the use of surface waters of Panigan-Tamugan Rivers. The same surface water is also the lifeline of the proposed hydropower project of Hedcor. Clearly, under the principle of primary jurisdiction, the NWRB is the proper agency to rule on the issue of water rights,” he said.
Eleseo Braganza, executive director of the DCWD, said the two rivers would certainly solve the water supply problem of Davao but not the imminent power crisis.
“The problem of Davao City is not only the delivery of water to the homes of the people but also the supply of the water that must be delivered to the people. The water here is not the solution to the power crisis but it will solve the water crisis,” Braganza said.
Groundwater source
Right now, over 99 percent of the water consumed by the city comes from groundwater extracted from the Talomo-Lipadas Watershed. With a daily extraction of 212,000 cubic meters from 50 production wells, sustainability is in danger.

i'm back!!!

the past few weeks was a hell for me...to many problems crop up one by one and no help insight...but now i'm back to hell with the problems! time to buckle down and face whatever they maybe...