Many Hurricanes, Many Eyes

Often times it is not the leading front of the hurricane that does the most damage, it is the backside. Here is the three stage pattern of hurricane damage.


Winds from the front side weaken but do not destroy structures
The eye of the hurricane brings a foreboding sense of unnatural calm
Wind comes slamming from the opposite direction as the eye passes over, shearing structures from the opposite direction
The "calm" Bernanke thinks we are in, is nothing more than the prelude to the back side of a hurricane. My post, Things That Have Not Yet Happened, is essentially about the backside of the hurricane.

New Crisis Threatens Healthy Banks

The mainstream press is catching on. The Washington Post article "New Crisis Threatens Banks" is not really new. It's really about the backside of a hurricane. Let's take a look.
http://globaleconomicanalysis.blogspot.com/2008/06/many-hurricanes-many-eyes.html

Insurer-Cut 'Hurricane' Hits

Having just talked about hurricanes in Many Hurricanes, Many Eyes, this headline caught my eye: U.S. Muni Yields Soar as Insurer-Cut 'Hurricane' Hits.


Yields on floating-rate, tax-exempt debt insured by MBIA Inc. and Ambac Financial Corp. soared as high as 9 percent last week as investors dumped the securities after the companies' credit ratings were cut by Moody's Investors Service on June 19. The spiraling debt costs are reminiscent of those that followed the collapse of the auction-rate securities market in February.

"You survived the big waves, then the next thing you know, you've got the hurricane coming," said Brian Mayhew, chief financial officer of the Bay Area Toll Authority, which saw costs jump as high as 7 percent on $1.8 billion of bonds backed by Ambac even before the downgrades. "This is clearly the storm. This is what we thought would never ever happen."
More Than Meets The Eye

There is more to this hurricane than meets the eye. In this case I mean the eyes of Brian Mayhew at the toll authority. Rising yields are just one aspect of the storm. There are many others. Consider things from the point of view of Ambac (ABK) and MBIA (MBI).

http://globaleconomicanalysis.blogspot.com/2008/06/insurer-cut-hurricane-hits.html

Job Cuts Increase Economic Stress

Corporations are slashing jobs. States are in on the act too. Let's take a look at a few headlines. All are from last weekend.

Citigroup (C) Slashing Investment Banking Jobs

Yahoo Finance is reporting Citigroup to slash investment-banking jobs


Citigroup is preparing fire thousands from its worldwide investment-banking division, The Wall Street Journal reported on Sunday. The Journal, citing people familiar with the matter, said the layoffs are part of a plan to cut about 10 percent of the staff of the 65,000-member investment-banking group.
Miami Teachers Protest Job Cuts

NBC is reporting Teachers Protest Job Cuts.

Teachers in Miami-Dade County are fighting back against the school board's decision to slash jobs. Several teachers gathered outside the Intercontinental Hotel on Sunday to protest superintendent Rudy Crew's decision to slash jobs while refusing to cut his own pay. The board approved additional job cuts last week, raising the total number of jobs lost to more than 2,000.
Continental Airlines Slashing Jobs

The Economic Times is reporting Continental Airlines to slash jobs.

Continental Airlines Inc, which is shedding 3,000 jobs in a cost-cutting move, is offering employees a year's worth of health insurance and travel perks if they leave on their own.

"We are offering all of our work groups voluntary plans to reduce the number of involuntary furloughs and terminations that will be required due to capacity cuts," said Continental spokeswoman Mary Clark.

Continental has made an umbrella offer to all labor groups that includes the health benefits and free travel privileges for employees and their families until 2023. The offer was extended to employees who have worked at Continental for at least 10 years.

Janesville WI GM Closing To Cost 9,000 Jobs

http://globaleconomicanalysis.blogspot.com/2008/06/job-cuts-increase-economic-stress.html

<snip>
Government 1919–1923?
(ILRIM)
1. Ineffective Constitution
The Weimar Constitution did not create a strong government:

Article 48 of the constitution gave the President sole power in ‘times of emergency’ – something he took often.

The system of proportional voting led to 28 parties. This made it virtually impossible to establish a majority in the Reichstag, and led to frequent changes in the government. During 1919-33, there were twenty separate coalition governments and the longest government lasted only two years. This political chaos caused many to lose faith in the new democratic system.

The German states had too much power and often ignored the government.

The Army, led by the right-wing General Hans von Seeckt, was not fully under the government’s control. It failed to support government during the Kapp Putsch or the crisis of 1923.

Many government officials – especially judges – were right-wing and wanted to destroy the government. After the Kapp Putsch, 700 rebels were tried for treason; only 1 went to prison. After the Munich Putsch, Hitler went to prison for only 9 months.


2. Left-wing Rebellions
The Communist KPD hated the new government:

In Jan 1919, 50,000 Spartacists rebelled in Berlin, led by Rosa Luxemburg and Karl Leibknecht.

In 1919, Communist Workers’ Councils seized power all over Germany, and a Communist ‘People’s Government’ took power in Bavaria.

In 1920, after the failure of the Kapp Putsch, a paramilitary group called the Red Army rebelled in the Ruhr.


3. Right-wing terrorism
Many right-wing groups hated the new government for signing the Versailles Treaty (June 1919):

The Kapp Putsch: in March 1920, a Freikorps brigade rebelled against the Treaty, led by Dr Wolfgang Kapp. It took over Berlin and tried to bring back the Kaiser.

Nationalist terrorist groups murdered 356 politicians. In August 1921 Matthias Erzberger, the man who signed the armistice (and therefore a 'November criminal'), was shot. In 1922, they assassinated Walter Rathenau, the SPD foreign minister, because he made a treaty with Russia.


4. Invasion-Inflation: the crisis of 1923
The cause of the trouble was Reparations – the government paid them by printing more money, causing inflation. In January 1923, Germany failed to make a payment, and France invaded the Ruhr. This humiliated the government, which ordered a general strike, and paid the strikers by printing more money, causing hyperinflation:

In Berlin on 1 October 1923, soldiers calling themselves Black Reichswehr rebelled, led by Bruno Buchrucker.

The Rhineland declared independence (21–22 October).

In Saxony and Thuringia the Communists took power.



5. Munich Putsch
On 8–9 November 1923, Hitler’s Nazis tried to take control of Bavaria (the Munich Putsch).

http://www.johndclare.net/Weimar3.htm