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October 03, 2008

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Ugh would like to congratulate the Democratic party for agreeing to push the depression past the end of Bush's presidency and into Obama's by passing what will ultimately be an ineffective bailout package.

Now excuse me while I go out and buy some more canned food.

Here is a "stab from the past" on how this problem was allowed to happen...

Seattle talk radio host Dave Ross , a moderate liberal and "common sense" proponent, interviewed William Isaac, who was FDIC chair from 1981 to 1985. Isaac singled out the SEC for blame. He stated as an example that it took action in 1999 against Atlanta bank SunTrust for holding excessive loan loss reserves, claiming that this was manipulating earnings. (This interview can be downloaded from www.mynorthwest.com/rss/dave.rss in the 2008-OCT-03 9:00-10:00am Dave Ross Show podcast. Look at 19:00-21:00 for this anecdote.)

There's a lot of weirdness in Iceland right now. Iceland's third biggest bank, Glitnir, got forcibly nationalized by the Central Bank:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aQwIFKhLTL2Q&refer=home

Because of this forced nationalization the state is currently very vulnerable because it's got so much of its reserve tied up in this one venture. If the two banks that are bigger fail, there might be nothing the Icelandic state can do about it since the those two banks have assets valued at 10 times the GDP of Iceland:

http://www.portfolio.com/views/blogs/market-movers/2008/10/03/iceland-when-too-big-to-fail-becomes-too-big-to-rescue?tid=true

Finally, there's a lot of weirdness surrounding the takeover since there has been a lot of bad blood between one of the directors of the Central Bank, a former prime minister, and the principal shareholder in Glitnir. Read the whole weird, soap-operaish story here:

http://icelandweatherreport.com/2008/10/the-biggest-bank-robbery-in-icelandic-history.html

I traced back Felix Salmon's report to some FT blog. That email is reported spurious.

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