Friday, November 23, 2007
Food prices: Africa shows first signs of trouble
Recent violent unrest over soaring food prices in several West African nations points to new signs of trouble on a continent where nearly half the people live on a dollar a day, experts warn.After Mauritania and Morocco, Senegal this week was the latest country hit by violent protests.The United Nations Food and Agriculture Organisation chief Jacques Diouf last month warned of a "risk of social and political troubles in Third World nations in the months or years to come" due to the global rise in cereal prices."Soaring international prices have obviously had much more impact in the countries that depend a lot on imports for their [food] needs," UN World Food Programme (WFP) spokesperson for West Africa Stephanie Savariaud told Agence France-Presse.The mounting demand for biofuels and escalating prices of fossil fuels mean farmers cultivate less food in preference of fast cash-spinning biofuel crops.And the internationally rising oil prices are reflected in imported food costs."The growing demand for biofuels and the high prices of fossil fuel have a dramatic impact on millions of people," said Savariaud."Food prices in Mauritania, Guinea-Bissau and Senegal shot up steeply in 2007," she said, citing countries that depend heavily on imported staples.In the vast and arid Mauritania, where national cereal output is less than 30% of needs, the price of imported flour shot up nearly 100% -- from $200 per ton last year to $360 in September, according to WFP.Shops there were vandalised and torched earlier this month to protest spiralling food prices, leaving one person dead and 17 wounded.In Morocco, about 50 people were injured during September food protests.Escalating food prices have affected almost every nation on the continent, but so far without sparking the kind of violent outbreaks witnessed in West Africa, home to the greatest number of the world's most poverty-stricken countries.Chances of controlling the high food bills are not easy in the short term, warned FAO chief of Global Information and Early Warning System, Henri Josserand."It is something that cannot be changed quickly," he said."Prospects are not good for countries that strongly rely on imports because in the short-to-medium term, we forecast that food prices will remain extremely firm, at least in the next 10 years," Josserand said.Countries are therefore left with no choice but to change dietary habits by substituting imports with local produce, said Josserand. But home-grown food production is also threatened by climate change, with the continent facing desertification and in cases oscillating between extreme conditions of droughts and floods.Climate change might mean African countries that depend on rain for food production would harvest half their normal output 12 years from now, WFP chief Josette Sheeran warned during a visit to West Africa last week.Climate change, rising food prices and population growth could combine to create a "perfect storm" on the continent, she said.Already in the Democratic Republic of Congo, for example, three-quarters of the 60-million people don't have enough food and 1,5-million are actually facing hunger, according to WFP.And so far, the leading coping mechanism is hunger.From Côte d'Ivoire in West Africa to Southern Africa's worst-hit Zimbabwe, already buckling under the world's highest inflation rate, families have no option but to skip a meal or two a day in an effort to stretch the little available. -- Sapa-AFP
http://www.mg.co.za/articlePage.aspx?articleid=325865&area=/breaking_news/breaking_news__africa/
This is biblical ---- Famine will take 1/3
Saturday, November 17, 2007
Russian Military Chief Calls America "Evil"
'Russias top military chief has dubbed America "evil" while cautioning that the "insidious" U.S. missile defense shield weapons system has nothing to do with countering Iran and is aimed squarely at Moscow, as tensions continue to heat between the two superpowers.';
Russian Military Chief Calls America "Evil" Baluyevsky says U.S. missile defense is aimed at Moscow as tensions rise
Prison Planet November 13, 2007 Paul Joseph Watson
Russia's top military chief has dubbed America "evil" while cautioning that the "insidious" U.S. missile defense shield weapons system has nothing to do with countering Iran and is aimed squarely at Moscow, as tensions continue to heat between the two superpowers.
The Chief of the Russian General Staff, Gen. Yury Baluyevsky told Russia Today , an English-language state TV channel, that Washington's plans to place a radar in the Czech Republic and ten missile interceptors in Poland supposedly to counter Iran was just a pretext to deploy weaponry close to Russia's borders.
"If the Americans deploy the radar by 2011 and anti-ballistic missiles by 2012-2013, they will certainly be directed against Russia, and we can easily prove it," said Baluyevsky.
(Article Continues Below)
"There will be no Iranian threat to the United States in the near future. Iran will be unable to create intercontinental ballistic missiles capable of reaching the United States until at least 2020," he added.
In the same interview , Baluyevsky labeled America as "evil" and swore to defend Russian military interests while absolving Russia of the responsibility of defending the rest of the world against American imperialism.
"Today, there is no need to be afraid of the Russian Armed Forces. However, I do not believe that the Russian military is obliged to defend the world from the evil Americans," he said.
Baluyevsky's inflammatory comments are likely to sour increasingly hostile relations between Washington and Moscow and they come just a month after Russian President Vladimir Putin compared the Pentagon's plan to deploy weapons in central Europe to the Soviet Union's 1962 deployment of nuclear missiles in Cuba, which led to the Cuban Missile Crisis and brought the world to the brink of nuclear war.
http://infowars.com/articles/ww3/russia_military_chief_calls_america_evil.htm
Soviet plan for WW3 nuclear attack unearthed
Soviet plan for WW3 nuclear attack unearthedBy Henry Samuel in Paris
Last Updated: 3:54am BST 21/09/2007
Chilling Soviet plans to launch massive nuclear strikes in Europe followed by a ground offensive in Germany and southern France have been unearthed by a Nato historian.
Soviet troops were to storm across Europe
According to scenarios drafted in 1964, Warsaw Pact forces planned to use 131 tactical nuclear missiles and bombs to sideline NATO armaments and destroy Western Europe’s political and communications centres, in the event of an “imperialist” strike.
In an alarming insight into the “Doctor Strangelove” mindset of Soviet strategists, the Czechoslovak People’s Army, CSLA, was then expected to immediately march over deadly radioactive landscape and invade Nuremburg, Stuttgart and Munich, then bastions of West Germany.
On the ninth day the troops would take Lyon, south eastern France.
Soviet reinforcements would then continue the offensive towards the Pyrenees in the west.
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Historian Petr Lunak from NATO’s information office in Brussels, found the 17-page Warsaw Pact plan while sifting through declassified communist-era documents in Prague’s military archives.
“Russians outlined the general (war) plan, while the (leaders of) individual Warsaw Pact armies prepared precise military blueprints, with details on front lines, deployment of troops and arms,” said Mr Lunak.
The text, written in Russian and entitled CSLA Plan of Action for a War Period, was signed by the Czech defence minister of the time and carried president Antonin Novotny’s stamp of approval.
According to Mr Lunak, the plan was still an option until 1986, three years before the fall of the Berlin Wall.
It was shelved by Vaclav Havel in 1990 when he was elected Czech president.
While most Western planners were convinced that any first strike would lead to total mutual destruction, the plan - written in matter-of-fact language - shows that Warsaw Pact nations presumed a massive ground war would follow nuclear attacks.
Mr Lunak described the military plans as “fairy tale” thinking based on World War II warfare: “They (the Soviets) really planned to send ground troops out in the field and have them fight for a few days until they died from radiation,” he said.
The final draft of the invasion plan was completed under Soviet Communist Party chief Nikita Khrushchev, shortly after the 1961 Cuban missile crisis, when the United States and the Soviet Union had teetered on the brink of war.
According to the Prague documents, Moscow’s commanders fully expected western “imperialists” to make the first nuclear strike.
Mr Lunak includes the plans, as well as interviews with Czech generals of the time in his book, Planning the Unthinkable: Czechoslovak War Plans, 1950-1990.
The first English translation of the text was published earlier this month by the Parallel History Project on Cooperative Security, which analyses and publishes declassified NATO and Warsaw Pact archives.
Vojtech Mastny, a senior fellow at the National Security Archive in Washington, D.C., who coordinates the project, said the 1964 document is the first such detailed war plan to come to light. “There’s no doubt that the plan would have been used if the green light was given from above - the political leadership of the communist bloc,” he said.
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/09/20/wwthree120.xml
Last Updated: 3:54am BST 21/09/2007
Chilling Soviet plans to launch massive nuclear strikes in Europe followed by a ground offensive in Germany and southern France have been unearthed by a Nato historian.
Soviet troops were to storm across Europe
According to scenarios drafted in 1964, Warsaw Pact forces planned to use 131 tactical nuclear missiles and bombs to sideline NATO armaments and destroy Western Europe’s political and communications centres, in the event of an “imperialist” strike.
In an alarming insight into the “Doctor Strangelove” mindset of Soviet strategists, the Czechoslovak People’s Army, CSLA, was then expected to immediately march over deadly radioactive landscape and invade Nuremburg, Stuttgart and Munich, then bastions of West Germany.
On the ninth day the troops would take Lyon, south eastern France.
Soviet reinforcements would then continue the offensive towards the Pyrenees in the west.
advertisement
Historian Petr Lunak from NATO’s information office in Brussels, found the 17-page Warsaw Pact plan while sifting through declassified communist-era documents in Prague’s military archives.
“Russians outlined the general (war) plan, while the (leaders of) individual Warsaw Pact armies prepared precise military blueprints, with details on front lines, deployment of troops and arms,” said Mr Lunak.
The text, written in Russian and entitled CSLA Plan of Action for a War Period, was signed by the Czech defence minister of the time and carried president Antonin Novotny’s stamp of approval.
According to Mr Lunak, the plan was still an option until 1986, three years before the fall of the Berlin Wall.
It was shelved by Vaclav Havel in 1990 when he was elected Czech president.
While most Western planners were convinced that any first strike would lead to total mutual destruction, the plan - written in matter-of-fact language - shows that Warsaw Pact nations presumed a massive ground war would follow nuclear attacks.
Mr Lunak described the military plans as “fairy tale” thinking based on World War II warfare: “They (the Soviets) really planned to send ground troops out in the field and have them fight for a few days until they died from radiation,” he said.
The final draft of the invasion plan was completed under Soviet Communist Party chief Nikita Khrushchev, shortly after the 1961 Cuban missile crisis, when the United States and the Soviet Union had teetered on the brink of war.
According to the Prague documents, Moscow’s commanders fully expected western “imperialists” to make the first nuclear strike.
Mr Lunak includes the plans, as well as interviews with Czech generals of the time in his book, Planning the Unthinkable: Czechoslovak War Plans, 1950-1990.
The first English translation of the text was published earlier this month by the Parallel History Project on Cooperative Security, which analyses and publishes declassified NATO and Warsaw Pact archives.
Vojtech Mastny, a senior fellow at the National Security Archive in Washington, D.C., who coordinates the project, said the 1964 document is the first such detailed war plan to come to light. “There’s no doubt that the plan would have been used if the green light was given from above - the political leadership of the communist bloc,” he said.
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/09/20/wwthree120.xml
Russia abandons arms treaty
Russia abandons arms treaty
Geskryf deur Yahoonews
Saterdag, 17 November 2007
The Russian senate voted Friday to suspend compliance with a key Cold War treaty limiting conventional military forces across Europe, drawing renewed Western criticism.The unanimous vote in the upper house Federation Council followed last week's decision in the lower house of parliament, the State Duma, to freeze Moscow's participation in the Conventional Forces in Europe (CFE) treaty from December 12.The 1990 CFE treaty places strict limitations on the deployment of tanks and other military hardware across Europe.President Vladimir Putin ordered the moratorium on July 13 amid a row over US plans to install an anti-missile shield in eastern Europe.In a statement, the Federation Council said Russia had been forced to look at suspending the treaty "for as long as all the countries of NATO have not ratified" an adapted version of the accord.General Yury Baluyevsky, Russia's chief of the general staff, said the move was "the correct, logical step from the political and military point of view," ITAR-TASS news agency reported.Responding to Friday's vote the Western military alliance NATO reiterated earlier criticism it had made."Any measure which takes forward the process by which Russia would unilaterally withdraw from the treaty is regrettable," said NATO spokesman James Appathurai.The state-run RIA Novosti news agency said Russia could still return to the CFE if Putin reversed parliament's decision.But a NATO diplomat, requesting anonymity, questioned what Russia meant by suspending the treaty, saying it contained no provision for suspension and that Moscow was intentionally muddying the waters."Russia's decision to use the term 'suspension' only adds an element of doubt," he said."Does this mean the CFE treaty is dead? Nothing is clear. It's an ambiguous situation that could satisfy both parties," he said.The treaty's demise highlights deteriorating relations between Moscow and countries of the Atlantic alliance as Putin's administration pushes to reassert Russia on the international stage."This will be an indicator of Russia's seriousness in its uncompromising stand on ensuring its defensive capabilities, including in answer to US plans to put anti-missile defences in eastern Europe," State Duma deputy Leonid Slutsky told ITAR-TASS.Last week Deputy Defence Minister Alexander Kolmakov said that plans were being considered for boosting troop deployments on the western flank, something impossible under the CFE.This is not the first indication of a return to Cold War-style tensions.Russia has also this year renewed long-distance strategic bomber patrols, threatened to retarget nuclear missiles at European cities, and to withdraw from other bedrock disarmament treaties.Moscow says the CFE is not working because an updated version agreed on in 1999 has been ratified by Russia, but not by NATO countries.NATO members, led by the United States, say they cannot ratify the pact because of Russia's military presence in ex-Soviet Georgia and Moldova.But for NATO, Appathurai stressed: "NATO countries want to see the adapted treaty enter into force as soon as possible."Although Russia this week handed over a third Soviet-era base to the pro-Western Georgian authorities, there is controversy over a fourth.Although Russia says that the base has been decommissioned, Georgian officials are unable to inspect the facility because it is in the Russian-backed separatist Abkhazia region.Adding to the tension is the growing unease in the West with wide-ranging limitations imposed by Putin on democratic reforms and what critics call Russia's aggressive use of massive energy resources.Moscow accuses Washington of interfering in Russia's backyard and attempting to rule the world as the sole superpower.Speaking about the decision to quit the CFE, Baluyevsky said: "The US and NATO political leadership hoped that Russia would flinch at the last moment and not take the decision about introducing a moratorium," RIA Novosti reported
http://www.praag.org/mambo/index.php?option=com_content&task=view&id=1138&Itemid=107
Geskryf deur Yahoonews
Saterdag, 17 November 2007
The Russian senate voted Friday to suspend compliance with a key Cold War treaty limiting conventional military forces across Europe, drawing renewed Western criticism.The unanimous vote in the upper house Federation Council followed last week's decision in the lower house of parliament, the State Duma, to freeze Moscow's participation in the Conventional Forces in Europe (CFE) treaty from December 12.The 1990 CFE treaty places strict limitations on the deployment of tanks and other military hardware across Europe.President Vladimir Putin ordered the moratorium on July 13 amid a row over US plans to install an anti-missile shield in eastern Europe.In a statement, the Federation Council said Russia had been forced to look at suspending the treaty "for as long as all the countries of NATO have not ratified" an adapted version of the accord.General Yury Baluyevsky, Russia's chief of the general staff, said the move was "the correct, logical step from the political and military point of view," ITAR-TASS news agency reported.Responding to Friday's vote the Western military alliance NATO reiterated earlier criticism it had made."Any measure which takes forward the process by which Russia would unilaterally withdraw from the treaty is regrettable," said NATO spokesman James Appathurai.The state-run RIA Novosti news agency said Russia could still return to the CFE if Putin reversed parliament's decision.But a NATO diplomat, requesting anonymity, questioned what Russia meant by suspending the treaty, saying it contained no provision for suspension and that Moscow was intentionally muddying the waters."Russia's decision to use the term 'suspension' only adds an element of doubt," he said."Does this mean the CFE treaty is dead? Nothing is clear. It's an ambiguous situation that could satisfy both parties," he said.The treaty's demise highlights deteriorating relations between Moscow and countries of the Atlantic alliance as Putin's administration pushes to reassert Russia on the international stage."This will be an indicator of Russia's seriousness in its uncompromising stand on ensuring its defensive capabilities, including in answer to US plans to put anti-missile defences in eastern Europe," State Duma deputy Leonid Slutsky told ITAR-TASS.Last week Deputy Defence Minister Alexander Kolmakov said that plans were being considered for boosting troop deployments on the western flank, something impossible under the CFE.This is not the first indication of a return to Cold War-style tensions.Russia has also this year renewed long-distance strategic bomber patrols, threatened to retarget nuclear missiles at European cities, and to withdraw from other bedrock disarmament treaties.Moscow says the CFE is not working because an updated version agreed on in 1999 has been ratified by Russia, but not by NATO countries.NATO members, led by the United States, say they cannot ratify the pact because of Russia's military presence in ex-Soviet Georgia and Moldova.But for NATO, Appathurai stressed: "NATO countries want to see the adapted treaty enter into force as soon as possible."Although Russia this week handed over a third Soviet-era base to the pro-Western Georgian authorities, there is controversy over a fourth.Although Russia says that the base has been decommissioned, Georgian officials are unable to inspect the facility because it is in the Russian-backed separatist Abkhazia region.Adding to the tension is the growing unease in the West with wide-ranging limitations imposed by Putin on democratic reforms and what critics call Russia's aggressive use of massive energy resources.Moscow accuses Washington of interfering in Russia's backyard and attempting to rule the world as the sole superpower.Speaking about the decision to quit the CFE, Baluyevsky said: "The US and NATO political leadership hoped that Russia would flinch at the last moment and not take the decision about introducing a moratorium," RIA Novosti reported
http://www.praag.org/mambo/index.php?option=com_content&task=view&id=1138&Itemid=107
Friday, November 16, 2007
S.African Farm Murders: Who is actually behind them?
From the News Archives of: WWW.AfricanCrisis.OrgDate & Time Posted: 12/30/2006
S.African Farm Murders: Who is actually behind them?
[Here is another piece concerning Farm Murders and what I was told directly by someone senior in one of the few remaining Commando Units. The Govt will be shutting down ALL of the Commando units. So far, 70 of the 90 commando units have already been shut down.The Commando units have been in existence for over a century and they are volunteer groups who protect the rural areas. The man I spoke to spoke from personal experience of things he had seen and operations he had been on.He told me that while the "Commandos" have been offered positions in the Police Reserve, that most of them will NOT join the Police Reserve. He said that the view of many of them is that the Police PART OF THE PROBLEM. They feel that shutting down the commandos is a way of "disarming" them and that in the long term, they expect this to cause the Farm Murder rate to pick up once more!He told me that in the course of his Commando duties, he and many others were sent on courses and they interacted with other specialists. He told me a fascinating thing which I did not know. He said that both the Police and the South African Army have got specialised units that investigate Farm Murders! (I never knew this and never saw it mentioned in the news). He said there are specialists who go to the scene of every single farm murder and they take photos and get video footage. They gather STACKS of data quietly. He said one guy once showed them on his laptop photos of farm murders. He said you could name any farm murder incident and this guy would pull up photos of the murder. He said he saw all sorts of horrific stuff including people with pieces of wire around their throats, etc. *ALL* Farm murders are documented - but its just not available to the public.He said these officers are very interested in defeating this farm murder scourge. But he said that in discussions with some of these people, he realised that they are very unhappy themselves and that they know they will be worked out of the system - and ultimately removed from the Army, etc. They have in the course of their duties come across very fascinating information. He said that informally, when "chatting", some of these people have hinted at their "belief" that Farm Murders are orchestrated by particular political forces. I use the word "belief" above, but later you'll see some of the hard evidence they have uncovered. He said there is talk about "communism" being behind the farm murders - and I will deal on the possible Eastern European connection in another post. There is also a whole "underground crime organisation" that may be linked to farm murders and all these things may work together. However, he said there is "talk" that three particular people connected to the ANC are actually the driving force behind the Farm Murders. The three names he has heard people talk of are:-1. Jacob Zuma (former Deputy President that Mbeki fired but whom the commies love and who will try to stand for President in 2009).2. Jackie Selebi - the man who heads our national Police force. (In recent months the Mass Media has been bringing up hard evidence showing Jackie Selebi's connections to organised crime). 3. Mosiuoa Lekota - the Minister of Defense here in S.Africa. (Interestingly, when I spoke to PW Botha shortly before his death he also mentioned that he thinks Lekota is a very dangerous man. He did not elaborate on what made him think that. The Media love him, but PW had another view of him which surprised me).My informant told me that some of these people in these specialised Police/Army Farm Murder units are themselves very demoralised and they know that their careers won't last. Jan]
http://www.africancrisis.org/default2.asp
S.African Farm Murders: Who is actually behind them?
[Here is another piece concerning Farm Murders and what I was told directly by someone senior in one of the few remaining Commando Units. The Govt will be shutting down ALL of the Commando units. So far, 70 of the 90 commando units have already been shut down.The Commando units have been in existence for over a century and they are volunteer groups who protect the rural areas. The man I spoke to spoke from personal experience of things he had seen and operations he had been on.He told me that while the "Commandos" have been offered positions in the Police Reserve, that most of them will NOT join the Police Reserve. He said that the view of many of them is that the Police PART OF THE PROBLEM. They feel that shutting down the commandos is a way of "disarming" them and that in the long term, they expect this to cause the Farm Murder rate to pick up once more!He told me that in the course of his Commando duties, he and many others were sent on courses and they interacted with other specialists. He told me a fascinating thing which I did not know. He said that both the Police and the South African Army have got specialised units that investigate Farm Murders! (I never knew this and never saw it mentioned in the news). He said there are specialists who go to the scene of every single farm murder and they take photos and get video footage. They gather STACKS of data quietly. He said one guy once showed them on his laptop photos of farm murders. He said you could name any farm murder incident and this guy would pull up photos of the murder. He said he saw all sorts of horrific stuff including people with pieces of wire around their throats, etc. *ALL* Farm murders are documented - but its just not available to the public.He said these officers are very interested in defeating this farm murder scourge. But he said that in discussions with some of these people, he realised that they are very unhappy themselves and that they know they will be worked out of the system - and ultimately removed from the Army, etc. They have in the course of their duties come across very fascinating information. He said that informally, when "chatting", some of these people have hinted at their "belief" that Farm Murders are orchestrated by particular political forces. I use the word "belief" above, but later you'll see some of the hard evidence they have uncovered. He said there is talk about "communism" being behind the farm murders - and I will deal on the possible Eastern European connection in another post. There is also a whole "underground crime organisation" that may be linked to farm murders and all these things may work together. However, he said there is "talk" that three particular people connected to the ANC are actually the driving force behind the Farm Murders. The three names he has heard people talk of are:-1. Jacob Zuma (former Deputy President that Mbeki fired but whom the commies love and who will try to stand for President in 2009).2. Jackie Selebi - the man who heads our national Police force. (In recent months the Mass Media has been bringing up hard evidence showing Jackie Selebi's connections to organised crime). 3. Mosiuoa Lekota - the Minister of Defense here in S.Africa. (Interestingly, when I spoke to PW Botha shortly before his death he also mentioned that he thinks Lekota is a very dangerous man. He did not elaborate on what made him think that. The Media love him, but PW had another view of him which surprised me).My informant told me that some of these people in these specialised Police/Army Farm Murder units are themselves very demoralised and they know that their careers won't last. Jan]
http://www.africancrisis.org/default2.asp
In Subprime Crisis, the Worst Is Yet to Come
In Subprime Crisis, the Worst Is Yet to Come
By Beat Balzli and Frank Hornig
The consequences of the US real estate crisis are far greater than previously suspected. Wall Street could face losses of over $200 billion, and German banks are unlikely to escape unscathed. The full extent of the disaster will not be known for months.
AP
The full extent of the fall-out from the subprime crisis is still not known.Only a few weeks ago, in October, the world still seemed a fairly orderly place to Charles Prince, the chairman and CEO of Citigroup. Although the bank's earnings were already heading south as a result of the subprime crisis (more...), Citigroup's largest individual shareholder, Saudi Arabian Prince Alwaleed bin Talal, wasn't losing his cool. What was happening on the financial markets was a "mere hiccup," the Arab multibillionaire explained.
A short time later, at the beginning of last week, it was time for another Citigroup executive to take the company jet to the Saudi Arabian capital Riyadh for some urgently needed damage control. Until 2003, Sandy Weill (more...) was chairman of Citigroup, the world's biggest bank at the time. Weill, who is now 74, is credited with having expanded the company in the 1990s into the broadly diversified financial services conglomerate it is today. Now his life's work was in jeopardy.
FROM THE MAGAZINE
Find out how you can reprint this DER SPIEGEL article in your publication. Weill knew that the "hiccup" had quickly turned into a serious threat. "We discussed the situation, what was wrong and why things are happening like that," Prince Alwaleed told the magazine Fortune, describing his crisis meeting with Weill.
News of the meeting in Saudi Arabia sent faraway Wall Street into turmoil. Only a few days after Merrill Lynch CEO Stan O'Neal was let go, Citigroup chief executive Prince was also asked to clear his desk.
Both executives were guilty of a fundamental miscalculation. As a result, the two companies will each be forced to write off between $8 billion and $11 billion in bad debt. But, as dramatic as the events at Merrill Lynch and Citigroup were, they do not mark the end of the banking nightmare that began in mid-summer.
That was when the first financial institutions and hedge funds began issuing warnings that the US real estate bubble was on the verge of bursting. Many homeowners who had borrowed heavily against the equity in their homes, confident that real estate prices would continue to rise, were suddenly faced with the realization that they could no longer afford to keep up their mortgage payments.
PHOTO GALLERY: CASUALTIES OF THE SUBPRIME CRISIS
Click on a picture to launch the image gallery (6 Photos)The repercussions of the crisis have mushroomed since then, with billions at stake now instead of millions. And despite ongoing efforts by politicians and central banks to bring calm to the market, a crisis that began among smaller banks has since spread to the industry's giants.
The effects of the disaster on almost every major Wall Street institution and many European banks have been far more severe than previously supposed. The 10 biggest losers have already reported losses of more than $40 billion, and even this is only the beginning.
"I believe that we are still not aware of all the risks," said Alexander Dibelius, the head of investment bank Goldman Sachs's German office, only two weeks ago -- shortly before the CEOs at Citigroup and Merrill were let go.
Economists and central bankers are already predicting total losses in excess of $200 billion. "The bloodbath in credit and financial markets will continue and sharply worsen," Nouriel Roubini, a highly regarded American economist, recently wrote on his blog.
His fears stem from the fact that so far banks have only published their results for the third quarter of 2007, which, for most institutions, ended in August or September. The real estate crisis has worsened since then, with even greater losses expected for the fourth quarter.
The true scope of the debacle will likely become apparent only after annual financial statements are published next spring. Quarterly statements are an imperfect indicator, because they enable banks to defer their losses relatively unnoticed.
DER SPIEGEL
It's been a nasty few weeks for the global banking giants.One of the results of the dismal news is that, after weeks of rising prices, the US's leading stock market index, the Dow Jones, took a sharp downward turn in recent days. The central banks' efforts to improve the situation by increasing liquidity and lowering interest rates have evaporated like drops of water on a hot stone. Fear and suspicion are the prevailing sentiments on the world's stock markets. A banker in Frankfurt predicts: "We are just at the beginning of the second tsunami wave."
Its effects will likely extend beyond the banking sector. AIG, America's largest insurance group, is already reporting a 27-percent loss for the third quarter. In addition to the now notorious high-risk subprime mortgages, financial worries in the United States are now also being stoked by concern over subprime credit cards and subprime auto loans. For consumers unable to pay their mortgages, the monthly credit card bill or the car loan are also likely to present a problem.
With the price of oil close to the $100 mark and the dollar in a nosedive, the outlook for the US economy -- and the world economy -- is becoming increasingly bleak.
In a hearing before the US Congress last Thursday, Federal Reserve Chairman Ben Bernanke warned lawmakers of the consequences of the crisis: higher inflation, declining consumer spending and lower growth rates. On the same day, Bernanke's counterpart in the European Union, European Central Bank President Jean-Claude Trichet, expressed concern over what he called the "brutal moves" in the euro-dollar exchange rate.
To make matters worse, the banks' mortgage problem is developing into a crisis of confidence reminiscent of the collapse of the scandal-plagued US corporations Enron and WorldCom. The first investor lawsuit has already been filed, and the US market watchdog, the Securities and Exchange Commission (SEC), is taking a closer look at questionable accounting practices. New York Attorney General Andrew Cuomo has also launched his own investigations.
Part 2: Foolhardiness and Greed
But as complex as today's banking transactions are, the motives behind key players' actions are as simple as ever: foolhardiness and greed.
Take Stan O'Neal, for example. As chairman of Merrill Lynch, he pushed the company into increasingly risky real estate deals. Highly profitable in the short term, these deals earned O'Neal handsome bonuses. The fact that the entire model stood on shaky ground was water off a duck's back to O'Neal, who left the company with $162 million in severance pay.
PHOTO GALLERY: CASUALTIES OF THE SUBPRIME CRISIS
Click on a picture to launch the image gallery (6 Photos)To meet their profit goals, banking executives and their brokers had repeatedly delayed performing risk assessments of their financial instruments. "What would happen if Boeing Co. or Johnson & Johnson rolled out products with similar defect rates?" the Wall Street Journal asked rhetorically. The subprime crisis, the paper writes, acts as "a vital portal onto Wall Street, helping us understand just how upside-down the place has become."
In addition, the banks' boards of directors, blinded by the celebrity status of their senior executives, neglected to draft recruitment scenarios for top-level positions. The consequences of their neglect are now coming home to roost, as they face a limited selection of qualified candidates. The few remaining prospects, like Deutsche Bank Chairman Josef Ackermann, are suddenly in high demand.
Other US banks are also feeling the pinch. Morgan Stanley and Wachovia reported write-offs of $3.7 billion and $1.1 billion, respectively -- and those were only the numbers being reported late last week.
While Wall Street brokers are worried about their usually lavish Christmas bonuses, analysts at market research company CreditSights are busy calculating expected losses for the fourth quarter. Their predictions include a loss of $5.1 billion at Goldman Sachs, $3.9 billion at Lehman Brothers and $3.2 billion at Bear Stearns, whose CEO, James Cayne, has also faced heavy criticism. Trouble is also brewing at British bank Barclays.
Meanwhile Germany has by no means remained untouched by the fiasco. Despite posting substantial write-offs, Deutsche Bank, Commerzbank and Hypo Real Estate managed to report earnings growth in the last quarter. Nevertheless, this has by no means eliminated the uncertainty.
Only after their annual reports have been audited will "they all be able to breathe easier," says a risk management expert. "In other words, all kinds of things can reappear in the last quarter." According to the risk management expert, so far the Germans have taken a less hard line in their assessments than the Americans or Swiss banks like UBS. Does this mean that it's all just a question of valuation?
The valuation of complex credit products, for which there are currently almost no market prices, is a hotly debated issue among bankers, auditors and industry groups. Neither the German Federal Financial Supervisory Authority (BaFin) nor the Institute of Public Auditors in Germany (IDW) has offered clear guidelines. The resulting vacuum creates the temptation to doctor the numbers.
Fraudulent labeling is a hotly discussed issue at the moment, especially among Germany's state-backed banks, which are currently revising their accounting rules. Under the proposed new rules, the types of assets banks used to acquire purely for trading purposes, to earn a quick euro, so to speak, could now be declared as a long-term capital investment. The advantage of this approach is it would allow painful market losses in trading positions to be posted directly to the profit and loss statement. Securities held to maturity, however, would not have to be valued at current market prices, but instead at their acquisition prices. It's the perfect recipe for concocting an accounting fairy tale.
Part 3: 'Buy, Buy, Buy'
But the fear of time bombs on balance sheets raises worries on precisely the financial markets on which banks lend money to each other. Despite all efforts by central banks to intervene, everyone in these markets distrusts everyone else.
PHOTO GALLERY: CASUALTIES OF THE SUBPRIME CRISIS
Click on a picture to launch the image gallery (6 Photos)The year-end rally over funds that won't have to be repaid until January is already underway. No bank wants to risk no longer being able to guarantee its daily monetary transactions. "That's because most of them close their books starting in mid-December," says a London banker. "There's hardly any money available after that."
This scarcity makes borrowing money more costly. Financial managers use freshly borrowed cash primarily to plug the holes in their bank's sizeable investment funds. But the different possible solutions present the funds with a painful choice. Fund managers can either inject new cash, which could easily be consumed in no time, or they could face the prospect of devastating forced sales, which would lead to yet another broad decline in prices for credit products.
This is precisely the acute danger facing Sachsen Funding I, a €2 billion fund. In the next four weeks, Landesbank Baden-Württemberg and other investors will have to decide whether to inject additional cash or close the fund.
A rescue operation is already underway at an investment firm called Ormond Quay, which was responsible for the emergency sale of SachsenLB to Landesbank Baden-Württemberg.
To prevent a collapse, a consortium of German savings banks provided Sachsen Funding I with a €17.3 billion emergency funding package several weeks ago. Of German bank DekaBank's €6 billion share of the package, only about €500 million has been used to date.
WestLB, another German state bank, is also involved in an extensive bailout effort. According to a spokesman, WestLB had to provide its €3.3 billion Kestrel fund with "a credit line to support liquidity."
The credit line, says the WestLB spokesman, "guarantees the full repayment of all debt securities." It has also saved the fund from being downgraded by ratings agency Moody's.
WestLB believes that the prices in the Kestrel portfolio will recover. This reflects the current focus on faith in a world normally dominated by hard numbers. The situation is also tense at Harrier Finance, another WestLB company with assets of $11 billion.
NEWSLETTER
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Is Harrier about to face a complete fire sale? This would be all too convenient for some financial jugglers. The first vultures hoping to turn a profit from the debacle are already circling.
One of them is market guru Bill Gross. For the past few days, Gross, who founded German insurance conglomerate Allianz's PIMCO pension fund, has been buying up the supposedly junk securities at bargain-basement prices.
Giants like Goldman Sachs and the Royal Bank of Scotland have been doing the same thing, investing their wealthy customers' money. If the market bounces back, these high stakes players could end up raking in huge profits in the global financial casino.
"If I had the money," says an envious chairman of a German state bank, "all I would do now is buy, buy, buy."
Translated from the German by Christopher Sultan
http://www.spiegel.de/international/business/0,1518,517139,00.html
By Beat Balzli and Frank Hornig
The consequences of the US real estate crisis are far greater than previously suspected. Wall Street could face losses of over $200 billion, and German banks are unlikely to escape unscathed. The full extent of the disaster will not be known for months.
AP
The full extent of the fall-out from the subprime crisis is still not known.Only a few weeks ago, in October, the world still seemed a fairly orderly place to Charles Prince, the chairman and CEO of Citigroup. Although the bank's earnings were already heading south as a result of the subprime crisis (more...), Citigroup's largest individual shareholder, Saudi Arabian Prince Alwaleed bin Talal, wasn't losing his cool. What was happening on the financial markets was a "mere hiccup," the Arab multibillionaire explained.
A short time later, at the beginning of last week, it was time for another Citigroup executive to take the company jet to the Saudi Arabian capital Riyadh for some urgently needed damage control. Until 2003, Sandy Weill (more...) was chairman of Citigroup, the world's biggest bank at the time. Weill, who is now 74, is credited with having expanded the company in the 1990s into the broadly diversified financial services conglomerate it is today. Now his life's work was in jeopardy.
FROM THE MAGAZINE
Find out how you can reprint this DER SPIEGEL article in your publication. Weill knew that the "hiccup" had quickly turned into a serious threat. "We discussed the situation, what was wrong and why things are happening like that," Prince Alwaleed told the magazine Fortune, describing his crisis meeting with Weill.
News of the meeting in Saudi Arabia sent faraway Wall Street into turmoil. Only a few days after Merrill Lynch CEO Stan O'Neal was let go, Citigroup chief executive Prince was also asked to clear his desk.
Both executives were guilty of a fundamental miscalculation. As a result, the two companies will each be forced to write off between $8 billion and $11 billion in bad debt. But, as dramatic as the events at Merrill Lynch and Citigroup were, they do not mark the end of the banking nightmare that began in mid-summer.
That was when the first financial institutions and hedge funds began issuing warnings that the US real estate bubble was on the verge of bursting. Many homeowners who had borrowed heavily against the equity in their homes, confident that real estate prices would continue to rise, were suddenly faced with the realization that they could no longer afford to keep up their mortgage payments.
PHOTO GALLERY: CASUALTIES OF THE SUBPRIME CRISIS
Click on a picture to launch the image gallery (6 Photos)The repercussions of the crisis have mushroomed since then, with billions at stake now instead of millions. And despite ongoing efforts by politicians and central banks to bring calm to the market, a crisis that began among smaller banks has since spread to the industry's giants.
The effects of the disaster on almost every major Wall Street institution and many European banks have been far more severe than previously supposed. The 10 biggest losers have already reported losses of more than $40 billion, and even this is only the beginning.
"I believe that we are still not aware of all the risks," said Alexander Dibelius, the head of investment bank Goldman Sachs's German office, only two weeks ago -- shortly before the CEOs at Citigroup and Merrill were let go.
Economists and central bankers are already predicting total losses in excess of $200 billion. "The bloodbath in credit and financial markets will continue and sharply worsen," Nouriel Roubini, a highly regarded American economist, recently wrote on his blog.
His fears stem from the fact that so far banks have only published their results for the third quarter of 2007, which, for most institutions, ended in August or September. The real estate crisis has worsened since then, with even greater losses expected for the fourth quarter.
The true scope of the debacle will likely become apparent only after annual financial statements are published next spring. Quarterly statements are an imperfect indicator, because they enable banks to defer their losses relatively unnoticed.
DER SPIEGEL
It's been a nasty few weeks for the global banking giants.One of the results of the dismal news is that, after weeks of rising prices, the US's leading stock market index, the Dow Jones, took a sharp downward turn in recent days. The central banks' efforts to improve the situation by increasing liquidity and lowering interest rates have evaporated like drops of water on a hot stone. Fear and suspicion are the prevailing sentiments on the world's stock markets. A banker in Frankfurt predicts: "We are just at the beginning of the second tsunami wave."
Its effects will likely extend beyond the banking sector. AIG, America's largest insurance group, is already reporting a 27-percent loss for the third quarter. In addition to the now notorious high-risk subprime mortgages, financial worries in the United States are now also being stoked by concern over subprime credit cards and subprime auto loans. For consumers unable to pay their mortgages, the monthly credit card bill or the car loan are also likely to present a problem.
With the price of oil close to the $100 mark and the dollar in a nosedive, the outlook for the US economy -- and the world economy -- is becoming increasingly bleak.
In a hearing before the US Congress last Thursday, Federal Reserve Chairman Ben Bernanke warned lawmakers of the consequences of the crisis: higher inflation, declining consumer spending and lower growth rates. On the same day, Bernanke's counterpart in the European Union, European Central Bank President Jean-Claude Trichet, expressed concern over what he called the "brutal moves" in the euro-dollar exchange rate.
To make matters worse, the banks' mortgage problem is developing into a crisis of confidence reminiscent of the collapse of the scandal-plagued US corporations Enron and WorldCom. The first investor lawsuit has already been filed, and the US market watchdog, the Securities and Exchange Commission (SEC), is taking a closer look at questionable accounting practices. New York Attorney General Andrew Cuomo has also launched his own investigations.
Part 2: Foolhardiness and Greed
But as complex as today's banking transactions are, the motives behind key players' actions are as simple as ever: foolhardiness and greed.
Take Stan O'Neal, for example. As chairman of Merrill Lynch, he pushed the company into increasingly risky real estate deals. Highly profitable in the short term, these deals earned O'Neal handsome bonuses. The fact that the entire model stood on shaky ground was water off a duck's back to O'Neal, who left the company with $162 million in severance pay.
PHOTO GALLERY: CASUALTIES OF THE SUBPRIME CRISIS
Click on a picture to launch the image gallery (6 Photos)To meet their profit goals, banking executives and their brokers had repeatedly delayed performing risk assessments of their financial instruments. "What would happen if Boeing Co. or Johnson & Johnson rolled out products with similar defect rates?" the Wall Street Journal asked rhetorically. The subprime crisis, the paper writes, acts as "a vital portal onto Wall Street, helping us understand just how upside-down the place has become."
In addition, the banks' boards of directors, blinded by the celebrity status of their senior executives, neglected to draft recruitment scenarios for top-level positions. The consequences of their neglect are now coming home to roost, as they face a limited selection of qualified candidates. The few remaining prospects, like Deutsche Bank Chairman Josef Ackermann, are suddenly in high demand.
Other US banks are also feeling the pinch. Morgan Stanley and Wachovia reported write-offs of $3.7 billion and $1.1 billion, respectively -- and those were only the numbers being reported late last week.
While Wall Street brokers are worried about their usually lavish Christmas bonuses, analysts at market research company CreditSights are busy calculating expected losses for the fourth quarter. Their predictions include a loss of $5.1 billion at Goldman Sachs, $3.9 billion at Lehman Brothers and $3.2 billion at Bear Stearns, whose CEO, James Cayne, has also faced heavy criticism. Trouble is also brewing at British bank Barclays.
Meanwhile Germany has by no means remained untouched by the fiasco. Despite posting substantial write-offs, Deutsche Bank, Commerzbank and Hypo Real Estate managed to report earnings growth in the last quarter. Nevertheless, this has by no means eliminated the uncertainty.
Only after their annual reports have been audited will "they all be able to breathe easier," says a risk management expert. "In other words, all kinds of things can reappear in the last quarter." According to the risk management expert, so far the Germans have taken a less hard line in their assessments than the Americans or Swiss banks like UBS. Does this mean that it's all just a question of valuation?
The valuation of complex credit products, for which there are currently almost no market prices, is a hotly debated issue among bankers, auditors and industry groups. Neither the German Federal Financial Supervisory Authority (BaFin) nor the Institute of Public Auditors in Germany (IDW) has offered clear guidelines. The resulting vacuum creates the temptation to doctor the numbers.
Fraudulent labeling is a hotly discussed issue at the moment, especially among Germany's state-backed banks, which are currently revising their accounting rules. Under the proposed new rules, the types of assets banks used to acquire purely for trading purposes, to earn a quick euro, so to speak, could now be declared as a long-term capital investment. The advantage of this approach is it would allow painful market losses in trading positions to be posted directly to the profit and loss statement. Securities held to maturity, however, would not have to be valued at current market prices, but instead at their acquisition prices. It's the perfect recipe for concocting an accounting fairy tale.
Part 3: 'Buy, Buy, Buy'
But the fear of time bombs on balance sheets raises worries on precisely the financial markets on which banks lend money to each other. Despite all efforts by central banks to intervene, everyone in these markets distrusts everyone else.
PHOTO GALLERY: CASUALTIES OF THE SUBPRIME CRISIS
Click on a picture to launch the image gallery (6 Photos)The year-end rally over funds that won't have to be repaid until January is already underway. No bank wants to risk no longer being able to guarantee its daily monetary transactions. "That's because most of them close their books starting in mid-December," says a London banker. "There's hardly any money available after that."
This scarcity makes borrowing money more costly. Financial managers use freshly borrowed cash primarily to plug the holes in their bank's sizeable investment funds. But the different possible solutions present the funds with a painful choice. Fund managers can either inject new cash, which could easily be consumed in no time, or they could face the prospect of devastating forced sales, which would lead to yet another broad decline in prices for credit products.
This is precisely the acute danger facing Sachsen Funding I, a €2 billion fund. In the next four weeks, Landesbank Baden-Württemberg and other investors will have to decide whether to inject additional cash or close the fund.
A rescue operation is already underway at an investment firm called Ormond Quay, which was responsible for the emergency sale of SachsenLB to Landesbank Baden-Württemberg.
To prevent a collapse, a consortium of German savings banks provided Sachsen Funding I with a €17.3 billion emergency funding package several weeks ago. Of German bank DekaBank's €6 billion share of the package, only about €500 million has been used to date.
WestLB, another German state bank, is also involved in an extensive bailout effort. According to a spokesman, WestLB had to provide its €3.3 billion Kestrel fund with "a credit line to support liquidity."
The credit line, says the WestLB spokesman, "guarantees the full repayment of all debt securities." It has also saved the fund from being downgraded by ratings agency Moody's.
WestLB believes that the prices in the Kestrel portfolio will recover. This reflects the current focus on faith in a world normally dominated by hard numbers. The situation is also tense at Harrier Finance, another WestLB company with assets of $11 billion.
NEWSLETTER
Sign up for Spiegel Online's daily newsletter and get the best of Der Spiegel's and Spiegel Online's international coverage in your In- Box everyday.
Is Harrier about to face a complete fire sale? This would be all too convenient for some financial jugglers. The first vultures hoping to turn a profit from the debacle are already circling.
One of them is market guru Bill Gross. For the past few days, Gross, who founded German insurance conglomerate Allianz's PIMCO pension fund, has been buying up the supposedly junk securities at bargain-basement prices.
Giants like Goldman Sachs and the Royal Bank of Scotland have been doing the same thing, investing their wealthy customers' money. If the market bounces back, these high stakes players could end up raking in huge profits in the global financial casino.
"If I had the money," says an envious chairman of a German state bank, "all I would do now is buy, buy, buy."
Translated from the German by Christopher Sultan
http://www.spiegel.de/international/business/0,1518,517139,00.html
Stormberger
from Crawford2000 Website
"Iron rods will be built and iron monsters will bark though the wilderness. Cars without horses and shaft will come, and man will fly through the air like birds "....
"The catholic faith will almost completely disappear, the religiousness will be quite badly respected, they will not earn any respect due to their way of living, there won't be many good Christians among the people, the Commandments of God are no longer respected by the aristocracy as well as by the smallest worker, one will not think the greatest unfairness to be a sin. When the faith disappears also the love of the next one will completely lose itself, one will not estimate the justice, often the poor one will not be given right and he will be less respected than a dog. After this a mischief will arise that has to be regretted, there will be no order among the people""When in the outskirts of the forest the iron road will be finished, and there the iron horse will be seen, a war will begin, to last twice two years ...It would be fought with iron fortresses that move without horses". Two or three decades after the first war it will come one a Second War still larger. Almost all the nations of the world will be involved. Millions of men will die, without being soldiers. The fire will fall from the sky and many great cities will be destroyed. And after the end of the Second Great War, a third universal conflagration will come, so that it will determine everything. There will be weapons totally new. In one day, more men will die than in all the previous wars. The battles will be accomplished with artificial weapons. Gigantic catastrophes will happen. With the open eyes, the nations of the planet will go through these catastrophes. They won't know what is happening, and those that know and tell, will be silenced. Everything will be different from before, and in many places the Earth will be a great cemetery. The third war will be the end of many nations".
"You, my children, won't experience the largest mischief, you, my grandchildren, won't also experience it, but the third stock, that will easily experience it." "Over night it will take place - in a pub in Zwiesel many people will be together, and outside the soldiers will ride over the bridge." ........
"The people will run out of the forest. Those, who hide themselves at the "Fuchsenriegel" or at the "Falkenstein", remain spared. Who survives must have an iron heading. The people become ill, and nobody can help them... however it will continue, and what follows then, is the end of the world. Sky and earth burn, because it is the time, when everything comes to an end. And this time will be, when the wild hunt with fire and sulphur roars over the country. But it is still long time, till it will happen, then no humans will know anymore, where "Zwiesel" and where "Rabenstein" (German towns) have been. Of all frights the this will be the last. When the people fall off the bank like the flies off the wall, the last time begins. It will be horrible." ........
"But when however someone at the whole Danube stream finds still another cow, then she is worth it to be attached with a silver bell by the owner." ....
"After these events it will be a miracle, if one still sees two or three rulers going together, after these events the clarity will be anew, and those who survived, will face a good time for hope".
HOGUE'S TEXT
from Millennium Book of Prophecy by John Hogue
Railroads, Cars, and Planes
"Iron roads will be built, and iron monsters will bark through the wilderness. Cars without horses and shaft will come, and men will fly though the air like birds."
World War 1
"When in the outskirts of the forest the iron road will be finished, and there the iron horse will be seen, a war will begin, to last for twice two years. It will be fought with iron fortresses that move without horses, and with powers that come from the earth and fall from the sky."
According to Hogue:
"The day WW1 began was pinpointed two centuries before it happened by a simple and reclusive cowherd in the Bavarian forests bordering Czechoslovakia. On Aug. 1, 1914, a new railroad line between Kalteneck and Deggendorf (running on the edge of Stormberger's forest) officially opened -the day hostilities began. The war did last four years and saw the introduction of terrible new weapons such as mines "from the earth", poison gas "falling from the sky" and tanks-"iron fortresses" that move.
1929: The Stock Market Crash
"Right after this horrible war there will come a time when money will have no value. For 200 guilders not even a loaf of bread will be available, and yet there shall be no famine. Money will be made of iron, and gold shall become so valuable that for a few gold coins a small farm can be bought."
The Interval Between World Wars
"Two or three decades after the first great war will come a second, still greater war. Almost all nations of the world will be involved. Millions of men will die, without being soldiers. Fire will fall from the sky and many great cites will be destroyed."
WW3
"And after the second great struggle between the nations will come a third universal conflagration, which will determine everything. There will be entirely new weapons. In one day more men will die than in all previous wars combined. Battles will be fought with artificial weapons. Gigantic catastrophes will occur. With open eyes will the nations of the Earth enter into these catastrophes. They shall not be aware of what is happening, and those who will know and tell, will be silenced.Everything will become different than before, and in many places the Earth will be a great cemetery. The third great war will be the end of many nations."
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