Chris Whalen: Tim Geithner is a Disaster and Will Be Out by June

"Tim Geithner has no financial skills. The only reason he is there [the Treasury Secretary] is to protect Goldman Sachs."

Interview with Chris Whalen of Institutional Risk Analytics on TheStreet.com

Warren Buffett: "Economy Has Fallen Off a Cliff"

Warren Buffett is 'talking his book' for a portion of this interview, but he does have some unique insights into the real time economic conditions because of the position of his conglomerate in a number of key businesses that measure the pulse of economic activity.

He sees inflation ahead, and rightly so. The question however is, as always, when?

Adding debt capacity to the system now is useless. Yes, stabilizing the financial system is important. But the demand for debt is so lagging, and the prospects for profit so poor, that one wonders if only the desparate will cry for more credit while they drown.

The solution will be an improvement in the median wage, systemic reforms, and the orderly writedown of debt held by effectively insolvent banks. 'Saving the banking system' as it is constituted now is more than a fool's errand.

It is the path to a test of the fabric of our government not seen since the 1860's.

Bloomberg
Warren Buffett Says Economy Has ‘Fallen Off a Cliff’
By Erik Holm
March 9, 2009 09:29 EDT

March 9 (Bloomberg) -- Billionaire Warren Buffett, whose Berkshire Hathaway Inc. posted its worst results ever in 2008, said the economy “has fallen off a cliff” and that efforts to stimulate recovery may lead to inflation higher than the 1970s.

The American public is fearful, confused and changing their buying habits, which is showing up at Berkshire’s operating units, Buffett said during an appearance on the CNBC television network today. While the recession will end and future generations will live better than their parents, the economy “can’t turn around on a dime,” Buffett said, adding that some inflation is appropriate right now.

“We are doing things now that are potentially very inflationary,” he said. Buffett called on Congress to unite behind President Barack Obama, comparing the economic crisis to a military conflict that needs a commander-in-chief. “Patriotic Americans will realize this is a war,” he said....

Finacial Crisis Racks Up $50 Trillion in Worldwide Losses in 2008

This is the price we pay for chronic malinvestment, unsustainable imbalances, a bubble in the world's reserve currency, and a blind eye to protracted fraud and misrepresentation of the economic reality by the financiers and their partners in government.

Staggering losses to be sure, and more to come. But what is most discouraging is that so far we have made little or no progress towards systemic reform and a return balanced global trade with organic growth, savings, and an efficient world financial flow of goods, services, and wealth.


Economic Times (India)
$50 trillion wiped off world financial assets: ADB
9 Mar 2009, 1022 hrs IST,
ET Bureau

MANILA: The global crisis wiped a staggering $50 trillion off the value of financial assets last year including $9.6 trillion of losses in developing Asia alone, the Asian Development Bank said Monday.

``This is by far the most serious crisis to hit the world economy since the Great Depression,'' said ADB President Haruhiko Kuroda. But he predicted Asia would be ``one of the first regions to emerge from it.''

In a study commissioned by the Manila-based lender on the impact of the financial crisis on emerging economies, it estimated the value of financial assets worldwide, currency, equity and bond markets, to have dropped by $50 trillion in 2008.

It said developing Asia was hit harder, losing the equivalent of just over one year's worth of gross domestic product, than other emerging economies because the region has expanded much more rapidly.

In Latin America, losses were estimated at $2.1 trillion. According to the study, the figures provide clear proof of the close connections between markets and economies around the world, leaving few, if any, countries immune to financial or economic fallout. A recovery can only now be envisaged for late 2009 or early 2010, it said.

A sprawling region, developing Asia includes 44 economies from the central Asian republics to China to the Pacific islands. The bank had earlier projected the region's growth to slow to 5.8 percent this year from an estimated 6.9 percent last year.

The worldwide downturn has hit export-driven economies particularly hard. From South Korea to Taiwan to Singapore, exports have plunged by double digits in recent months as American and European consumers spent less on cars and gadgets....

Reykjavik on the Thames: A Run on the British Pound

The British economy is mortally wounded, and Gordon Brown is quite frankly not the man to fix it.

Britain faces the real risk of a crisis in the pound that will be worse than its euro peg crisis made famous by George Soros and the gnomes of Zurich chanting "Sell 100 quid! Sell 100 quid!"

Will investors flee from currency to currency in search of a safe haven as the global financial system collapses? Who can say. But it is certainly past time to hedge one's bets with sources of alternative wealth protection.


The Independent (UK)
Run on UK sees foreign investors pull $1 trillion out of the City
By Sean O'Grady, Economics correspondent
Saturday, 7 March 2009

Banking crisis undermines Britain's reputation as a safe place to hold funds

A silent $1 trillion "Run on Britain" by foreign investors was revealed yesterday in the latest statistical releases from the Bank of England. The external liabilities of banks operating in the UK – that is monies held in the UK on behalf of foreign investors – fell by $1 trillion (£700bn) between the spring and the end of 2008, representing a huge loss of funds and of confidence in the City of London.

Some $597.5bn was lost to the banks in the last quarter of last year alone, after a modest positive inflow in the summer, but a massive $682.5bn hemorrhaged in the second quarter of 2008 – a record. About 15 per cent of the monies held by foreigners in the UK were withdrawn over the period, leaving about $6 trillion. This is by far the largest withdrawal of foreign funds from the UK in recent decades – about 10 times what might flow out during a "normal" quarter.

The revelation will fuel fears that the UK's reputation as a safe place to hold funds is being fatally compromised by the acute crisis in the banking system and a general trend to financial protectionism internationally.

This week, Lloyds became the latest bank to approach the Government for more assistance. A deal was agreed last night for the Government to insure about £260bn of assets in return for a stake of up to 75 per cent in the bank. The slide in sterling – it has shed a quarter of its value since mid-2007 – has been both cause and effect of the run on London, seemingly becoming a self-fulfilling phenomenon. The danger is that the heavy depreciation of the pound could become a rout if confidence completely evaporates....