The Archbishop of Canterbury Rowan Williams will on Wednesday become the first Anglican leader to visit the Roman Catholic shrine of Lourdes, his office said.
The Church of England chief will preach at the International Mass at the invitation of the Bishop of Tarbes and Lourdes, Monsignor Jacques Perrier, Williams’s Lambeth Palace said in a statement.
A friend serving in the Bush administration called Sunday to try to talk me out of my doubts about the $700 billion financial bailout the administration was asking Congress to approve. I picked up the phone, and made the mistake of good-naturedly remarking, in my best imitation of Oliver Hardy, “Well, this is a fine mess you’ve gotten us into.”
People who’ve been working 18-hour days trying to avert a meltdown are entitled to bristle at jocular comments from those of us not in public office. So he bristled. He then tried to persuade me that the only responsible course of action was to support the administration’s request.
I’m not convinced.
Back in 2002, when his reputation as “The Man Who Saved the World” was at its peak, Alan Greenspan, former chairman of the Federal Reserve, came to Britain to pick up his knighthood. His biggest fan, Gordon Brown, now the UK prime minister, had ensured that the citation said it was being awarded for promoting “economic stability”.
During his trip, Mr Greenspan visited the Bank of England’s monetary policy committee. He told them the US financial system had been resilient amid the bursting of the internet bubble. Share prices had halved and there had been massive bond defaults, but no big bank collapses. Mr Greenspan lauded the fact that risk had been spread, using complex derivative instruments. One of the MPC members asked: how could this be? Someone must have lost all that money; who was it? A look of quiet satisfaction came across Mr Greenspan’s face as he answered: “European insurance companies.”
Six years later, AIG, the largest US insurance company, has in effect been nationalised to stop it blowing up the financial world. The US has nationalised the core of its mortgage industry and the government has become the arbiter of which financial companies should survive or die.
Arturo Perez, a fiscal analyst for the National Conference of State Legislatures, said that 31 states struggled to close gaps in their latest annual budgets. They managed to do so, but now risk a drop in revenues if stocks continue to decline.
The standing committee of the Diocese of Sydney has expressed its strong support for Bishop Robert Duncan of the American diocese of Pittsburgh, saying it is ”˜deeply distressed’ that he has been deposed by the Episcopal Church.
Bishop Duncan, who has been negotiating to withdraw his diocese from the Episcopal Church because of revisionist teaching, was the subject of a deposition vote by the US House of Bishops and with 15 bishops missing, including Texans because of Hurricane Ike, the vote passed 88 to 35.
Because of his stand on biblical authority and the historic teachings of the church, it was claimed that Bishop Duncan’s “actions over recent months and years constitute ”˜abandonment of the communion of this church’”.
Bishop Duncan is one of the foremost conservative leaders in the North American wing of the Anglican communion and the Sydney standing committee commended him “as he stands firmly for the authority and teaching of the Bible.”
(ACNS) The Archbishop of the Sudan, the Most Revd Dr. Daniel Deng Bul, on the weekend was in Yambio on a tour of the Western Equatoria State ECS dioceses. On Sunday 14th September the Archbishop visited Ibba, to enthrone the new diocesan bishop, Bishop Wilson Kamani, who was elected the Second Bishop of Ibba in June this year. During the service in St. Barnabus’ Cathedral, Ibba, on Sunday morning, incoming Bishop Wilson told his priests and congregation the “the people” were his priority for the diocese, both spiritually and in terms of services. Though the Ibba area was hard hit by an attack of the Lords’ Resistance Army (LRA) earlier this year, Bishop Wilson is well placed to serve both the ecclesiastical and developmental needs of his people, having been the General Manager of the Episcopal Church of the Sudan’s Sudanese Development and Relief Agency (ECS/SUDRA) until his election as bishop. Please keep the Diocese of Ibba in your prayers.
Before stopping in Ibba between Friday 12th and Monday 15th, Archbishop Daniel passed through the ECS dioceses of Rokon, Lui, Mundri and Maridi, greeting the diocesan bishops and faithful as he went. The enthronement has been an opportunity for him to visit all the Western Equatorian dioceses bar one ”“ Ezo ”“ on the far western border with the Central African Republic.
In a service on Tuesday 16th September in Yambio Cathedral attended by the Governor of Western Equatoria State amongst other dignitaries, the Archbishop spoke passionately about the Church’s role in building unity and peace in Southern Sudan ”“ especially in the run up to next year’s elections and the 2011 referendum on secession from the North, as well as in the wake of recent Zande-Dinka clashes over cattle grazing. The Archbishop reminded the assembled that God had put all the Southern Sudanese tribes together, so to reject this and fight amongst themselves not only played into the hands of those “enemies of the Comprehensive Peace Agreement (CPA)” both in the North and the South, but was also to go against God’s wishes.
The Archbishop gave his promise to do everything he could to spread peace and unity in Southern Sudan, and told all the faithful gathered to do the same. “Pastors are not for one place, they are international” he said, adding “if the white people could come here and preach the Gospel, why can’t we go to other bits of Southern Sudan and do the same? It is only through Jesus Christ that our people will truly be one”. He closed by encouraging all church groups to stand up and lead Southern Sudan to peace and unity.
“I feel so much more joy and peace coming here,” said Nancy McBride, a resident of Palos Verdes Estates who left St. Francis Episcopal Church about five years ago and now attends Christ Our Savior. “What I know is right, and I no longer have to defend that view.”
John Whitmeyer, also a lifelong Episcopalian, came Sunday at the invitation of McBride, but describes him as “on the fence” when it comes to switching churches.
“It’s hard to leave a church where all your friends are,” said Whitmeyer, who has attended St. Francis since 1960. “I don’t want to leave the Episcopal church, but it is a ship that’s sinking.”
A.I.G.’s financial statements provided a clue to the identities of some of its credit default swap counterparties. The company said that almost three-quarters of the $441 billion it had written on soured mortgage securities was bought by European banks. The banks bought the insurance to reduce the amounts of capital they were required by regulators to set aside to cover future losses.
Enjoy the absurdity: Billions in unregulated derivatives that were about to take down the insurance company that sold them were bought by banks to get around their regulatory capital requirements intended to rein in risk.
Got that?
Which brings us to Item 2 for policy makers. Stop pretending that the $62 trillion market for credit default swaps does not need regulatory oversight. Warren E. Buffett was not engaging in hyperbole when he called these things financial weapons of mass destruction.
“The last eight years have been about permitting derivatives to explode, knowing they were unregulated,” said Eric R. Dinallo, New York’s superintendent of insurance. “It’s about what the government chose not to regulate, measured in dollars. And that is what shook the world.”
Read it all. I didn’t catch this piece until this morning, but please note once again the absolutely crucial role of the Credit Default Swaps market–KSH
It was a message he never expected to deliver. Henry Paulson””free-market thinker, former CEO of Goldman Sachs and Treasury secretary to a conservative Republican president””was unveiling to the world a massive taxpayer bailout of the American financial system. Afterward, as he headed into yet another weekend of nonstop work with his team, carrying the weight of the troubled markets on his shoulders, the former college-football star was clearly conflicted about what he’d just proposed. “It’s very unpleasant for me, but it’s a lot more attractive than the alternative,” Paulson told NEWSWEEK. “We can spend a lot of time talking about how it happened and how we got here. But we have to get through the night first.”
Let us hope the old saw, about the night being darkest before the dawn, is true. Recent weeks certainly have been the darkest Wall Street has seen since October 1929. Investment banks that had survived the Great Depression, the crash of 1987 and the trauma of 9/11””venerable names like Lehman Brothers and Merrill Lynch””fell by the wayside. They were just the latest victims in the subprime-mortgage and credit debacle that has taken down banks and lenders across the country, and yanked the dream of homeownership away from millions of Americans. For the past several months, the government’s solution to the problem has been to make a series of Solomonic decrees about who would live and who would die. Investment bank Bear Stearns? “Too big to fail,” the government decreed, arranging a sale of the firm to JPMorgan Chase. Lehman Brothers? It must be sacrificed and file for bankruptcy. Overextended homeowners? Try renting. The nation’s largest mortgage companies, Fannie Mae and Freddie Mac? Bail them out and let taxpayers foot the bill. AIG, the world’s largest insurer? Uncle Sam owns it now.
Wielding much of this power over financial life and death is this tall, calm man. Paulson came to Washington from Wall Street in 2006 expecting to deal with issues like Social Security reform and trade agreements. But the economy had other ideas. At a time when President Bush seems to have largely checked out, the teetotaling 62-year-old has emerged as the nation’s most powerful leader””the investment banker in chief. As he did on the Street, Paulson continues to advise CEOs on the best course of action, to arrange financing and to get the best terms possible for his clients. Only now his clients are American taxpayers, the president and the global financial system.
Yes, greed is ever with us, at least until Washington transforms human nature. The wizards of Wall Street and London became ever more inventive in finding ways to sell mortgages and finance housing. Some of those peddling subprime loans were crooks, as were some of the borrowers who lied about their incomes. This is what happens in a credit bubble that becomes a societal mania.
But Washington is as deeply implicated in this meltdown as anyone on Wall Street or at Countrywide Financial. Going back decades, but especially in the past 15 or so years, our politicians have promoted housing and easy credit with a variety of subsidies and policies that helped to create and feed the mania. Let us take the roll of political cause and financial effect:
– The Federal Reserve. The original sin of this crisis was easy money. For too long this decade, especially from 2003 to 2005, the Fed held interest rates below the level of expected inflation, thus creating a vast subsidy for debt that both households and financial firms exploited. The housing bubble was a result, along with its financial counterparts, the subprime loan and the mortgage SIV.
Fed Chairmen Alan Greenspan and Ben Bernanke prefer to blame “a global savings glut” that began when the Cold War ended. But Communism was dead for more than a decade before the housing mania took off. The savings glut was in large part a creation of the Fed, which flooded the world with too many dollars that often found their way back into housing markets in the U.S., the U.K. and elsewhere.
We’ve looked at the [Housing] bubble question and we’ve concluded that it is most unlikely.
It’s a rare day when finance officials, leftist intellectuals and ordinary salespeople can agree on something. But the economic meltdown that wrought its wrath from Rome to Madrid to Berlin this week brought Europeans together in a harsh chorus of condemnation of the excess and disarray on Wall Street.
The finance minister of Italy’s conservative and pro-U.S. government warned of nothing less than a systemic breakdown. Giulio Tremonti excoriated the “voracious selfishness” of speculators and “stupid sluggishness” of regulators. And he singled out Alan Greenspan, the former chairman of the U.S. Federal Reserve, with startling scorn.
“Greenspan was considered a master,” Tremonti declared. “Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most. . . . It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis.”
…a note from Jon Hatzius, the Goldman analyst who was an early housing/financial firm bear and has forecast that credit-related losses to the economy will reach $2 trillion. His outline of what the rescue program must do:
Basically, I see three main conditions for resolving the crisis (a slicker marketer would call them “The Three R’s”):
a) Recognition. We need to find out what the assets on the balance sheets of banks and other financial institutions are really worth, and what the balance sheets of the most troubled institutions look like under a regime of realistic marks.
b) Recapitalization. The US banking system needs a lot more capital. Credit losses are depleting equity capital, and deleveraging increases the required equity capital per unit of balance sheet capacity. So capital infusions are needed to avert a sharp contraction in lending.
c) Relief. In many cases, we need to restructure the loan terms of homeowners who lack the ability (or economic incentive) to service their mortgage. This isn’t just in the interest of the homebuyers, but it’s often also in the interest of the lender (given the cost of foreclosure) and certainly in the interest of the macroeconomy (given the feedback effects between foreclosures, home prices, and economic performance)….
In any case, recognition is only a start. In fact, recognition actually increases the need for recapitalization because it brings capital shortfalls out into the open. So it will be important to see how the Treasury proposal addresses this. Do they force banks to seek equity infusions from private investors in a specified time period? Do they simply “pay over the odds” for the assets (this would promote recapitalization but jeopardize recognition)? Is part of the program earmarked for the purchase of preferred stock in banks? Or is there a public/private partnership scheme such as an issuance of publicly financed puts in e xchange for warrants for would-be private investors?
Congressional Democrats began to set their own terms on Sunday for a plan to rescue the nation’s financial institutions, including greater legislative oversight of the Treasury Department, more direct assistance for homeowners and limits on the pay of top executives whose firms seek help.
The Democrats’ demands came as Treasury Secretary Henry M. Paulson Jr. blanketed the Sunday talk shows to promote the Bush administration’s $700 billion bailout package, emphasizing that it was needed not just for Wall Street, but for all Americans. He urged Congress to move swiftly to approve a “clean” rescue plan without tacking on extra programs.
“I hate the fact that we have to do it, but it’s better than the alternative,” Mr. Paulson said on “Fox News Sunday.”
The financial crisis that began in the United States spread to many corners of the globe. Now, the American bailout looks as if it is going global, too, a move that could raise its cost and intensify scrutiny by Congress and critics.
Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks.
On Sunday, the Treasury secretary, Henry M. Paulson Jr., indicated in a series of appearances on morning talk shows that an original proposal introduced on Saturday had been widened. “It’s a distinction without a difference whether it’s a foreign or a U.S. one,” he said in an interview with Fox News.
The Communion has repeatedly asked TEC to make pastoral provisions and avoid steps that will alienate further those within TEC who wish to live by the Anglican faith which they believe to be true and remain in fellowship within the Anglican Communion. Even as recent[ly] as at the recent Lambeth, the great majority of Bishops present, including those from TEC, have expressed sincere desire for healing and reconciliation and to observe restraints on contentious issues for the Windsor-Covenant process to proceed.
The HOB has instead proceeded to depose a faithful bishop of the Gospel and the diocese under his care. This raises serious questions yet again, and more strikingly so soon after Lambeth, as to how sincere TEC and some of its bishops are in wanting to bring reconciliation, healing and resolution to the Communion crisis at hand.
All of us should. Below, John Mauldin wrote:
We absolutely must move credit default swaps to a regulated exchange, no matter how much investment banks and hedge funds scream. Must be done. Do it now. Real rules about writing mortgages, although now that losses are in the hundreds of billions, underwriting rules are already becoming quite restrictive.”
I cannot possibly tell you how important this is. Jim Chanos said something similar earlier in the week on CNBC. If I had to recommend ONE thing in what Congress and our national leadership does in the package they put together this week, it would be this. Remember: the few somewhat intelligent commentators this week on the crisis noted that the bond market is WAY bigger than the stock market, and was much more at the center of the real storm (see, e.g. Henry Paulson below).
Well, the CDS market is WAY, WAY bigger than the bond market. And it played a huge role””huge””in the exponential expansion of debt. And as we speak, someone like JP Morgan””right now””is expanding their off book CDS exposure by at least 150 billion/quarter.
We do not just need a regulated CDS market. We need a carefully thought through cessation of the huge off book CDS paired nonsense that is currently being undertaken and will continue to be undertaken by our financial institutions.
At lease one NY times reporter was somewhat onto the story. Please take the time to read Gretchen Morgenson’s articles here and there.
I find it simply incredible that this market is not being addressed under the current “plan.”
By the way, one of my very knowledgeable friends who has lots of industry ties thinks the current CDS market is now in the range of 90 trillion dollars (I think that is high, and it is more like 60-70 trillion, but no one really knows exactly). That’s up from $900 billion in 2000. Everett Dirksen would know that is a lot of money–KSH.
MR. BROKAW: The market did go up a record amount. Since 1987 it went up more than 600 points in two days. But that really is a false positive sign, as they would say in laboratory testing, isn’t it?
SEC’Y PAULSON: Yeah, I, I would say this. It’s not what we should be looking at. It is not what we should be looking at. The stock market going up and down is not what we should be looking at. We need to look at what’s going on in the credit markets, and they are still very fragile right now and frozen. And we need to do something to deal with this and deal with it quickly.
MR. BROKAW: There is a big political debate about whether, whether the fundamentals of the American economy are strong or not. Is it fair to say that the fundamentals of the American economy may not be strong, but, in fact, they’re staggering at the moment?
SEC’Y PAULSON: Well, what I should say is, I won’t bet against the American people. We’re an entrepreneurial people, a hard-working people, and we will work through this, we always do. I wouldn’t bet against the American people, and I wouldn’t bet against the long-term fundamentalists of this country. But this is a humbling experience to see so much fragility in our capital markets and to ask how did we ever get here.
Read it all. I enjoyed the interview with Mayor Michael Bloomberg also.
The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post.
Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level – a 22 percent decline! – while the clang of the opening bell was still echoing around the cavernous exchange floor.
According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning.
The panicked selling was directly linked to the seizing up of the credit markets – including a $52 billion constriction in commercial paper – and the rumors of additional money market funds “breaking the buck,” or dropping below $1 net asset value.
We absolutely must move credit default swaps to a regulated exchange, no matter how much investment banks and hedge funds scream. Must be done. Do it now. Real rules about writing mortgages, although now that losses are in the hundreds of billions, underwriting rules are already becoming quite restrictive.
At first, I didn’t recognize the place.
On Karada Mariam, a street that runs over the Tigris River toward the Green Zone, the Serwan and the Zamboor, two kebab places blown up by suicide bombers in 2006, were crammed with customers. Farther up the street was Pizza Napoli, the Italian place shut down in 2006; it, too, was open for business. And I’d forgotten altogether about Abu Nashwan’s Wine Shop, boarded up when the black-suited militiamen of the Mahdi Army had threatened to kill its owners. There it was, flung open to the world.
Two years ago, when I last stayed in Baghdad, Karada Mariam was like the whole of the city: shuttered, shattered, broken and dead.
Abu Nawas Park ”” I didn’t recognize that, either. By the time I had left the country in August 2006, the two-mile stretch of riverside park was a grim, spooky, deserted place, a symbol for the dying city that Baghdad had become.
These days, the same park is filled with people: families with children, women in jeans, women walking alone. Even the nighttime, when Iraqis used to cower inside their homes, no longer scares them. I can hear their laughter wafting from the park. At sundown the other day, I had to weave my way through perhaps 2,000 people. It was an astonishing, beautiful scene ”” impossible, incomprehensible, only months ago.
Of all the points raised by different analysts about the economy last week, surely the best was Representative Barney Frank’s reminder on “Charlie Rose” that Ronald Reagan’s favorite laugh line was telling audiences that: “The nine most terrifying words in the English language are: ”˜I’m from the government, and I’m here to help.’ ”
Hah, hah, hah.
Are you still laughing? If it weren’t for the government bailing out Fannie Mae, Freddie Mac and A.I.G., and rescuing people from Hurricane Ike and pumping tons of liquidity into the banking system, our economy would be a shambles. How would you like to hear the line today: “I’m from the government, and I can’t do a darn thing for you.”
In this age of globalization, government matters more than ever….
Those are the kind of words that would get my attention. The last president who challenged his base was Bill Clinton, when he reformed welfare and created a budget surplus with a fair and equitable tax program. George W. Bush never once ”” not one time ”” challenged Americans to do anything hard, let alone great. The next president is not going to have that luxury. He will have to ask everyone to do something hard ”” and I want to know now who is up to that task.
Bipartisan support appeared to be emerging Sunday among American lawmakers to give quick approval to a vast bailout of financial institutions.
The Bush administration has proposed granting unfettered authority for the Treasury Department to buy up to $700 billion in distressed mortgage-related assets from private firms as part of a program that Treasury Secretary Henry M. Paulson Jr. said “has to work.”
“I hate the fact that we have to do it, but it’s better than the alternative,” Mr. Paulson said on “Fox News Sunday.” “This is a humbling, humbling time for the United States of America.”
The proposal, presented on Saturday, would raise the national debt ceiling to $11.3 trillion and would place no restrictions on the administration other than requiring semiannual reports to Congress while allowing the Treasury secretary unprecedented power to buy and resell mortgage debt.
With some estimates that the program could involve the purchase of as much as $1 trillion in assets from private firms, Mr. Paulson emphasized that the true cost would be “determined by how quickly the economy recovers and how quickly housing prices stabilize.”
And that really is the crux of the matter ”” the financial system has seized up. But so far, the government’s actions haven’t helped. Letting Lehman go bust may have sounded good at the time, but it has had disastrous consequences.
It has led to complete chaos in the multitrillion-dollar market for credit-default swaps and was a crucial reason Morgan Stanley was forced to scramble to stay alive this week. It is also why questions were raised about the viability of Goldman Sachs, a firm with a pristine balance sheet and almost none of the bad assets that are bringing down other firms.
The rescue of A.I.G. further undermined confidence because, within the space of several days, the government did a complete about-face. The bailout suggested the Treasury Department was as confused about what to do as the rest of us.
So rather than help solve the crisis, the Treasury Department has actually contributed to the biggest problem in the market right now: an utter lack of confidence.
Nobody understands who owes what to whom ”” or whether they have the ability to pay. Counterparties have become afraid to trade with each other. Sovereign wealth funds are no longer willing to supply badly needed capital because they no longer know what they are investing in. The crisis continues because nobody knows what anything is worth. You simply cannot have a functioning market under such circumstances.
Will this latest round of proposals end the crisis? I know the stock market reacted joyously on Friday, but I’m not hopeful….