UK Daily Telegraph mentions idea of “Alien Invasion”

From: Andrew Johnson

Date: 2008-10-19 10:53:10

In a story related to the “credit crunch craziness”, a UK Daily Telegraph writer asks the question “What next? An Alien Invasion?”…   The £2 trillion craziness that swept the globe Let’s be generous here. Perhaps history will prove that the events of this week were all a clever plot by the world’s leaders to deter an alien invasion.   By Alistair Osborne Last Updated: 10:52PM BST 17 Oct 2008 How else to comprehend the £2 trillion of craziness that swept the globe – the sort of financial caper that would have had the little green men scurrying for their spacecraft, sharpish. It started, in Britain, with a twist on a popular TV programme. Call it “Darling’s Den” – the Chancellor’s lair to which quivering bank chiefs were hauled last weekend. With Treasury and Financial Services Authority officials applying the thumbscrews, the bankers were shown just how much capital they needed to raise. If they had thought they might get away with offering the taxpayer, say, a 10pc stake for a £5bn cash injection, the heads of Royal Bank of Scotland, HBOS and Lloyds TSB were swiftly disillusioned. In what Lloyds boss Eric Daniels described as “bullet-proofing the banks against any downturn”, the trio were told they needed to pump in £37bn among them to improve their capital ratios. When the news broke on Monday, there was only one word for it. New Labour was poised to do what Old Labour had never dared and partially “nationalise” three high-street banks serving more than 40m customers – on top of the two existing state dependants, Northern Rock and Bradford & Bingley. It was a simple question of arithmetic. Unless the trio can raise tens of billions from their own investors – a tall order, if ever, in the current crisis-torn markets – the taxpayer will wind up with a near-60pc stake in RBS and up to 43.5pc in the planned Lloyds/HBOS combo. There was a price for tapping the taxpayer too – the scalps of Sir Fred Goodwin and Sir Tom McKillop, respectively the chief executive and chairman of RBS, and of Andy Hornby and Lord Stevenson, their counterparts at HBOS. David Freud, the former UBS banker now advising the Government on welfare reform, characterised the taxpayer-funded bail-out as “not really nationalisation. It’s extra capital with punishment.” Long-term, the Government does not want to own banks. But while it does, the kicking it gives them – over such things as bonuses and lending criteria – will change the face of the industry. Not least if Lord “Red Adair” Turner, the FSA chairman, gets his way. One issue became increasingly contentious as the week wore on: the Government’s plan to compel banks that took its preference shares to suspend dividends for up to five years – a diktat, as it turned out, from Brussels. Investors responded by dumping high-yielding bank shares, threatening Lloyds’ tie-up with HBOS. Recapitalising the banks was the final piece in Flush Gordon’s cistern-bursting £500bn bail-out plan. He also earmarked £250bn of Government guarantees to coerce banks into lending to each other again and £200bn of emergency funding from the Bank of England’s gushers. Lampooned over here for his tardy response to the crisis, the PM suddenly found himself a hero abroad as US Treasury Secretary Hank Paulson copied the Brit blueprint. He set aside $250bn (£145bn) from his $850bn rescue stash to recapitalise nine American banks. They include such bastions of capitalism as Goldman Sachs and Morgan Stanley – and Paulson made no secret of his misgivings. “Government owing a stake in any private US company is objectionable to most Americans – me included,” he said. “Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable.” Europe followed suit, with six countries setting aside €1,500bn (£1,170bn) to save its banks. Both Germany’s €500bn bail-out and France’s €360bn lifebelt carried the UK imprimatur of addressing banks’ capital positions. Tot it all up and the world’s leaders – acting in concert after last weekend’s G7 meeting – had thrown more than £2 trillion at the problem. And, for almost two days, the markets roared their approval as politicians sought to put the banking crisis behind them. Having tanked 21pc the previous week, the FTSE-100 leapt 8.26pc on Monday and a further 3.23pc on Tuesday to stand at 4,394.21 – moves mirrored on all major markets, excepting minor wobbles in Russia and Spain. By Tuesday night, however, the US Dow Jones was signalling the big-dipper to come. Having bounced 11.1pc on Monday, the Dow surged to a 500 point advance on Tuesday before beating a hasty retreat to close down 0.82pc. Increasingly febrile markets had shifted their focus from the banks to the world economy. Traders were now in a right sweat over the looming global slump – their panic over the pain required to pay back a £2 trillion bail-out bill exacerbated by more specific concerns. Who, they wonderedm, is on the hook for $360bn of default insurance arising from the toxic dump at Lehman Brothers? What is the $2 trillion hedge fund industry sitting on? And will insurance companies become the next major casualties? So began the rollercoaster. By Wednesday, data was coming thick and fast. None of it was pretty. On this side of the Atlantic, Bank of England Monetary Policy Committee member Andrew Sentance had already warned that “the risks of a bigger and more sustained downturn” were increasing. The UK unemployment figures – a lagging indicator of economic health – confirmed that. They showed the jobless total rising at the fastest rate for 17 years. Abroad, evidence that the crisis on Wall Street had extended to Main Street came with September’s 1.2pc fall in US retail sales – far worse than the 0.7pc drop expected. Meanwhile San Francisco Federal Reserve Bank president, Janet Yellen, dared to utter the dreaded “R” word. Recession fears swept the market, puncturing the commodity bubble on the rational grounds that if the global economy goes into reverse, demand for raw materials and manufactured goods plummets. Even China, the engine of world growth was beginning to splutter, according to Rio Tinto chief executive Tom Albanese. “China is not completely insulated from OECD recession,” he warned. Meanwhile, the contagion was spreading to Eastern Europe, with Ukraine, Hungary and Serbia all in emergency talks with the International Monetary Fund, while victims of Iceland’s meltdown continued to emerge in unlikely corners. Oxford University became the latest institution to admit that £30m of its money was submerged somewhere in Iceland’s Blue Lagoon. The markets took their cue. The FTSE plunged 7.16pc, only slightly more than Germany’s DAX index and France’s CAC. And the Dow dived 7.87pc to below 9,000. A day later, the markets were out of step again, the FTSE tanking a further 5.35pc, while the Dow climbed 4.68pc after an 800-point gyration. Its higher close, analysts said, was brought about by oil falling to just above $66. In Europe, Switzerland’s proud banking nation was forced to provide a Sfr60bn (£31bn) lifeline to UBS, while traders drove UK insurance companies shares up to 20pc lower on fears that their solvency ratios were going the same way as falling equity markets. Hedge funds became a bigger worry still, with London’s Gradient Capital the latest on the slide. Howard Wheeldon, senior strategist at BGC Partners, summed up the antsy atmosphere: “Market sentiment is now being completely driven by fear,” he said. By yesterday, the panic had subsidied – for now. The FTSE bounced by 5.2pc to end the week at 4063.01 points – ahead of last week’s 3932.06 close. Those two figures scarcely tell the story. What, you wonder, could possibly top this week’s dramas? An alien invasion perhaps. Are you interested in what’s really going on in the world, behind the facade? Then…www.checktheevidence… happened on 9/11?    

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